National Futures Association Publishes Statement on Its Compliance Programs

The National Futures Association (the "NFA") CEO Daniel Roth and Chairman of the Board Christopher Hehmeyer published a letter to its members regarding increased compliance initiatives. The NFA stated that the failure of MF Global and Peregrine Financial Group has eroded the trust of regulators and customers and highlighted regulatory deficiencies within the organization. The NFA explained that, in the wake of these crises, it hired an outside research group to gather information and analyze the NFA's audit practices and procedures. The outside group submitted a report to the NFA Board of Directors providing recommendations designed to achieve "a greater sense of professional skepticism in its examinations." The NFA implemented every aspect of the outside group's report, which included: (i) examination process/risk management; (ii) professional development; (iii) monitoring compliance with segregated funds requirements; and (iv) industry interface.Furthermore, the NFA noted that it has been given new responsibilities regarding swap execution facilities ("SEFs"). However, it noted that the SEF compliance program is "still in its embryonic stage." The NFA stated that, as its regulatory responsibilities become more clear, it will build a more comprehensive SEF regulatory staff.

See: NFA Letter.