Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations 20127

Issued in Kansas City, Missouri, on April

30, 1996.

Bobby W. Sexton,

Acting Manager, Small Airplane Directorate,

Aircraft Certification Service.

[FR Doc. 96–11167 Filed 5–3–96; 8:45 am]

BILLING CODE 4910–13–U

14 CFR Part 39

[Docket No. Docket No. 94–ANE–56;

Amendment 39–9513; AD 96–04–02]

Airworthiness Directives; AlliedSignal

Inc. ALF502L Series Turbofan Engine

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule; correction.

SUMMARY: This document makes a

correction to Airworthiness Directive

(AD) 96–04–02 applicable to

AlliedSignal Inc. (formerly Textron

Lycoming) ALF502L series turbofan

engines that was published in the

Federal Register on February 29, 1996

(61 FR 7692). The AD number in the

compliance section is incorrect. This

document corrects the AD number. In

all other respects, the original document

remains the same.

DATES: Effective May 6, 1996.

SUPPLEMENTARY INFORMATION: A final

rule airworthiness directive applicable

to AlliedSignal Inc. (formerly Textron

Lycoming) ALF502L engines, was

published in the Federal Register on

February 29, 1996 (61 FR 7692). The

following correction is needed:

On page 7693, in the middle column,

in the Compliance Section 2., in the

fourth line, ‘‘94–04–02’’ should read

‘‘96–04–02.’’

Issued in Burlington, MA, on April 22,

1996.

Jay J. Pardee,

Manager, Engine and Propeller Directorate,

Aircraft Certification Service.

[FR Doc. 96–11173 Filed 5–3–96; 8:45 am]

BILLING CODE 4910–13–U

14 CFR Part 73

[Airspace Docket No. 95–ANE–71]

Change in Using Agency for Restricted

Areas R–4102A and B, Fort Devens;

MA

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Final rule.

SUMMARY: This action changes the using

agency for Restricted Areas R–4102A

and B, Fort Devens, MA, from ‘‘Director

of Plans, Training and Security, Fort

Devens, MA’’ to ‘‘Chief, Reserve

Component Division, Devens Reserve

Forces Training Area, Ayer, MA.’’ This

is an administrative change resulting

from a realignment of responsibilities

within the Department of the Army.

There are no changes to the boundaries,

designated altitudes, time of

designation, or activities conducted

within these restricted areas.

EFFECTIVE DATE: 0901 UTC, June 20,

1996.

FOR FURTHER INFORMATION CONTACT: Ken

McElroy, Airspace and Rules Division

(ATA–400), Office of Airspace

Management, Federal Aviation

Administration, 800 Independence

Avenue, SW., Washington, DC 20591;

telephone: (202) 267–3075.

SUPPLEMENTARY INFORMATION:

The Rule

This amendment to part 73 of the

Federal Aviation Regulations changes

the using agency for Restricted Areas R–

4102A and B, Fort Devens, MA, from

‘‘Director of Plans, Training and

Security, Fort Devens, MA’’ to ‘‘Chief,

Reserve Component Division, Devens

Reserve Forces Training Area, Ayer,

MA.’’ This is an administrative change

to reflect organizational changes within

the Department of the Army. There are

no changes to the dimensions, time of

designation, or activities conducted

within the affected restricted areas.

Because this action is a minor technical

amendment in which the public is not

particularly interested, I find that notice

and public procedure under 5 U.S.C.

553(b) are unnecessary. Section 73.41 of

part 73 of the Federal Aviation

Regulations was republished in FAA

Order 7400.8C dated June 29, 1995.

The FAA has determined that this

regulation only involves an established

body of technical regulations for which

frequent and routine amendments are

necessary to keep them operationally

current. It, therefore—(1) is not a

‘‘significant regulatory action’’ under

Executive Order 12866; (2) is not a

‘‘significant rule’’ under DOT

Regulatory Policies and Procedures (44

FR 11034; February 26, 1979); and (3)

does not warrant preparation of a

regulatory evaluation as the anticipated

impact is so minimal. Since this is a

routine matter that will only affect air

traffic procedures and air navigation, it

is certified that this rule will not have

a significant economic impact on a

substantial number of small entities

under the criteria of the Regulatory

Flexibility Act.

Environmental Review

This action changes the using agency

of the restricted areas. There are no

changes to the boundaries, designated

altitudes, times of designation, or

activities conducted within the affected

restricted areas. Accordingly, this action

is not subject to environmental

assessments and procedures as set forth

in FAA Order 1050.1D, ‘‘Policies and

Procedures for Considering

Environmental Impacts’’ and the

National Environmental Policy Act.

List of Subjects in 14 CFR Part 73

Airspace, Navigation (air).

