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2012-20962

  • Federal Register, Volume 77 Issue 167 (Tuesday, August 28, 2012)[Federal Register Volume 77, Number 167 (Tuesday, August 28, 2012)]

    [Rules and Regulations]

    [Pages 51898-51910]

    From the Federal Register Online via the Government Printing Office [www.gpo.gov]

    [FR Doc No: 2012-20962]

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    COMMODITY FUTURES TRADING COMMISSION

    17 CFR Part 3

    RIN 3038-AC96

    Registration of Intermediaries

    AGENCY: Commodity Futures Trading Commission.

    ACTION: Final rule.

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    SUMMARY: The Commodity Futures Trading Commission (Commission) is

    adopting regulations to further implement new statutory provisions

    enacted by Title VII of the Dodd-Frank Wall Street Reform and Consumer

    Protection Act (Dodd-Frank Act) regarding registration of

    intermediaries. Specifically, the Commission is adopting certain

    conforming amendments to the Commission's regulations regarding the

    registration of intermediaries, consistent with other Commission

    rulemakings issued pursuant to the Dodd-Frank Act, and other non-

    substantive, technical amendments to its regulations.

    DATES: Effective October 29, 2012.

    FOR FURTHER INFORMATION CONTACT: Andrew Chapin, Associate Director,

    Division of Swap Dealer and Intermediary Oversight, (202) 418-5465,

    achapin@cftc.gov; or Claire Noakes, Attorney Advisor, Division of Swap

    Dealer and Intermediary Oversight, (202) 418-5444, cnoakes@cftc.gov;

    Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st

    Street NW., Washington, DC 20581.

    SUPPLEMENTARY INFORMATION:

    I. Introduction

    On July 21, 2010, President Obama signed the Dodd-Frank Act.\1\

    Title VII of the Dodd-Frank Act amended the Commodity Exchange Act

    (CEA) \2\ to establish a comprehensive new regulatory framework to

    reduce risk, increase transparency, and promote market integrity within

    the financial system by, among other things: (1) Providing for the

    registration and comprehensive regulation of swap dealers (SDs) and

    major swap participants (MSPs); (2) imposing clearing and trade

    execution requirements on standardized derivative products; (3)

    creating rigorous recordkeeping and real-time reporting regimes; and

    (4) enhancing the Commission's rulemaking and enforcement authorities

    with respect to all registered entities and intermediaries subject to

    the Commission's oversight.

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    \1\ See Dodd-Frank Act, Public Law 111-203, 124 Stat. 1376

    (2010). The text of the Dodd-Frank Act may be accessed at: http://www.cftc.gov/ucm/groups/public/@swaps/documents/file/hr4173_enrolledbill.pdf.

    \2\ 7 U.S.C. 1 et seq.

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    As discussed below, the regulations the Commission is adopting

    today concern conforming and technical amendments to part 3 governing

    the registration of intermediaries. These final regulations are based

    in large part on the Commission's proposed regulations regarding part 3

    (Proposal).\3\ The conforming amendments largely consist of adding

    references, where appropriate, to SDs, MSPs and swap execution

    facilities (SEFs). In addition, the adopted regulations contain

    modernizing and technical amendments to part 3 in anticipation of an

    influx of new registrants. Further, the adopted regulations clarify or

    update definitions, outdated cross-references to other regulations, and

    other typographical errors.

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    \3\ 76 FR 12888, Mar. 9, 2011.

    \4\ The comments the Commission received on the Proposal are

    currently available on the Commission's Web site.

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    II. Comments \4\ and Responses

    A. In General

    In response to the Proposal, the Commission received four comments

    from the Futures Industry Association (FIA), the National Futures

    Association (NFA), and two individuals, Chris Barnard and Bill Nolan.

    In addition, the Commission also received comments relevant to the

    Proposal in a global comment letter submitted by a U.S. investor and a

    petition for exemption submitted pursuant to Section 4(c) of the CEA

    \5\ by a group of trade industry associations.\6\ The commenters

    generally supported the Commission's efforts to update and modernize

    part 3 consistent with the regulatory developments set forth in the

    Dodd-Frank Act. In consideration of the comments received,\7\ and

    unless specifically addressed below in the section-by-section analysis,

    the Commission adopts the final regulations as proposed.

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    \5\ 7 U.S.C. 6(c).

    \6\ The Commission determined that the issues raised in the

    global comment letter with respect to addressing the types of

    activities that would cause a market participant to be deemed an

    introducing broker engaged in swap-related activities were outside

    of the scope of the Proposal, and therefore is not addressing them

    in this final rule. Likewise, the petition submitted by the trade

    industry associations cited the Proposal as an example of amendments

    that would likely not be effective in time for a July 16, 2011

    compliance deadline. Those concerns were addressed when the

    Commission granted related relief and extended the effective and/or

    compliance date applicable to many Dodd-Frank requirements. See the

    second amended version of the effective date order at 77 FR 41260,

    July 13, 2012.

    \7\ NFA requested that the Commission specifically list the

    chief compliance officer of a registered foreign exchange dealer in

    the definition of principal. The Commission addressed this request

    in another rulemaking, wherein chief compliance officer is listed as

    an example of a principal of a registrant. See 77 FR 20200, Apr. 3,

    2012.

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    B. Section 3.1--Definitions

    Section 3.1 proposed alterations to the scope of persons who, by

    reason of their ownership of securities of a registrant, must be listed

    as a principal. The Commission proposed to narrow the current category

    of persons in Sec. 3.1(a)(2)(i) to only those individuals who are the

    owners or are entitled to vote or have the power to sell or direct the

    sale of 10 percent or more of the outstanding shares of any class of

    equity securities, other than non-voting securities. The Commission

    intended to narrow the scope of the provision because the existing

    provision was over-inclusive, in that it captured individuals without

    the ability to influence a company's actions, such as owners of 10% of

    a class of preferred stock. However, upon further reflection, the

    Commission is concerned that the Proposal might, in other ways, be

    under-inclusive, in that it would fail to capture an owner who might

    indirectly have the power--such as through a membership agreement--to

    dictate upfront the entity's activities that are subject to regulation

    by the Commission. Consequently, in order to strike the right balance

    between the over-inclusive existing provision and the under-inclusive

    proposed language, the Commission is modifying Sec. 3.1(a)(2)(i) to

    include individuals who have the power to exercise a controlling

    influence over the entity's activities that are subject to regulation

    by the Commission.\8\

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    \8\ In comparison, broker-dealers regulated by the Securities

    and Exchange Commission are required to disclose on Form BD that is

    filed with the Financial Industry Regulatory Authority any person

    not otherwise named on Schedule A as a direct owner or Schedule B as

    an indirect owner who nonetheless controls the management or

    policies of the applicant through agreement or otherwise. See http://www.sec.gov/about/forms/formbd.pdf.

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    [[Page 51899]]

    C. Section 3.10--Registration of Futures Commission Merchants, Retail

    Foreign Exchange Dealers, Introducing Brokers, Commodity Trading

    Advisors, Commodity Pool Operators, Swap Dealers, Major Swap

    Participants, and Leverage Transaction Merchants. Section 3.11--

    Registration of Floor Brokers and Floor Traders. Section 3.12--

    Registration of Associated Persons of Futures Commission Merchants,

    Retail Foreign Exchange Dealers, Introducing Brokers, Commodity Trading

    Advisors, Commodity Pool Operators and Leverage Transaction Merchants

    Section 3.10 generally sets forth the registration requirements for

    various Commission registrants. Section 3.11 generally sets forth the

    registration requirements for floor brokers and floor traders. Section

    3.12 generally sets forth the registration requirements for natural

    persons associated with a Commission registrant in certain capacities,

    referred to as associated persons (APs).

    With respect to APs, the Commission proposed to amend Sec. 3.10 to

    add a new paragraph (c)(5) to clarify that a person employed by either

    an SD or a MSP and acting as its AP is not required to separately

    register as an SD or MSP, respectively, solely arising out of the

    person's activities as an AP. The Commission sought public comment as

    to whether this exemption is necessary to clarify the registration

    responsibilities of employees, in light of the current absence of a

    registration requirement as an AP of an SD or an MSP, and in light of

    the definition requiring persons who engage in certain swap activities

    to register as an SD or an MSP.\9\ FIA and Chris Barnard were

    supportive of this clarification on the grounds that it provided

    regulatory certainty. The Commission is adopting the language in new

    paragraph (c)(5) with a change in the language to reflect that it is

    not appropriate to consider the AP's activities as an AP of an SD for

    the purpose of determining whether the person is an SD.

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    \9\ See 77 FR 30596, May 23, 2012.

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    With respect to intermediaries, current Sec. 3.10(c)(2) and (3)

    provides exemptions from registration as a futures commission merchant

    (FCM) for foreign brokers and other foreign intermediaries conducting

    activities in commodity interest transactions on designated contract

    markets (DCMs) solely on behalf of customers located outside the U.S.

    The Commission proposed to amend this section to expand these

    registration exemptions to foreign brokers and foreign intermediaries

    engaged in commodity interest transactions solely on behalf of non-U.S.

    customers executed on a SEF and cleared on a designated clearing

    organization through the customer omnibus account maintained with a

    registered FCM. FIA supported the Commission's proposal to align

    registration exemptions for foreign intermediaries across DCMs and

    SEFs. The Commission also sought comment as to whether it should expand

    such exemption to swap transactions executed bilaterally, and FIA

    supported this suggestion as well. Finally, the Commission sought

    comment as to whether any expansion should distinguish between

    bilateral swap transactions that occur within the U.S. and those that

    occur abroad. The Commission did not receive any comments regarding

    such a distinction. Therefore, the Commission is amending Sec.

