[Code of Federal Regulations]
[Title 17, Volume 1]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR3.12]

[Page 122-127]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER I--COMMODITY FUTURES TRADING COMMISSION
 
PART 3--REGISTRATION--Table of Contents
 
                         Subpart A--Registration
 
Sec. 3.12  Registration of associated persons of futures commission merchants, introducing brokers, commodity trading advisors, commodity pool operators and 
          leverage transaction merchants.

    (a) Registration required. It shall be unlawful for any person to be 
associated with a futures commission merchant, introducing broker, 
commodity trading advisor, commodity pool operator or leverage 
transaction merchant as an associated person unless that person shall 
have registered under the Act as an associated person of that sponsoring 
futures commission merchant, introducing broker, commodity trading 
advisor, commodity pool operator or leverage transaction merchant in 
accordance with the procedures in paragraphs (c), (d), (f), (i), or (j) 
of this section or is exempt from such registration pursuant to 
paragraph (h) of this section.
    (b) Duration of registration. A person registered in accordance with 
paragraphs (c), (d), (f), (i), or (j) of this section and whose 
registration has not been revoked will continue to be so registered 
until the revocation or withdrawal of the registration of each of the 
registrant's sponsors, or until the cessation of the association of the 
registrant with each of his sponsors. Such person will be prohibited 
from engaging in activities requiring registration under the Act or from 
representing himself to be a registrant under the Act or the 
representative or agent of any registrant during the pendency of any 
suspension of his or his sponsor's registration. In accordance with 
Sec. 3.31(c) of this part, each of the registrant's sponsors must file a 
notice with the National Futures Association on Form 8-T or on a Uniform 
Termination Notice for Securities Industry Registration reporting the 
termination of the association of the associated person within twenty 
days thereafter.
    (c) Application for registration. Except as otherwise provided in 
paragraphs

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(d), (f), (i), and (j) of this section, application for registration as 
an associated person in any capacity must be on Form 8-R, completed and 
filed in accordance with the instructions thereto.
    (1) No person will be registered as an associated person in 
accordance with this paragraph (c) unless a person duly authorized by 
the sponsor certifies that:
    (i) It is the intention of the sponsor to hire or otherwise employ 
the applicant as an associated person and that it will do so within 
thirty days after the receipt of the notification provided in accordance 
with paragraph (c)(4) of this section and that the applicant will not be 
permitted to engage in any activity requiring registration as an 
associated person until the applicant is registered as such in 
accordance with this section;
    (ii) The sponsor has verified the information supplied by the 
applicant in response to the questions on Form 8-R which relate to the 
applicant's education and employment history during the preceding three 
years.
    (iii) To the best of the sponsor's knowledge, information, and 
belief, all of the publicly available information supplied by the 
applicant on Form 8-R is accurate and complete: Provided, That it is 
unlawful for the sponsor to make the certification required by this 
paragraph (c)(1)(iii) if the sponsor knew or should have known that any 
of that information is not accurate and complete; and
    (2) The certification required by paragraph (c)(1) of this section 
must be submitted concurrently with the Form 8-R.
    (3) Each Form 8-R filed in accordance with the requirements of 
paragraph (c) of this section must be accompanied by the fingerprints of 
the applicant on a fingerprint card provided for that purpose by the 
National Futures Association.
    (4) When the Commission or the National Futures Association 
determines that an applicant for registration as an associated person is 
not unfit for such registration, it will notify the sponsor that has 
made the certifications required by paragraph (c)(1) of this section 
that the applicant's registration as an associated person is granted 
contingent upon the sponsor hiring or otherwise employing the applicant 
as such within thirty days.
    (d) Special temporary licensing and registration procedures for 
certain persons. (1) Registration terminated within the preceding 60 
days. Except as otherwise provided in paragraphs (f) and (i) of this 
section, any person whose registration as an associated person in any 
capacity has terminated within the preceding 60 days and who becomes 
associated with a new sponsor will be granted a temporary license to act 
in the capacity of an associated person of such sponsor upon filing by 
that sponsor with the National Futures Association a Form 8-R, completed 
in accordance with the instructions thereto and, if applicable, a 
Supplemental Sponsor Certification Statement filed on behalf of the new 
sponsor (who must meet the requirements set forth in 
Sec. 3.60(b)(2)(i)(A) and (B)) stating that the new sponsor will 
supervise the applicant in accordance with conditions identical to those 
agreed to by the previous sponsor, which includes certifications 
stating:
    (i) That such person has been hired or is otherwise employed by that 
sponsor;
    (ii) That such person's registration as an associated person in any 
capacity is not suspended or revoked;
    (iii) That such person is eligible to be registered or temporarily 
licensed in accordance with this paragraph (d);
    (iv) Whether there is a pending adjudicatory proceeding under 
sections 6(c), 6(d), 6c, 6d, 8a or 9 of the Act or Secs. 3.55, 3.56 or 
3.60 or if, within the preceding 12 months, the Commission has permitted 
the withdrawal of an application for registration in any capacity after 
instituting the procedures provided in Sec. 3.51 and, if so, that the 
sponsor has been given a copy of the notice of the institution of a 
proceeding in connection therewith; and
    (v) That the sponsor has received a copy of the notice of the 
institution of a proceeding if the applicant has certified, in 
accordance with paragraph (d)(1)(iv) of this section, that there is a 
proceeding pending against the applicant as described in that paragraph 
or that the Commission has permitted the