Adoption of the Amendment

In consideration of the foregoing, the

Federal Aviation Administration

amends 14 CFR part 73 as follows:

PART 73—[AMENDED]

1. The authority citation for part 73

continues to read as follows:

Authority: 49 U.S.C. 106(g), 40103, 40113,

40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–

1963 Comp., p. 389.

§ 73.41 [Amended]

2. Section 73.41 is amended as

follows:

R–4102A Fort Devens, MA [Amended]

By removing ‘‘Using agency. Director of

Plans, Training and Security, Fort Devens,

MA.’’ and substituting the following: ‘‘Chief,

Reserve Component Division, Devens

Reserve Forces Training Area, Ayer, MA.’’

R–4102B Fort Devens, MA [Amended]

By removing ‘‘Using agency. Director of

Plans, Training and Security, Fort Devens,

MA.’’ and substituting the following: ‘‘Chief,

Reserve Component Division, Devens

Reserve Forces Training Area, Ayer, MA.’’

Issued in Washington, DC, on April 16,

1996.

Nancy B. Kalinowski,

Acting Program Director for Air Traffic

Airspace Management.

[FR Doc. 96–11252 Filed 5–3–96; 8:45 am]

BILLING CODE 4910–13–P

COMMODITY FUTURES TRADING

COMMISSION

17 CFR Part 3

Ethics Training for Registrants

AGENCY: Commodity Futures Trading

Commission.

ACTION: Final rules.

SUMMARY: On December 14, 1995, the

Commodity Futures Trading

Commission (Commission or CFTC)

published for comment proposed

amendments to § 3.34, which governs
20128 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations

1This provision of the Act is codified at 7 U.S.C.

6p(b) (1994) and states that:

The Commission shall issue regulations to require

new registrants, within 6 months after receiving

such registration, to attend a training session, and

all other registrants to attend periodic training

sessions, to ensure that registrants understand their

responsibilities to the public under this Act,

including responsibilities to observe just and

equitable principles of trade, any rule or regulation

of the Commission, any rule of any appropriate

contract market, registered futures association, or

other self-regulatory organization, or any other

applicable Federal or state law, rule or regulation.

2 58 FR 19575, 19584–19587, 19593–19594 (Apr.

15, 1993). In September, 1993, the Commission

issued a Federal Register release to clarify the

procedures to be followed by persons seeking to

provide ethics training pursuant to Rule 3.34. 58 FR

47890 (Sept. 13, 1993).

3 60 FR 63907 (Dec. 13, 1995).

4 7 U.S.C. 12a(2) and (3)(1994). The Act specifies

several grounds for disqualification from

registration including, among others, a prior

revocation of registration, felony conviction, and an

injunction relating to futures or securities activities.

5No person may serve on SRO governing boards

or committees who, among other things, has been

found within the prior three years to have

committed a ‘‘disciplinary offense’’ or entered into

a settlement agreement with respect to a charge

involving a ‘‘disciplinary offense,’’ is currently

suspended from trading on any contract market, is

suspended or expelled from membership in any

SRO, or is currently subject to an agreement with

the Commission or an SRO not to apply for

registration or membership. A ‘‘disciplinary

offense’’ for these purposes means any violation of

the Act or the rules promulgated thereunder or SRO

rules other than those relating to: (1) Decorum or

attire; (2) financial requirements; or (3) reporting or

recordkeeping, unless resulting in fines aggregating

more than $5,000 in a calendar year, provided such

SRO rule violations did not involve fraud, deceit or

conversion, or result in a suspension or expulsion.

17 CFR 1.63 (1995).

6See Commission Rule 3.34(b)(3), 60 FR 63907,

63912.

7 60 FR 64132 (Dec. 14, 1995).

8 17 CFR 3.1(a) (1995).

ethics training for Commission

registrants. These amendments require

ethics training providers, who have not

already been authorized by the

Commission to provide ethics training,

to pass the Series 3 Examination, the

standard industry proficiency test, and

possess three years of relevant

experience. The rule is now also

applicable to state-accredited entities,

which in the past were exempt from

certain requirements.

EFFECTIVE DATE: These rule amendments

will become effective June 5, 1996.

However, with respect to stateaccredited persons or entities providing

ethics training pursuant to § 3.34 as of

March 29, 1996, the applicable date

shall be August 6, 1996.

FOR FURTHER INFORMATION CONTACT:

Lawrence B. Patent, Associate Chief

Counsel or Myra R. Silberstein,

Attorney-Advisor, Division of Trading

and Markets, 1155 21st Street, NW.,

Washington, DC 20581. Telephone (202)

418–5450.

