[Federal Register Volume 64, Number 103 (Friday, May 28, 1999)]
[Rules and Regulations]
[Pages 28910-28915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-13573]
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 30
Representations and Disclosures Required by Certain IBs, CPOs and
CTAs
AGENCY: Commodity Futures Trading Commission.
ACTION: Final rules.
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SUMMARY: The Commodity Futures Trading Commission (``Commission'') is
adopting amendments to Commission Rules 30.5 and 30.6. The amendments
will revise the procedure by which foreign persons may obtain an
exemption from registration under Rule 30.5 and will require foreign
and domestic commodity pool operators and commodity trading advisors to
provide U.S. retail customers with certain disclosures, regardless of
whether they are trading on U.S. or foreign markets.
EFFECTIVE DATE: June 28, 1999.
FOR FURTHER INFORMATION CONTACT: Laurie Plessala Duperier, Special
Counsel, or Andrew Chapin, Staff Attorney, Division of Trading and
Markets, Commodity Futures Trading Commission, 1155 21st Street, N.W.,
Washington, D.C. 20581. Telephone: (202) 418-5430.
[[Page 28911]]
SUPPLEMENTARY INFORMATION:
I. Proposed Rules
On January 11, 1999, the Commission published amendments to Part 30
of its regulations. Part 30 governs the solicitation and sale of
foreign futures \1\ and foreign option \2\ contracts to foreign futures
or foreign options customers.\3\ The activities which are subject to
regulation and require registration under Part 30 include the
solicitation or acceptance of funds, or the sale of stock or other
forms of securities, for the purpose of trading any foreign futures or
foreign option contract, as well as soliciting or entering into an
agreement to direct a U.S. customer account or to guide a U.S. customer
account by means of a systematic program that recommends specific
transactions in foreign futures or options.\4\
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\1\ ``Foreign futures'' as defined in Part 30 means ``any
contract for the purchase or sale of any commodity for future
delivery made, or to be made, on or subject to the rules of any
foreign board of trade.'' Commission Rule 30.1(a) Commission rules
referred to herein are found at 17 CFR Ch. I (1998).
\2\ ``Foreign option'' as defined in Part 30 means ``any
transaction or agreement which is or is held out to be of the
character of, or is commonly known to the trade, an `option',
`privilege', `indemnity', `bid', `put', `call', `advance guaranty',
or `decline guaranty', made or to be made on or subject to the rules
of any foreign board of trade.'' Commission Rules 30.1(b).
\3\ Pursuant to Commission Rule 30.1(c), ``Foreign futures or
foreign options customers'' means ``any person located in the United
States, its territories or possessions who trades in foreign futures
or foreign options: Provided, That an owner or holder of a
proprietary account as defined in paragraph (y) of Sec. 1.3 of this
chapter shall not be deemed to be a foreign futures or foreign
options customer within the meaning of Secs. 30.6 and 307 of this
part.
\4\ See Commission Rule 30.4.
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Commission Rule 30.5 provides an exemption from the registration
requirement for any person located outside of the United States, its
territories or possessions who is required to be registered with the
Commission under Part 30 of the regulations, other than a person
required to be registered as a futures commission merchant (``FCM'')--
i.e., an introducing broker (``IB''), commodity pool operator (``CPO'')
or commodity trading advisor (``CTA''). All persons who are registered
or required to be registered under Rule 30.4, including persons who are
exempt pursuant to Rule 30.5, must comply with the disclosure
requirements of Rule 30.6.\5\
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\5\ Persons claiming exemption pursuant to Rule 30.5 must also
comply with Commission Rules 1.37 and 1.57. Rule 30.5(c).
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A. Rule 30.5
An exemption from registration pursuant to Rule 30.5 currently is
effective when a foreign IB, CPO or CTA enters into a written agency
agreement with any of the persons or entities provided for by the rule
and files the agreement with the National Futures Association
(``NFA''). CPOs and CTAs who have obtained a Rule 30.5 exemption were
requested by Commission staff to make certain representations,
including the representation that they would solicit only qualified
eligible participants (``QEPs'') and qualified eligible clients
(``QECs''), as those terms are defined in Rule 4.7. Pursuant to the
Commission's September 11, 1997 delegation order to the NFA,\6\ NFA has
continued to request these representations from Rule 30.5 exempt
persons. Thus, most Rule 30.5 exempt persons have solicited only QEPs
and QECs, not U.S. ``retail customers,'' defined for the purpose of
this Federal Register Release as U.S. customers who do not meet the
definition of a QEP or QEC.
