15740 Federal Register / Vol. 72, No. 62 / Monday, April 2, 2007 / Notices 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(6). 

11 17 CFR 240.19b–4(f)(6)(iii). 

12For purposes only of waiving the 30-day 

operative delay of this proposal, the Commission 

has considered the proposed rule’s impact on 

efficiency, competition, and capital formation. 15 

U.S.C. 78c(f). 13 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(7). 

2 17 CFR 240.19b–7. 

3See Letter from Eileen Donovan, Acting 

Secretary, CFTC, to Thomas W. Sexton, General 

Counsel, NFA, dated March 12, 2007, confirming 

approval of the proposal. 

4 15 U.S.C. 78o–3(k). 

5 15 U.S.C. 78o(b)(11). 

6 17 CFR 30.1–30.12. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

NASD does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: 

(i) Significantly affect the protection 

of investors or the public interest; 

(ii) Impose any significant burden on 

competition; and 

(iii) Become operative for 30 days 

from the date on which it was filed, or 

such shorter time as the Commission 

may designate, it has become effective 

pursuant to Section 19(b)(3)(A) of the 

Act 9 and Rule 19b–4(f)(6) thereunder.10

At any time within 60 days of the filing 

of the proposed rule change, the 

Commission may summarily abrogate 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. 

NASD has asked that the Commission 

waive the 30-day operative delay set 

forth in Rule 19b–4(f)(6)(iii) under the 

Act 11 to allow the proposed rule change 

to be implemented on the first day of 

operation of the NASD/NYSE TRF, 

which is currently anticipated to be in 

April 2007. The Commission believes 

such waiver is consistent with the 

protection of investors and the public 

interest, for it will allow the proposed 

fees and credits to be in place at the 

time NASD begins operating the NASD/ 

NYSE TRF. For these reasons, the 

Commission designates the proposal to 

be operative upon filing with the 

Commission.12

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASD–2007–025 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NASD–2007–025. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Room. Copies of such filing also will be 

available for inspection and copying at 

the principal office of NASD. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NASD–2007–025 and 

should be submitted on or before April 

23, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–5979 Filed 3–30–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55525; File No. SR–NFA–

2007–01] 

Self-Regulatory Organization; National 

Futures Association; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Amendment Relating to NFA 

Compliance Rule 2–10 

March 26, 2007. 

Pursuant to Section 19(b)(7) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–7 under the 

Act,2 notice is hereby given that on 

February 27, 2007, National Futures 

Association (‘‘NFA’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change described in Items I, II, and III 

below, which Items have been 

substantially prepared by NFA. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. NFA 

also has filed the proposed rule change 

with the Commodity Futures Trading 

Commission (‘‘CFTC’’). 

NFA, on February 26, 2007, submitted 

the proposed rule change to the CFTC 

for approval. The CFTC approved the 

proposed rule change on March 12, 

2007.3

I. Self-Regulatory Organization’s 

Description of the Proposed Rule 

Change 

Section 15A(k) of the Act 4 makes 

NFA a national securities association for 

the limited purpose of regulating the 

activities of NFA members (‘‘Members’’) 

who are registered as brokers or dealers 

in security futures products under 

Section 15(b)(11) of the Act.5 NFA 

Compliance Rule 2–10(b) applies to all 

futures commission merchant (‘‘FCM’’) 

Members, including those who are 

registered as security futures brokers or 

dealers under Section 15(b)(11) of the 

Act. 

NFA Compliance Rule 2–10 currently 

requires FCM Members to maintain 

their books and records in an office 

located in either the U.S. or a 

jurisdiction that the CFTC has 

determined to have a comparable 

regulatory scheme for purposes of the 

CFTC’s Part 30 regulation.6 The 

amendment requires the U.S. or Part 30 


hsrobinson on PROD1PC76 with NOTICES
Federal Register / Vol. 72, No. 62 / Monday, April 2, 2007 / Notices 15741 

7See Securities Exchange Act Release No. 53190 

(January 30, 2006), 71 FR 6119 (February 6, 2006). 