SUPPLEMENTARY INFORMATION:

I. Background

Section 210 of the Futures Trading

Practices Act of 1992 added a new

paragraph (b) to Section 4p of the

Commodity Exchange Act (Act) to

mandate ethics training for persons

required to be registered under the Act.1

On April 6, 1993, the Commission

adopted Rule 3.34 to implement this

Congressional mandate.2 Rule 3.34

requires natural persons registered

under the Act to attend ethics training

to ensure that they understand their

responsibilities to the public under the

Act. The required training must address

the requirements of the Act and relevant

rules concerning the treatment and

handling of customer orders and

business. Issues to be addressed may

include: Honesty, fairness and the

interests of customers and the integrity

of the markets; effective supervisory

systems and controls; assessment of

financial circumstances and investment

experience of customers; disclosure of

material information; and avoidance of

conflicts of interest.

New registrants must attend ethics

training within six months of being

granted registration and every three

years thereafter. The initial training is

required to be at least four hours in

duration; subsequent training must be at

least one hour in duration. Persons

registered when Rule 3.34 became

effective on April 26, 1993 were granted

until April 26, 1996 to attend an initial

training session of at least two hours in

duration and thereafter to attend a onehour session every three years. Ethics

trainers must maintain records of

materials used in such training and of

attendees at such training.

In December 1995, the Commission

adopted amendments to Rule 3.34 to

enhance the operation of the ethics

training program and furnish additional

guidance with respect to the activities of

ethics training providers.3 These

amendments, which became effective on

January 12, 1996, require, among other

things, that a person seeking to provide

ethics training certify that he is not

subject to a statutory disqualification

from registration under the Act,4 barred

from service on self-regulatory

organization (SRO) governing boards or

committees,5 or subject to a pending

proceeding concerning possible

violations of the Act or rules or orders

promulgated thereunder.6 Also in

December 1995, the Commission

published proposals for further

amendments to Rule 3.34 which would

require that persons who seek to

provide ethics training: (1) present

satisfactory evidence of successful

completion of proficiency testing

requirements established by a registered

futures association; and (2) possess a

minimum of three years of relevant

experience. The Commission also

proposed to amend Rule 3.34 to

eliminate the provision permitting stateaccredited entities to provide ethics

training without compliance with the

requirements applicable to other

providers under the rule.7

The Commission received five

comment letters on the proposed rule

amendments. The commenters included

a registered futures association, an SRO

and three ethics training providers. The

commenters generally supported the

objectives of the proposed rule

amendments, but some commenters

recommended modifications of the

proposals. Comments addressed to

specific provisions of the proposed rule

amendments and the Commission’s

resolution of the issues raised therein

are discussed below in the context of

the relevant rule provision.

Based upon its review of the

comments received and in light of its

experience in administering this

program, the Commission has adopted,

substantially in the form proposed, the

amendments to Rule 3.34 regarding

ethics training providers published in

December 1995. The amendments

adopted herein will require any person

other than an SRO seeking to provide

ethics training to meet a proficiency

testing requirement and possess a

minimum of three years of relevant

experience. These amendments have

been adopted generally as proposed,

with certain clarifications based upon

the Commission’s review of the

comments received. The provisions of

the rule relating to the topics to be

covered in ethics training and the

minimum requirements for attendance

by registrants at such training remain

unchanged.

II. Amendments to Commission Rule

3.34

A. Proficiency Testing and Minimum

Experience Requirements

Currently, Rule 3.34 requires that any

person seeking to provide ethics

training to registrants under Rule 3.34,

other than an SRO or a state-accredited

entity, certify to a registered futures

association that such person, any

principals thereof (as defined in

Commission Rule 3.1(a)) 8 and any

individuals who, on behalf of such

person, present ethics training or

prepare ethics training videotapes or

electronic presentations are not subject
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations 20129

9Commission Rule 3.34(b)(3), 60 FR 63907,

63912.

10Section 17(p)(1) of the Act, 7 U.S.C.

21(p)(1)(1994), provides, in part, that a registered

futures association must establish training

standards and proficiency testing for persons

involved in the solicitation of transactions subject

to the Act, supervisors of such persons, and all

persons for whom it has registration

responsibilities.

11See NFA Registration Rule 401. 12 58 FR 19575, 19586.

13One commenter suggested that the minimum

experience requirement be two years rather than

three, because two years corresponds to the

minimum experience required by NFA before APs

of member futures commission merchants and

introducing brokers are permitted to exercise

discretion over accounts. See NFA Rule 2–8(d).

However, the Commission believes that the special

responsibilities of ethics training instructors

warrant a three-year minimum experience

requirement.

14The Commission believes that the Series 3

Exam is the only relevant proficiency test currently

available for ethics training providers, since it is the

proficiency test that is generally applicable to

Commission registrants and is designed to assure a

broad working knowledge of the futures industry.