    3.10(c)(2) and (3) to extend the registration exemption to commodity

    interest transactions executed bilaterally, on or subject to the rules

    of a DCM, or on or subject to the rules of a SEF, that are submitted

    for clearing on an omnibus basis through a registered FCM.

    As proposed, Sec. 3.11 pertaining to registration of floor brokers

    and floor traders contained a series of technical changes, such as

    consolidating an exemption found in Sec. 3.4 and removing references

    to DTEFs. Subsequently, the Commission has promulgated the further

    definition of the term ``swap dealer'' \10\ which, among other things,

    excludes certain swaps entered into by registered floor traders from

    the SD determination. Specifically, Sec. 1.3(ggg)(6)(iv) states that

    ``[i]n determining whether a person is a swap dealer, each swap that

    the person enters into in its capacity as a floor trader as defined by

    section 1a(23) of the Act or on or subject to the rules of a swap

    execution facility shall not be considered for the purpose of

    determining whether the person is a swap dealer,'' provided that the

    person is registered as a floor trader pursuant to Sec. 3.11 and

    otherwise satisfies other conditions with respect to its trading,

    including certain requirements as if it were an SD.\11\

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    \10\ 77 FR 30596, May 23, 2012.

    \11\ 17 CFR 1.3(ggg)(6)(iv) (emphasis added). Section 1a(23) of

    the CEA restricts floor traders to the offer and sale of contracts

    ``solely for such person's own account.'' 7 U.S.C. 1a(23).

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    Given that legal entities, in addition to natural persons, may seek

    to avail themselves of the exclusion set forth above, the Commission

    therefore is adding a reference to Form 7-R in Sec. 3.11. Form 7-R, as

    the application for registration as an intermediary, is the appropriate

    form for NFA to process an entity's application for registration as a

    floor trader engaged in swaps activities. Additionally, references to

    SEFs are being added throughout Sec. 3.11 as one of the two categories

    of facilities for which floor traders in swaps will be granted trading

    privileges. Although these additions were omitted in the Proposal, the

    Commission believes that insertion of the appropriate reference to the

    type of registration form, and the type of facility, that would allow

    the NFA to properly process applications for registration of floor

    traders engaged in swaps activities are conforming changes to the

    registration rule that are necessary to implement the SD definition.

    Consequently, the Commission is adopting additional technical

    modifications in Sec. 3.21 to address the processing of fingerprints

    for principals of a floor trader that is a non-natural person, as well

    as in Sec. 3.33 to reflect the use of Form 7-W for a request for

    withdrawal from a floor trader that is a non-natural person. The

    Commission is also adopting other technical modifications in Sec. Sec.

    3.30 and 3.40 to reflect the registration of legal entities as floor

    traders,\12\ and in Sec. Sec. 3.2, 3.4, 3.42, 3.56, 3.60 and 3.64 to

    add references to SEFs.

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    \12\ In Sec. 3.40, the provision for temporary licenses is

    limited to individual floor traders because this provision is

    applicable only to natural persons (such as APs addressed in Sec.

    3.40(a)).

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    The Commission proposed to amend Sec. 3.12(h)(1) to provide that a

    person is not required to register as an AP in any capacity if such

    person is registered in one of the other enumerated categories,

    including an SD or MSP. FIA agreed with the Commission that it is

    highly improbable that an individual, rather than an entity, would

    register as an SD and MSP, but supported the Commission's proposal in

    light of the regulatory certainty that it provides. Accordingly, the

    Commission is adopting Sec. 3.12(h)(1) as proposed.

    D. Section 3.31--Deficiencies, Inaccuracies, and Changes To Be

    Reported. Section 3.33--Withdrawal From Registration

    Section 3.31 sets forth procedural requirements for a registrant to

    update and/or correct information previously provided to the Commission

    and the NFA. The NFA is a registered futures association (RFA) to which

    the Commission has delegated certain registration functions.\13\

    Currently, NFA

    [[Page 51900]]

    exercises discretion in determining whether changes to the information

    originally filed on the registrant's Form 7-R or 8-R,\14\ including its

    legal name, form of organization, and list of principals, would require

    a registrant to withdraw and re-register or, in the alternative, amend

    its Form 7-R or 8-R. The NFA's discretion is subject only to the

    requirement to withdraw and re-register set forth in Sec. 3.31(a)(1)

    where a registrant is reporting a change in the form of organization

    from or to a sole proprietorship, and the safe-harbor from re-

    registration set forth in Sec. 3.31(a)(3).

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    \13\ Section 17(o)(1) of the CEA, 7 U.S.C. 21(o)(1), provides

    that the Commission may require an RFA to perform certain Commission

    registration functions, in accordance with the CEA and the rules of

    the RFA.

    \14\ Form 7-R is the Commission's application for registration

    as an intermediary or floor broker that is a non-natural person and

    application for NFA membership, while Form 8-R is the Commission's

    application for registration as an AP, floor broker, or individual

    floor trader, as well as the application for listing as a principal

    of a registrant.

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    Among other changes set forth in the Proposal, the Commission

    proposed: (1) To adopt Sec. 3.31(a)(5) to require re-registration in

    the event of a change in name or form of organization and a change in

    principal, while preserving the existing safe harbor in Sec.

    3.31(a)(3) in the event that there is no change in principal and the

    registrant will be liable for its predecessor organization. The

    Commission specifically requested comment on whether the additional

    transparency under the new provisions of Sec. 3.31 is beneficial and

    necessary to fulfill the Commission's mandate to protect customers, and

    whether the existing safe harbors from re-registration should be

    maintained. In response to the Commission's request, NFA and FIA

    opposed the proposed re-registration requirements as unnecessary, while

    Bill Nolan supported the proposed re-registration requirements as

    necessary to ensure that the existing process is not abused by

    registrants to the detriment of customers.

    In particular, the NFA challenged the proposed amendments to Sec.

    3.31 on the following grounds: (1) It will be more difficult for

    members of the public to uncover a ``new'' firm's true disciplinary

    information; (2) the change in the legal name or form of a business

    organization and the addition of a principal does not necessarily

    trigger a regulatory need for re-registration; and (3) the proposed

    changes do not adequately address the timing of events sufficient to

    require re-registration. FIA similarly opposed the proposed changes on

    the grounds that re-registration should not be required for concurrent

    changes to the name or form of an organization, or the addition of a

    principal because re-registration is not required separately for each

    of these occurrences. FIA also stated that, upon implementation of the

    Dodd-Frank Act, the prospective mergers of affiliated companies will be

    negatively impacted by the proposed requirements.

    After carefully considering the foregoing comments, the Commission

    has determined not to adopt the amendment in Sec. 3.31(a)(3) and (5)

    as proposed.\15\ The Commission intends to promptly consider

    alternatives to the Proposal's re-registration requirements \16\ in

    order to address customer protection issues raised by the current

    rules. In the meantime, a prospective customer will continue to be able

    to obtain disciplinary history of any associated organizations by

    reviewing the list of principals shared by both the currently and

    formerly registered organizations, which is already contained in a

    publicly available database maintained by the NFA.

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    \15\ In its comment letter, the NFA also suggested a few

    technical edits to the language in proposed Sec. 3.31(a)(2) and (4)

    to reflect the current filing requirements associated with the

    filing of Form 7-R. The Commission agrees with these comments and is

    adopting these technical edits in the final rule. Additionally, as a

    technical change, the Commission is deleting Sec. 3.31(b)(2)

    because it duplicates some of the language in Sec. 3.31(a)(1) with

    respect to the obligations of applicants for registration as SDs or

    MSPs, and is combining the reference to principals of SDs or MSPs

    found in current Sec. 3.31(b)(2) with the reference to principals

    of other registrants in current Sec. 3.31(b)(1).

    \16\ In comparison, consider that broker-dealers regulated by

    the Securities and Exchange Commission are required to provide on

    Form BD, which is filed with the Financial Industry Regulatory

    Authority, any information about business predecessors, including

    the date of succession, name of predecessor, and the registration

    number for any predecessor.

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    In its comment letter, the NFA also suggested a few technical edits

    to the language in proposed Sec. 3.31 to clarify that: (1) It is not

    the electronic update reporting a change on a Form 7-R that creates any

    deficiency or inaccuracy; and (2) an applicant or registrant no longer

    lists its principals who are individuals on its application for

    registration, as only holding companies are listed. The Commission

    believes that these comments improve upon the proposed language and is

    adopting these suggested changes in the final regulation. Finally, as

    previously mentioned, the Commission is also adopting additional

    technical modifications in Sec. 3.31 to reflect the use of Form 7-R

    for floor traders that are non-natural persons.

    E. Corrections

    In the Proposal, the Commission noted that it would be necessary to

    harmonize any distinctions between the Proposal and other rulemakings

    as they become final. On January 19, 2012, the Commission published in

    the Federal Register a final rulemaking regarding the registration of

    SDs and MSPs.\17\ In that final rulemaking, the Commission adopted new

    registration requirements for SDs and MSPs that were not contained in

    the rule language on which the Proposal was based. In order to

    integrate the new rule language from the above final rulemaking with

    the proposed language to be finalized in this release, the Commission

    is incorporating, where relevant, the amended rule language referencing

    SDs and MSPs into this release.\18\

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    \17\ 77 FR 2613, Jan. 19, 2012. The Commission subsequently

    published a correction regarding certain language set forth in the

    January 19, 2012 release. See 77 FR 3590, Jan. 25, 2012.

    \18\ See, e.g., Sec. 3.12.

