Document ID: SEC-2007-0026-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Futures Association
Posted Date: 2007-01-08T05:00Z

[Federal Register: January 8, 2007 (Volume 72, Number 4)]
[Notices]               
[Page 813-814]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08ja07-98]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54979; File No. SR-NFA-2006-05]

 
Self-Regulatory Organization; National Futures Association; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
and Amendment No. 1 Thereto Relating to the Interpretive Notice 
Regarding Automated Order-Routing Systems

 December 20, 2006.
    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 December 4, 2006, 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. On December 14, 2006, 
NFA submitted an amendment to the proposed rule change.\3\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons. NFA also has 
filed the proposed rule change with the Commodity Futures Trading 
Commission (``CFTC'').
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    \1\ 15 U.S.C. 78s(b)(7).
    \21\ 17 CFR 240.19b-7.
    \3\ See facsimile from Thomas W. Sexton, General Counsel, NFA, 
to Elizabeth King, Associate Director, Division of Market 
Regulation, Commission, dated December 14, 2006 (``Amendment No. 
1''). In Amendment No. 1, NFA replaced Exhibit 4, which was 
incomplete in the original filing.
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    NFA, on November 30, 2006, submitted the proposed rule change to 
the CFTC for approval and invoked the ``ten-day'' provision of Section 
17(j) of the Commodity Exchange Act (``CEA'').\4\ By letter dated 
December 12, 2006, the CFTC notified NFA of its determination not to 
review the proposed rule change.\5\
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    \4\ 7 U.S.C. 21(j).
    \5\ See Letter from Lawrence B. Patent, Deputy Director, CFTC, 
to Thomas W. Sexton, General Counsel, NFA (December 12, 2006) 
(``Letter'').
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I. Self-Regulatory Organization's Description of the Proposed Rule 
Change

    Section 15A(k) of the Act \6\ 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.\7\ NFA's 
interpretive notice entitled ``Compliance Rule 2-9: Supervision of the 
Use of Automated Order-Routing Systems'' (``Interpretive Notice'') 
applies to all futures commission merchant and introducing broker 
Members, including those who are registered as security futures brokers 
or dealers under Section 15(b)(11).\8\
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    \6\ 15 U.S.C. 78o-3(k).
    \7\ 15 U.S.C. 78o(b)(11).
    \8\ Id.
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    In 2002, NFA adopted the Interpretive Notice, which referred 
Members to an AICPA/CICA WebTrustSM/TM Self-Assessment 
Questionnaire for Availability and stated that they could download the 
questionnaire from NFA's Web site. The questionnaire is not available 
on NFA's Web site. Therefore, the AORS Interpretive Notice is amended 
to delete the paragraph referencing the WebTrustSM/TM Self-
Assessment Questionnaire for Availability.

[[Page 814]]

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 2002, NFA adopted the Interpretative Notice, which referred 
Members to an AICPA/CICA WebTrustSM/TM Self-Assessment 
Questionnaire for Availability and stated that they could download the 
questionnaire from NFA's Web site. At the time the Interpretative 
Notice was adopted, NFA knew that the questionnaire was copyrighted but 
was in discussions with AICPA/CICA and believed that it would give NFA 
permission to use the material in this manner.
    AICPA/CICA subsequently informed NFA that it had decided not to 
allow NFA to use the questionnaire as described in the Interpretive 
Notice. Although the questionnaire is not available on NFA's Web site, 
NFA never removed the reference in the Interpretative Notice. 
Therefore, the Interpretive Notice is amended to delete the paragraph 
referencing the WebTrustSM/TM Self-Assessment Questionnaire 
for Availability.
2. Statutory Basis
    The rule change is authorized by, and consistent with, Section 
15A(k) of the Act.\9\
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    \9\ 15 U.S.C. 78o-3(k).
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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 CEA.

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 November 30, 2006, submitted the proposed rule change to 
the CFTC for approval and invoked the ``ten-day'' provision of Section 
17(j) of the CEA.\10\ By letter dated December 12, 2006, the CFTC 
notified NFA of its determination not to review the proposed rule 
change.\11\
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    \10\ 7 U.S.C. 21(j).
    \11\ See Letter, supra note 5.
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    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.\12\
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    \12\ 15 U.S.C. 78s(b)(1).
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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 

Filed No. SR-NFA-2006-05 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-2006-05. 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 the 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-2006-05 and should be submitted on or before January 
29, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(75).
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Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E6-22657 Filed 1-5-07; 8:45 am]

BILLING CODE 8011-01-P