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17 CFR 1.64 - Composition of various self-regulatory organization governing boards and major disciplinary committees. | US Law | LII / Legal Information Institute
CFR › Title 17 › Chapter I › Part 1 › Section 1.64 17 CFR 1.64 - Composition of various self-regulatory organization governing boards and major disciplinary committees.
§ 1.64
Composition of various self-regulatory organization governing boards and major disciplinary committees.
Self-regulatory organization means “self-regulatory organization” as defined in § 1.3(ee), not including a “clearing organization” as defined in § 1.3(d).
Major disciplinary committee means a committee of persons who are authorized by a self-regulatory organization to conduct disciplinary hearings, to settle disciplinary charges, to impose disciplinary sanctions or to hear appeals thereof in cases involving any violation of the rules of the self-regulatory organization except those which:
Are related to:
Decorum or attire,
Financial requirements, or
Reporting or recordkeeping; and,
Do not involve fraud, deceit or conversion.
Regular voting member of a governing board means any person who is eligible to vote routinely on matters being considered by the board and excludes those members who are only eligible to vote in the case of a tie vote by the board.
Membership interest (i) In the case of a contract market, each of the following will be considered a different membership interest:
Floor brokers,
Floor traders,
Producers, consumers, processors, distributors, and merchandisers of commodities traded on the particular contract market,
Participants in a variety of pits or principal groups of commodities traded on the particular contract market; and,
Other market users or participants; except that with respect to paragraph (c)(2) of this section, a contract market may define membership interests according to the different pits or principal groups of commodities traded on the contract market.
In the case of a registered futures association, each of the following will be considered a different membership interest:
Introducing brokers,
Commodity pool operators,
Commodity trading advisors; and,
Associated persons, except that under paragraph (c)(3) of this section an associated person will be deemed to represent the same membership interest as its sponsor.
Each self-regulatory organization must maintain in effect standards and procedures with respect to its governing board which have been submitted to the Commission pursuant to section 5a(a)(12)(A) of the Act and § 1.41 or, when applicable to a registered futures association, pursuant to section 17(j) of the Act, that ensure:
That twenty percent or more of the regular voting members of the board are persons who:
Are knowledgeable of futures trading or financial regulation or are otherwise capable of contributing to governing board deliberations; and,
(A) Are not members of the self-regulatory organization,
Are not currently salaried employees of the self-regulatory organization,
Are not primarily performing services for the self-regulatory organization in a capacity other than as a member of the self-regulatory organization's governing board, or
Are not officers, principals or employees of a firm which holds a membership at the self-regulatory organization either in its own name or through an employee on behalf of the firm;
In the case of a contract market, that ten percent or more of the regular voting members of the governing board be comprised where applicable of persons representing farmers, producers, merchants or exporters of principal commodities underlying a commodity futures or commodity option traded on the contract market; and
That the board's membership includes a diversity of membership interests. The self-regulatory organization must be able to demonstrate that the board membership fairly represents the diversity of interests at such self-regulatory organization and is otherwise consistent with this regulation's composition requirements;
Each self-regulatory organization must maintain in effect rules with respect to its major disciplinary committees which have been submitted to the Commission pursuant to section 5a(a)(12)(A) of the Act and § 1.41 or, when applicable to a registered futures association, pursuant to section 17(j) of the Act, that ensure:
That at least one member of each major disciplinary committee or hearing panel thereof be a person who is not a member of the self-regulatory organization whenever such committee or panel is acting with respect to a disciplinary action in which:
The subject of the action is a member of the self-regulatory organization's:
Governing board, or
Major disciplinary committee; or,
Any of the charged, alleged or adjudicated contract market rule violations involve:
Manipulation or attempted manipulation of the price of a commodity, a futures contract or an option on a futures contract, or
Conduct which directly results in financial harm to a non-member of the contract market;
In the case of a contract market, that more than fifty percent of each major disciplinary committee or hearing panel thereof include persons representing membership interests other than that of the subject of the disciplinary proceeding being considered;
In the case of a registered futures association, that each major disciplinary committee or hearing panel thereof include persons representing membership interests other than that of the subject of the disciplinary proceeding being considered; and,
That each major disciplinary committee or hearing panel thereof include sufficient different membership interests so as to ensure fairness and to prevent special treatment or preference for any person in the conduct of a committee's or the panel's responsibilities.
