Release:            #4517-01
For Release:    May 17, 2001

Proposed Rules to Provide for Notice Registration as a Futures Commission Merchant or Introducing Broker for Securities Broker-Dealers Trading Security Futures Products 

            Washington, D.C. -- The Commodity Futures Trading Commission (Commission) has proposed for public comment amendments to rule 3.10, which governs the information application process for persons seeking registration in any of the futures industry firm categories, including futures commission merchant (FCM) and introducing broker (IB). These amendments would provide for notice registration as an FCM or IB, as applicable, in the case of a broker or dealer (BD) registered with the Securities and Exchange Commission (SEC) that, among other things, limits its involvement with commodity futures contracts to security futures products. Security futures products would include futures on individual equity issues as well as futures on narrow-based indices of securities. The Commission also has proposed for public comment an amendment to rule 170.15, which requires each registered FCM to be a member of a registered futures association. The amendment would exempt these “notice registrants” from this requirement.           

These amendments to rules 3.10 and 170.15 are being proposed in accordance with newly-adopted sections 4f(a)(2) and (a)(4), respectively, of the Commodity Exchange Act (CEA), which were added to the CEA by the Commodity Futures Modernization Act of 2000 (CFMA). The CFMA similarly amended section 15(b) of the Securities Exchange Act of 1934 to provide for notice registration as a BD for a person that, among other things, is required to register as a BD only because it effects transactions in security futures products on a national securities exchange. The Commission expects that the SEC will soon be proposing rules to implement BD notice registration.             

The proposed new rules were published in the Federal Register on May 17, 2001. Copies may be obtained by contacting the Office of the Secretariat, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, N.W., Washington, D.C. 20581, (202) 418-5100, or by accessing the Commodity Futures Trading Commission website. Public comments on the proposed rule must be received at the Office of the Secretariat on or before June 18, 2001.