Although the Commission recently approved an

alternative proficiency testing requirement under

which general securities representatives whose

commodity interest activity will be limited to

managed accounts or commodity pool interests may

take the Futures Managed Funds Examination

(Series 31 Exam) in lieu of the Series 3 Exam, the

Commission believes that even if an ethics training

provider wishes to instruct only commodity pool

operators, commodity trading advisors and their

associated persons (APs), the more comprehensive

based Series 3 Exam is the appropriate proficiency

test.

to: (1) Statutory disqualification from

registration under Sections 8a (2) or (3)

of the Act; (2) a bar from service on SRO

governing boards or committees based

upon disciplinary histories pursuant to

Commission Rule 1.63 or any SRO rule

adopted thereunder; and (3) a pending

adjudicatory proceeding under Sections

6(c), 6(d), or 9 of the Act, or similar

proceeding under Section 8a of the Act,

or Commission Rules 3.55, 3.56 or 3.60.

If the person intends to conduct training

via videotape or electronic presentation,

he must also certify that he will

maintain documentation reasonably

designed to verify attendance of

registrants at such presentations for the

minimum time required. These

certifications are continuous; thus, if

circumstances change which result in

the certification becoming inaccurate,

the ethics training provider must

promptly so inform the registered

futures association which, upon being

so notified, shall refuse to include in, or

shall remove such person from, the list

of ethics training providers.9

The amendments to Rule 3.34

proposed in December 1995 would

require any person seeking to provide

ethics training (other than an SRO) to

furnish satisfactory evidence to a

registered futures association that he has

met the proficiency testing requirement

established by a registered futures

association pursuant to Section 17(p)(1)

of the Act for the registration of

commodity professionals 10 and

possesses three years of relevant

experience. Currently, the National

Commodity Futures Examination (Series

3 Exam) is the proficiency test required

to be completed by most commodity

professionals.11

The proficiency requirement, coupled

with a three-year experience

requirement, provides an even-handed,

objective basis for assuring a minimum

level of expertise. Further, such

standards are compatible with the

method used by the Commission to date

in reviewing applications from potential

offerors of ethics training. As the

Commission noted in proposing the

original Rule 3.34, ‘‘pedagogical

expertise and knowledge of futures are

factors that should be taken into

consideration in evaluating potential

offerors of ethics training.’’ 12

Consequently, in reviewing applications

filed under Rule 3.34 by persons seeking

to provide ethics training, the

Commission has endeavored to assure

that such providers demonstrate

pedagogical experience and knowledge

of the futures markets.

In commenting on these proposed

amendments, the National Futures

Association (NFA) stated that it fully

supports the concept of requiring ethics

training providers to meet objective and

readily measurable standards of

proficiency. NFA reiterated its view,

expressed initially in commenting upon

the amendments to Rule 3.34 in

December 1995, that it is imperative that

these standards assure that ethics

training providers possess a working

knowledge of the futures industry and

relevant regulations. NFA expressed its

belief that satisfactory completion of the

Series 3 Exam, in conjunction with

three years of relevant experience,

generally will achieve this end.

Two commenters suggested that

persons having certain types of

experience, e.g., former CFTC

Commissioners or non-compensated

instructors, should be automatically

exempted from the proficiency testing

requirement. One commenter expressed

concern that the proposed amendments

would exclude attorneys who have

practiced extensively in this field but

who would be unwilling to incur the

time and expense associated with taking

the Series 3 Exam. This commenter

recommended an alternative proficiency

requirement to the Series 3 Exam based

upon representations that the proposed

provider is not subject to a statutory

disqualification, is a member in good

standing of a state bar association and:

(1) Was a CFTC Commissioner or staff

attorney or SRO staff attorney for at least

two years; (2) has taught a futures

course at an accredited university or law

school for at least two years; or (3) has

had a law practice consisting of at least

thirty percent futures work over the

previous three years. A second

commenter proposed that the

Commission exempt from the

proficiency testing requirement

experienced new instructors who

participate in ethics training programs

previously authorized by the

Commission. This commenter suggested

that such an exemption could be

limited, so as not to detract from

achievement of the objective of assuring

effective, high quality ethics training, to

instructors who: (1) Co-instruct with at

least one other instructor who has

passed the Series 3 Exam; (2) possess

qualifications similar to those

instructors previously participating as

ethics training providers; (3) are not

compensated; and (4) meet minimum

experience requirements. The

commenter supported such an

exemption as a means of assuring a

healthy influx of additional qualified

instructors. This commenter noted that

its pro bono instructors are highly

experienced in-house counsel and

compliance officers of future

commission merchants, commodity

pool operators and commodity trading

advisors and attorneys specializing in

financial services law and regulation

who have been very effective instructors

of ethics training.

