During the month 25 examinations were closed, 6 of
which were BCC matters, and 22 examination reports were
issued to Member firms.
NFA received and assigned to analysts for review 140
statements during February. NPA also received 6 option
submissions for PCMS and IBs. Currently 89 NFA Members
are allowed to trade options.
NFA's five week Compliance Training Program concluded
on March 1, 1985. Participants on the program included
one Staff Auditor for our New York office, 10 Staff, 3
Experienced Staff and 1 In-Charge Auditor, for a total
of 14 for the Chicago office. These auditors/analysts
will be immediately incorporateå into NFA audit
financial surveillance and investigations programs.
During February the Compliance Department opened 9
Preliminary Inquiries (PIS) into possible NFA rule
violations and closed 23 PIS where rule violations were
not evident. In addition, three investigations
were closed by the issuance of a complaint from a.
Business Conduct Committee.
NFA made 32 referrals to the CFTC and various states
in instances where commodity related activity involving
non-NFA Members was detected by NFA staff.
Staff has been assisting the California State Authori-
ties on commodity cases involving criminal matters.
Staff gave a presentation to the San Diego Police
Department, the District Attorneys office and the local
Federal Authorities on the investigation and prose-
cution of commodity cases. Presentations have also
been given at the National Association of Attorneys
General Conference in Washington and at the FBI
Academy.
Other activities in February included attending the
NASAA Commodity Committee Meetings and the final
drafting session for the Model State Commodity Code.

As of February 28, 1985, NFA has 1,953 Members. Ву primary category, there are 372 FCMS, 526 CPOs, 489 CTAS, 550 IBS, 11 Exchanges, 2 Banks and 3 Commercial

Total Registrations for both firms and individuals are
as follows: 421 PCMS; 1,162 CPOs; 2,035 CTAs; 782 IBs;
48,669 APs of FCMs; 486 APs of CPOS; 1,041 APS of CTAS;
2,312 APs of IBS; 15,662 Principals and 4,373 Branch
Managers.
Registrations granted during the month of February are
as follows: 2 PCMS, 12 CPOS, 8 CTAS, 15 Independent
IBS, 9 Guaranteed IBS, 549 Associated Persons, 106
Principals and 83 Branch Managers for a total of 78
firms and 738 individuals (not including 418
8S t. isfers). Included in the number of firm
registrations were 32 IB renewals.
716 temporary licenses were granted in February and 512
were denied, primarily due to lack of test or
certification deficiencies.
During the month the Registration/Membership Department
received 148 7Rs; 1,345 8Rs; 354 3RS; 494 8Ss; 1,427
8Ts; 88 NFA Membership applications and 1,101
miscellaneous items, for a total of 4,957 pieces of
mail.

The Membership Registration Receivables System (MRRS) is up and running, as it has been for the past two months. The Financial analysis Auditing Compliance Tracking System (FACTS) also has been running very smoothly.

A successful search for a Human Resources package has just been completed. The package is to be installed over the next few months.

Future plans include a search fo: a General Ledger and
Accounts Payable system to run on the mainframe
computer. When completed, these systems will replace
the Accounting system presently running on the
micro-computers. The selection process is to begin in
April.

Attached for your review are financial statements showing Budget vs. Actual Revenue and Expenditures for the month of January and for the seven months ended

Total volume for the month of January was 14.4 million contracts or 2.1 million greater than budget. This increase more than offsets the decline in public participation we have been experiencing in futures contracts, from a budget of 28% to actual of 26%. Thus, assessment fees for the month of January are approximately $100,000 ahead of budget.

Total volume for the seven months ended January 31 is 90 million contracts or 4.4 million contracts ahead of budget. On a year to date basis, the net effect of increased volume and decreased public participation has produced a slight negative variance from budget. Interest earned was approximately $59,000 in January on an average daily invested balance of $6.3 million, representing a yield of 11%. As of January 31, our membership exceeded 1,900 Members. During January, we received in excess of $ 48,000 in registration fees which is $12,000 ahead of budget. The attached budget vs. actual statement shows total actual administrative and capital expenditures to be under budget by $730,000 for the first seven months of the fiscal year. Significant variances are discusses below:

For the 7 Months Ended

January 31, 1985 Under (Over) Budget

1.

Wages and Related Benefits
reflect the fact that we are
currently 41 employees under
budget. Budget savings are
expected to continue in this
category until late in fiscal
1985 when we expect to reach
a full complement of staff as
originally anticipated in the
budget.

$328,000

2.

Travel and Meetings - is under
budget due to the number of
employees being under budget,
some Compliance staff manpower
being temporarily shifted to
investigatory responsibilities,
Compliance staff contributing
to the implementation of MRRS
and more audits being done in

113,000

3. Computer Expenditures is

under budget due to expending
more funds in fiscal 1984 for
the PACTS system than we in-
tended, leaving unexpected
funds in the fiscal 1985 bud-
get and expending less than
anticipated on the lease for

14 th floor mainframe computer.
4. Space and Related Expenditures -

Most of the total variance shown
is attributable to originally
anticipating that our lease for
the 14th floor would begin
December 1, 1984, when it actually

began January 1, 1985.
5. Outside Printing and Publications -

is over budget due to greater than
anticipated expenditures related to
the preparation and printing of the
1984 Annual Review, Registration
Guide and NFA Manual.

60,000

(77,000)

6.

Outside Consulting and Services -
of the total variance shown,
$ 192,000 is the result of incurring
fees for services related to the
registration conversion process.
These fees were not anticipated in
the budget and are expected to
continue through the first quarter
of 1985. In addition to this, we
are under budget in the area of
services for FBI processing.

(116,000) 7. Equipment - is under budget due to

a decision to lease a greater num-
ber of terminals instead of pur-
chasing them.

57,000

8. Leasehold Improvements - is over

budget as a result of incurring
14th floor construction costs
earlier than budgeted. Staff
began moving to the 14th floor

9. Purchased software - is under

budget as the budget antici-
pate fuli payment for the IBM
operating software early in the
year. The software is actually
being installed on a piecemeal
basis with billing to follow at
a later date.

202,000

10. Depreciation/Amortization - is

over budget as a result of
recognizing 100% of actual de-
preciation expense based on the
asset iives for accounting pur-
poses versus the depreciation
budget at 60% of actual.

(98,000)
11. Miscellaneous categories which

are comprised of smaller variances
both over and under budget.

(3,000)
Net variance for the seven months
ended January 31, 1985 -
Under Budget

$730,000

During the month of February the Public Affairs and Education Department issued four press releases. The first, dated February 5, announced the development of new compliance rules designed to enhance customer protection. On February 26, a release was distributed detailing NFA's proposed Draft Compliance Rule which governs communications with the public and the use of promotional materials. On the same day a news release was issued concerning NFA's Board of Directors election of officers and Executive Committee. Another release, also dated February 26, announced Leo Melamed's reelection as Chairman of the Board.

The February issues of both "NFA -- News, Facts,
Actions" (the membership newsletter) and "Inside NFA"
(the in-house newsletter) were distributed this month.
Preliminary plans were made for a luncheon and briefing
session on the coordinated Campaign Against Commodity
fraud to be held Thursday, March 21 in Los Angeles.
Among those invited are California consumer leaders,
members of the media, educators and enforcement
officials. A public relations firm has been retained
to schedule a "media tour" for Robert Wilmouth in