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    III. Related Matters

    A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (Reg Flex Act) requires that

    agencies consider whether the rules they propose will have a

    significant economic impact on a substantial number of small entities

    and, if so, provide a regulatory flexibility analysis respecting the

    impact.\19\ A regulatory flexibility analysis or certification is

    required for ``any rule for which the agency publishes a general notice

    of proposed rulemaking pursuant to'' the notice-and-comment provisions

    of the Administrative Procedure Act, 5 U.S.C. 553(b) or any other

    law.\20\ The final rules promulgated today amend existing rules in part

    3 regarding the registration of intermediaries consistent with other

    Commission rulemakings issued pursuant to the Dodd-Frank Act, and also

    make other technical, non-substantive amendments to part 3.

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    \19\ 5 U.S.C. 601 et seq.

    \20\ See 5 U.S.C. 601(2), 603, 604 and 605.

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    As set forth in the Proposal,\21\ the final rules shall affect

    registered FCMs, IBs, commodity trading advisors, commodity pool

    operators, SDs, and MSPs. The Commission has previously determined that

    FCMs, commodity pool operators, SDs, and MSPs are not small entities

    for purposes of the Reg Flex Act.\22\ The Commission has previously

    made a determination with respect to IBs and commodity trading advisors

    to evaluate within the context of a

    [[Page 51901]]

    particular rule proposal whether all or some IBs or commodity trading

    advisors should be considered to be small entities and, if so, to

    analyze the economic impact on them of any such rule.\23\ The final

    rules will also affect floor traders. The Commission has not previously

    made a determination regarding floor traders, since currently all

    registered floor traders are individuals, and individuals are not

    included in the small entity analysis under the Reg Flex Act.

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    \21\ The Commission did not receive any comments regarding the

    Reg Flex Act and the Proposal.

    \22\ See 47 FR 18618, 18619-20, Apr. 30, 1982 (FCMs and

    commodity pool operators); 77 FR 30596, 30701 (finding that MSPs are

    not small entities and that the number of SDs that are small

    entities, if any, is not significant).

    \23\ See, with respect to commodity trading advisors, 47 FR

    18620, Apr. 30, 1982, and see, with respect to IBs, 48 FR 35276,

    Aug. 3, 1983.

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    Since there could be some small entities that register as IBs,

    commodity trading advisors, or floor traders, the Commission considered

    whether this rulemaking would have a significant economic impact on

    these registrants. The final rules would clarify the mechanics of

    registration by updating cross-references, consolidating exemptions,

    and deleting obsolete forms. The Commission does not expect registrants

    to incur additional expenses as a result of these clarifications.

    Consequently, the Commission finds that there is no significant

    economic impact on IBs or commodity trading advisors resulting from

    this rulemaking. The final rules also provide clarity to floor traders

    regarding existing registration requirements (for example, the

    revisions to Sec. 3.11 clarify that an entity that wishes to register

    as a floor trader shall do so by filing Form 7-R), rather than imposing

    any new registration requirement. Consequently, the Commission finds

    that there is no significant economic impact on floor traders resulting

    from this rulemaking.

    Accordingly, for the reasons stated in the Proposal and the

    additional rationale provided above, the Commission believes that the

    conforming and other technical amendments in this rulemaking will not

    have a significant economic impact on a substantial number of small

    entities. Therefore, the Chairman, on behalf of the Commission, hereby

    certifies, pursuant to 5 U.S.C. 605(b), that the regulations being

    published today by this Federal Register release will not have a

    significant economic impact on a substantial number of small entities.

    B. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA), an agency may not

    conduct or sponsor, and a person is not required to respond to, a

    collection of information unless it displays a currently valid control

    number.\24\ In the Proposal, the Commission indicated that the proposed

    rules would not impose any new recordkeeping or information collection

    requirements, or other collections of information that require approval

    of the Office of Management and Budget under the PRA. The Commission

    invited public comment on the accuracy of its estimate that no

    additional information collection requirements or changes to existing

    collection requirements would result from the rules proposed herein. In

    response, the Commission received no comments.

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    \24\ 44 U.S.C. 3501 et seq.

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    The currently approved rule collection covering the regulatory

    filings discussed in this final rule (3038-0023, which covers Forms 3-

    R, 7-R, 8-R and 8-T) has a burden of 78,109 respondents and 7,030

    annual hours.\25\ The Commission believes that the number of entities

    filing Form 7-R will increase slightly, since that form may now be used

    by an entity to register as a floor trader, and the number of persons

    filing Form 8-R and 8-T will also increase slightly, when individuals

    who are principals of entities that are registered as floor traders use

    those forms to list themselves.

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    \25\ See currently approved information collection, available at

    http://www.reginfo.gov/public/do/PRAICList?ref_nbr=201203-3038-004.

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    Therefore, the Commission has determined to revise the burden for

    this information collection as follows. The burden associated with the

    use of Form 7-R for the registration of entities as floor traders is

    estimated to be 60 hours, assuming 60 respondents,\26\ which will

    result from: (1) Application for registration by entities as floor

    traders and submission of required information on behalf of their

    respective principals; (2) initially, no withdrawals from registration

    by floor traders and a relatively small decrease in the number of their

    respective principals; and (3) initially, no reported corrections.

    Burden means the total time, effort, or financial resources expended by

    persons to generate, maintain, retain, disclose or provide information

    to or for a federal agency.

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    \26\ The Commission has previously estimated that approximately

    120 entities will register as SDs. See 77 FR 2613, 2622 (January 19,

    2012). The Commission believes it is reasonable to estimate that

    half as many entities will register as floor traders.

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    The respondent burden for this collection is estimated to average 1

    hour per response for the Form 7-R; 0.8 hours per response for the Form

    8-R; and 0.2 hours per response for the Form 8-T.\27\ These estimates

    include the time needed to review instructions; to prepare technology

    and systems for the purposes of collecting, validating, and verifying

    information, processing and maintaining information, and disclosing and

    providing information; to adjust the existing ways to comply with any

    previously applicable instructions and requirements; to train personnel

    to be able to respond to a collection of information; and to transmit

    or otherwise disclose the information.

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    \27\ See id. at 2643.

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    Form 7-R

    Respondents/Affected Entities: 60.

    Estimated number of responses: 60.

    Estimated total annual burden on respondents: 1 hour.

    Frequency of collection: On occasion and annually.

    Burden Statement: 60 respondents x 1 hour = 60 Burden Hours.

    Form 8-R

    Respondents/Affected Entities: 5 principals per each of 60 floor

    traders.

    Estimated number of responses: 300.

    Estimated total annual burden on respondents: 0.8 hours.

    Frequency of collection: On occasion.

    Burden Statement: 300 respondents x 0.8 hours = 240 Burden Hours.

    Form 8-T

    Respondents/Affected Entities: 1 principal per each of 10 floor

    traders.

    Estimated number of responses: 10.

    Estimated total annual burden on respondents: 0.2 hours.

    Frequency of collection: On occasion.

    Burden Statement: 10 respondents x 0.2 hours = 2 Burden Hours.

    C. Cost-Benefit Considerations

    Section 15(a) of the CEA \28\ requires the Commission to consider

    the costs and benefits of its actions before promulgating a regulation

    under the CEA or issuing an order. Section 15(a) further specifies that

    the costs and benefits shall be evaluated in light of the following

    five broad areas of market and public concern: (1) Protection of market

    participants and the public; (2) efficiency, competitiveness, and

    financial integrity of futures markets; (3) price discovery; (4) sound

    risk management practices; and (5) other public interest

    considerations. The Commission considers the costs and benefits

    resulting from its discretionary determinations with respect to the

    Section 15(a) factors.

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    \28\ 7 U.S.C. 19(a).

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    The regulations being adopted today conform, modernize, and make

    technical amendments to part 3 governing the regulation of

    intermediaries. Their purpose is to

    [[Page 51902]]

    ensure that the Commission's current rules are consistent with other

    Commission rulemakings issued pursuant to the Dodd-Frank Act. Before

    adopting these regulations, the Commission sought public comment on the

    Proposal, including comment on the costs and benefits of the Proposal.

    While inviting public comments on its cost-benefit considerations, the

    Proposal clarified that the substantive proposed rulemakings with which

    this rulemaking is associated have addressed the costs and benefits of

    the proposals as required by section 15(a) of the CEA.\29\

    ---------------------------------------------------------------------------

    \29\ 76 FR at 12891.

    ---------------------------------------------------------------------------

    The Commission received few specific comments concerning the

    Proposal's consideration of costs and benefits beyond general comments

    that the costs associated with particular rule amendments would

    outweigh the benefits. Those it did receive are addressed in the

    discussion below. None of the comments received provided a basis to

    quantify estimated costs or benefits.

    The Commission's baseline for consideration of the costs and

    benefits of this rulemaking are the costs and benefits that the public

    and market participants would experience in the absence of this

    proposed regulatory action. In other words, the proposed baseline is an

    alternative situation in which the Commission takes no action to

    conform, modernize, and make technical adjustments to its existing

    rules as described above in light of the Dodd-Frank Act amendments to

    the CEA.

    1. Costs and Benefits of the Conforming Amendments--In General

    As set forth in the Proposal, the regulations the Commission is

    adopting concern conforming and technical amendments to part 3

    governing the registration of intermediaries. Although the conforming

    amendments do not involve substantive changes to existing regulations,

    and hence no significant changes to the costs or benefits of the same,

    the final rules do benefit market participants by adding specificity to

    the mechanics of registration, which also benefits customers in the

    form of increased transparency. For example, the conforming amendments

    will add references to SEFs in Sec. 3.42 to clarify that a temporary

    license would immediately terminate upon failure to comply with an

    award in an arbitration proceeding conducted pursuant to the rules of a

    SEF.