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\6\ 62 FR 47792 (September 11, 1997).
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As described below, amended Rule 30.5 will change the procedure by
which foreign IBs, CPOs and CTAs can obtain a Rule 30.5 exemption to
ensure that exempt persons meet basic fitness requirements and consent
to the jurisdiction of the Commission and United States federal and
state courts with respect to activities governed by Part 30 of the
regulations.
B. Rule 30.6
Rule 30.6 sets forth the disclosure requirements that apply to
domestic and foreign IBs, CPOs and CTAs who are registered or required
to be registered under Part 30 or who have a Rule 30.5 exemption. As
currently written, Rule 30.6 does not distinguish between QEPs and
QECs, who are sophisticated customers, and U.S. retail customers. To
ensure that adequate risk disclosures are provided in U.S. retail
customers and pool participants trading in foreign futures and option
contracts, the Commission proposed to amend Rule 30.6(b)(2) to provide
that CPOs and CTAs registered or required to be registered under Rule
30.4 or exempt from registration under Rule 30.5 must provide each
prospective participant or prospective client with the Disclosure
Document required by Rule 4.21 for CPOs and Rule 4.31 for CTAs,
including the disclosure statement required by Rules 4.24 and 4.34,
respectively, prior to engaging in the activities described in Rule
30.4. The proposed rule therefore provides that U.S. retail customers
shall receive similar disclosures whether they trade on domestic or
foreign markets.
As discussed below, the Commission also proposed that the required
disclosures by CPOs and CTAs to QEPs and QECs be decreased to recognize
the sophistication of these persons. The Commission proposed to retain
the disclosure language contained in Rule 4.24(b) and Rule 4.34(b)(2),
however, to ensure that QEPs and QECs were apprised that there are
different risks of trading foreign futures or foreign options as
compared with U.S. futures and options.
II. Final Rules
The Commission received three comment letters on the proposed
rulemaking: one from a U.S. commodity exchange; one from NFA; and one
from a bar association. The commenters all supported the Commission's
proposing the rule amendments. They commended the Commission for
expanding Rule 30.5 to allow foreign exempt persons to solicit U.S.
retail customers, not just QEPs and QECs. In addition, commenters were
supportive of the requirement that all CPOs and CTAs, both foreign and
domestic, provide certain disclosures to U.S. retail customers,
regardless of whether those customers are trading on domestic or
foreign markets. As one commenter stated, ``[t]his requirement will
level the playing field for foreign and domestic markets with respect
to the amount of disclosure that must be provided to U.S. retail
customers.''
A. Rule 30.5 Petitions
Proposed Rule 30.5 is being adopted by the Commission with only
minor revisions. It permits a foreign IB, CPO or CTA to solicit any
U.S. customer--not just QEPs and QECs--after filing a petition that
establishes that it is qualified for the exemption. A petitioner is
required to show affirmatively that it qualifies for an exemption by
representing that (i) the petitioner is located outside of the United
States, its territories or possessions; (ii) the petitioner does not
act as a CTA, CPO or IB, respectively, in connection with trading on or
subject to the rules of a designated contract market in the United
States by, for, on behalf of, or for the benefit of any U.S. customer,
client or pool;\7\ and (iii) petitioner irrevocably consents to
jurisdiction in the United States with respect to transactions subject
to Part 30 of the regulations promulgated under the Commodity
[[Page 28912]]
Exchange Act (``CEA'').\8\ To ensure the fitness of persons who conduct
business with U.S. customers, the petitioner also must represent that
it would not be statutorily disqualified from registration under
Section 8a(2) or 8a(3) of the Act and has not been and would not be
disqualified from registration or licensing by the home country
regulator. If the petitioner or its activities are regulated by any
government entity or self-regulatory organization, it must provide the
name and address of such government entity or self-regulatory
organization. In addition, the petitioner must specify whether it is
applying for an exemption based on activities as an IB, CPO or CTA and
provide the name, address and telephone number of its main business
location.\9\
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\7\ This language differs slightly from the language of the
proposed rule. The proposed rule required petitioners to represent
that they would not ``trade'' on U.S. markets on behalf of U.S.
foreign futures and option customers. The revised language makes
clear that Rule 30.5 exempt persons may not engage in any of the
activities of an IB, CPO or CTA on U.S. contract markets with U.S.
customers, clients or pools.