The Commission believes that

requiring persons who seek to provide

ethics training to provide proof of

satisfactory completion of a proficiency

testing requirement and of three years of

relevant industry or pedagogical

experience provide objective, readily

administered standards for determining

knowledge of relevant matters,

compliance with which should not be

unduly burdensome.13 Compliance with

the proficiency test requirements

applicable to registrants is an

appropriate benchmark for a minimum

level of knowledge of relevant statutory

and rule requirements.14 However, the

Commission appreciates that the

proficiency requirement may be unduly

restrictive in some cases and believes

that this requirement can be

implemented with sufficient flexibility

to permit highly qualified instructors, at

least those providing services on a pro

bono basis, to participate in ethics

training programs with providers who
20130 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations

15NFA Rule 402 permits NFA’s Vice-President of

Compliance to waive the general proficiency

requirements under circumstances approved by

NFA’s Board of Directors. See also NFA Interpretive

Notices under Rule 402 at ¶9018 and ¶9022.

16NFA noted that it employs a similar approach

under NFA Compliance Rule 2–8. Rule 2–8 requires

NFA associates who exercise discretion over

customer accounts to have been registered for two

years. NFA may, at its discretion, waive this

requirement if the associate shows that he has

equivalent experience. Although ‘‘equivalent

experience’’ is not defined in the rule, NFA has

encountered no difficulties in administering this

rule.

17 60 FR 64132, 64133.

18Of course, NFA’s rules must be submitted to the

Commission for review pursuant to Section 17(j) of

the Act, which governs Commission review and

approval of registered futures association rules. 7

U.S.C. 21(j) (1994).

19The SRO commenter also recommended an

additional amendment of Rule 3.34(b)(4) to require

that ethics training providers submit records of

ethics training attendance by floor traders and floor

brokers to the contract markets that have granted

them trading privileges as well as to NFA. The

Commission adopted an amendment to Rule

3.34(b)(4) in December 1995 to require ethics

training providers to furnish records of attendees at

such training to a registered futures association but

did not propose further amendments to this

provision. 60 FR 63907, 63911–63912. While the

Commission is generally supportive of contract

markets receiving ethics training records on floor

traders and floor brokers to whom they have

granted trading privileges, the Commission does not

believe that an additional amendment to Rule

3.34(b)(4) is necessary to achieve that end. Contract

markets may encourage or require their own floor

trader and floor broker members to provide

satisfactory proof of satisfactory completion of the

ethics training requirements. Further, the

Commission encourages ethics training providers

instructing floor traders and floor brokers to provide

this information to the relevant contract markets.

20As to whether SROs themselves should be

subject to the requirements applicable to other

providers under 3.34, the Commission believes that

the business purposes and functions of SROs, the

statutory and regulatory requirements applicable to

SROs, and the Commission’s oversight program for

assuring compliance by SROs with their

responsibilities under the Act and Commission

rules provide sufficient assurance of the expertise

and fitness of SROs as ethics training providers

without the necessity for imposing additional

requirements. Consequently, the Commission’s

proposals with respect to proficiency training and

pedagogical or industry experience did not apply to

SROs seeking to provide ethics training to their

members or employees. 60 FR 64132, 64134.

have passed the Series 3 Exam. Such

service is itself in furtherance of the

public interest and established ethical

precepts, and the Commission believes

that alternative indicia of experience

can be relied upon in such cases.

The Commission therefore believes

that it would be appropriate for NFA, in

establishing proficiency standards, to

create either on a case-by-case or generic

basis, a waiver of the proficiency test

requirement in appropriate cases, where

the proposed instructors would serve

without compensation and have

qualifications that evidence expertise at

least comparable to that provided by

successful completion of the Series 3

Exam. Such an exception might

appropriately be granted in

circumstances in which the person: (1)

Co-instructs with at least one other

instructor who has passed the Series 3

Exam; (2) meets the minimum

experience requirements and has

experience in financial services law and

regulation; and (3) is acting on a pro

bono basis, i.e., without compensation

other than reimbursement for travel

expenses. The Commission

contemplates that NFA may grant other

exemptions from the proficiency test

requirement in special circumstances,

such as where a scheduled instructor

becomes unavailable.15

The Commission intends that the

requirement of three years of relevant

experience may be satisfied not only by

pedagogical experience but, also, by

relevant industry experience. For

example, such industry experience

might be acquired through legal practice

in the fields of futures or securities or

employment as a compliance officer or

risk manager at a brokerage or end-user

firm. NFA suggests in its comment letter

that guidelines, rather than an itemized

list of acceptable positions, be provided

to address the types of experience that

would be acceptable for this purpose.