    2. Costs and Benefits of the Definitions

    Current Sec. 3.1(a) sets forth the definition of ``principal,''

    and Sec. 3.1(a)(3) carves out from that definition certain persons

    that have made capital contributions in the form of subordinated debt

    to a registrant, including unaffiliated banks operating in the U.S. and

    U.S. branches of foreign banks. The Commission is adopting amendments

    to expand the carve-out to accommodate the likelihood that persons with

    capital contributions from foreign banks might register as SDs and thus

    be included within the definition of principal. This expanded

    definitional carve-out makes the foreign bank registration process

    consistent with that for domestic banks. This consistency promotes

    market efficiency by avoiding additional costs that foreign banks would

    otherwise incur to comply with listing and qualification requirements.

    No comments were received with respect to any cost or benefit

    implications of this definitional amendment, notwithstanding that the

    Commission specifically sought comments concerning it.\30\

    ---------------------------------------------------------------------------

    \30\ The Commission requested comments on whether the provision

    is warranted to ensure uniform listing of principals by domestic and

    foreign-domiciled registrants, and whether the expansion would

    ensure that the list of principals remains a meaningful reflection

    of the persons who actually exercise control over the registrant's

    regulated activities.

    ---------------------------------------------------------------------------

    3. Costs and Benefits of Section 3.10--Registration of Futures

    Commission Merchants, Retail Foreign Exchange Dealers, Introducing

    Brokers, Commodity Trading Advisors, Commodity Pool Operators, Swap

    Dealers, Major Swap Participants, and Leverage Transaction Merchants.

    Section 3.11--Registration of Floor Brokers and Floor Traders. Section

    3.12--Registration of Associated Persons of Futures Commission

    Merchants, Retail Foreign Exchange Dealers, Introducing Brokers,

    Commodity Trading Advisors, Commodity Pool Operators and Leverage

    Transaction Merchants

    Section 3.10 generally sets forth the registration requirements for

    various Commission registrants. The Commission has decided to implement

    the expansion of the existing exemption in Sec. 3.10(c)(2) and (3),

    which will introduce parity between registration obligations of foreign

    brokers and foreign intermediaries conducting commodity interest

    transactions bilaterally, on DCMs, and on SEFs. The Commission expects

    such expansion of the exemption to reduce compliance costs without

    affecting customer protection. The Commission has also decided to

    implement the proposed new paragraph Sec. 3.10(c)(5), which will

    provide regulatory certainty that the activities engaged in solely as

    an associated person of an SD would not require such person to register

    as an SD. The Commission believes that this amendment is beneficial by

    reducing the costs to market participants of approaching the Commission

    for clarifications.

    Section 3.11 is being amended to reflect the further definition of

    the term ``swap dealer'' which, among, other things, excludes certain

    swaps entered into by registered floor traders from the SD

    determination. Traditionally, natural persons have registered as floor

    traders. However, following promulgation of rules further defining the

    term ``swap dealer,'' the Commission foresees that firms will register

    as floor traders, making the previous rule requiring fingerprinting for

    all floor traders impractical without clarification. The new rules

    clarify that principals of a firm registering as a floor trader, and

    each individual responsible for entry of orders from that floor

    trader's own account, will be subject to the fingerprinting

    requirement. The Commission believes that this amendment is beneficial

    by obviating the need for potentially impacted market participants to

    incur costs to approach the Commission for clarifications. The other

    amendments extending the scope of Sec. 3.11 to SEFs, while mainly

    technical in nature, will improve operational efficiency by allowing

    NFA to properly process applications for registration for floor traders

    engaged in swap activities.

    Section 3.12 generally sets forth the registration requirement for

    APs. The Commission is adopting an amendment to Sec. 3.12(h)(1)(i) to

    provide that a person is not required to register as an AP in any

    capacity if he or she is registered in one of the other enumerated

    categories, including an SD or MSP. FIA agreed with the Commission that

    it is highly improbable that an individual, rather than an entity,

    would register as an SD and MSP, but supported the Commission's

    proposal in light of the clarity it provides. As the change clarifies

    and extends the exemptions to activities of an SD or MSP, it will not

    create additional costs, and will benefit the markets by promoting

    efficiency by eliminating the need for multiple registrations by a

    single individual.

    4. Costs and benefits--DTEF

    The rules amendments adopted today delete the term DTEF from

    Sec. Sec. 3.2(c), 3.2(c)(2), 3.10(a)(3)(i)(A), 3.10(c)(2)(i),

    [[Page 51903]]

    3.10(c)(3)(i), 3.10(c)(4)(ii) and (iv), 3.11(a)(2) and (3), 3.11(b),

    3.31(d), 3.40(a)(2)(iv), 3.42(a)(6), and 3.46(a)(8). This will

    implement the abolishment of DTEF as a market category by the Dodd-

    Frank Act.

    As this change is mandated by statute, it will not create costs and

    benefits relative to the baseline. No comments were received on the

    costs and benefits of this aspect of the Proposal.

    5. Cost and Benefits of Modernization and Technical Amendments to Part

    3--Definitions

    Section 3.1(a)(2) defines a principal to include persons who exceed

    a threshold for equity ownership. As a technical matter, the Commission

    is adopting amendments to harmonize the references to outstanding

    classes of securities in Sec. 3.1(a)(2)(i) and (ii) by referring

    throughout to ``outstanding shares of any class of equity securities,

    other than non-voting securities.'' The primary benefit from these

    amended regulations is that they provide specificity for calculations

    involving authorized but unissued securities, or debt securities.

    Also, the Commission is amending its regulations to move the

    concept of indirect owners found in the definition of beneficial

    ownership in Sec. 3.1(d) to Sec. 3.1(a)(4) to serve as a backstop to

    the requirement to list indirect owners in Sec. 3.1(a)(2). The

    Commission received no comments with respect to the costs and benefits

    of this amendment. The Commission does not believe that this amendment

    will have a material impact on costs and benefits relative to the

    baseline.

    The rules incorporate revised language further defining the

    definition of principal to include any person who has the power to

    exercise a controlling influence over an entity's activities that are

    subject to regulation by the Commission. As described earlier, the

    proposed amendments were designed to reduce the scope of persons who

    might potentially be covered by the definition. Under certain

    circumstances, the revised Sec. 3.1(a)(2)(i) language referencing

    those with power to exercise a controlling influence could potentially

    increase the scope of persons covered by the definition. But, given

    that this amendment is similar to an existing requirement in Form BD

    covering broker-dealers, the Commission believes that any additional

    costs will be limited to the subset of firms that are not already

    registered with the SEC and within this subset, those firms which have

    individuals who are not subject to the existing equity ownership

    threshold, or the existing director or officer function threshold, but

    nonetheless who possess the power to exercise control. Given the nature

    of the control structure being addressed, while it is not feasible for

    the Commission to estimate the number of firms likely to be impacted by

    this rule, it believes that costs of complying with the rule are likely

    to be minimal because information on which owners of an entity exercise

    control is generally known to officers of that entity. Furthermore, the

    minimal costs are justified by the benefits to the market and market

    participants from ensuring that individuals cannot circumvent the

    fitness qualifications presently in place for principals by structuring

    their holdings into non-voting securities, and then exercising control

    through a separate agreement.

    6. Costs and Benefits of Section 3.31--Deficiencies, Inaccuracies, and

    Changes To Be Reported, and Section 3.33--Withdrawal From Registration

    Current Sec. 3.31 sets forth procedural requirements for a

    registrant to update and/or correct information previously provided to

    the Commission and the NFA. Section 3.33 addresses the procedural

    requirements for the withdrawal of registration. The Commission is

    adopting amendments to Sec. 3.31(a) to reference the requirement in

    amended Sec. 3.33 to withdraw registration upon certain events of

    dissolution, and in Sec. 3.31(b), (c) and (d) to make technical

    corrections.

    The adopted amendments in Sec. 3.31 are technical and are not

    expected to involve costs, but will provide greater clarity by

    correcting references to outdated forms and by deleting duplicate

    instructions. The amendments to Sec. 3.33 clarify the requirement to

    withdraw under certain circumstances involving dissolution of a

    company, and would improve the predictability of withdrawal

    requirements to the benefit of market participants. There were no

    comments on the costs and benefits of the proposed withdrawal

    requirements under Sec. 3.33.

    7. Costs and Benefits of Registration Forms

    The Commission is adopting amendments to the regulations addressing

    the forms used during the registration process. These changes are

    technical in nature--for example, the changes would delete references

    to an obsolete form and obsolete cross-references. The Commission does

    not believe that increased costs to market participants or the public

    will result from these changes. That said, the Commission believes they

    do provide a benefit by addressing gaps in the current information

    collected through the various forms, particularly those forms cross-

    referencing other data.

    There were no comments on the costs and benefits of the proposed

    technical amendments to the forms.

    8. Section 15(a) Factors

    Protection of market participants and the public.

    The Commission believes that the amendments to Sec. 3.33 will

    improve the protection of market participants and the public by

    requiring withdrawal of registration in the event of dissolution of a

    registrant, thus improving the protection of the public.

    Efficiency, competitiveness, and financial integrity.

    The amendments to Sec. 3.1 clarify the calculations used to

    determine who meets the definition of principal, reducing uncertainty

    surrounding compliance by intermediaries. The amendments to the

    regulations addressing the forms used during the registration process

    will update the description of information collection and make it more

    accurate, which improves the overall efficiency of our markets.

    Price discovery. The Commission has not identified any

    impact to the price discovery process from these rules.

    Sound risk management policies. The Commission has not

    identified any impact to sound risk management practices from these

    rules.