\8\ These representations are consistent with the
representations required of foreign firms claiming exemption from
registration pursuant to Commission Rule 30.10. (See Commission Rule
30.10, Appendix A--Part 30, Interpretative Statement with Respect to
the Commission's Exemptive Authority under Sec. 30.10 of Its Rules).
\9\ The new rule also clarifies that a Rule 30.5 exempt person
must designate either a U.S. futures commission merchant through
which business is done, a registered futures association or any
other person located in the United States in the business of
providing services as an agent for service of process to act as the
agent for service of process in accordance with Rule 30.5(a).
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The amended rule also states that persons exempt under Rule 30.5
must use either a U.S. registered FCM or a foreign broker that has
received confirmation of Rule 30.10 relief to carry accounts for, on
behalf of or for the benefit of foreign futures or foreign options
customers, a position previously set forth by Commission staff in
1989.\10\ For example, a Rule 30.5 exempt commodity pool operator may
not operate a pool with U.S. foreign futures and options customers as
participants unless the foreign futures and option trades entered into
on behalf of the pool are intermediated on a fully disclosed basis by a
U.S. registered FCM or a Rule 30.10 exempt foreign broker.
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\10\ This rule codifies the position stated in CFTC
Interpretative Letter No. 89-3 [1987-1990 Transfer Binder] Comm.
Fut. L. Rep. (CCH) para. 24,416 (April 4, 1989). The text of the
introductory language in final Rule 30.5 was modified from the
language in the proposed rule to more closely parallel the language
of the interpretative letter.
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Two commenters questioned why a Rule 30.5 petition would not
continue to be self-effectuating, but rather must be approved by NFA.
One of these commenters also requested clarification regarding what
type of review NFA would make, the time frame in which the review would
be conducted, and whether NFA would notify the petitioner of the
disposition of its application.
NFA currently reviews all petitions for confirmation of Rule 30.10
relief for compeleteness and conformity with the requisite
representations and then notifies the foreign firm whether its petition
is approved, denied, or is deficient in any way. The NFA review
performs a vital function by ensuring that the petitioner firm has
consented to U.S. jurisdiction and made other required representations
prior to the firm's soliciting U.S. customers for trading on foreign
markets. Since September 1997 when the Commission delegated this
responsibility to NFA, NFA has carried out its functions in this regard
thoroughly and expeditiously. In those cases where a Rule 30.10 firm
has made all of the appropriate representations, NFA usually confirms
relief to the firm within 30 days.
Proposed Rule 30.5 sets forth a parallel procedure for Rule 30.5
exemptions. NFA will review the Rule 30.5 petition to ensure that all
of the representations required by the rule have been made and to
verify that a proper agreement with a U.S. agent for service of process
is on file with NFA. NFA's role will be solely to verify that the
petitioner has complied with all aspects of the rule. If the petition
is deficient, NFA will notify the petition of the deficiency. If the
petition is complete, NFA will confirm to the petitioner that it has a
Rule 30.5 exemption. As is the case with Rule 30.10 exemptions, the
Commission believes that it is important for NFA to verify that a Rule
30.5 petitioner has made all of the necessary representations and
consents prior to engaging in any of the activities described in Rule
30.4. Accordingly, the Commission does not believe that the Rule 30.5
petition should be self-effectuating and has retained in the final rule
the requirement that NFA review Rule 30.5 petitions.
The Commission requested comment regarding who should sign a Rule
30.5 petition on behalf of foreign entities that may not fit within
traditional U.S. legal structures. One commenter proposed that the rule
allow ``a natural person involved in the management of the petitioner
who is legally authorized under local law to make binding agreements
and representations for the applicant'' to sign the petition. The
Commission has incorporated similar language into Rule 30.5(e)(7).