Each self-regulatory organization must submit to the Commission within thirty days after each governing board election a list of the governing board's members, the membership interests they represent and how the composition of the governing board otherwise meets the requirements of § 1.64(b) and the self-regulatory organization's implementing standards and procedures.
[58 FR 37654, July 13, 1993; 59 FR 5082, Feb. 3, 1994]
§ 1.64 Composition of various self-regulatory organization governing boards and major disciplinary committees.
(i) Are related to:
(A) Decorum or attire,
(B) Financial requirements, or
(C) Reporting or recordkeeping; and,
(ii) Do not involve fraud, deceit or conversion.
(i) In the case of a contract market, each of the following will be considered a different membership interest:
(A) Floor brokers,
(B) Floor traders,
(C) Futures commission merchants,
(D) Producers, consumers, processors, distributors, and merchandisers of commodities traded on the particular contract market,
(E) Participants in a variety of pits or principal groups of commodities traded on the particular contract market; and,
(F) Other market users or participants; except that with respect to paragraph (c)(2) of this section, a contract market may define membership interests according to the different pits or principal groups of commodities traded on the contract market.
(ii) In the case of a registered futures association, each of the following will be considered a different membership interest:
(A) Futures commission merchants,
(B) Introducing brokers,
(E) Associated persons, except that under paragraph (c)(3) of this section an associated person will be deemed to represent the same membership interest as its sponsor.
(b) Each self-regulatory organization must maintain in effect standards and procedures with respect to its governing board which have been submitted to the Commission pursuant to section 5a(a)(12)(A) of the Act and § 1.41 or, when applicable to a registered futures association, pursuant to section 17(j) of the Act, that ensure:
(1) That twenty percent or more of the regular voting members of the board are persons who:
(i) Are knowledgeable of futures trading or financial regulation or are otherwise capable of contributing to governing board deliberations; and,
(B) Are not currently salaried employees of the self-regulatory organization,
(C) Are not primarily performing services for the self-regulatory organization in a capacity other than as a member of the self-regulatory organization's governing board, or
(D) Are not officers, principals or employees of a firm which holds a membership at the self-regulatory organization either in its own name or through an employee on behalf of the firm;
(2) In the case of a contract market, that ten percent or more of the regular voting members of the governing board be comprised where applicable of persons representing farmers, producers, merchants or exporters of principal commodities underlying a commodity futures or commodity option traded on the contract market; and
(3) That the board's membership includes a diversity of membership interests. The self-regulatory organization must be able to demonstrate that the board membership fairly represents the diversity of interests at such self-regulatory organization and is otherwise consistent with this regulation's composition requirements;
(c) Each self-regulatory organization must maintain in effect rules with respect to its major disciplinary committees which have been submitted to the Commission pursuant to section 5a(a)(12)(A) of the Act and § 1.41 or, when applicable to a registered futures association, pursuant to section 17(j) of the Act, that ensure:
(1) That at least one member of each major disciplinary committee or hearing panel thereof be a person who is not a member of the self-regulatory organization whenever such committee or panel is acting with respect to a disciplinary action in which:
(i) The subject of the action is a member of the self-regulatory organization's:
(A) Governing board, or
(B) Major disciplinary committee; or,
(ii) Any of the charged, alleged or adjudicated contract market rule violations involve:
(A) Manipulation or attempted manipulation of the price of a commodity, a futures contract or an option on a futures contract, or
(B) Conduct which directly results in financial harm to a non-member of the contract market;
(2) In the case of a contract market, that more than fifty percent of each major disciplinary committee or hearing panel thereof include persons representing membership interests other than that of the subject of the disciplinary proceeding being considered;
(3) In the case of a registered futures association, that each major disciplinary committee or hearing panel thereof include persons representing membership interests other than that of the subject of the disciplinary proceeding being considered; and,
(4) That each major disciplinary committee or hearing panel thereof include sufficient different membership interests so as to ensure fairness and to prevent special treatment or preference for any person in the conduct of a committee's or the panel's responsibilities.
(d) Each self-regulatory organization must submit to the Commission within thirty days after each governing board election a list of the governing board's members, the membership interests they represent and how the composition of the governing board otherwise meets the requirements of § 1.64(b) and the self-regulatory organization's implementing standards and procedures.