    Other public interest considerations. The Commission has

    not identified any impact to other public interest considerations from

    these rules.

    List of Subjects in 17 CFR Part 3

    Administrative practice and procedure, Brokers, Commodity futures,

    Major swap participants, Reporting and recordkeeping requirements, Swap

    dealers.

    For the reasons stated in the preamble, the Commission amends 17

    CFR part 3 as follows:

    PART 3--REGISTRATION

    0

    1. The authority citation for part 3 is revised to read as follows:

    Authority: 5 U.S.C. 552, 552b; 7 U.S.C. 1a, 2, 6a, 6b, 6b-1, 6c,

    6d, 6e, 6f, 6g, 6h, 6i, 6k, 6m, 6n, 6o, 6p, 6s, 8, 9, 9a, 12, 12a,

    13b, 13c, 16a, 18, 19, 21, 23.

    0

    2. Amend Sec. 3.1 by revising paragraphs (a) introductory text,

    (a)(2), and (a)(3), adding paragraph (a)(4), and removing and reserving

    paragraphs (d) and (e). The revisions and addition read as follows:

    [[Page 51904]]

    Sec. 3.1 Definitions.

    (a) Principal. Principal means, with respect to an entity that is

    an applicant for registration, a registrant or a person required to be

    registered under the Act or the regulations in this part:

    * * * * *

    (2)(i) Any individual who directly or indirectly, through

    agreement, holding company, nominee, trust or otherwise, is either the

    owner of ten percent or more of the outstanding shares of any class of

    equity securities, other than non-voting securities, is entitled to

    vote or has the power to sell or direct the sale of ten percent or more

    of the outstanding shares of any class of equity securities, other than

    non-voting securities, is entitled to receive ten percent or more of

    the profits of the entity, or has the power to exercise a controlling

    influence over the entity's activities that are subject to regulation

    by the Commission; or

    (ii) Any person other than an individual that is the direct owner

    of ten percent or more of the outstanding shares of any class of equity

    securities, other than non-voting securities; or

    (3) Any person that has contributed ten percent or more of the

    capital of the entity, provided, however, that if such capital

    contribution consists of subordinated debt contributed by either:

    (i) An unaffiliated bank insured by the Federal Deposit Insurance

    Corporation,

    (ii) An unaffiliated ``foreign bank,'' as defined in 12 CFR

    211.21(n) that currently operates an ``office of a foreign bank,'' as

    defined in 12 CFR 211.21(t), which is licensed under 12 CFR 211.24(a),

    (iii) Such unaffiliated office of a foreign bank that is licensed,

    or

    (iv) An insurance company subject to regulation by any State, such

    bank, foreign bank, office of a foreign bank, or insurance company will

    not be deemed to be a principal for purposes of this section, provided

    such debt is not guaranteed by another party not listed as a principal.

    (4) Any individual who, directly or indirectly, creates or uses a

    trust, proxy, power of attorney, pooling arrangement or any other

    contract, arrangement, or device with the purpose or effect of

    divesting such person of direct or indirect ownership of an equity

    security of the entity, other than a non-voting security, or preventing

    the vesting of such ownership, or of avoiding making a contribution of

    ten percent or more of the capital of the entity, as part of a plan or

    scheme to evade being deemed a principal of the entity, shall be deemed

    to be a principal of the entity.

    * * * * *

    0

    3. Amend Sec. 3.2 by revising the section heading and paragraphs (c)

    introductory text and (c)(2) to read as follows:

    Sec. 3.2 Registration processing by the National Futures Association;

    notification and duration of registration.

    * * * * *

    (c) The National Futures Association shall notify the registrant,

    or the sponsor in the case of an applicant for registration as an

    associated person, and each designated contract market and swap

    execution facility that has granted the applicant trading privileges in

    the case of an applicant for registration as a floor broker or floor

    trader, if registration has been granted under the Act.

    * * * * *

    (2) If an applicant for registration as a floor broker or floor

    trader receives a temporary license in accordance with Sec. 3.40, the

    National Futures Association shall notify the designated contract

    market or swap execution facility that has granted the applicant

    trading privileges that only a temporary license has been granted.

    * * * * *

    0

    4. Amend Sec. 3.4 by revising paragraph (a) to read as follows:

    Sec. 3.4 Registration in one capacity not included in registration in

    any other capacity.

    (a) Except as may be otherwise provided in the Act or in any rule,

    regulation, or order of the Commission, each futures commission

    merchant, retail foreign exchange dealer, swap dealer, major swap

    participant, floor broker, floor trader of any commodity for future

    delivery, commodity trading advisor, commodity pool operator,

    introducing broker, leverage transaction merchant, and associated

    person (other than an associated person of a swap dealer or major swap

    participant) must register as such under the Act. Except as may be

    otherwise provided in the Act or in any rule, regulation, or order of

    the Commission, registration in one capacity under the Act shall not

    include registration in any other capacity.

    * * * * *

    0

    5. Amend Sec. 3.10 by revising paragraphs (a)(3)(i)(A), (c)(2)(i),

    (c)(3)(i), (c)(4)(ii), (c)(4)(iii), and (c)(4)(iv) and adding paragraph

    (c)(5) to read as follows:

    Sec. 3.10 Registration of futures commission merchants, introducing

    brokers, commodity trading advisors, commodity pool operators, swap

    dealers, major swap participants, and leverage transaction merchants.

    (a) * * *

    (3) * * *

    (i) * * *

    (A) The broker or dealer limits its solicitation of orders,

    acceptance of orders, or execution of orders, or placing of orders on

    behalf of others involving any contracts of sale of any commodity for

    future delivery, on or subject to the rules of any contract market, to

    security futures products as defined in section 1a(44) of the Act;

    * * * * *

    (c) * * *

    (2)(i) A foreign broker, as defined in Sec. 1.3(xx) of this

    chapter, is not required to register as a futures commission merchant

    if it submits any commodity interest transactions executed bilaterally,

    on or subject to the rules of a designated contract market, or on or

    subject to the rules of a swap execution facility, for clearing on an

    omnibus basis through a futures commission merchant registered in

    accordance with section 4d of the Act.

    * * * * *

    (3)(i) A person located outside the United States, its territories

    or possessions engaged in the activity of: An introducing broker, as

    defined in Sec. 1.3(mm) of this chapter; a commodity trading advisor,

    as defined in Sec. 1.3(bb) of this chapter; or a commodity pool

    operator, as defined in Sec. 1.3(nn) of this chapter, in connection

    with any commodity interest transaction executed bilaterally or made on

    or subject to the rules of any designated contract market or swap

    execution facility only on behalf of persons located outside the United

    States, its territories or possessions, is not required to register in

    such capacity provided that any such commodity interest transaction is

    submitted for clearing through a futures commission merchant registered

    in accordance with section 4d of the Act.

    * * * * *

    (4) * * *

    (ii) Such a person introduces, on a fully-disclosed basis in

    accordance with Sec. 1.57 of this chapter, any institutional customer,

    as defined in Sec. 1.3(g) of this chapter, to a registered futures

    commission merchant for the purpose of trading on a designated contract

    market;

    (iii) Such person's affiliated futures commission merchant has

    filed with the National Futures Association (Attn: Vice President,

    Compliance) an acknowledgement that the affiliated futures commission

    merchant will be jointly and severally liable for any violations of the

    Act or the Commission's regulations committed by such person in

    connection with those introducing activities, whether or not

    [[Page 51905]]

    the affiliated futures commission merchant submits for clearing any

    trades resulting from those introducing activities; and

    (iv) Such person does not solicit any person located in the United

    States, its territories or possessions for trading on a designated

    contract market, nor does such person handle the customer funds of any

    person located in the United States, its territories or possessions for

    the purpose of trading on any designated contract market.

    * * * * *

    (5) In determining whether a person is a swap dealer, the

    activities of a registered swap dealer with respect to which such

    person is an associated person shall not be considered.

    * * * * *

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    6. Revise Sec. 3.11 to read as follows:

    Sec. 3.11 Registration of floor brokers and floor traders.

    (a) Application for registration. (1) Application for registration

    as a floor broker or floor trader must be on Form 8-R, if as an

    individual, or Form 7-R, if as a non-natural person, and must be

    completed and filed with the National Futures Association in accordance

    with the instructions thereto. Each Form 7-R filed in accordance with

    this paragraph (a) must be accompanied by a Form 8-R, completed in

    accordance with the instructions thereto and executed by each

    individual who is a principal of the applicant, and each individual

    responsible for entry of orders from that applicant's own account. Each

    Form 8-R filed in accordance with this paragraph (a) must be

    accompanied by the fingerprints of the applicant on a fingerprint card

    provided for that purpose by the National Futures Association, except

    that a fingerprint card need not be filed by any applicant who has a

    current Form 8-R on file with the Commission or the National Futures

    Association.

    (2) An applicant for registration as a floor broker or floor trader

    will not be registered or issued a temporary license as a floor broker

    or floor trader unless the applicant has been granted trading

    privileges by a board of trade designated as a contract market or

    registered as a swap execution facility by the Commission.

    (3) When the Commission or the National Futures Association

    determines that an applicant for registration as a floor broker or

    floor trader is not disqualified from such registration or temporary

    license, the National Futures Association will notify the applicant and

    any contract market or swap execution facility that has granted the

    applicant trading privileges that the applicant's registration or

    temporary license as a floor broker or floor trader is granted.