B. Rule 30.6 Disclosures
As an initial matter, the Commission wishes to reiterate that the
disclosure requirements in Rule 30.6(b), both currently and as
amended,\11\ apply to both domestic and foreign CPOs and CTAs, whether
registered with the Commission or exempt pursuant to Rule 30.5, that
operate pools or advise clients that trade in foreign futures and
options. Thus, CPOs and CTAs located in the United States with foreign
futures and options customers must comply with the requirements of Part
4 and the requirements of Part 30.
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\11\ The text of Rule 30.6(b)(1) and (b)(2) was modified in the
final rule to refer back to Rule 30.4 in describing to whom the
disclosure requirements apply, rather than reiterating the
registration requirements again in the text of Rule 30.6. The change
is technical and non-substantive.
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Amended Rule 30.6(b)(2) requires domestic and foreign CPOs and CTAs
to provide U.S. foreign futures and options customers that are not QEPs
or QECs with a disclosure document in accordance with Rule 4.21 for
CPOs and 4.24 for CTAs.\12\ These Disclosure Documents should be filed
with NFA in accordance with Rules 4.26 and 4.36 and in compliance with
the order issued by the Commission in conjunction with this Federal
Register release, which delegates to NFA the authority to review
disclosures documents filed pursuant to Rule 30.6.
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\12\ The disclosure requirements for IBs that solicit or accept
orders from U.S. foreign futures and option customers are set forth
in Rule 30.6(a), which is not being amended in this rulemaking.
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With regard to QEPs and QECs, CPOs and CTAs registered or required
to be registered or exempt pursuant to Rule 30.5 must provide to QEPs
and QECs that trade on domestic markets the statements set forth in
Rule 4.7(a)(2)(i)(A) and 4.7(b)(2)(i)(A), respectively, which disclose
generally that the materials being provided to the participant or
client are not required to be and have not been reviewed by the
Commission (``the general statement''). In addition, Rule 30.6
currently requires domestic and foreign CPOs and CTAs to provide a
lengthy disclosure statement to all U.S. foreign futures and options
customers, including QEPs and QECs, in accordance with Rule 4.24(b) and
4.34(b). To better harmonize the requirements of Part 4 and Part 30,
Rule 30.6(b)(1) will require both registered and Rule 30.5 exempt CPOs
and CTAs to provide the general statement to QEPs and QECs trading
foreign futures and options. It also will pare down the current
disclosure statement requirement by specifying that CPOs and CTAs must
provide QEPs and QECs with the specific disclosure regarding the risks
of trading in foreign futures and options in Rules 4.24(b)(2) and
4.34(b)(2), rather than the entire
[[Page 28913]]
disclosure statement contained in Rules 4.24(b) and 4.34(b).
Even though Rule 30.6(b)(1) as proposed would lessen the current
disclosure requirement with regard to QEPs and QECs, two commenters
expressed the view that, since QEPs and QECs are sophisticated
investors, the Commission should not require any disclosure other than
the general statement required by Rules 4.7(a)(2)(i)(A) and
4.7(b)(2)(i)(A). While QEPs and QECs may be sophisticated investors for
purposes of Rule 4.7, they are not necessarily sophisticated and/or
knowledgeable regarding the different types of risks present when
trading on foreign boards of trade. As the Commission recently learned
in the wake of the collapse of Griffin Trading Company, many Griffin
customers, including CTAs and other sophisticated investors, claimed
not to be fully aware of the risks that they undertook when trading on
foreign markets. In particular, certain ``sophisticated'' clients did
not appear to understand that the Commission had no legal ability to
compel actions on foreign exchanges or to compel actions by foreign
persons who held U.S. foreign futures and options customers' funds.
Recent Commission experience confirms that it is necessary to
require disclosure regarding the risks of trading on foreign boards of
trade to QEPs and QECs, as well as to U.S. retail customers. Moreover,
the Commission notes that, since the required disclosure is only three
sentences long and is less disclosure than that which is currently
required, it does not impose a significant burden on CPOs and CTAs.
