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(b) GROUNDS FOR DECISIONS ON APPLICATIONS FOR
REGISTRATION.—
(1) IN GENERAL.—The Board shall grant such
registration if it finds that the requirements of this
title and the rules and regulations thereunder with
respect to the applicant are satisfied. The Board
shall deny such registration if it does not make such
finding.
(2) CRITERIA FOR APPROVAL.—An association
of derivatives dealers shall not be registered as a na-
tional derivatives association unless the Board deter-
mines that:
(A) By reason of the number and geo-
graphical distribution of its members and the
scope of their transactions, such association will
be able to carry out the purposes of this sec-
tion.
(B) Such association is so organized and
has the capacity to be able to carry out the pur-
poses of this Act and to comply, and to enforce
compliance by its members and persons associ-
ated with its members, with the provisions of
this Act, and the rules and regulations there-
under, and the rules of the association.
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(C) Subject to the provisions of section
406, the rules of the association provide that
any derivatives dealer may become a member of
such association and any person may become
associated with a member thereof.
(D) The rules of the association assure a
fair representation of its members in the selec-
tion of its directors and administration of its
affairs.
(E) The rules of the association provide for
the equitable allocation of reasonable dues, fees,
and other charges among members and other
persons using any facility or system which the
association operates or controls.
(F) The rules of the association are de-
signed to prevent fraudulent and manipulative
acts and practices, to promote just and equi-
table principles of trade, to foster cooperation
and coordination with persons engaged in regu-
lating, clearing, settling, processing information
with respect to, and facilitating transactions in
derivatives, and, in general, to protect investors
and the public interest.
(G) The rules of the association provide
that its members and persons associated with
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its members shall be appropriately disciplined
for violation of any provision of this Act, the
rules or regulations thereunder, or the rules of
the association, by expulsion, suspension, limi-
tation of activities, functions, and operations,
fine, censure, being suspended or barred from
being associated with a member, or any other
fitting sanction.
(H) The rules of the association provide a
fair procedure for the disciplining of members
and persons associated with members, the de-
nial of membership to any person seeking mem-
bership therein, the barring of any person from
becoming associated with a member thereof,
and the prohibition or limitation by the associa-
tion of any person with respect to access to
services offered by the association or a member
thereof.
(I) The rules of the association do not im-
pose any burden on competition not necessary
or appropriate in furtherance of the purposes of
this Act.
(J) The rules of the association to promote
just and equitable principles of trade.
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(c) WITHDRAWAL FROM REGISTRATION.—A national
derivatives association may, upon such terms and condi-
tions as the Board, by rule, deems necessary or appro-
priate in the public interest or for the protection of inves-
tors, withdraw from registration by filing a written notice
of withdrawal with the Board. If the Board finds that any
national derivatives association is no longer in existence
or has ceased to do business in the capacity specified in
its application for registration, the Board, by order, shall
cancel its registration. Upon the withdrawal of a national
derivatives association from registration or the cancella-
tion, suspension, or revocation of the registration of a na-
tional derivatives association, the registration of any asso-
ciation affiliated therewith shall automatically terminate.
SEC. 406. REGISTRATION OF DERIVATIVES DEALERS WITH
ASSOCIATION.
(a) DENIAL OF MEMBERSHIP.—
(1) STATUTORY
DISQUALIFICATIONS.—A na-
tional derivatives association may, and in cases in
which the Board, by order, directs as necessary or
appropriate in the public interest or for the protec-
tion of investors shall, deny membership to any de-
rivatives dealer, and bar from becoming associated
with a member any person, who is subject to a stat-
utory disqualification. A national derivatives associa-
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tion shall file notice with the Board not less than
thirty days prior to admitting any derivatives dealer
to membership or permitting any person to become
associated with a member, if the association knew,
or in the exercise of reasonable care should have
known, that such derivatives dealer or person was
subject to a statutory disqualification. The notice
shall be in such form and contain such information
as the Board, by rule, may prescribe as necessary or
appropriate in the public interest or for the protec-
tion of investors.
(2) ADDITIONAL
DISQUALIFICATIONS.—A na-
tional derivatives association may deny membership
to, or condition the membership of, a derivatives
dealer if (A) such derivatives dealer does not meet
such standards of financial responsibility or oper-
ational capability or such derivatives dealer or any
natural person associated with such derivatives deal-
er does not meet such standards of training, experi-
ence, and competence as are prescribed by the rules
of the association or (B) such derivatives dealer or
person associated with such derivatives dealer has
engaged and there is a reasonable likelihood he will
again engage in acts or practices inconsistent with
just and equitable principles of trade. A national de-
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rivatives association may examine and verify the
qualifications of an applicant to become a member
and the natural persons associated with such an ap-
plicant in accordance with procedures established by
the rules of the association.
(3) ASSOCIATIONS BASED ON BUSINESS TYPE
PERMITTED.—A national derivatives association may
deny membership to a derivatives dealer not engaged
in a type of business in which the rules of the asso-
ciation require members to be engaged, except that
no national derivatives association may deny mem-
bership to a derivatives dealer by reason of the
amount of such type of business done by such de-
rivatives dealer or the other types of business in
which he is engaged.
(b) DENIAL OF ASSOCIATION.—
(1) ASSOCIATION WITH MEMBERS.—A national
derivatives association may bar a natural person
from becoming associated with a member or condi-
tion the association of a natural person with a mem-
ber if such natural person (A) does not meet such
standards of training, experience, and competence as
are prescribed by the rules of the association or (B)
has engaged and there is a reasonable likelihood he
will again engage in acts or practices inconsistent