Final Rule

Federal Register / Vol. 81, No. 63 / Friday, April 1, 2016 / Rules and Regulations

(i) Related Information
For more information about this AD,
contact Fnu Winarto, Aerospace Engineer,
Systems and Equipment Branch, ANM–130S,
FAA, Seattle ACO, 1601 Lind Avenue SW.,
Renton, WA 98057–3356; phone: 425–917–
6659; fax: 425–917–6590; email:
[email protected].
(j) Material Incorporated by Reference
None.
Issued in Renton, Washington, on March
25, 2016.
Michael Kaszycki,
Acting Manager, Transport Airplane
Directorate, Aircraft Certification Service.
[FR Doc. 2016–07190 Filed 3–31–16; 8:45 am]

‘‘CFTC’’) is amending existing
Commission regulations to establish an
alternative to fingerprinting to evaluate
the fitness of natural persons who are
required to submit fingerprints under
the Commission’s regulations and who
have not resided in the United States
since reaching 18 years of age (‘‘Final
Rule’’).
DATES: The Final Rule is effective on
May 2, 2016.
FOR FURTHER INFORMATION CONTACT:
Katherine Driscoll, Associate Chief
Counsel, 202–418–5544, kdriscoll@
cftc.gov; Jacob Chachkin, Special
Counsel, 202–418–5496, jchachkin@
cftc.gov; or Adam Kezsbom, Special
Counsel, 202–418–5372, akezsbom@
cftc.gov, Division of Swap Dealer and
Intermediary Oversight, Commodity
Futures Trading Commission, Three
Lafayette Centre, 1155 21st Street NW.,
Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
I. Proposal
On January 12, 2016, the Commission
published a Notice of Proposed
Rulemaking (‘‘Proposal’’) 1 to amend the
requirement that, pursuant to the
registration process for determining a
registrant’s fitness in part 3 of the
Commission’s regulations, natural
persons 2 that wish to be principals 3 or
associated persons 4 of Commission

BILLING CODE 4910–13–P

COMMODITY FUTURES TRADING
COMMISSION
17 CFR Part 3

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RIN 3038–AE16

Alternative to Fingerprinting
Requirement for Foreign Natural
Persons
Commodity Futures Trading
Commission.
ACTION: Final rule.
AGENCY:

The Commodity Futures
Trading Commission (‘‘Commission’’ or

SUMMARY:

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1 Alternative to Fingerprinting Requirement for
Foreign Natural Persons, 81 FR 1359 (Jan. 12, 2016).
2 As used herein, the terms ‘‘natural person’’ and
‘‘individual’’ have the same meaning.
3 See the definition of principal in Commission
regulation 3.1(a). 17 CFR 3.1(a).
4 An ‘‘associated person’’ is any natural person
who is associated in certain capacities with a
futures commission merchant (‘‘FCM’’), retail
foreign exchange dealer (‘‘RFED’’), introducing
broker (‘‘IB’’), commodity pool operator (‘‘CPO’’),
commodity trading advisor (‘‘CTA’’), swap dealer
(‘‘SD’’), major swap participant (‘‘MSP’’), or
leverage transaction merchant (‘‘LTM’’). 17 CFR
1.3(aa).
For the definitions of these registration categories
(other than RFED), see Section 1a of the Commodity
Exchange Act (‘‘CEA’’ or ‘‘Act’’) and Commission
regulation 1.3. 7 U.S.C. 1a and 17 CFR 1.3. For the
definition of RFED, see Commission regulation
5.1(h). 17 CFR 5.1(h).

