HR 20 IH
or government securities dealer or
limiting his or her activities as a for-
eign person performing a function
substantially equivalent to any of the
above; or
(II) barring or suspending for a
period not exceeding 12 months his or
her being associated with a broker,
dealer, municipal securities dealer,
government securities broker, govern-
ment securities dealer, or foreign per-
son performing a function substan-
tially equivalent to any of the above;
(ii) an order of the Commodity Fu-
tures Trading Commission denying, sus-
pending, or revoking his or her registration
under the Commodity Exchange Act (7
U.S.C. 1 et seq.); or
(iii) an order by a foreign financial
regulatory authority denying, suspending,
or revoking the person’s authority to en-
gage in transactions in contracts of sale of
a commodity for future delivery or other
instruments traded on or subject to the
HR 20 IH
rules of a contract market, board of trade,
or foreign equivalent thereof;
(C) by his or her conduct while associated
with a broker, dealer, municipal securities deal-
er, government securities broker, or government
securities dealer, or while associated with an en-
tity or person required to be registered under
the Commodity Exchange Act, has been found
to be a cause of any effective suspension, expul-
sion, or order of the character described in sub-
paragraph (A) or (B) of this paragraph, and
in entering such a suspension, expulsion, or
order, the Board, an appropriate regulatory
agency, or any such self-regulatory organization
shall have jurisdiction to find whether or not
any person was a cause thereof;
(D) by his or her conduct while associated
with any broker, dealer, municipal securities
dealer, government securities broker, govern-
ment securities dealer, or any other entity en-
gaged in transactions in securities, or while as-
sociated with an entity engaged in transactions
in contracts of sale of a commodity for future
delivery or other instruments traded on or sub-
ject to the rules of a contract market, board of
HR 20 IH
trade, or foreign equivalent thereof, has been
found to be a cause of any effective suspension,
expulsion, or order by a foreign or international
securities exchange or foreign financial regu-
latory authority empowered by a foreign govern-
ment to administer or enforce its laws relating
to financial transactions as described in sub-
paragraph (A) or (B) of this paragraph;
(E) has associated with him any person
who is known, or in the exercise of reasonable
care should be known, to him to be a person de-
scribed by subparagraph (A), (B), (C), or (D)
of this paragraph; or
(F) has committed or omitted any act enu-
merated in subparagraph (D), (E), or (F) of
section 408(g)(2) of this title, has been con-
victed of any offense specified in subparagraph
(B) of such section or any other felony within
ten years of the date of the filing of an applica-
tion for membership or participation in, or to
become associated with a member of, such na-
tional derivatives association, is enjoined from
any action, conduct, or practice specified in
subparagraph (C) of such section, has willfully
made or caused to be made in any application
HR 20 IH
for membership or participation in, or to be-
come associated with a member of, a national
derivatives association, report required to be
filed with a national derivatives association, or
proceeding before a national derivatives associa-
tion, any statement which was at the time, and
in the light of the circumstances under which it
was made, false or misleading with respect to
any material fact, or has omitted to state in
any such application, report, or proceeding any
material fact which is required to be stated
therein.
(8) APPROPRIATE REGULATORY AGENCY.—The
term ‘‘appropriate regulatory agency’’ includes the
Board, the Securities and Exchange Commission,
the Commodity Futures Trading Commission, the
Comptroller of the Currency, and the Federal De-
posit Insurance Corporation.
SEC. 404. AUTHORITY OF BOARD TO REQUIRE SELF-REGU-
LATORY ORGANIZATION.
(a) AUTHORITY TO REQUIRE SELF-REGULATION.—
The provisions of this title, requiring the establishment of
a self-regulatory system for the supervision of derivatives
dealers, shall be effective at such time (or at such different
HR 20 IH
times for different provisions) as the Board shall specify
in a determination made pursuant to subsection (b).
(b) GROUNDS
FOR DETERMINATION.—The Board
may provide for the taking effect of this title if the Board
determines that the establishment of a self-regulatory sys-
tem for the supervision of derivatives dealers is in the pub-
lic interest. In making such determination, the Board shall
take into account the following factors:
(1) Promotion of fair and orderly markets for
derivative financial instruments.
(2) Control of risks associated with derivative
financial instruments, including market risk, legal
risk, and systemic risk.
(3) Establishment of uniformity and com-
parability in regulatory principles and standards ap-
plied to derivatives dealers.
(4) Improvement in regulatory coordination
among those responsible for supervision of deriva-
tives dealers.
(5) Closure of gaps and loopholes in the super-
vision of derivatives dealers.
(6) Strengthened enforcement of rules and reg-
ulations applicable to derivatives dealers.
(7) Maintenance of high standards and quali-
fications for derivatives dealers.
HR 20 IH
(8) Prevention of fraud and manipulation in the
derivatives markets and protection of investors in
derivative financial instruments.
(9) General improvement in the supervision and
functioning of the markets for derivative financial
instruments.
(c) PROCEDURES TO IMPOSE REQUIREMENTS.—The
Board shall not issue a determination under subsection
(b) except after notice and opportunity for comment.
SEC. 405. REGISTRATION OF SELF-REGULATORY ORGANI-
ZATION.
(a) REGISTRATION.—
(1) FILING.—An association of derivatives deal-
ers may be registered as a national derivatives asso-
ciation pursuant to subsection (b) under the terms
and conditions hereinafter provided in this section
by filing with the Board an application for registra-
tion in such form as the Board, by rule, may pre-
scribe containing the rules of the association and
such other information and documents as the Board,
by rule, may prescribe as necessary or appropriate
in the public interest or for the protection of inves-
tors.
(2) NOTICE OF FILING.—The Board shall, upon
the filing of an application for registration as a na-
HR 20 IH
with just and equitable principles of trade. A na-
tional derivatives association may examine and verify
the qualifications of an applicant to become a person
associated with a member in accordance with proce-
dures established by the rules of the association and
require a natural person associated with a member,
or any class of such natural persons, to be registered
with the association in accordance with procedures
so established.
(2) INFORMATION
AND
RECORDS
ACCESS.—A
national derivatives association may bar any person
from becoming associated with a member if such
person does not agree (A) to supply the association
with such information with respect to its relationship
and dealings with the member as may be specified
in the rules of the association and (B) to permit ex-
amination of its books and records to verify the ac-
curacy of any information so supplied.
SEC. 407. PROCEDURES FOR SELF-REGULATION OF MEM-
BERS.
(a) IN GENERAL.—In any proceeding by a national
derivatives association to determine whether a member or
person associated with a member should be disciplined
(other than a summary proceeding pursuant to subsection
(c) of this section) the association shall bring specific