    (b) Duration of registration. A person registered as a floor broker

    or floor trader in accordance with paragraph (a) of this section, and

    whose registration has neither been revoked nor withdrawn, will

    continue to be so registered unless such person's trading privileges on

    all contract markets and swap execution facilities have ceased:

    provided, that if a floor broker or floor trader whose trading

    privileges on all contract markets and swap execution facilities have

    ceased for reasons unrelated to any Commission action or any contract

    market or swap execution facility disciplinary proceeding and whose

    registration is not revoked, suspended or withdrawn is granted trading

    privileges as a floor broker or floor trader, respectively, by any

    contract market or swap execution facility where such person held such

    privileges within the preceding sixty days, such registration as a

    floor broker or floor trader, respectively, shall be deemed to continue

    and no new Form 7-R, Form 8-R or Form 3-R record of a change to Form 7-

    R or Form 8-R need be filed solely on the basis of the resumption of

    trading privileges. A floor broker or floor trader is prohibited from

    engaging in activities requiring registration under the Act or from

    representing such person to be a registrant under the Act or the

    representative or agent of any registrant during the pendency of any

    suspension of such registration or of all such trading privileges. Each

    contract market and swap execution facility that has granted trading

    privileges to a person who is registered, or has applied for

    registration, as a floor broker or floor trader, must provide notice in

    accordance with Sec. 3.31(d) after such person's trading privileges on

    such contract market or swap execution facility have ceased.

    (c) Exceptions. A registered floor broker need not also register as

    a floor trader in order to engage in activity as a floor trader.

    0

    7. Amend Sec. 3.12 by revising paragraphs (b), (c) introductory text,

    (g), (h)(1) introductory text, and (h)(1)(i) and (ii) to read as

    follows:

    Sec. 3.12 Registration of associated persons of futures commission

    merchants, retail foreign exchange dealers, introducing brokers,

    commodity trading advisors, commodity pool operators and leverage

    transaction merchants.

    * * * * *

    (b) Duration of registration. A person registered in accordance

    with paragraphs (c), (d), (f), or (i) of this section and whose

    registration has not been revoked will continue to be so registered

    until the revocation or withdrawal of the registration of each of the

    registrant's sponsors, or until the cessation of the association of the

    registrant with each of the registrant's sponsors. Such person will be

    prohibited from engaging in activities requiring registration under the

    Act or from representing himself or herself to be a registrant under

    the Act or the representative or agent of any registrant during the

    pendency of any suspension of his or her registration, or his or her

    sponsor's registration. Each of the registrant's sponsors must file a

    notice in accordance with Sec. 3.31(c) reporting the termination of

    the association of the associated person.

    (c) Application for registration. Except as otherwise provided in

    paragraphs (d), (f), and (i) of this section, application for

    registration as an associated person in any capacity must be on Form 8-

    R, completed and filed in accordance with the instructions thereto.

    * * * * *

    (g) Petitions for exemption. Any person adversely affected by the

    operation of this section may file a petition with the Secretary of the

    Commission, which petition must set forth with particularity the

    reasons why that person believes that an applicant should be exempted

    from the requirements of this section and why such an exemption would

    not be contrary to the public interest and the purposes of the

    provision from which exemption is sought. The petition will be granted

    or denied by the Commission on the basis of the papers filed. The

    Commission may grant such a petition if it finds that the exemption is

    not contrary to the public interest and the purposes of the provision

    from which exemption is sought. The petition may be granted subject to

    such terms and conditions as the Commission may find appropriate.

    (h) Exemption from registration. (1) A person is not required to

    register as an associated person in any capacity if that person is:

    (i) Registered under the Act as a futures commission merchant,

    retail foreign exchange dealer, swap dealer, major swap participant,

    floor broker, or as an introducing broker;

    (ii) Engaged in the solicitation of funds, securities, or property

    for a participation in a commodity pool, or the supervision of any

    person or persons so engaged, pursuant to registration

    [[Page 51906]]

    with the Financial Industry Regulatory Authority as a registered

    representative, registered principal, limited representative or limited

    principal, and that person does not engage in any other activity

    subject to regulation by the Commission;

    * * * * *

    0

    8. Amend Sec. 3.21 by:

    0

    a. Revising paragraphs (a)(1) and (2);

    0

    b. Adding paragraph (a)(3); and

    0

    c. Revising paragraphs (b)(1) through (3), (c) introductory text, and

    (c)(4)(i) and (iii).

    The revisions and addition read as follows:

    Sec. 3.21 Exemption from fingerprinting requirement in certain cases.

    (a) * * *

    (1) A legible, accurate and complete photocopy of a fingerprint

    card that has been submitted to the Federal Bureau of Investigation for

    identification and appropriate processing and of each report, record,

    and notation made available by the Federal Bureau of Investigation with

    respect to that fingerprint card if such identification and processing

    has been completed satisfactorily by the Federal Bureau of

    Investigation not more than ninety days prior to the filing with the

    National Futures Association of the photocopy;

    (2) A statement that such person's application for initial

    registration in any capacity was granted within the preceding ninety

    days, provided that the provisions of this paragraph (a)(2) shall not

    be applicable to any person who, by Commission rule, regulation, or

    order, was not required to file a fingerprint card in connection with

    such application for initial registration; or

    (3) A statement that such person has a current Form 8-R on file

    with the Commission or the National Futures Association.

    (b) * * *

    (1) With respect to the fingerprints of an associated person: An

    officer, if the sponsor is a corporation; a general partner, if a

    partnership; or the sole proprietor, if a sole proprietorship;

    (2) With respect to fingerprints of a floor broker or individual

    floor trader: The applicant for registration; and with respect to

    fingerprints of each individual who is responsible for entry of orders

    from the account of a floor trader that is a non-natural person, the

    applicant for registration, or

    (3) With respect to the fingerprints of a principal: An officer, if

    the futures commission merchant, retail foreign exchange dealer, swap

    dealer, major swap participant, commodity trading advisor, commodity

    pool operator, introducing broker, floor trader that is a non-natural

    person, or leverage transaction merchant with which the principal will

    be affiliated is a corporation; a general partner, if a partnership; or

    the sole proprietor, if a sole proprietorship.

    (c) Outside directors. Any futures commission merchant, retail

    foreign exchange dealer, swap dealer, major swap participant,

    introducing broker, commodity pool operator, commodity trading advisor,

    floor trader that is a non-natural person, or leverage transaction

    merchant that has a principal who is a director but is not also an

    officer or employee of the firm may, in lieu of submitting a

    fingerprint card in accordance with the provisions of Sec. 3.10(a)(2),

    file a ``Notice Pursuant to Rule 3.21(c)'' with the National Futures

    Association. Such notice shall state, if true, that such outside

    director:

    * * * * *

    (4) * * *

    (i) The name of the futures commission merchant, retail foreign

    exchange dealer, swap dealer, major swap participant, introducing

    broker, commodity trading advisor, commodity pool operator, floor

    trader that is a non-natural person, leverage transaction merchant, or

    applicant for registration in any of these capacities of which the

    person is an outside director;

    * * * * *

    (iii) The internal controls used to ensure that the outside

    director for whom exemption under this paragraph (c) is sought does not

    have access to the keeping, handling or processing of the items

    described in paragraphs (c)(2)(i) and (ii) of this section; and

    * * * * *

    0

    9. Amend Sec. 3.22 by revising paragraph (b) to read as follows:

    Sec. 3.22 Supplemental filings.

    * * * * *

    (b) That the person, or any individual who, based upon his or her

    relationship with that person is required to file a Form 8-R in

    accordance with the requirements of this part, as applicable, must,

    within such period of time as the Commission or the National Futures

    Association may specify, complete and file with the Commission or the

    National Futures Association a current Form 7-R, or if appropriate, a

    Form 8-R, in accordance with the instructions thereto.

    * * * * *

    0

    10. Revise Sec. 3.30 to read as follows:

    Sec. 3.30 Current address for purpose of delivery of communications

    from the Commission or the National Futures Association.

    (a) The address of each registrant, applicant for registration, and

    principal, as submitted on the application for registration (Form 7-R

    or Form 8-R) or as submitted on the biographical supplement (Form 8-R)

    shall be deemed to be the address for delivery to the registrant,

    applicant or principal for any communications from the Commission or

    the National Futures Association, including any summons, complaint,

    reparation claim, order, subpoena, special call, request for

    information, notice, and other written documents or correspondence,

    unless the registrant, applicant or principal specifies another address

    for this purpose: Provided that the Commission or the National Futures

    Association may address any correspondence relating to a biographical

    supplement submitted for or on behalf of a principal to the futures

    commission merchant, retail foreign exchange dealer, swap dealer, major

    swap participant, introducing broker, commodity pool operator,

    commodity trading advisor, floor trader that is a non-natural person,

    or leverage transaction merchant with which the principal is affiliated

    and may address any correspondence relating to an associated person to

    the futures commission merchant, retail foreign exchange dealer, swap

    dealer, major swap participant, introducing broker, commodity pool

    operator, commodity trading advisor, floor trader that is a non-natural

    person, or leverage transaction merchant with which the associated

    person or the applicant for registration is or will be associated as an

    associated person.

    (b) Each registrant, while registered and for two years after

    termination of registration, and each principal, while affiliated and

    for two years after termination of affiliation, must notify in writing

    the National Futures Association of any change of the address on the

    application for registration, biographical supplement, or other address

    filed with the National Futures Association for the purpose of

    receiving communications from the Commission or the National Futures

    Association. Failure to file a required response to any communication

    sent to the latest such address filed with the National Futures

    Association that is caused by a failure to notify in writing the

    National Futures Association of an address change may result in an

    order of default and award of claimed monetary damages or other

    appropriate order in any National Futures Association or Commission

    [[Page 51907]]

    proceeding, including a reparation proceeding brought under part 12 of

    this chapter.