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registrants,5 or who are responsible for
entry of orders from an FB’s or FT’s own
account, submit their fingerprints (the
‘‘Fingerprinting Requirement’’).6 The
Proposal contemplated adding a new
paragraph (e) to the existing list of
exemptions from the Fingerprinting
Requirement in § 3.21 7 to, among other
things, codify and clarify the alternative
to the Fingerprinting Requirement
provided by CFTC Staff Letter No. 12–
49 8 and CFTC Staff Letter No. 13–29 9
(‘‘DSIO No-Action Letters’’). In
particular, the Commission proposed
5 Subject to certain exceptions and exclusions,
persons engaging in specified activities involving
commodity interests are required pursuant to the
CEA and/or Commission regulations to register with
the Commission in certain registration categories.
These include registration as an FCM, RFED, IB,
CPO, CTA, SD, MSP, LTM, floor broker (‘‘FB’’), and
floor trader (‘‘FT’’). For the definitions of FB and
FT, see Section 1a of the CEA and Commission
regulation 1.3. 7 U.S.C. 1a and 17 CFR 1.3.
6 Currently, the Commission may, directly or
indirectly, require fingerprinting pursuant to
Commission regulations 3.10(a)(2); 3.11(a)(1);
3.12(c)(3), d(2), f(3), or (i)(3); 3.40(a)(1), (a)(2), or (b);
3.44(a)(5) or (c); or 3.46(a)(3). 17 CFR 3.10(a)(2);
3.11(a)(1); 3.12(c)(3), d(2), f(3), and (i)(3); 3.40(a)(1),
(a)(2), and (b); 3.44(a)(5) and (c); and 3.46(a)(3).
In support of its initial promulgation of the
fingerprinting requirements, the Commission stated
that these requirements ‘‘are necessary to permit
improvements in the Commission’s background
checking of applicants for registration, to permit
positive identification of certain individuals with
common names, to reduce the number of
applications filed by individuals who are unfit for
registration, and to facilitate fitness reviews of
registrants on a spot and periodic basis.’’ See
Revision of Registration Regulations; Final Rules;
Designation of New Part, 45 FR 80485, 80485 (Dec.
5, 1980).
7 Commission regulation 3.21 provides
exemptions to the Fingerprinting Requirement,
subject to certain conditions, for persons whose
fingerprints have recently been identified and
processed by the Federal Bureau of Investigation,
for persons whose application for initial registration
with the Commission in any capacity was recently
granted, for persons that have a current Form 8–R
on file with the Commission or National Futures
Association (‘‘NFA’’), and for principals that are
outside directors. 17 CFR 3.21.
8 CFTC Staff Letter No. 12–49 (Dec. 11, 2012),
available at http://www.cftc.gov/ucm/groups/
public/@lrlettergeneral/documents/letter/12-49.pdf.
9 CFTC Staff Letter No. 13–29 (Jun. 21, 2013),
available at http://www.cftc.gov/ucm/groups/
public/@lrlettergeneral/documents/letter/13-29.pdf.

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ER01AP16.000

(h) Alternative Methods of Compliance
(AMOCs)
(1) The Manager, Seattle Aircraft
Certification Office (ACO), FAA, has the
authority to approve AMOCs for this AD, if
requested using the procedures found in 14
CFR 39.19. In accordance with 14 CFR 39.19,
send your request to your principal inspector
or local Flight Standards District Office, as
appropriate. If sending information directly
to the manager of the ACO, send it to the
attention of the person identified in
paragraph (i) of this AD. Information may be
emailed to: [email protected].
(2) Before using any approved AMOC,
notify your appropriate principal inspector,
or lacking a principal inspector, the manager
of the local flight standards district office/
certificate holding district office.

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adding an alternative to the requirement
to provide fingerprints when applying
for Commission registration for natural
persons who have not resided in the
United States since reaching 18 years of
age. The Proposal allowed any such
person’s registered firm to complete a
criminal history background check in
lieu of submitting fingerprints for such
person.10
The Commission generally requested
comments on the Proposal and also
solicited comments on a number of
specific matters.11 For example, the
Commission solicited comments on
potential changes to its proposed
definition of a foreign natural person, on
the scope and effectiveness of the
criminal history background check
required by the Proposal and any
alternatives thereto, and on the
Commission’s analysis of the costs and
benefits of the Proposal. The comment
period for the Proposal ended on
February 11, 2016.
II. Summary of Comments