[[Page 124]]

withdrawal of an application for registration as described in that 
paragraph.
    (2) Any temporary license granted pursuant to paragraph (d)(1) of 
this section shall be terminated immediately upon notice to the sponsor 
of the person granted the temporary license that, within 20 days 
following the date the temporary license was issued, the National 
Futures Association has not received the applicant's fingerprints.
    (3) A temporary license received in accordance with paragraph (d)(1) 
of this section shall be subject to the provisions of Secs. 3.42 and 
3.43.
    (4) The certifications permitted by paragraphs (d)(1)(i) and (v) of 
this section must be filed by a person duly authorized by the sponsor. 
The certifications permitted by paragraphs (d)(1)(ii)-(iv) must be filed 
by the applicant for registration as an associated person.
    (e) Retention of records. The sponsor must retain in accordance with 
Sec. 1.31 of this chapter such records as are necessary to support the 
certifications required by this section.
    (f) Reporting of dual and multiple associations. (1)(i) Except as 
otherwise provided in paragraph (f)(4) of this section, a person who is 
already registered as an associated person in any capacity whose 
registration is not subject to conditions or restrictions may become 
associated as an associated person with another sponsor if the new 
sponsor (who must meet the requirements set forth in Sec. 3.60(b)(2)(i) 
(A) and (B)) files with the National Futures Association a Form 8-R in 
accordance with the instructions thereto.
    (ii) NFA shall notify each sponsor of the associated person that the 
associated person has applied to become associated with another sponsor.
    (iii) Each sponsor of the associated person shall supervise that 
associated person and each sponsor is jointly and severally responsible 
for the conduct of the associated person with respect to the:
    (A) Solicitation or acceptance of customers' orders,
    (B) Solicitation of funds, securities, or property for a 
participation in a commodity pool,
    (C) Solicitation of a client's or prospective client's discretionary 
account,
    (D) Solicitation or acceptance of leverage customers' orders for 
leverage transactions, and
    (E) Associated person's supervision of any person or persons engaged 
in any of the foregoing solicitations or acceptances, with respect to 
any customers common to it and any other futures commission merchant, 
introducing broker, commodity trading advisor, commodity pool operator, 
or leverage transaction merchant with which the associated person is 
associated.
    (2) Upon receipt by the National Futures Association of a Form 8-R 
filed in accordance with paragraph (f)(1) of this section from an 
associated person, the associated person named therein shall be 
registered as an associated person of the new sponsor.
    (g) Petitions for exemption. (1) Any person adversely affected by 
the operation of this section may file a petition with the Secretary of 
the Commission, which petition must set forth with particularity the 
reasons why that person believes that an applicant should be exempted 
from the requirements of this section and why such an exemption would 
not be contrary to the public interest and the purposes of the provision 
from which exemption is sought. The petition will be granted or denied 
by the Commission on the basis of the papers filed. The Commission may 
grant such a petition if it finds that the exemption is not contrary to 
the public interest and the purposes of the provision from which 
exemption is sought. The petition may be granted subject to such terms 
and conditions as the Commission may find appropriate.
    (2)(i) Until such time as the Commission orders otherwise, the 
Commission hereby delegates to the Director of the Division of Clearing 
and Intermediary Oversight or his designee the authority to grant or 
deny petitions filed pursuant to this paragraph (g).
    (ii) The Director of the Division of Clearing and Intermediary 
Oversight may submit to the Commission for its consideration any matter 
which has been delegated to him pursuant to paragraph (g)(2)(i) of this 
section.
    (h) Exemption from registration. (1) A person is not required to 
register as an