    0

    11. Amend Sec. 3.31 by revising paragraphs (a), (b), (c)(1)

    introductory text, (c)(2), and (d) to read as follows:

    Sec. 3.31 Deficiencies, inaccuracies, and changes to be reported.

    (a)(1) Each applicant or registrant as a futures commission

    merchant, retail foreign exchange dealer, swap dealer, major swap

    participant, commodity trading advisor, commodity pool operator,

    introducing broker, floor trader that is a non-natural person or

    leverage transaction merchant shall, in accordance with the

    instructions thereto, promptly correct any deficiency or inaccuracy in

    Form 7-R or Form 8-R that no longer renders accurate and current the

    information contained therein, with the exception of any change that

    requires withdrawal from registration under Sec. 3.33. Each such

    correction shall be prepared and filed in accordance with the

    instructions thereto to create a Form 3-R record of such change.

    (2) Where a registrant has changed its form of organization to or

    from a sole proprietorship, the registrant must request withdrawal from

    registration in accordance with Sec. 3.33.

    (3) Where any person becomes a principal of an applicant or

    registrant subsequent to the filing of the applicant's or registrant's

    current Form 7-R:

    (i) If the new principal is not a natural person, the registrant

    shall update such Form 7-R to create a Form 3-R record of change.

    (ii) If the new principal is a natural person, the registrant shall

    file a Form 8-R, completed in accordance with the instructions thereto

    and executed by such person who is a principal of the registrant and

    who was not listed on the registrant's initial application for

    registration or any amendment thereto.

    (b) Each applicant or registrant as a floor broker, floor trader or

    associated person, and each principal of a futures commission merchant,

    retail foreign exchange dealer, swap dealer, major swap participant,

    commodity trading advisor, commodity pool operator, introducing broker,

    floor trader that is a non-natural person, or leverage transaction

    merchant must, in accordance with the instructions thereto, promptly

    correct any deficiency or inaccuracy in the Form 8-R or supplemental

    statement thereto to create a Form 3-R record of change.

    (c)(1) After the filing of a Form 8-R or updating a Form 8-R to

    create a Form 3-R record of change by or on behalf of any person for

    the purpose of permitting that person to be an associated person of a

    futures commission merchant, retail foreign exchange dealer, commodity

    trading advisor, commodity pool operator, introducing broker, or a

    leverage transaction merchant, that futures commission merchant, retail

    foreign exchange dealer, commodity trading advisor, commodity pool

    operator, introducing broker or leverage transaction merchant must,

    within thirty days after the occurrence of either of the following,

    file a notice thereof with the National Futures Association indicating:

    * * * * *

    (2) Each person registered as, or applying for registration as, a

    futures commission merchant, retail foreign exchange dealer, swap

    dealer, major swap participant, commodity trading advisor, commodity

    pool operator, introducing broker, floor trader that is a non-natural

    person, or leverage transaction merchant must, within thirty days after

    the termination of the affiliation of a principal with the registrant

    or applicant, file a notice thereof with the National Futures

    Association.

    * * * * *

    (d) Each contract market or swap execution facility that has

    granted trading privileges to a person who is registered, has received

    a temporary license, or has applied for registration as a floor broker

    or floor trader, must notify the National Futures Association within

    sixty days after such person has ceased having trading privileges on

    such contract market or swap execution facility.

    * * * * *

    0

    12. Amend Sec. 3.33 by revising paragraphs (a) introductory text, (b)

    introductory text, and (e) to read as follows:

    Sec. 3.33 Withdrawal from registration.

    (a) A futures commission merchant, retail foreign exchange dealer,

    swap dealer, major swap participant, introducing broker, commodity

    trading advisor, commodity pool operator, floor trader that is a non-

    natural person, or leverage transaction merchant must request that its

    registration be withdrawn prior to any voluntary resolution to file

    articles (or a certificate) of dissolution (or cancellation), and upon

    notice of any involuntary dissolution initiated by a third-party. A

    futures commission merchant, retail foreign exchange dealer, swap

    dealer, major swap participant, introducing broker, commodity trading

    advisor, commodity pool operator, leverage transaction merchant, floor

    broker or floor trader may request that its registration be withdrawn

    in accordance with the requirements of this section if:

    * * * * *

    (b) A request for withdrawal from registration as a futures

    commission merchant, retail foreign exchange dealer, swap dealer, major

    swap participant, introducing broker, commodity trading advisor,

    commodity pool operator, floor trader that is a non-natural person, or

    leverage transaction merchant must be made on Form 7-W, and a request

    for withdrawal from registration as a floor broker or individual floor

    trader must be made on Form 8-W, completed and filed with the National

    Futures Association in accordance with the instructions thereto. The

    request for withdrawal must be made by a person duly authorized by the

    registrant and must specify:

    * * * * *

    (e) A request for withdrawal from registration as a futures

    commission merchant, retail foreign exchange dealer, swap dealer, major

    swap participant, introducing broker, commodity pool operator,

    commodity trading advisor, floor trader that is a non-natural person,

    or leverage transaction merchant on Form 7-W, and a request for

    withdrawal from registration as a floor broker or individual floor

    trader on Form 8-W, must be filed with the National Futures Association

    and a copy of such request must be sent by the National Futures

    Association within three business days of the receipt of such

    withdrawal request to the Commodity Futures Trading Commission,

    Division of Swap Dealer and Intermediary Oversight, Three Lafayette

    Centre, 1155 21st Street NW., Washington, DC 20581. In addition, any

    floor broker or individual floor trader requesting withdrawal from

    registration must file a copy of his or her Form 8-W with each contract

    market or swap execution facility that has granted him or her trading

    privileges, and any floor trader that is a non-natural person

    requesting withdrawal from registration must file a copy of its Form 7-

    W with each contract market or swap execution facility that has granted

    it trading privileges. Within three business days of any determination

    by the National Futures Association under Sec. 3.10(d) to treat the

    failure by a registrant to file an annual Form 7-R as a request for

    withdrawal, the National Futures Association shall send the Commission

    notice of that determination.

    * * * * *

    [[Page 51908]]

    0

    13. Amend Sec. 3.40 by revising paragraph (a)(2) introductory text and

    (a)(2)(iv) to read as follows:

    Sec. 3.40 Temporary licensing of applicants for associated person,

    floor broker or floor trader registration.

    (a) * * *

    (2) The National Futures Association may grant a temporary license

    to any applicant for registration as a floor broker or individual floor

    trader upon the contemporaneous filing with the National Futures

    Association of:

    * * * * *

    (iv) Evidence that the applicant has been granted trading

    privileges by a contract market or swap execution facility that has

    filed with the National Futures Association a certification signed by

    its chief operating officer with respect to the review of an

    applicant's employment, credit and other history in connection with the

    granting of trading privileges.

    * * * * *

    0

    14. Amend Sec. 3.42 by revising paragraphs (a) introductory text,

    (a)(2), (a)(6), and (a)(8) to read as follows:

    Sec. 3.42 Termination.

    (a) A temporary license issued pursuant to Sec. 3.40 shall

    terminate:

    * * * * *

    (2) Immediately upon termination of the association of the

    applicant for registration as an associated person with the registrant

    which filed the sponsorship certification, or immediately upon loss of

    trading privileges by an applicant for registration as a floor broker

    or floor trader on all contract markets and swap execution facilities

    which filed the certification described in Sec. 3.40;

    * * * * *

    (6) Immediately upon failure to comply with an award in an

    arbitration proceeding conducted pursuant to the rules of a designated

    contract market, swap execution facility or registered futures

    association within the time specified in section 10(g) of the National

    Futures Association's Code of Arbitration or the comparable time period

    specified in the rules of a contract market or other appropriate

    arbitration forum.

    * * * * *

    (8) Immediately upon notice to the applicant and the applicant's

    sponsor or the contract market or swap execution facility that has

    granted the applicant trading privileges that:

    (i) The applicant failed to disclose relevant disciplinary history

    information on the applicant's Form 8-R; or

    (ii) An event has occurred leading to a required disclosure on the

    applicant's Form 8-R.

    * * * * *

    0

    15. Amend Sec. 3.44 by revising paragraph (a)(5) to read as follows:

    Sec. 3.44 Temporary licensing of applicants for guaranteed

    introducing broker registration.

    (a) * * *

    (5) The fingerprints of the applicant, if a sole proprietor, and of

    each principal (including each branch office manager) thereof on

    fingerprint cards provided by the National Futures Association for that

    purpose.

    * * * * *

    0

    16. Amend Sec. 3.46 by revising paragraphs (a) introductory text,

    (a)(6), (a)(8), and (a)(10) to read as follows:

    Sec. 3.46 Termination.

    (a) A temporary license issued pursuant to Sec. 3.44 shall

    terminate:

    * * * * *

    (6) Immediately upon failure to comply with an order to pay a civil

    monetary penalty, restitution, or disgorgement within the time

    permitted under section 6(e), 6b, or 6c(d) of the Act;

    * * * * *

    (8) Immediately upon failure to comply with an award in an

    arbitration proceeding conducted pursuant to the rules of a designated

    contract market, swap execution facility, or registered futures

    association within the time specified in section 10(g) of the National

    Futures Association's Code of Arbitration or the comparable time period

    specified in the rules of a contract market, swap execution facility,

    or other appropriate arbitration forum.

    * * * * *

    (10) Immediately upon notice to the applicant and the guarantor

    futures commission merchant that:

    (i) The applicant or any principal (including any branch officer

    manager) failed to disclose relevant disciplinary history information

    on the applicant's Form 7-R or on a principal's Form 8-R; or

    (ii) An event has occurred leading to a required disclosure on the

    applicant's Form 7-R or on a principal's Form 8-R.