8Telephone conversation between Kathryn Page 

Camp, Associate General Counsel, NFA, and Molly 

M. Kim, Special Counsel, Division of Market 

Regulation, Commission, on March 22, 2007. 

9 15 U.S.C. 78o–3(k). 

10 15 U.S.C. 78s(b)(1). 11 17 CFR 200.30–3(a)(75). 

jurisdiction office to be under the 

supervision of an associated person 

(‘‘AP’’) principal resident in that office. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

NFA has prepared statements 

concerning the purpose of, and basis for, 

the proposed rule change, burdens on 

competition, and comments received 

from members, participants, and others. 

The text of these statements may be 

examined at the places specified in Item 

IV below. NFA has prepared summaries, 

set forth in Sections A, B, and C below, 

of the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

In November 2005, NFA’s Board 

adopted amendments to NFA 

Compliance Rule 2–10 to require FCMs 

to maintain their books and records in 

an office located in either the U.S. or a 

Part 30 jurisdiction (if the firm is subject 

to the Part 30 regulatory scheme).7 The 

rule does not require the office to be 

under the supervision of an AP 

principal resident in that office, 

however. 

This creates several potential 

problems. First, the rule allows the 

firm’s principals to supervise the office 

from a remote location. Without a 

principal on the premise to oversee the 

office’s day-to-day recordkeeping 

activities, the firm is less likely to 

discover potential problems quickly. 

Second, there may be no one in the 

office who is subject to NFA’s 

disciplinary jurisdiction. Although the 

firm’s AP principals may ultimately be 

responsible for the firm’s books and 

records violations, their distance from 

the office could dilute their sense of 

accountability as well as the 

accountability of those in the office. 

The lack of a resident principal also 

means that NFA Compliance staff may 

not have ready access to someone who 

can answer questions during an audit or 

investigation. Although Compliance 

Rule 2–10 requires all Members to have 

an individual who is authorized to act 

on the Member’s behalf, is fluent in 

English, and is knowledgeable about the 

Member’s business and about financial 

matters, the absence of a resident AP 

principal can be problematic when NFA 

is seeking information from an FCM.8

Accordingly, NFA amends 

Compliance Rule 2–10(b) to require that 

an FCM’s books and records be kept in 

a U.S. or Part 30 office that is under the 

supervision of an AP principal resident 

in that office. As is currently the case, 

a firm could only use an office in a Part 

30 jurisdiction if the firm is actually 

subject to regulation in that jurisdiction. 

2. Statutory Basis 

The rule change is authorized by, and 

consistent with, Section 15A(k) of the 

Act.9

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The rule change will not impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act and the 

Commodity Exchange Act. 

C. Self-Regulatory Organization’s 

Statement of Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

NFA did not publish the rule change 

to the membership for comment. NFA 

did not receive comment letters 

concerning the rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

NFA, on February 26, 2007, submitted 

the proposed amendments to NFA 

Compliance Rule 2–10 to the CFTC for 

approval. The CFTC approved the 

proposed rule change on March 12, 

2007. 

Within 60 days of the date of 

effectiveness of the proposed rule 

change, the Commission, after 

consultation with the CFTC, may 

summarily abrogate the proposed rule 

change and require that the proposed 

rule change be refiled in accordance 

with the provisions of Section 19(b)(1) 

of the Act.10

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to 

rule-comments@sec.gov. Please include 

File No. SR–NFA–2007–01 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File No. 

SR–NFA–2007–01. This file number 

should be included on the subject line 

if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Room. Copies of such filing will also be 

available for inspection and copying at 

the principal office of NFA. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File No. 

SR–NFA–2007–01 and should be 

submitted on or before April 23, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–5989 Filed 3–30–07; 8:45 am] 

BILLING CODE 8010–01–P 


hsrobinson on PROD1PC76 with NOTICES