For Release: January 8, 1999
CFTC Adopts Amendments to Its Rules Governing the Granting of a Temporary License by the National Futures Association
The Commodity Futures Trading Commission (Commission) has adopted
amendments to its rules governing the granting of a temporary
license (TL) by the National Futures Association (NFA) to applicants
for registration in the categories of associated person (AP), floor
broker (FB), floor trader (FT) and guaranteed introducing broker. These
rule amendments permit NFA, in appropriate cases, to issue a TL to an
applicant despite a "yes" answer to a Disciplinary History
question on the application for registration. Currently, an applicant is
ineligible for a TL if he or she answers "yes" to any
Disciplinary History question on the registration application. The
Disciplinary History questions require an applicant to disclose, among
other things, whether he or she has ever been convicted of any felony,
been convicted of a misdemeanor involving securities or futures activity,
embezzlement, theft, fraud or gambling, or been subject to an exchange
disciplinary action. Since the registration application is designed to
capture an applicant's entire disciplinary history, in certain cases
an applicant who was previously registered may be required to answer
"yes" about a matter that has been previously disclosed and
reviewed and despite which the applicant was previously granted
registration. In cases such as this and other similar matters, NFA will
now have the discretion to issue a TL. The Commission proposed its rule
amendments concerning TLs on September 21, 1998 (63 Fed. Reg. 51048
(Sept. 24, 1998)) and received three favorable comments on the proposals.
The Commission also has approved rule amendments and new rules submitted
by NFA concerning TLs.
The Commission also adopted amendments to two of its rules pursuant to which a "yes" answer to a Disciplinary History question previously has prevented the granting of registration, not merely a TL. These circumstances pertain to: (1) a registered FT seeking to become registered as an FB; and (2) an AP whose registration is terminated because of the revocation or withdrawal of the sponsor's registration and who becomes associated with a new sponsor. Since these provisions are modeled upon those governing TLs, the Commission determined that it was appropriate to adopt amendments to these provisions to remove the restriction on granting registration in these circumstances if the applicant has answered "yes" to any Disciplinary History question.
The Commission's rule amendments will be published in the Federal Register shortly and become effective 30 days thereafter. Copies of the rule amendments may be obtained by contacting the Commission's Office of the Secretariat, Three Lafayette Centre, 1155 21st Street, N.W., Washington, D.C. 20581, (202) 418-5100, or by accessing the Commission's website, www.cftc.gov.