Such guidelines could include examples

of acceptable relevant experience, such

as those suggested by the Commission,

but would not preclude satisfaction of

the relevant experience requirement by

other means. NFA (or the Commission

if it chose to retain that responsibility)

would have the discretion to determine

whether a potential provider had

demonstrated the relevant experience.16

NFA expressed its willingness to

establish experience re-quirements but

requested confirmation that the

Commission intends that it do so. The

Commission believes that it is

appropriate for NFA to promulgate rules

establishing experience and proficiency

standards for ethics training providers,

subject to the general standards set forth

in Rule 3.34.17 The Commission hereby

delegates authority to NFA to

promulgate rules establishing

experience and proficiency standards

for ethics training providers. Such

standards may consist of guidelines

consistent with the views set forth

herein.18

B. Applicability of Certification,

Proficiency Testing and Experience

Requirements

Rule 3.34 requires that any provider

of ethics training, other than an SRO

offering ethics training to its members or

employees or an entity accredited to

conduct continuing education programs

by a state professional licensing

authority in the fields of law, finance,

accounting or economics, file the

certification referred to above in order to

be included on a list of ethics training

providers maintained by a registered

futures association. In December 1995,

the Commission proposed to amend

Rule 3.34 to eliminate the provision

permitting state-accredited entities to

provide ethics training without

compliance with the requirements

applicable to other providers under the

rule.

The Commission received one

comment letter addressing this aspect of

the proposals. The commenter, an SRO,

supported the proposal to impose

proficiency testing and experience

requirements upon ethics training

providers other than SROs, even if they

are state-accredited entities. The SRO

stated that until now almost all

exchange members received their ethics

training from the exchange itself. While

the SRO believes that most members

will continue to attend ethics training

provided by the exchange, a greater

number of exchange members may

choose to enroll in ethics training

programs offered by providers other

than the SRO as a result of the

December 1995 amendments to Rule

3.34 which may increase the availability

of videotape and electronic ethics

training programs. Therefore, the SRO

expressed a strong interest in assuring

that non-SRO providers have the

necessary knowledge and experience to

provide such training.19

The Commission is adopting as

proposed an amendment to Rule 3.34 to

require that state-accredited entities file

with the NFA the certification required

under Rule 3.34(b)(3)(iii) and comply

with the other relevant provisions of

Rule 3.34, including proficiency testing

and experience requirements. In the

absence of such compliance and in light

of the potential for significant variations

among state-accreditation regimes, the

Commission would have no ready

means of assuring that such providers

have a minimum level of relevant

knowledge or experience.20

The Commission proposed that the

proficiency testing and minimum

experience requirements apply to the

provider or sponsor of the ethics

training program, to any instructors or

presenters employed by the provider of

such ethics training, and to those

persons who prepare ethics training

videotapes or electronic presentations.

NFA expressed concern that the rule as

proposed appeared to require that the

ethics training provider itself, which in

many instances would be a corporate
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations 20131

entity, meet the proficiency and

experience requirements. NFA

recommended that the Commission

clarify this aspect of the rule to make

clear that the persons who will be

required to meet these standards

include the principals of the ethics

training provider, any instructors or

presenters employed by the provider

and persons who prepare ethics training

materials, including videotaped and

electronic presentations. NFA also

recommended that only those principals

of registered firms that offer in-house

ethics training who are directly

involved with the ethics training

process be required to meet the

proficiency and experience

requirements, noting that it would serve

no purpose to require all principals of

a registered firm to comply with these

requirements.

The Commission agrees that

clarification of the applicability of the

testing and experience requirements is

desirable and that these requirements

should not apply to all principals of

registered firms. The Commission

believes that the proficiency testing and

experience requirements should apply

to persons who are direct participants in

ethics training, whether as presenters of

such programs, preparers of course

materials, or supervisors of such

activities. Consequently, the

Commission believes that unlike the

required representations concerning

fitness, which apply to all principals of

the ethics training provider, the testing

and experience requirements should not

apply solely by virtue of status as a

principal, but, rather, should be

applicable based upon involvement in

such programs as instructors,

developers, supervisors or managers of

such programs.

A person who is currently acting as an

instructor or course preparer for an

ethics training provider whose

application to provide ethics training

has previously been granted by the

Commission will not be subject to the

proficiency testing and minimum

relevant experience standards of Rule

3.34. However, should such an ethics

training provider seek to add a new

instructor or course preparer, such

person would be subject to the

proficiency testing and minimum

relevant experience standards. Persons

acting as instructors or presenters of inperson ethics training or preparing

videotapes or electronic presentations

on behalf of a state-accredited entity

must meet the proficiency and

experience requirements, even if such

persons have previously been operating

under Rule 3.34. However, for existing

ethics training providers operating as of

March 29, 1996 pursuant to the former

Rule 3.34 provision permitting certain

state-accredited entities to provide

ethics training without further

authorization, the effective date for

these rule amendments will be deferred

for 60 days to allow adequate time for

filing the requisite certification and to

take and pass the Series 3 Exam.

