CFTC to Consider Amendments to Financial, Ethics Rules

The Commodity Futures Trading Commission will hold an open meeting on December 7, 1995 at 10:00 a.m. to consider proposed amendments to its financial rules and to consider adoption of certain rule amendments and additional proposed rule amendments concerning providers of ethics training to industry registrants.

The proposed financial rule amendments would:

  1. conform the Commission's minimum financial requirements for futures commission merchants (FCMs) and introducing brokers (IBs) to the industry standards established by National Futures Association, $250,000 and $30,000, respectively;
  2. codify a previous staff no-action letter to provide that prepayment of subordinated debt by an FCM or IB need generally be approved only by a firm's designated self-regulatory organization and not also by the Commission; and
  3. require that FCMs collect margin from foreign brokers for omnibus accounts on a gross basis, as now required for domestic omnibus accounts. Most exchanges already require gross margining of foreign omnibus accounts.

With respect to the Commission's rules governing providers of ethics training to industry registrants, the Commission will consider on Thursday the adoption of final rule amendments to:

  1. require a certification by persons seeking to provide ethics training that they would not be disqualified from registration under the Act;
  2. limit certain representations that ethics training providers may make concerning their status as such;
  3. facilitate the use of videotape and electronic presentations; and
  4. enhance the ability of a registered futures association to track the ethics training attendance dates of registrants.

To facilitate the implementation of these rule amendments, the Commission would delegate authority to NFA to:

  1. maintain the list of eligible ethics training providers, including the authority to refuse to include persons on such list pursuant to the criteria set forth in Commission Rule 3.34 or criteria established by NFA and approved by the Commission;
  2. establish guidelines as to the required proficiency and experience of ethics training providers;
  3. receive and evaluate complaints concerning such providers and conduct other appropriate reviews of providers' operations, subject to Commission oversight;
  4. develop appropriate procedures to verify certifications filed by potential ethics training providers; and (5) require that such certifications be updated periodically.

The Commission will also consider on Thursday whether to propose further rule amendments that would require an ethics training provider to have successfully completed proficiency testing requirements established by a registered futures association and to have three years of relevant futures industry experience. Also on the Commission's agenda is a proposal that would eliminate the heretofore special treatment of persons with state accreditations to furnish continuing education in the fields of law, finance, accounting or economics, thereby rendering them subject to the rules applicable generally to ethics training providers.

The final rule amendments applicable to ethics training providers, if adopted, will be effective thirty days after publication in the Federal Register except that the provisions related to permissible representations will not be effective until ninety days following publication. The additional proposed rule amendments concerning ethics training providers as well as the proposed financial rule amendments would be published for comment periods of thirty days.

For further information, please contact the Commission's Office of Public Affairs at (202) 418-5080.