Rule Submissions to the CFTC

October 1, 2000

At various times throughout its history, NFA has appointed several special committees to study specific issues facing the futures industry. At its November 16 meeting, NFA's Board of Directors approved the appointment of two such committees to examine give-up transactions and automated order routing systems.

"NFA is pleased to provide a forum for the discussion of these issues," says Dan Roth, NFA's chief operating officer. "We have assembled a cross-section of industry representatives to ensure that all sides of these issues are heard."

The Special Committee on Give-Up Transactions will be led by Ron Oppenheimer, first vice-president and general counsel of Merrill Lynch's Futures and Options Division. The committee will use the NFA/FIA Best Practices Report as a starting point for their discussions. The Best Practices Report, scheduled to be presented to the CFTC in February, recommends that each participant's rights and responsibilities in connection with give-up transactions should be clearly defined in a written agreement among the parties or in the rules of a relevant self-regulatory organization.

"Although give-up transactions can provide customers with a lot of flexibility, they also pose a significant risk as they are currently performed," says Roth. "The committee's principal task will be to develop industrywide standards for these transactions."

In addition to Oppenheimer, the Special Committee on Give-Up Transactions includes the following individuals:

Neil Citrone - Pioneer Futures, Inc.
Bruce Cleland - Campbell & Company, Inc.
Bryan Durkin - Chicago Board of Trade
Ronald Filler - Lehman Brothers, Inc.
Bonnie Litt - Goldman Sachs, Inc.
Todd Petzel - Commonfund Asset Management Company, Inc.
Michael Schaefer - Salomon Smith Barney
Eric Wolff - Chicago Mercantile Exchange
Neal Wolkoff - New York Mercantile Exchange

The Best Practices Report also addresses issues surrounding automated order routing systems (AORSs). In connection with the report, CFTC Chairman William Rainer sent a letter to NFA President Robert Wilmouth last July asking NFA to "consider what further follow-up action would be appropriate to address AORS issues, including security and capacity and controls over customer trading activity."

NFA's Board of Directors decided that the Special Committee to Review Technology was ideally suited to develop standards for AORSs. Because the committee was originally created in January 1997 and the commitments and affiliations of the committee members have changed, the Board decided to re-appoint the Committee to ensure that it includes adequate representation from all appropriate segments of the industry. Michael Schaefer, executive vice-president of Salomon Smith Barney, will chair the committee.

"The Special Committee's primary task will be to develop standards for security, capacity and controls by AORSs that route orders through an FCM," says Roth. "We will also supplement those standards with 'best practices' guidance on some of the ways to meet those standards."

The Special Committee to Review Technology is composed of Schaefer and the following individuals:

Thomas J. Basso - Trendstat Capital Management, Inc.
David M. Battan - Timber Hill/Interactive Brokers
John P. Davidson - Morgan Stanley & Co., Inc.
Clarence Delbridge, III - FC Stone, LLC
Patrick L. Gambaro - New York Board of Trade
Thomas Hammond - Board of Trade Clearing Corp.
Richard Jaycobs - OnExchange, Inc.
Thomas McCabe - Chicago Board of Trade
William Miller - Commonfund
Steve Monieson - Trading Technologies
Manuel Montejano - Chicago Mercantile Exchange
John Munro - Rolfe & Nolan
Ronald S. Oppenheimer - Merrill Lynch & Co.
Brian Regan - New York Mercantile Exchange
William M. Sexton - Refco, Inc.