III. Related Matters

A. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA),

5 U.S.C. 601–611 (1994), requires that

agencies, in proposing rules, consider

the impact of those rules on small

businesses. The rule amendments

discussed herein will not affect SROs

who wish to provide ethics training but

would affect all others who seek to be

included on a list of authorized ethics

training providers, including entities

accredited to conduct continuing

education programs by state

professional licensing authorities in the

fields of law, finance, accounting or

economics. The impact of this proposal

on persons seeking to become providers

of ethics training should be minimal. At

this time, a one-time processing fee for

the Series 3 Exam offered by the NFA

is $75.00. This should not constitute an

unduly burdensome entry cost for ethics

training providers; the same cost is

incurred by all the attendees at ethics

training as a cost of registration.

Requiring a minimum level of

experience also should not adversely

impact small businesses as this

requirement should not impose

additional financial cost upon such

entities. Further, the ethics training

requirement, reflects a Congressional

mandate to assure that registrants

understand their responsibilities to the

public under the Act. Therefore, these

rule amendments will not have a

significant economic impact on a

substantial number of small entities.

B. Paperwork Reduction Act

The Paperwork Reduction Act of 1980

(PRA), 44 U.S.C. 3501 et seq., imposes

certain requirements on federal agencies

(including the Commission) in

connection with their conducting or

sponsoring any collection of

information as defined by the PRA. In

compliance with the PRA, the

Commission has previously submitted

the proposed rule and its associated

information collection requirements to

the Office of Management and Budget.

While the amendments proposed herein

have no burden, Rule 3.34 is a part of

a group of rules which has the following

burden:

Rules 3.16, 3.32 and 3.34 (3038–0023,

approved June 2, 1993):

Average Burden Hours Per Response:

1.13.

Number of Respondents: 60,980.

Frequency of Response: On Occasion

and Triennially.

Persons wishing to comment on the

information which will be required by

these rules as amended should contact

Jeff Hill, Office of Management and

Budget, Room 3228, NEOB, Washington,

D.C. 20503, (202) 395–7340. Copies of

the information collection submission to

OMB are available from Joe F. Mink,

CFTC Clearance Officer, 1155 21st St.

NW, Washington, DC 20581, (202) 418–

5170.

List of Subjects in 17 CFR Part 3

Registration, Ethics Training.

Accordingly, the Commission,

pursuant to the authority contained in

the Commodity Exchange Act and, in

particular, sections 1a, 4d, 4e, 4g, 4m,

4p, 8a and 17 thereof (7 U.S.C. 1a, 6d,

6e, 6g, 6m, 6p, 12a and 21 (1994),

hereby amends Part 3 of Chapter I of

Title 17 of the Code of Federal

Regulations as follows:

PART 3—REGISTRATION

1. The authority citation for part 3

continues to read as follows:

Authority: 7 U.S.C. la, 2, 4, 4a, 6, 6b, 6d,

6e, 6f, 6g, 6h, 6i, 6k, 6m, 6o, 6p, 8, 9, 9a, 12,

12a, 13b, 13c, 16a, 18, 19, 21 and 23; 5 U.S.C.

552, 552b.

2. Section 3.34 is amended by

removing and reserving paragraph

(b)(3)(ii) and revising the introductory

text of paragraph (b)(3)(iii) and

paragraph (b)(3)(iii)(A)(3) to read as

follows:

§ 3.34 Mandatory ethics training for

registrants.

* * * * *

(b) * * *

(3) * * *

(ii) [Reserved]

(iii) A person included on a list

maintained by a registered futures

association who has presented

satisfactory evidence to the registered

futures association that any individuals,

on behalf of such person, who present

ethics training, prepare an ethics

training videotape or electronic

presentation, or who supervise the

foregoing, have taken and passed the

proficiency testing requirements for an

ethics training provider, as established

by rules of a registered futures

association that have been approved by

the Commission, and possess a

minimum of three years of relevant

experience for an ethics training
20132 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations

provider, as established by rules of a

registered futures association that have

been approved by the Commission, and

who certifies that:

(A) * * *

(3) A pending adjudicatory

proceeding under sections 6(c), 6(d), 6c,

6d, or 9 of the Act, or similar proceeding

under Section 8a of the Act, or §§ 3.55,

3.56, or 3.60; and

* * * * *

Issued in Washington, DC on April 25,

1996, by the Commission.

Jean A. Webb,

Secretary of the Commission.

[FR Doc. 96–10730 Filed 5–3–96; 8:45 am]

BILLING CODE 6351–01–P

DEPARTMENT OF TRANSPORTATION

Coast Guard

33 CFR Part 100

[CGD13–96–012]

RIN 2115–AE46

Special Local Regulations; Annual

Kennewick, Washington, Columbia

Unlimited Hydroplane Races

AGENCY: Coast Guard, DOT.

ACTION: Direct final rule.

SUMMARY: By this direct final rule, the

Coast Guard is permanently amending a

special local regulation governing

general navigation and anchorage in the

vicinity of the Annual Kennewick,

Washington, Columbia Unlimited

Hydroplane Races. Changes made to this

regulation will clarify its annual

effective date and will revise the

boundaries of the regulated area. This

change is intended to better inform the

boating public and to improve the level

of safety at this event.