[[Page 125]]

associated person in any capacity if that person is:
    (i) Registered under the Act as a futures commission merchant, floor 
broker, or as an introducing broker;
    (ii) Engaged in the solicitation of funds, securities, or property 
for a participation in a commodity pool, or the supervision of any 
person or persons so engaged, pursuant to registration with the National 
Association of Securities Dealers as a registered representative, 
registered principal, limited representative or limited principal, and 
that person does not engage in any other activity subject to regulation 
by the Commission; or
    (iii) The chief operating officer, general partner or other person 
in the supervisory chain-of-command, provided the futures commission 
merchant, introducing broker, commodity trading advisor, commodity pool 
operator, or leverage transaction merchant engages in commodity interest 
related activity for customers as no more than ten percent of its total 
revenue on an annual basis, the firm is not subject to a pending 
proceeding brought by the Commission or a self-regulatory organization 
alleging fraud or failure to supervise, and has not been found in such a 
proceeding to have committed fraud or failed to supervise, as required 
by the Act, the rules promulgated thereunder or the rules of a self-
regulatory organization, the person for whom exemption is sought and the 
person designated in accordance with paragraphs (h)(1)(iii)(C) or 
(h)(1)(iii)(D) of this section are listed as principals of the firm, the 
fitness examination conducted by the National Futures Association with 
respect to these persons discloses no derogatory information that would 
disqualify any of such persons as a principal or as an associated 
person, and the firm files with the National Futures Association 
corporate or partnership resolutions stating that:
    (A) Such supervisory person is not authorized to:
    (1) Solicit or accept customers' or leverage customers' orders,
    (2) Solicit a client's or prospective client's discretionary 
account,
    (3) Solicit funds, securities or property for a participation in a 
commodity pool, or
    (4) Exercise any line supervisory authority over those persons so 
engaged;
    (B) Such supervisory person has no authority with respect to hiring, 
firing or other personnel matters involving persons engaged in 
activities subject to regulation under the Act;
    (C) Another person (or persons) designated therein, who is 
registered as an associated person(s) or who has applied for 
registration as an associated person(s) and is not subject to a pending 
proceeding brought by the Commission or a self-regulatory organization 
alleging fraud or failure to supervise, and has not been found in such a 
proceeding to have committed fraud or failed to supervise, as required 
by the Act, the rules promulgated thereunder or the rules of a self-
regulatory organization, holds and exercises full and final supervisory 
authority, including authority to hire and fire personnel, over the 
customer commodity interest related activities of the firm; and
    (D) If the person (or persons) so designated in accordance with 
paragraph (h)(1)(iii)(C) of this section ceases to have the authority 
referred to therein, the firm will notify the National Futures 
Association within twenty days of such occurrence by means of a 
subsequent resolution which resolution must also include the name of 
another associated person (or persons) who has been vested with full 
supervisory authority, including authority to hire and fire personnel, 
over the customer commodity interest related activities of the firm in 
the event that all of those previously designated in accordance with 
paragraph (h)(1)(iii)(C) of this section have been relieved of such 
authority. Subsequent changes in supervisory authority shall be reported 
in the same manner.
    (2) A person is not required to register as an associated person of 
a commodity trading advisor if that person is:
    (i) Registered as a commodity trading advisor, if that person is 
associated with a commodity trading advisor; or
    (ii) Exempt from registration as a commodity trading advisor 
pursuant to the provisions of Sec. 4.14(a)(1), Sec. 4.14(a)(2) or 
Sec. 4.14(a) (8) of this chapter or is associated with a person who is 
so exempt from registration: Provided, That the

[[Page 126]]