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The Commission received two
relevant comments in response to the
Proposal—one from Sutherland Asbill &
Brennan LLP on behalf of The
Commercial Energy Working Group
(‘‘The Working Group’’) and one from
Joyce Dillard (‘‘Dillard’’).12 The Working
Group supported the Proposal as a
means of alleviating some of, what The
Working Group described as, ‘‘the
undue burdens associated with
providing a fingerprint card pursuant to
Part 3 of the Commission’s regulations.’’
However, The Working Group requested
that the Commission expand the
Proposal to all natural persons that are
principals or associated persons of
registrants subject to the Fingerprinting
Requirement. The Working Group stated
that ‘‘[t]his approach, rooted in fairness,
would provide equal treatment to U.S.
residents and non-U.S. residents alike,’’
but provided no further rationale for its
approach. Conversely, Dillard did not
support the Proposal, and stated that
fingerprinting should be required
without alternative.
10 The Commission has delegated to NFA, a
registered futures association under Section 17 of
the CEA, the registration functions set forth in
subparts A, B, and C of part 3 of the Commission’s
regulations, including the collection and review of
a completed Form 8–R and related fingerprint
submissions from each natural person completing a
Form 8–R. See 17 CFR 3.2(a).
11 Proposal, 81 FR at 1361.
12 The Commission also received two comments
that were not relevant to the Proposal. All of the
comments are available at http://comments.cftc.gov/
PublicComments/CommentList.aspx?id=1657.

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III. Final Rule
After careful consideration, the
Commission is adopting the Final Rule
as proposed. The Commission is not
expanding the Final Rule to cover
persons other than Foreign Natural
Persons (as defined below) as requested
by The Working Group because, while
there are limitations on the usefulness
of fingerprints of foreign nationals,
fingerprinting is an expedient way to
investigate whether someone has a
criminal record in the United States. For
instance, in the United States,
fingerprints may be checked for possible
matches against existing repositories of
fingerprints quickly and efficiently.
As discussed in the Proposal, the
Commission believes the Final Rule, in
providing certainty to market
participants by way of Commission
regulation, makes the commodity
interest markets it oversees more liquid,
competitive, and accessible by enabling
Foreign Natural Persons to demonstrate
that they meet the minimum standards
for fitness and competency without
undue burden. The alternative to
fingerprinting removes an impediment
to participation in United States’
markets by Foreign Natural Persons
while also ensuring the continued
protection of market participants and
the public. Further, the Commission
believes that, by providing an
alternative for Foreign Natural Persons,
the Final Rule is consistent with the
principles of international comity.
Section 3.21(e)(2) provides that the
obligation to provide a fingerprint card
for a Foreign Natural Person under part
3 of the Commission’s regulations shall
be deemed satisfied for a Certifying
Firm (as defined below) if: (a) Such
Certifying Firm causes a criminal
history background check of such
Foreign Natural Person to be performed;
(b) such criminal history background
check does not reveal any matters that
constitute a disqualification under
Sections 8a(2) or 8a(3) of the CEA,13
other than those disclosed to NFA; and
(c) a person authorized by such
Certifying Firm submits, in reliance on
such criminal history background
check, a certification by such Certifying
Firm to NFA.
The certification must: (i) State that
the conditions described above have
been satisfied; and (ii) be signed by a
person authorized by such Certifying
Firm to make such certification. In
addition, each criminal history
background check must: (a) Be of a type
that would reveal all matters listed
under Sections 8a(2)(D) or 8a(3)(D), (E),
13 7

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or (H) of the CEA 14 relating to the
Foreign Natural Person and (b) be
completed not more than one calendar
year prior to the date that such
Certifying Firm submits the certification
to NFA described in the Final Rule.
In terms of definitions, § 3.21(e)(1)(i)
defines Foreign Natural Person, solely
for purposes of paragraph (e), as any
natural person who has not resided in
the United States since reaching the age
of 18 years. Also, § 3.21(e)(1)(ii) defines
Certifying Firm, also solely for purposes
of paragraph (e), with respect to natural
persons acting in certain specified
capacities in relation to the firm.
By way of recordkeeping, § 3.21(e)(3)
requires that the Certifying Firm
maintain, in accordance with
Commission regulation 1.31, records
documenting each criminal history
background check and the results
thereof.15
As discussed in the Proposal, the
Final Rule supersedes the DSIO NoAction Letters without prejudice to
those that were relying on either of the
DSIO No-Action Letters and had
satisfied the requirements thereof prior
to January 12, 2016, the date the
Proposal was published in the Federal
Register.
V. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act
(‘‘RFA’’) 16 requires Federal agencies, in
promulgating regulations, to consider
whether the rules they propose will
have a significant economic impact on
a substantial number of small entities
and, if so, to provide a regulatory
flexibility analysis regarding the
economic impact on those entities. In
the Proposal, the Commission certified
that the Proposal would not have a
significant economic impact on a
substantial number of small entities.
The Commission received no comments
with respect to the RFA.
As discussed in the Proposal, the
Final Rule affects certain FCMs, RFEDs,
IBs, CPOs, CTAs, SDs, MSPs, LTMs,
FBs, and FTs that wish to take
advantage of the alternative to
fingerprinting to evaluate the fitness of
their Foreign Natural Persons for which
fingerprints must be submitted to
NFA.17 The Commission has previously
14 7 U.S.C. 12a(2)(D) and 12a(3)(D), (E), and (H).
These provisions of Sections 8a(2) and (3) of the
CEA generally relate to criminal convictions.
15 17 CFR 1.31.
16 5 U.S.C. 601 et seq.
17 The Final Rule also directly affects certain of
such individuals; however, the Commission has
noted that the RFA, by its terms, does not apply to
individuals. See 48 FR 14933, 14954 n.115 (Apr. 6,

