INTERPRETIVE NOTICE

In October 2001, the CFTC issued a Statement of Acceptable Practices ("Statement") for ethics training. This Statement replaces the Commission's prescriptive ethics training rule and allows flexibility in the format, frequency and providers of ethics training, permitting each firm to tailor its training program to better suit its own operations. By the same token, this shifted the responsibility to each firm to adopt and implement an appropriate ethics training scheme. The Commission intended that the compliance with the Statement's principles would serve as a "safe harbor" concerning acceptable procedures for ethics training programs and topics that ethics training programs should address. Because the Statement is fairly general in nature, however, Members have requested that NFA provide additional information to assist them to comply with their ethics training requirement.

Ethics training is one of a Member's supervisory obligations under NFA's Compliance Rule 2-9. The repeal of the specific regulations relating to ethics training does not diminish Members' and Associates' obligation to diligently supervise its employees. Professional ethical standards remain an essential element of each Member's business model. The use of well-designed ethics training programs supports each Member's supervision of its employees and business activities. Like any other business process, remaining aware of changing industry standards and ensuring high ethical standards is an on-going effort. Developments in technology, commercial practices and regulations and other changes will have ethical ramifications associated with them. Good business practice dictates that employees receive periodic training to keep them cognizant of these developments and their ethical implications.

PROCEDURES
The first thing that all firms should have is written procedures that outline their ethics training program. Acceptable procedures will address:

1. the topics that will be included in the training program;

2. by whom the training will be provided;

3. the format of the training, e.g., classroom instructions, software, etc.;

4. the frequency with which the Member expects its employees to obtain ethics training; and

5. how the firm will document that it has followed its written procedures.

CONTENT
The Statement lists the following as topics that an ethics training program should address:

1. An explanation of the applicable laws and regulations and rules of self-regulatory organizations or contract markets and registered derivatives transaction execution facilities;

2. The registrant's obligation to the public to observe just and equitable principles of trade;

3. How to act honestly and fairly and with due skill, care and diligence in the best interest of customers and the integrity of the markets;

4. How to establish effective supervisory systems and internal controls;

5. Obtaining and assessing the financial situation and investment experience of customers;

6. Disclosure of material information to customers; and

7. Avoidance, proper disclosure and handling of conflicts of interest.

TRAINING PROVIDERS
It is still acceptable to obtain ethics training sponsored by independent persons, firms, or industry associations. Each Member should ensure that its selected provider is qualified and obtain proof that the provider has completed relevant proficiency testing and has three years of relevant industry experience, or similar experience. NFA's Vice President of Registration may waive the testing requirement where the provider demonstrates competency comparable to satisfying proficiency testing requirements. Firms should only use providers that they reasonably in good faith believe are not subject to any investigations or bars from registration. In-house training is also acceptable; however, firms should apply these same criteria to any in-house training personnel. NFA's BASIC system, which can be found on our website, is an excellent resource to check registration and disciplinary history of providers.

TRAINING FORMAT
Ethics training may be provided through a variety of media, including the Internet, audiotapes, computer software, and videotapes, as well as in-person courses. Less formal methods of training are also permitted, including distribution of periodicals, legal cases and advisories. Each Member should choose a format or formats that best suit its business operations and the nature of its workforce. For example, firms that have a high percentage of APs with disciplinary histories or who come from firms with disciplinary histories may well decide that more structured, formal training is appropriate.

FREQUENCY
Like format, Members should decide how frequently ethics training is required based on the business model, the composition of their sales force and the format of the training. For example, firms that opt for less formal training such as distribution of pertinent written materials should consider keeping the training on a more on-going basis. More formal training, such as classroom instruction, could appropriately be offered less frequently but on a periodic basis.

DOCUMENTATION
Maintaining documentation that the Member has complied with its procedures is a critical element of an acceptable ethics training program because it enables the Member to be certain that it is actually implementing the policies it has deemed necessary and appropriate for its business. The appropriate documentation will vary depending on the firm's overall ethics training program. Firms that distribute written materials should maintain documentation showing what materials were distributed, who selected them and when and to whom they were circulated. Firms that utilize more formal training programs should keep records showing who obtained the training, the date of training, and any materials used.

FUTURES EXCHANGE REQUIRMENTS
The futures exchanges have taken a variety of approaches to ethics training. Members are urged to review the ethics training requirements of the exchanges of which they are members.