provisions of paragraph (h)(2)(ii) of this section shall not apply to 
the solicitation of a client's or prospective client's discretionary 
account, or the supervision of any person or persons so engaged, by, for 
or on behalf of a commodity trading advisor which is:
    (A) Not exempt from registration pursuant to the provisions of 
Sec. 4.14(a)(1), Sec. 4.14(a)(2) or Sec. 4.14(a)(8) of this chapter or
    (B) Registered as a commodity trading advisor notwithstanding the 
availability of that exemption.
    (3) A person is not required to register as an associated person of 
a commodity pool operator if that person is:
    (i) Registered as a commodity pool operator, if that person is 
associated with a commodity pool operator;
    (ii) Exempt from registration as a commodity pool operator pursuant 
to the provisions of Sec. 4.13 of this chapter or is associated with a 
person who is so exempt from registration: Provided, That the provisions 
of paragraph (h)(3)(ii) of this section shall not apply to the 
solicitation of funds, securities, or property for a participation in a 
commodity pool, or the supervision of any person or persons so engaged, 
by, for, or on behalf of a commodity pool operator which is
    (A) Not exempt from registration pursuant to the provisions of 
Sec. 4.13 of this chapter or
    (B) Registered as a commodity pool operator notwithstanding the 
availability of that exemption; or
    (iii) Where a commodity pool is operated or to be operated by two or 
more commodity pool operators, registered as an associated person of one 
of the pool operators of the commodity pool in accordance with the 
provisions of paragraphs (c), (d), (f), or (i) of this section: 
Provided, That each such commodity pool operator shall be jointly and 
severally liable for the conduct of that associated person in the 
solicitation of funds, securities, or property for participation in the 
commodity pool, or the supervision of any person or persons so engaged, 
regardless of whether that associated person is registered as an 
associated person of each such commodity pool operator.
    (i) Special registration or temporary licensing procedures when 
previous sponsor's registration ceases. (1) Any person whose 
registration as an associated person in any capacity was not subject to 
conditions or restrictions, and was terminated within the preceding 
sixty days because the previous sponsor's registration was revoked or 
withdrawn, and who becomes associated with a new sponsor, will be 
registered as an associated person of such new sponsor upon the mailing 
by that new sponsor to the National Futures Association of written 
certifications stating:
    (i) That such person has been hired or is otherwise employed by that 
sponsor;
    (ii) That such person's registration as an associated person in any 
capacity is not suspended or revoked;
    (iii) That such person is eligible to be registered in accordance 
with paragraph (i) of this section;
    (iv) Whether there is a pending adjudicatory proceeding under 
sections 6(c), 6(d), 6c, 6d, 8a or 9 of the Act or Sec. 3.55, 3.56 or 
3.60 or if, within the preceding twelve months, the Commission has 
permitted the withdrawal of an application for registration in any 
capacity after instituting the procedures provided in Sec. 3.51 and, if 
so, that the sponsor has been given a copy of the notice of the 
institution of a proceeding in connection therewith;
    (v) That the new sponsor has received a copy of the notice of the 
institution of a proceeding if the applicant for registration has 
certified, in accordance with paragraph (i)(1)(iv) of this section, that 
there is a proceeding pending against the applicant as described in that 
paragraph or that the Commission has permitted the withdrawal of an 
application for registration as described in that paragraph; and
    (vi) That the new sponsor will be responsible for supervising all 
activities of the person in connection with the sponsor's business as a 
registrant under the Act. Provided, however, That if such person's prior 
registration as an associated person was subject to conditions or 
restrictions, the new sponsor (who must meet the requirements set forth 
in Sec. 3.60(b)(2)(i) (A) and (B) of this part) must also file a signed 
Supplemental Sponsor Certification Statement that contains conditions 
identical to those agreed to by the original sponsor and, in such case, 
the person will be granted

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a temporary license, subject to the provisions of Secs. 3.41, 3.42 and 
3.43 of this part.
    (2) The certifications required by paragraphs (i)(1)(i), (i)(1)(v), 
and (i)(1)(vi) of this section must be signed and dated by an officer, 
if the sponsor is a corporation, a general partner, if a partnership, or 
the proprietor, if a sole proprietorship. The certifications required by 
paragraphs (i)(1)(ii)-(iv) of this section must be signed and dated by 
the applicant for registration as an associated person.
    (3) A person who is registered in accordance with the provisions of 
paragraph (i)(1) of this section shall be required, upon receipt of 
notice from the National Futures Association, to file with the National 
Futures Association his fingerprints on a fingerprint card provided by 
the National Futures Association for that purpose as well as such other 
information as the National Futures Association may require. The 
National Futures Association may require such a filing every two years, 
or at such greater period of time as the National Futures Association 
may deem appropriate, after the associated person has become associated 
with a new sponsor in connection with the requirements of paragraph 
(i)(1) of this section.
    (j) Special temporary licensing and registration procedures for 
associated persons of futures commission merchants and introducing 
brokers involved only with certain commodity interests. Notwithstanding 
any other provision of law, any person associated with a futures 
commission merchant or an introducing broker may be granted a temporary 
license or registration to act in the capacity of an associated person 
of such sponsor if such person restricts his activities only to those 
commodity interests listed in appendix B to this part and if such person 
and his sponsor comply with any special temporary licensing or 
registration procedures applicable to persons involved solely with such 
commodity interests that have been adopted by the National Futures 
Association and approved by the Commission.

(Approved by the Office of Management and Budget under control number 
3038-0023)

[45 FR 80491, Dec. 5, 1980, as amended at 47 FR 27551, June 25, 1982; 48 
FR 35292, Aug. 3, 1983; 49 FR 5522, Feb. 13, 1984; 49 FR 8218, Mar. 5, 
1984; 49 FR 39531, Oct. 9, 1984; 53 FR 8431, Mar. 15, 1988; 57 FR 23145, 
June 2, 1992; 58 FR 19592, Apr. 15, 1993; 64 FR 1727, Jan. 12, 1999; 67 
FR 38874, June 6, 2002; 67 FR 62351, Oct. 7, 2002]