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determined that FCMs, RFEDS, CPOs,
SDs, MSPs, and LTMs are not small
entities for purposes of the RFA.18
Therefore, the requirements of the RFA
do not apply to those entities. With
respect to CTAs, FBs, FTs, and IBs, the
Commission has found it appropriate to
consider whether such registrants
should be deemed small entities for
purposes of the RFA on a case-by-case
basis, in the context of the particular
Commission regulation at issue.19 As
certain of these registrants may be small
entities for purposes of the RFA, the
Commission considered whether the
Final Rule would have a significant
economic impact on such registrants. As
discussed in the Proposal, the Final
Rule solely provides an optional
alternative to complying with the
Fingerprinting Requirement, which
already applies to such registrants, and
will, therefore, not impose any new
regulatory obligations on affected
registrants. The Final Rule is not
expected to impose any new burdens on
market participants. Rather, to the
extent that the Final Rule provides an
alternative means to comply with the
Fingerprinting Requirement and is
elected by a market participant, the
Commission believes it is reasonable to
infer that the alternative is less
burdensome to such participant. The
Commission does not, therefore, expect
small entities to incur any additional
costs as a result of the Final Rule.
Consequently, the Commission finds
that no significant economic impact on
small entities will result from the Final
Rule.
Accordingly, for the reasons stated
above, the Commission believes that the
Final Rule will not have a significant
economic impact on a substantial
number of small entities. Therefore, the
Chairman, on behalf of the Commission,
hereby certifies, pursuant to 5 U.S.C.
605(b), that the Final Rule being
published today by this Federal
1983). Therefore, no analysis on the economic
impact of this rule on individuals is provided.
18 See Policy Statement and Establishment of
Definitions of ‘‘Small Entities’’ for Purposes of the
Regulatory Flexibility Act, 47 FR 18618 (Apr. 30,
1982) (FCMs and CPOs); Leverage Transactions, 54
FR 41068 (Oct. 5, 1989) (LTMs); Regulation of OffExchange Retail Foreign Exchange Transactions and
Intermediaries, 75 FR 55410, 55416 (Sept. 10, 2010)
(RFEDs); and Registration of Swap Dealers and
Major Swap Participants, 77 FR 2613, 2620 (Jan. 19,
2012) (SDs and MSPs).
19 See 47 FR at 18620 (CTAs and FBs);
Registration of Floor Traders; Mandatory Ethics
Training for Registrants; Suspension of Registrants
Charged With Felonies, 58 FR 19575, 19588 (Apr.
15, 1993) (FTs); and Introducing Brokers and
Associated Persons of Introducing Brokers,
Commodity Trading Advisors and Commodity Pool
Operators; Registration and Other Regulatory
Requirements, 48 FR 35248, 35276 (Aug. 3, 1983)
(IBs).