Therefore, after consideration of the comments, the Commission has
decided to retain the requirement in Rule 30.6(b)(1) that CPOs and CTAs
provide a risk disclosure statement to QEPs and QECs regarding the risk
of trading in foreign futures and options.
C. Effect of the Amendments
The amendments to Rules 30.5 and 30.6 will apply to all regulated
activities with all new foreign futures and foreign options customers
as of the effective date of the new rules. An IB, CPO or CTA currently
exempt under Rule 30.5 will not be required to file a new Rule 30.5
petition for exemption. However, all CPOs and CTAs will be required to
provide all new prospective poll participants or new prospective
customers with the disclosures required by Rule 30.6.
III. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-611,
requires that agencies, in adopting rules, consider the impact of those
rules on small businesses.
The Commission has previously established certain definitions of
``small entities'' to be used by the Commission in evaluating the
impact of its rules on such entities in accordance with the RFA.\13\
The Commission previously has determined that registered CPOs are not
small entities for the purpose of the RFA.\14\ And although IBs might
be small entities for purposes of the rule, the disclosure required to
IBs is not changed with this rulemaking, and thus the new rules will
not have any impact on domestic IBs.
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\13\ 47 FR 18618-18621 (April 30, 1982).
\14\ 47 FR 18619-18620.
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With respect to CTAs, the Commission has stated that it would
evaluate within the context of a particular rule proposal whether all
or some affected CTAs would be considered to be small entities and, if
so, the economic impact on them of any rule.\15\ In this regard, the
Commission notes that the regulations with respect to CTAs' activities
relating to foreign futures and foreign option contracts are
essentially the same as those contained in Part 4 governing CTAs in
connection with their activities relating to futures contracts and
options traded or executed on or subject to the rules of a contract
market designated by the Commission. The Commission has previously
determined that the disclosure requirements in Part 4 governing CTAs
will have a significant economic impact on a substantial number of
small entities.\16\ In fact, Rule 4.31, which governs the disclosure
requirements for CTAs and to which Rule 30.6(b) refers, was revised in
1995 for the purpose of reducing the number of disclosures required and
focusing on succinct disclosure of material information. The Commission
determined that the revised rule reduced rather than increased the
requirements of former Rule 4.31. Therefore, the Chairperson, on behalf
of the Commission, hereby certifies, pursuant to 5 U.S.C. 605(b), that
these regulations will not have a significant economic impact on a
substantial number of small entities.
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\15 \47 FR 18618-18620.
\16 \See 60 FR 38146, 38181 (July 25, 1995) and 48 FR 35248
(August 3, 1983).
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B. Paperwork Reduction Act
When publishing final rules, the Paperwork Reduction Act of 1995
\17\ (``Act'') imposes certain requirements on federal agencies
(including the Commission) in connection with their conducting or
sponsoring any collection of information as defined by the Act. In
compliance with the Act, these final rules and/or their associated
information collection requirement inform the public of:
\17\ Pub. L. 104-13 (May 13, 1995).
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(1) The reasons the information is planned to be and/or has been
collected: (2) the way such information is planned to be and/or has
been used to further the proper performance of the functions of the
agency; (3) an estimate, to the extent practicable, of the average
burden of the collection (together with a request that the public
direct to the agency any comments concerning the accuracy of this
burden estimate and any suggestions for reducing this burden); (4)
whether responses to the collection of information are voluntary,
required to obtain or retain a benefit or mandatory; (5) the nature
and extent of confidentiality to be provided, if any; and (6) that
fact that an agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless it
displays a current valid OMB control number.
The Commission previously submitted these rules in proposed form
and their associated information collection requirement to the Office
of Management and Budget. The Office of Management and Budget approved
the collection of information associated with these rules and assigned
OMB control number 3038-0023 to these rules. The burden associated with
this entire collection of which these proposed rules are a part, is as
follows:
Average burden hours per response: 16.13.
Number of respondents: 73,435.
Frequency of response: On occasion.
The burden associated with these specific proposed rules is as
follows:
Rule 30.5--
Average burden hours per response: 100.
Number of Respondents: 65.
Frequency of response: On occasion.
Rule 30.6(b)(1)--
Average burden hours per response: .5.
Number of Respondents: 40.