    * * * * *

    0

    17. Amend Sec. 3.56 by revising paragraph (b)(1)(iv) to read as

    follows:

    Sec. 3.56 Suspension or modification of registration pursuant to

    section 8a(11) of the Act.

    * * * * *

    (b) * * *

    (1) * * *

    (iv) The statement accompanying the notice referred to in paragraph

    (a)(2) of this section and, in an effort to have his registration

    modified rather than suspended, the Supplemental Sponsor Certification

    Statement signed by a sponsor, supervising floor broker or, in the case

    of a floor trader, a supervising registrant, principal, contract

    market, or swap execution facility, as appropriate for the registrant

    in accordance with Sec. 3.60(b)(2)(i) and who meets the standards set

    forth in Sec. 3.60(b)(2)(i)(A) and (C).

    * * * * *

    0

    18. Amend Sec. 3.60 by revising paragraphs (b)(2)(i) introductory

    text, (f)(3), and (l) to read as follows:

    Sec. 3.60 Procedure to deny, condition, suspend, revoke or place

    restrictions upon registration pursuant to sections 8a(2), 8a(3) and

    8a(4) of the Act.

    * * * * *

    (b) * * *

    (2)(i) In the response, if the person is not an associated person,

    a floor broker or a floor trader or an applicant for registration in

    any of those capacities, the applicant or registrant shall also state

    whether he or she intends to show that registration would not pose a

    substantial risk to the public despite the existence of the

    disqualification set forth in the notice. If the person is an

    associated person, a floor broker or a floor trader or an applicant for

    registration in any of those capacities, the applicant or registrant

    shall also state whether he or she intends to show that full,

    conditioned or restricted registration would not pose a substantial

    risk to the public despite the existence of the disqualification set

    forth in the notice. If the person is an associated person or an

    applicant for registration as an associated person and intends to make

    such a showing, he or she must also submit a letter signed by an

    officer or general partner authorized to bind the sponsor whereby the

    sponsor agrees to sign a Supplemental Sponsor Certification Statement

    and supervise compliance with any conditions or restrictions that may

    be imposed on the applicant or registrant as a result of a statutory

    disqualification proceeding under this section; if the person is a

    floor broker or a floor trader or an applicant for registration in

    either capacity and intends to make such a showing, he or she must, in

    the case of a floor broker or applicant for registration as a floor

    broker, also submit a letter signed by his employer or if he or she has

    no employer by another floor broker or, in the case of a floor trader

    or applicant for registration

    [[Page 51909]]

    as a floor trader, also submit a letter signed by an officer of the

    floor trader's clearing member, if such officer is a registrant or a

    principal of a registrant, or the chief operating officer of each

    contract market or swap execution facility that has granted trading

    privileges, whereby the employer or floor broker, appropriate

    registrant, principal or chief operating officer (on behalf of the

    contract market or swap execution facility) agrees to sign a

    Supplemental Sponsor Certification Statement and supervise compliance

    with any conditions or restrictions that may be imposed on the

    applicant or registrant as a result of a statutory disqualification

    proceeding under this section; provided, that, with respect to such

    sponsor, supervising employer or floor broker, supervising registrant

    or principal:

    * * * * *

    (f) * * *

    (3) If the person is an associated person, a floor broker or a

    floor trader or an applicant for registration in any of those

    capacities, evidence that the applicant's or registrant's registration

    on a conditioned or restricted basis would be subject to supervisory

    controls likely both to detect future wrongdoing by the applicant or

    registrant and protect the public from any harm arising from future

    wrongdoing by the applicant or registrant. Any decision providing for a

    conditioned or restricted registration shall take into consideration

    the applicant's or registrant's statutory disqualification and the time

    period remaining on such statutory disqualification, and shall fix a

    time period after which the registrant and his or her sponsor,

    supervising employer or floor broker, or supervising registrant,

    principal, contract market, or swap execution facility may petition to

    lift or modify the conditions or restrictions in accordance with Sec.

    3.64.

    * * * * *

    (l) The failure of any sponsor, supervising employer or floor

    broker, or supervising registrant, principal, contract market, or swap

    execution facility to fulfill its obligations with respect to

    supervision or monitoring of a conditioned or restricted registrant as

    agreed to in the Supplemental Sponsor Certification Statement shall be

    deemed a violation of this rule under the Act.

    0

    19. Amend Sec. 3.64 by revising paragraph (a)(2) to read as follows:

    Sec. 3.64 Procedure to lift or modify conditions or restrictions.

    (a) * * *

    (2) In the petition, the registrant and his or her sponsor,

    supervising employer or floor broker, or supervising registrant,

    principal, contract market, or swap execution facility shall be limited

    to a showing, by affidavit, that the conditions or restrictions have

    been satisfied pursuant to the order which imposed them. The affidavit

    must be sworn to by a person with actual knowledge of the registrant's

    activities on behalf of the sponsor, supervising employer or floor

    broker, or supervising registrant, principal, contract market or swap

    execution facility.

    * * * * *

    0

    20. Amend Sec. 3.75 by revising paragraph (a) to read as follows:

    Sec. 3.75 Delegation and reservation of authority.

    (a) The Commission hereby delegates, until such time as it orders

    otherwise, to the Director of the Division of Swap Dealer and

    Intermediary Oversight or his or her designee the authority to grant or

    deny requests filed pursuant to Sec. 3.12(g). The Director of the

    Division of Swap Dealer and Intermediary Oversight may submit to the

    Commission for its consideration any matter which has been delegated to

    him pursuant to Sec. 3.12(g). The Commission hereby delegates, until

    such time as it orders otherwise, the authority to perform all

    functions specified in subparts B through D of this part to the persons

    authorized to perform them thereunder.

    * * * * *

    Issued in Washington, DC, on August 15, 2012, by the Commission.

    Sauntia S. Warfield,

    Assistant Secretary of the Commission.

    Appendices to Registration of Intermediaries--Commission Voting Summary

    and Statements of Commissioners

    Note: The following appendices will not appear in the Code of

    Federal Regulations.

    Appendix 1--Commission Voting Summary

    On this matter, Chairman Gensler and Commissioners Sommers,

    Chilton and Wetjen voted in the affirmative; Commissioner O'Malia

    voted in the negative.

    Appendix 2--Statement of Chairman Gary Gensler

    I support the final rule to amend certain provisions of Part 3

    of the Commission's regulations regarding the registration of

    intermediaries. The final amendments are necessary to conform

    existing regulations to the new requirements in the Dodd-Frank Wall

    Street Reform and Consumer Protection Act.

    The final rule would amend Part 3 to facilitate the extension of

    the existing registration process to apply to new categories of

    registrants, such as swap dealers and major swap participants.

    Customers will benefit from the increased transparency of the

    registration process. The final amendments also modernize existing

    provisions that will apply to all Commission registrants.

    In addition, the Commission has made technical changes to permit

    legal entities (in addition to natural persons) to register as floor

    traders. This change was required to implement the exception from

    the definition of a swap dealer for floor traders that trade cleared

    swaps on swap execution facilities.

    Appendix 3--Statement of Commissioner Scott O'Malia

    I respectfully dissent with the Commodity Futures Trading

    Commission's (``Commission'') final rule to adopt certain conforming

    amendments to part 3 of the Commission's regulations regarding the

    registration of intermediaries.\1\ I find it disturbing that coming

    off of two widely publicized incidents of intermediary fraud and

    misappropriation of customer funds (i.e., MF Global Holdings and

    Peregrine Financial Group), the Commission is not adopting a rule

    that will provide customers with greater transparency of the

    professional and disciplinary background of Commission registrants.

    While I support most of what is included in this rule, I am unable

    to vote in the affirmative because of what has been excluded. The

    Commission indicates in the final rule that it will work with the

    National Futures Association (``NFA'') to increase transparency, but

    does not set forth any details describing how the Commission and NFA

    will accomplish that goal.

    ---------------------------------------------------------------------------

    \1\ See 17 CFR Part 3 (Registration).

    ---------------------------------------------------------------------------

    The Commission and NFA should follow the lead of the Securities

    and Exchange Commission (``SEC'') and the Financial Industry

    Regulatory Authority (``FINRA'') in terms of how professional and

    disciplinary background information is disclosed to the potential

    customers of SEC-registered broker-dealers. FINRA's

    BrokerCheck[supreg] is a tool that provides potential customers with

    detailed information regarding the professional backgrounds of

    current and former FINRA-registered brokerage firms and brokers, as

    well as investment adviser firms and representatives.\2\ Through

    BrokerCheck[supreg], these customers can research certain criminal

    matters, regulatory actions, civil judicial proceedings, and

    financial matters in which the broker-dealer, one of its control

    affiliates, or representatives has been involved.

    ---------------------------------------------------------------------------

    \2\ For more information regarding BrokerCheck[supreg], see

    http://www.finra.org/Investors/ToolsCalculators/BrokerCheck.

    ---------------------------------------------------------------------------

    Today's futures markets need better technology solutions that

    will help futures customers make informed choices about the

    Commission-registered intermediaries with which they may wish to do

    business. Instead of promising to take action in the future, the

    Commission's final rule should do everything it can right now to

    protect customer funds. I believe the final rule should enable the

    public to receive access to information about current and formerly

    registered intermediaries who may seek to attain

    [[Page 51910]]

    ---------------------------------------------------------------------------

    positions of trust with potential futures customers.

    [FR Doc. 2012-20962 Filed 8-27-12; 8:45 am]

    BILLING CODE 6351-01-P

    Last Updated: August 28, 2012