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Register release will not have a
significant economic impact on a
substantial number of small entities.
B. Paperwork Reduction Act
1. Background
The Paperwork Reduction Act of 1995
(‘‘PRA’’) 20 imposes certain
requirements on Federal agencies
(including the Commission) in
connection with conducting or
sponsoring any collection of
information as defined by the PRA.
As discussed in the Proposal, the
Final Rule contains collections of
information for which the Commission
has previously received control
numbers from the Office of Management
and Budget (‘‘OMB’’). The titles for
these collections of information are
‘‘Registration under the Commodity
Exchange Act, OMB control number
3038–0023’’ 21 and ‘‘Registration of
Swap Dealers and Major Swap
Participants, OMB control number
3038–0072.’’ 22
The responses to these collections of
information are mandatory. An agency
may not conduct or sponsor, and a
person is not required to respond to, a
collection of information unless it
displays a currently valid control
number issued by OMB.
The collection of information in the
Final Rule provides an optional
alternative to complying with the
Fingerprinting Requirement (as
described above). Eligible persons have
the option to elect the certification
process, but no obligation to do so. For
this reason, except to the extent that the
Commission has amended the subject
OMB control numbers for PRA purposes
to reflect the alternative certification
process, the Final Rule is not expected
to impose any new burdens on market
participants. Rather, to the extent that
the Final Rule provides an alternative
means to comply with the
Fingerprinting Requirement and is
elected by market participants, it is
reasonable for the Commission to infer
that the alternative is less burdensome
to such participants.
2. Revisions to Collections 3038–0023
and 3038–0072
Collections 3038–0023 and 3038–
0072 are currently in force with their
20 44

U.S.C. 3501 et seq.
OMB Control No. 3038–0023, http://
www.reginfo.gov/public/do/
PRAOMBHistory?ombControlNumber=3038-0023#
(last visited Feb. 24, 2016).
22 See OMB Control No. 3038–0072, http://
www.reginfo.gov/public/do/
PRAOMBHistory?ombControlNumber=3038-0072#
(last visited Feb. 24, 2016).
21 See

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18745

control numbers having been provided
by OMB.
As discussed above, the Final Rule
incorporates an alternative to
fingerprinting to evaluate the fitness of
certain Foreign Natural Persons. In
order to qualify for this alternative, the
Certifying Firm must take the steps
required pursuant to the Final Rule,
including submitting the required
certification to NFA and maintaining
records of the criminal history
background check and the results
thereof. Requiring such actions requires
revisions to collections 3038–0023 and
3038–0072. Accordingly, the
Commission submitted a request to
amend each of collections 3038–0023
and 3038–0072 to OMB and invited
public comment on its paperwork
burdens in the Proposal. In particular,
as further described in the Proposal, the
Commission estimates that
approximately 198 FCMs, RFEDs, IBs,
CPOs, CTAs, LTMs, FBs, and FTs and
2 SDs and MSPs will submit the
required certification 23 and,
accordingly, estimates the additional
hour burdens below.
a. Estimated Additional Hour Burden
for Collection 3038–0023
Collection 3038–0023 relates to
collections of information from FCMs,
RFEDs, IBs, CPOs, CTAs, LTMs, FBs,
and FTs. The estimated additional hour
burden for collection 3038–0023 of 495
hours is calculated as follows:
Number of registrants: 198.
Frequency of collection: As needed.
Estimated annual responses per
registrant: 1.
Estimated aggregate number of
annual responses: 198.
Estimated annual hour burden per
registrant: 2.5.24
Estimated aggregate annual hour
burden: 495 (198 registrants × 2.5 hours
per registrant).
b. Estimated Additional Hour Burden
for Collection 3038–0072
Collection 3038–0072 relates to
collections of information from SDs and
MSPs. The estimated additional hour
23 Proposal,

81 FR at 1362.
collection’s burdens are restricted to (i)
registrants providing necessary information to
commercial service provider(s) to conduct a
criminal history background check for a Foreign
Natural Person; (ii) registrants preparing and
submitting the certification described herein; and
(iii) registrants maintaining, in accordance with
Commission regulation 1.31, records documenting
that the criminal history background check was
completed and the results thereof. To the extent
that a market participant instead elects to conduct
the background check internally, it is reasonable for
the Commission to infer that doing so is less
burdensome to such participant.
24 This

