Release:                 #4226-99
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,