DATES: This rule is effective on July 22,

1996, unless the Coast Guard receives

written adverse comments or written

notice of intent to submit adverse

comments on or before June 20, 1996.

ADDRESSES: Comments may be mailed to

U.S. Coast Guard Group Portland, 6767

N. Basin Ave., Portland, OR 97217–

3992. The comments and other

materials referenced in this notice will

be available for inspection and copying

at the above address in the St. Helens

Building, Waterways Management

Section. Normal office hours are

between 7 a.m. and 4 p.m., Monday

through Friday, except Federal holidays.

Comments may also be hand-delivered

at this address.

FOR FURTHER INFORMATION CONTACT:

Lieutenant (Junior Grade) C.A. Roskam,

Waterways Management Section, U.S.

Coast Guard MSO/Group Portland, OR

(Telephone: (503) 240–9327).

SUPPLEMENTARY INFORMATION:

Request for Comments

Any comments must identify the

name and address of the person

submitting the comment, specify the

rulemaking docket (CGD13–96–012) and

the specific section of this rule to which

each comment applies, and give the

reason for each specific comment.

Please submit two copies of all

comments and attachments in an

unbound format, no larger than 81⁄2 by

11 inches, suitable for copying and

electronic filing. Persons wanting

acknowledgment of receipt of comments

should enclose stamped, self-addressed

postcards or envelopes.

Regulatory Information

The Coast Guard is publishing a direct

final rule, the procedures of which are

outlined in 33 CFR 1.05–55, because no

adverse comments are anticipated. If no

adverse comments or any written notice

of intent to submit adverse comment are

received within the specified comment

period, this rule will become effective as

stated in the DATES section. In that case,

approximately 30 days prior to the

effective date, the Coast Guard will

publish a notice in the Federal Register

stating that no adverse comment was

received and confirming that this rule

will become effective as scheduled.

However, if the Coast Guard receives

written adverse comment or written

notice of intent to submit adverse

comment, the Coast Guard will publish

a notice in the final rule section of the

Federal Register to announce

withdrawal of all or part of this direct

final rule. If adverse comments apply to

only part of this rule, and it is possible

to remove that part without defeating

the purpose of this rule, the Coast Guard

may adopt as final those parts of this

rule on which no adverse comments

were received. The part of this rule that

was the subject of adverse comment will

be withdrawn. If the Coast Guard

decides to proceed with a rulemaking

following receipt of adverse comments,

a separate Notice of Proposed

Rulemaking (NPRM) will be published a

new opportunity for comment provided.

A comment is considered ‘‘adverse’’ if

the comment explains why this rule

would be inappropriate, including a

challenge to the rule’s underlying

premise or approach, or would be

ineffective or unacceptable without a

change.

Background and Purpose

Each year, during the last week in

July, the Annual Kennewick,

Washington, Columbia Unlimited

Hydroplane Races are held on the

waters of the Columbia River between

the western end of Hydro Island and the

western end of Clover Island. Under

current Coast Guard regulations, 33 CFR

100.1303, a special local regulation is

established each year during the event

to provide for public safety by

controlling the movement of spectators

and participants in the area of the race

course.

The current regulations do not clearly

state the days and times each year when

the become effective. In years past, the

Coast Guard has published a notice of

implementation in the Federal Register

in order to clearly announce the

effective dates and times of the

regulations for a given year. This direct

final rule will permanently amend 33

CFR 100.1303, making the regulation

effective each year on the last Tuesday

through Sunday in July from 8:30 a.m.

local time until the last race is

completed each day at approximately

7:30 p.m. local time.

In recent years, the number of

recreational vessels transiting the area

near the race course and the number of

spectator craft anchoring in the vicinity

of the race course has greatly increased.

The majority of the recreational vessels

drawn to this event congregate in the

vicinity of the upstream end of the race

course. Often, spectator craft anchoring

upstream of the race course break free

of their anchorage and drift downstream

onto the race course, endangering both

themselves and race participants.

To promote the safety of spectators

and participants, the boundaries of the

regulated navigation area created by this

special local regulation are being

revised. This revision will move the

upriver boundary an additional 400

yards upriver. This change is intended

to increase the distance between the

upriver boundary of the regulated area

and the race course, therefore

decreasing the likelihood that spectator

boats will drift downriver into the

course. At the same time the downriver

boundary of the regulated area will be

moved upriver and additional 1,000

yards. This change is intended to

decrease the distance between the

downriver boundary of the regulated

area and the race course, therefore

encouraging spectators to observe the

race from the downriver side where

there is little danger of drifting into the

course.

Discussion of Rules

The Coast Guard is permanently

amending 33 CFR 100.1303—Annual

Kennewick, Washington, Columbia

Unlimited Hydroplane Races.