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burden for collection 3038–0072 of 5
hours is calculated as follows:
Number of registrants: 2.
Frequency of collection: As needed.
Estimated annual responses per
registrant: 1.
Estimated aggregate number of
annual responses: 2.
Estimated annual hour burden per
registrant: 2.5.25
Estimated aggregate annual hour
burden: 5 (2 registrants × 2.5 hours per
registrant).
3. Information Collection Comments
In the Proposal, the Commission
invited the public and other Federal
agencies to comment on any aspect of
the information collection requirements
discussed above. The Commission did
not receive any such comments.
C. Cost-Benefit Considerations
Section 15(a) of the Act 26 requires the
Commission to consider the costs and
benefits of its actions before issuing a
regulation under the Act. Section 15(a)
further specifies that the costs and
benefits shall be evaluated in light of the
following five broad areas of market and
public concern: (i) Protection of market
participants and the public; (ii)
efficiency, competitiveness and
financial integrity of futures markets;
(iii) price discovery; (iv) sound risk
management practices; and (v) other
public interest considerations. The
Commission considers the costs and
benefits resulting from its discretionary
determinations with respect to the
Section 15(a) considerations.
1. Costs

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a. Costs to FCMs, RFEDs, IBs, CPOs,
CTAs, SDs, MSPs, LTMs, FBs, FTs,
Associated Persons, and Other Foreign
Natural Persons
The Final Rule provides an alternative
to complying with the Fingerprinting
Requirement, which alternative no
FCM, RFED, IB, CPO, CTA, SD, MSP,
LTM, FB, FT, associated person, or
other Foreign Natural Person is required
to elect. As such, the Commission
believes that the Final Rule does not
impose any net cost on such persons,
because the Commission presumes that
such persons will elect the alternative
only if they assess it to have a lower or
equal net cost.
b. Other Costs
Because the Final Rule allows FCMs,
RFEDs, IBs, CPOs, CTAs, SDs, MSPs,
LTMs, FBs, and FTs to submit, subject
to the terms and conditions herein, a
25 See
26 7

n. 24, supra.
U.S.C. 19(a).

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certification in lieu of a fingerprint card
for Foreign Natural Persons, NFA will
need to develop a process to review and
retain such certifications and consider
amending its applications and/or other
forms to reflect the availability of this
alternative to the Fingerprinting
Requirement. The Commission expects
that the costs of such activities will not
be significant, because NFA has been
processing and retaining requests under
the DSIO No-Action Letters since their
issuance and the changes to NFA’s
applications and/or other forms to take
into account the Final Rule would likely
be minimal and could be included in
other future unrelated updates.
2. Benefits
The Commission believes that, by
establishing an alternative method for
evaluating the fitness of Foreign Natural
Persons for whom a fingerprint card
must currently be submitted, the Final
Rule helps keep the United States’
commodity interest markets accessible
and competitive with other markets
around the world by removing an
impediment to participation in United
States’ markets by Foreign Natural
Persons while also ensuring the
continued protection of market
participants and the public. Further, the
Commission believes that, by providing
an alternative for persons outside the
United States, the Final Rule is
consistent with the principles of
international comity.
3. Commenter’s Request
As discussed above, The Working
Group requested that the Commission
expand the alternative provided in the
Proposal to include all natural persons
that are principals or associated persons
of registrants subject to the
Fingerprinting Requirement. The
Commission is not making such an
expansion, because, while there are
limitations on the usefulness of
fingerprints of foreign nationals,
fingerprinting is an expedient way to
investigate whether someone has a
criminal record in the United States.
4. Section 15(a) Factors
Section 15(a) of the CEA requires the
Commission to consider the costs and
benefits of its actions before
promulgating a regulation under the
CEA or issuing certain orders. CEA
Section 15(a) further specifies that the
costs and benefits shall be evaluated in
light of five broad areas of market and
public concern: (i) Protection of market
participants and the public; (ii)
efficiency, competitiveness, and
financial integrity of futures markets;
(iii) price discovery; (iv) sound risk