Frequency of response: On occasion.
Rule 30.6(b)(2)--
Average burden hours per response: 3.0.
Number of Respondents: 5.
Frequency of response: On occasion.
Persons wishing to comment on the information which is required by
these final rules should contact the Desk
[[Page 28914]]
Officer, CFTC, Office of Management and Budget, Room 10202, NEOB,
Washington, DC 20503, (202) 395-7340. Copies of the information
collection submission to OMB are available from the CFTC Clearance
Officer, 1155 21st Street, NW, Washington, DC 20581, (202) 418-5160.
List of Subjects in 17 CFR Part 30
Definitions, Foreign futures, Foreign options, Reporting and
recordkeeping requirements, Registration requirements, Risk disclosure
statements, Treatment of foreign futures and options secured amount,
Customer protection.
In consideration of the foregoing, and pursuant to the authority
contained in the Commodity Exchange Act and, in particular, sections
2(a)(1), 4(b), 4c and 8a thereof, 7 U.S.C. 2, 6(b), 6c and 12a (1998),
and pursuant to the authority contained in 5 U.S.C. 552 (1998), the
Commission hereby amends Chapter I of Title 17 of the Code of Federal
Regulations as follows:
PART 30--FOREIGN FUTURES AND OPTIONS TRANSACTIONS
1. The authority citation for part 30 continues to read as follows:
Authority: 7 U.S.C. 1a, 2, 4, 6, 6c and 12a, unless otherwise
noted.
2. Section 30.5 is amended by adding introductory text, revising
paragraph (a) and adding paragraph (e) to read as follows:
Sec. 30.5 Alternative procedures for non-domestic persons.
Any person not located in the United States, its territories or
possessions, who is required in accordance with the provisions of this
part to be registered with the Commission, other than a person required
to be registered as a futures commission merchant, may apply for an
exemption from registration under this part by filing a petition for
exemption with the National Futures Association and designating an
agent for service of process, as specified below. A person who receives
confirmation of an exemption pursuant to this section must engage in
all transactions subject to regulation under Part 30 through a
registered futures commission merchant or a foreign broker who has
received confirmation of an exemption pursuant to Sec. 30.10 in
accordance with the provisions of Sec. 30.3(b).
(a) Agent for service of process. Any person who seeks exemption
from registration under this part shall enter into a written agency
agreement with the futures commission merchant located in the United
States through which business is done, with any registered futures
association or any other person located in the United States in the
business of providing services as an agent for service of process,
pursuant to which agreement such futures commission merchant or other
person is authorized to serve as the agent of such person for purposes
of accepting delivery and service of communications issued by or on
behalf of the Commission, U.S. Department of Justice, any self-
regulatory organization or any foreign futures or foreign options
customer. If the written agency agreement is entered into with any
person other than the futures commission merchant through which
business is done, the futures commission merchant or foreign broker who
has received confirmation of an exemption pursuant to Sec. 30.10 with
whom business is conducted must be expressly identified in such agency
agreement. Service or delivery of any communication issued by or on
behalf of the Commission, U.S. Department of Justice, any self-
regulatory organization or any foreign futures or foreign options
customer, pursuant to such agreement, shall constitute valid and
effective service or delivery upon such person. Unless otherwise
specified by the Commission, the agreement required by this section
shall be filed with the Vice President-Registration, National Futures
Association, 200 West Madison Street, Chicago, Illinois 60606, with a
copy to the Vice President-Compliance, National Futures Association.
For the purposes of this section, the term ``communication'' includes
any summons, complaint, order, subpoena, request for information, or
notice, as well as any other written document or correspondence
relating to any activities of such person subject to regulation under
this part.
