NFA proposed a new interpretive notice to NFA Compliance Rule 2-9(d) ("Supervision") that would require swap dealers ("SDs") and major swap participant members ("SD Members") to establish a supervisory program for the use of marketing materials. NFA defines "marketing material" as a standardized document used to solicit a counterparty to enter into swap transactions with the SD Member.
NFA stated that an "adequate" supervisory system must include written policies and procedures for (i) reviewing and approving marketing materials, (ii) training employees on appropriate marketing materials, and (iii) recordkeeping. Additionally, NFA stated that such program should be "designed to reasonably ensure" compliance with NFA and CFTC rules concerning fraudulent and deceptive practices.
The interpretive notice will go into effect 10 days after submission to the CFTC, assuming there is no CFTC objection.
Commentary
Much of the interpretive notice is consistent with general expectations of regulated firms involved in sales of products to customers. However, if the notice is adopted (and it is drafted to become effective in 10 days unless the CFTC determines to review the notice for approval), then SDs should review their policies and procedures to ensure consistency with the new interpretations. Among other things, the interpretive notice sets forth specific expected procedures for "general" (intended for all counterparties or groups of counterparties) audiences and those that are "tailored to or focused on a particular group of counterparties."
Primary Sources
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