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management practices; and (v) other
public interest considerations.
i. Protection of Market Participants and
the Public
The Final Rule continues to protect
the public by ensuring that persons who
are currently subject to the
Fingerprinting Requirement, whether or
not they reside in the United States,
must have their fitness reviewed
through the completion of a background
check.
ii. Efficiency, Competitiveness, and
Financial Integrity of Markets
The Final Rule may increase the
efficiency and competitiveness of the
markets by encouraging more
participation in United States markets
by Foreign Natural Persons. The
Commission does not believe that the
integrity of financial markets is harmed
because the Final Rule requires that the
background check meet the objective
standards which rely on the clearlystated matters under Sections 8a(2)(D)
and 8a(3)(D), (E), and (H) of the CEA.
iii. Price Discovery
The Commission generally believes
that providing an alternative means of
ensuring the fitness of a person who
resides outside the United States for
purposes of Commission registration, by
reducing the burden that the
Fingerprinting Requirement could
impose on such persons, could reduce
impediments to transact on a crossborder basis, increasing participation in
commodity interest markets. The
Commission believes that such
increased participation and the resulting
increased liquidity may help to facilitate
price discovery.
iv. Sound Risk Management Practices
One of the critically important
functions of registration is to allow the
Commission to ensure that all futures
and swaps industry professionals who
deal with the public meet minimum
standards of fitness and competency.27
The fitness investigations that are part
of the registration process permit the
Commission and/or its delegatees to (a)
uncover past misconduct that may
disqualify an individual or entity from
registration and (b) help determine if
such persons have disclosed all matters
required to be disclosed in their
applications to become registered with
27 See, e.g., Commodity Futures Trading Comm’n,
Division of Clearing and Intermediary Oversight,
Public Report on the Registration Program of the
National Futures Association, June 2010, at 1 (citing
H.R. REP. NO. 97–565(I), at 48 (1982), reprinted in
1982 U.S.C.C.A.N. 3871, 3897–3899).

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Federal Register / Vol. 81, No. 63 / Friday, April 1, 2016 / Rules and Regulations
the Commission.28 Having futures and
swaps market participants that are not
subject to any of the matters that would
lead to a disqualification of registration
under Sections 8a(2) or (3) of the CEA
is one way to help ensure that a
Commission registrant will not be a risk
to its customers or to the market in
general.
v. Other Public Interest Considerations
The Commission believes that, by
providing an alternative for persons
outside the United States, the Final Rule
is consistent with the principles of
international comity.
List of Subjects in 17 CFR Part 3
Associated persons, Brokers,
Commodity futures, Commodity pool
operators, Commodity trading advisors,
Customer protection, Fingerprinting,
Foreign exchange, Futures commission
merchants, Introducing brokers,
Leverage transaction merchants,
Leverage transactions, Major swap
participants, Principals, Registration,
Reporting and recordkeeping
requirements, Retail foreign exchange
dealers, Swap dealers, Swaps.
For the reasons set forth in the
preamble, the Commodity Futures
Trading Commission amends part 3 as
follows:
PART 3—REGISTRATION
1. The authority citation for part 3
continues to read as follows:

■

Authority: 5 U.S.C. 552, 552b; 7 U.S.C. 1a,
2, 6, 6a, 6b, 6b–1, 6c, 6d, 6e, 6f, 6g, 6h, 6i,
6k, 6m, 6n, 6o, 6p, 6s, 8, 9, 9a, 12, 12a, 13b,
13c, 16a, 18, 19, 21, 23.

2. In § 3.21, add paragraph (e) to read
as follows:

■

Lhorne on DSK5TPTVN1PROD with RULES

28 See

http://www.nfa.futures.org/NFAregistration/index.HTML (last visited Feb. 24, 2016),
stating that ‘‘[t]he primary purposes of registration
are to screen an applicant’s fitness to engage in
business as a futures professional and to identify
those individuals and organizations whose
activities are subject to federal regulation.’’
Pursuant to Commission regulation 3.60, the
Commission may, subject to some limitations, deny,
grant with conditions, suspend, revoke, or restrict
registration to an applicant if the Commission
alleges and is prepared to prove that the registrant
or applicant is subject to one or more of the
statutory disqualifications set forth in section 8a(2),
8a(3) or 8a(4) of the Act. 17 CFR 3.60. Sections 8a(2)
and 8a(3) of the Act contain an extensive list of
matters that provide grounds for refusing or
conditioning an applicant’s registration, including,
without limitation, felony convictions, commodities
or securities law violations, bars or other adverse
actions taken by financial regulators, and willfully
omitting to state any material fact in an application.
See 7 U.S.C. 12a(2) and (3). See also Interpretative
Statement With Respect to Section 8a(2)(C) and (E)
and Section 8a(3)(J) and (M) of the Commodity
Exchange Act, appendix A to part 3 of the
Commission’s regulations.