* * * * *
(e) Petition for exemption. Any person seeking an exemption from
registration as an introducing broker, commodity pool operator or
commodity trading advisor under this section must file a petition for
exemption, which will be granted or denied based on compliance with
Sec. 30.5(a) and the provision of this paragraph. The petition must:
(1) Be in writing;
(2) Provide the name, main business address and main business
telephone number of the petitioner;
(3) Represent that:
(i) The petitioner is located outside of the United States, its
territories or possessions;
(ii) The petitioner does not act as an introducing broker,
commodity pool operator or commodity trading advisor, respectively, in
connection with trading on or subject to the rules of a designated
contract market in the United States by, for, on behalf of, or for the
benefit of any U.S. customer, client or pool; and
(iii) The petitioner irrevocably agrees to the jurisdiction of the
Commission and state and federal courts in the United States with
respect to activities and transactions subject to this part;
(4) Represent that the petitioner would not be statutorily
disqualified from registration under Section 8a(2) or 8a(3) of the
Commodity Exchange Act and that the petitioner is not disqualified from
registration pursuant to the laws or regulations of its home country;
(5) If the petitioner or its activities are regulated by any
government entity or self-regulatory organization, state the name and
address of such government entity or self-regulatory organization;
(6) State whether the petitioner is applying for a Sec. 30.5
exemption from registration as an introducing broker, commodity pool
operator or commodity trading advisor;
(7) Be signed as follows: If the petitioner is a sole
proprietorship, by the sole proprietor; if a partnership, by a general
partner; if a corporation, by the chief executive officer or other
person(s) legally authorized to bind the corporation; if any other
business structure, by such person or persons involved in the
management of the petitioner and legally authorized to bind the
petitioner; and
(8) Be filed with the Vice President-Registration, National Futures
Association, 200 West Madison Street, Chicago, Illinois 60606.
3. Section 30.6 is amended by revising paragraph to read as
follows:
Sec. 30.6 Disclosure.
* * * * *
(b) Commodity pool operators and commodity trading advisors. (1)
With respect to qualified eligible participants, as defined in
Sec. 4.7(a)(1)(ii) of this chapter, a commodity pool operator
registered or required to be registered under this part, or exempt from
registration pursuant to Sec. 30.5, may not, directly or indirectly,
engage in any of the activities described in Sec. 30.4(c) unless the
commodity pool operator, at or before the time it engages in such
activities, first provides each prospective qualified eligible
participant with the Risk Disclosure Statement set forth in
Sec. 4.24.(b)(2) of this chapter and the statement in
Sec. 4.7(a)(2)(i)(A) of this chapter. With respect to qualified
eligible clients, as defined in Sec. 4.7(b)(1)(ii) of this chapter,
[[Page 28915]]
a commodity trading advisor registered or required to be registered
under this part, or exempt from registration pursuant to Sec. 30.5, may
not, directly or indirectly, engage in any of the activities described
in Sec. 30.4(d) unless the commodity trading advisor, at or before the
time it engages in such activities, first provides each qualified
eligible client with the Risk Disclosure Statement set forth in
Sec. 4.34(b)(2) of this chapter and the statement in Sec. 4.7(b)(2
(i)(A) of this chapter.
(2) With respect to participants who do not satisfy the
requirements of qualified eligible participants, as defined in
Sec. 4.7(a)(1)(ii) of this chapter, a commodity pool operator
registered or required to be registered under this part, or exempt from
registration pursuant to Sec. 30.5, may not, directly or indirectly,
engage in any of the activities described in Sec. 30.4(c) unless the
commodity pool operator, at or before the time it engages in such
activities, first provides each prospective participant with the
Disclosure Document required to be furnished to customers or potential
customers pursuant to Sec. 4.21 of this chapter and files the
Disclosure Document in accordance with Sec. 4.26 of this chapter. With
respect to clients who do not satisfy the requirements of qualified
eligible clients, as defined in Sec. 4.7(b)(1)(ii) of this chapter, a
commodity trading advisor registered or required to be registered under
this part, or exempt from registration pursuant to Sec. 30.5, may not,
directly or indirectly, engage in any of the activities described in
Sec. 30.4(d) unless the commodity trading advisor, at or before the
time it engages in such activities, first provides each prospective
client with the Disclosure Document required to be furnished customers
or potential customers pursuant to Sec. 4.31 of this chapter and files
the Disclosure Document in accordance with Sec. 4.36 of this chapter.
* * * * *
Dated: May 21, 1999.
By the Commission.
Jean A. Webb,
Seretary of the Commission.
[FR Doc. 99-13573 Filed 5-27-99; 8:45 am]
BILLING CODE 6351-01-M
