DIVISION OF 

TRADING AND MARKETS 

Dear 

COMMODITY FUTURES TRADING COMMISSION 

2033 K STREET, N.W., WASHINGTON, D.C. 20561 

(202) 254-5955 

(202) 254-5265 FACSIMILE 

71o-822·9327 TELEX 

11-13 

November 9, 1989 

This is in reference to your letter to the Division of 

Trading and Markets ("Division") dated October 19, 1989 on behalf 

of , a registered 

broker/dealer, in which you requested relief from certain of the 

regulatory requirements applicable to introducing brokers ("IBs") 

set forth in Commodity Futures Trading Commission ("Commission") 

rule 3. 15. 11 · ··- is seeking to register as an IB so that its 

Canadian affiliate, ___ . ', may continue to be 

eligible for the rule 30.10 ll relief granted to certain 

designated members of the Montreal Exchange on March 14, 1989. 11 

In your October 19, 1989 letter you have stated the 

following: 

In connection with the registration of as an 

IB, we are requesting a "no action" position ot the 

(Commission] staff with regard to the failure of all 

persons who fall within the definition of principal as 

defined in [Commission] Rule 3.1 to comply with the 

regulatory requirements applicable to principals. We .. 

l/ 17 C.F.R. S3.15(a) (2) (1988). Rule 3.15 contains the IB 

registration requirements. 

l/ 17 C.F.R. §30.10 (1988). 

11 See 54 Fed. Reg. 11,179 (March 17, 1989). In Interpretative 

Letter 88-3, 2 Comm. Fut. L. Rep. (CCH) !24,085 (1988), the 

Division stated that in order for a foreign firm to be 

eligible for the Commission's rule 30.10 relief, certain of 

that firm's affiliates/subsidiaries in the United States, 

including firms which act in the capacity of a securities 

broker/dealer, would be required to register as IBs. 
propose to designate our President, 

as our principal. 

In connection with our request we make the following 

assurances to the [Commission] staff: 

That no principal of would be precluded from 

being registered [under Section 8a(2) of the Commodity 

Exchange Act, 7 u.s.c. S12a(2) (1982)]; 

The President will comply with the regulatory 

requirements applicable to principals; 

Neither__ _ officers or employees will engage in 

any IB related activities at this time; and 

will notify the [Commission] before it engages 

in any IB related activities and any and all persons 

who act in the capacity of an associated person of an 

IB will be registered as such. 

Absent the relief requested in this letter, pursuant to rule 

3.15(a)(2), all persons affi~iated with who fall within 

the definition of a principal as set forth in Commission rule 

3.1 !/would be required to file the Form 8-R, including the 

requisite fingerprint cards. 

In an analogous situation, the Division granted no action 

relief to a securities broker/dealer which was required to 

register as an IB so that its foreign affiliate could qualify for 

the Commission's rule 30.10 relief. ~/ Specifically, the 

securities broker/dealer was permitted to register as an IB upon 

the filing of a Form 7-R and a Form 8-R by one principal of the 

firm. No other principal of the firm was required to file the 

i/ 17 C.F.R. §3.1 (1988). Specifically, a principal is defined 

to include: 

(1) Any person including, but not limited to, a sole 

proprietor, general partner, officer, director, branch 

office manager or designated supervisor, or person 

occupying a similar status or performing similar 

functions, having the power, directly or indirectly, 

through agreement or otherwise, to exercise a 

controlling influence over its activities which are 

subject to regulation by the Commission •••• 

21 See Interpretative Letter No. 89-5, 2 Comm. Fut. L. Rep. 

(CCH) !24,471 (1989). 
Page 3 

Form 8-R and no officer or employee was required to register as 

an associated person ("AP"). The no action relief was granted 

subject to receipt of the representations and undertakings which 

you have provided in your October 19, 1989 letter. In view of 

the foregoing and, in particular, the representations and 

undertakings in your October 19, 1989 letter, the Division has 

determined to grant _ the no action relief which it has 

requested. Specifically, under the circumstances herein, the 

Division will not recommend enforcement action against for 

failure to comply with all of the provisions of rule 3.15 if 

President is designated as the sole principal for 

purposes of its IB registration. 

The Division wishes to clarify that in the event 

wishes to act in the capacity of an IB, it must otherwise comply ~ with all of the requirements applicable to IBs, including the_ ~ 

requirement in rule 3.15 that all principals of the firm file the 

Form 8-R and the requirement in Commission rule 3.12 Q/ that any 

person who acts in the capacity of an AP of an IB, or any person 

up to and including the president or chief executive officer who 

supervises one so engaged, register as an AP. The no action 

position set forth herein will not take effect until you confirm 

in writing that you are authorized to bind to the 

representations and undertakings set forth In your October 19, 

1989 letter, or one who is so authorized files a notice on behalf 

of ·~ ___ I affirming his consent to the representations and 

undertakings set forth therein. 

The position adopted herein is based on the information 

provided to us. Any different, changed or omitted facts or 

conditions might require us to reach a different conclusion. 

This position is solely that of the Division of Trading and 

Markets and does not necessarily represent the views of the 

Commission or those of any other unit of its staff. 

Q/ 17 C.F.R. S3.12 (1988).