CONCLUSION
Members that establish a corporate culture of high ethical behavior will provide the best service for their customers. Remaining aware of changing industry standards and adopting an appropriate ethics training program will help ensure that Members and their Associates continually adhere to the high ethical standards that the Members set for themselves.

The Statement of Acceptable Practices is available on the Commission’s web site at www.cftc.gov/foia/fedreg01/foi011023a.htm.

On October 23, 2001, the Commodity Futures Trading Commission ("Commission") repealed its specific ethics training requirements and adopted a Statement of Acceptable Practices with Respect to Ethics Training. This Statement of Acceptable Practices allows for greater flexibility by providing that registrants may develop their own ethics training programs in order to meet their ethics training obligations required by the Commodity Exchange Act. The Statement of Acceptable Practices is accessible through the registration section of NFA's web site at www.nfa.futures.org or the Commission's web site at www.cftc.gov/foia/fedreg01/foi011023a.htm.

Because the Commission has placed the responsibility for ethics training with registrants, NFA will no longer maintain a list of authorized ethics training providers. The list below represents the firms that were known to NFA as of October 23, 2001 to provide ethics training. Neither the Commission nor NFA have reviewed or approved the specific content of the training programs and do not recommend the provider of such training.

NAME OF PROVIDER	COURSE CONTENT
Charles Berra 11014 Burns Avenue Westchester, IL 60154 (708) 562-7007	Provides 1, 2 and 4 hour courses for all registrants. The training that is offered is in person or teleconference.
BISYS Educational Services, Inc. 5728 Jefferson Highway New Orleans, LA 70123-5113 (504) 733-8400 (800) 955-7005	Provides 1, 2 and 4 hour courses for all registrants except Floor Brokers and Floor Traders. The training that is offered is computer based.
Center for Futures Education, Inc. P.O. Box 309 Grove City, PA 16127 (724) 458-5860 www.thectr.com	Provides 1, 2 and 4 hour courses for all registrants. The training that is offered is in person, by teleconference, or on video.
Dearborn Financial Institute, Inc. 155 North Wacker Drive Chicago, IL 60606-1719 (312) 836-4400	Provides 1, 2 and 4 hour courses for all registrants. The 1, 2 and 4 hour courses are offered in person. Computer based 1 and 4 hour courses are also offered.
Exchange Analytics 1892 First Street Suite 102 Highland Park, IL 60035 (847) 266-7602 (800) 823-8442 www.xanalytics.com	Provides 1, 2 and 4 hour courses for all registrants. The training that is offered is in person, on video or is computer based. The 1 and 4 hour courses are also offered on the internet, by audiotape, or by teleconference.
Financial Training Services, Inc. 1120 Avenue of the Americas Suite 4100 New York, NY 10036 (212) 626-6899	Provides 1, 2 and 4 hour courses for all registrants. The training that is offered is in person or by teleconference.
Institute for Financial Markets (formerly the Futures Industry Institute) 2001 Pennsylvania Ave., N.W. Suite 600 Washington, D.C. 20006-1807 (202) 223-1528 www.theIFM.org	Provides 1, 2 and 4 hour courses for all registrants. The 1, 2 and 4 hour courses are offered in person or are computer based. The 1 and 4 hour courses are also offered on the internet.
J-Vee Co. 40 Exchange Place Suite 1606 New York, NY 10005 (212) 785-1646	Provides 1, 2 and 4 hour courses for all registrants. The training that is offered is in person.
National Ethics Mandatory Education (NEME) 2925 Wellesley Drive Columbus, OH 43221 (614) 442-9000 (800) 878-3900	Provides 1, 2 and 4 hour courses for all registrants. The 1 and 4 hour courses are offered in person or on audiotape. The 2 hour course is only offered in person.
Securities Training Corporation 17 Battery Place Suite 1730 New York, NY 10004 (212) 425-7255	Provides 1 and 4 hour courses for all registrants except Floor Brokers and Floor Traders. The training that is offered is in person.
Training Consultants Fountain Valley, CA 92708 (800) 339-3445 www.trainingconsultants.net	Provides 1, 2 and 4 hour courses for all registrants. The training that is offered is in person or is computer based.
Walsh Agency, Inc. P.O. Box 37 Hastings, MI 49058 (269) 945-8920 www.futuresethicstraining.com	Provides 1 and 4 hour courses for all registrants except Floor Brokers and Floor Traders. The training that is offered is in person, by teleconference, on video, on audiotape, on the internet, or is computer based.

Ethics training may also be available from the U.S. futures exchanges.