VerDate Sep<11>2014

14:14 Mar 31, 2016

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§ 3.21 Exemption from fingerprinting
requirement in certain cases.

*

*
*
*
*
(e) Foreign natural persons. (1) For
purposes of this paragraph (e):
(i) The term foreign natural person
means any natural person who has not
resided in the United States since
reaching the age of 18 years.
(ii) The term certifying firm means:
(A) For any natural person that is a
principal or associated person of a
futures commission merchant, retail
foreign exchange dealer, swap dealer,
major swap participant, introducing
broker, commodity pool operator,
commodity trading advisor, leverage
transaction merchant, floor broker, or
floor trader, such futures commission
merchant, retail foreign exchange
dealer, swap dealer, major swap
participant, introducing broker,
commodity pool operator, commodity
trading advisor, leverage transaction
merchant, floor broker, or floor trader;
and
(B) For any natural person that is
responsible for, or directs, the entry of
orders from a floor broker’s or floor
trader’s own account, such floor broker
or floor trader.
(2) Any obligation in this part to
provide a fingerprint card for a foreign
natural person shall be deemed satisfied
with respect to a certifying firm if:
(i) Such certifying firm causes a
criminal history background check of
such foreign natural person to be
performed; and
(ii) The criminal history background
check:
(A) Is of a type that would reveal all
matters listed under Sections 8a(2)(D) or
8a(3)(D), (E), or (H) of the Act relating
to such foreign natural person;
(B) Does not reveal any matters that
constitute a disqualification under
Sections 8a(2) or 8a(3) of the Act, other
than those disclosed to the National
Futures Association; and
(C) Is completed not more than one
calendar year prior to the date that such
certifying firm submits the certification
described in paragraph (e)(2)(iii) of this
section;
(iii) A person authorized by such
certifying firm submits, in reliance on
such criminal history background
check, a certification by such certifying
firm to the National Futures
Association, that:
(A) States that the conditions of
paragraphs (e)(2)(i) and (ii) of this
section have been satisfied; and
(B) Is signed by a person authorized
by such certifying firm to make such
certification.
(3) The certifying firm shall maintain,
in accordance with § 1.31 of this

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chapter, records documenting that the
criminal history background check
performed pursuant to paragraph
(e)(2)(i) of this section was completed
and the results thereof.
Issued in Washington, DC, on March 28,
2016, by the Commission.
Robert N. Sidman,
Deputy Secretary of the Commission.
Note: The following appendices will not
appear in the Code of Federal Regulations.

Appendices to Alternative to
Fingerprinting Requirement for Foreign
Natural Persons—Commission Voting
Summary and Chairman’s Statement
Appendix 1—Commission Voting
Summary
On this matter, Chairman Massad and
Commissioners Bowen and Giancarlo voted
in the affirmative. No Commissioner voted in
the negative.

Appendix 2—Statement of Chairman
Timothy G. Massad
I support the rule being finalized today,
which provides foreign natural persons with
an alternative to the fingerprinting
requirement that applies to certain
participants in our markets. This will reduce
unnecessary burdens on foreign individuals
while maintaining appropriate standards of
fitness and competency. This final rule also
continues the Commission’s ongoing efforts
to codify, where appropriate, and through
notice-and-comment rulemaking, no-action
relief that previously had been provided by
Commission staff.
[FR Doc. 2016–07304 Filed 3–31–16; 8:45 am]
BILLING CODE 6351–01–P

SECURITIES AND EXCHANGE
COMMISSION
17 CFR Part 240
General Rules and Regulations,
Securities Exchange Act of 1934
CFR Correction
In Title 17 of the Code of Federal
Regulations, part 240 to End, revised as
of April 1, 2015, on page 543, § 240.17a–
23 is removed and reserved.
[FR Doc. 2016–07561 Filed 3–31–16; 8:45 am]
BILLING CODE 1505–01–D

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