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How NFA safeguards confidential information

As a self-regulatory organization, NFA collects and maintains a great deal of information about its Members, their associates and its client exchanges. Virtually all of the information NFA obtains is confidential, although some information (e.g., registration status and history, and futures industry disciplinary actions) is available to the public through the Background Affiliation Status Information Center (BASIC) on NFA's Web site. NFA has always focused on the importance of guarding confidential information, and the Association evaluates its practices and procedures in this area on a regular basis.

"Integrity, not only in the markets, but within NFA itself, is paramount to the success that NFA has achieved over its history," says Executive Vice-President and COO Dan Driscoll. "In its 22 years of existence, staff is not aware of any breach in the confidentiality of Member data that resulted in any harm to its Members."

NFA has taken a number of steps to ensure that confidential information prepared or obtained during the course of its work is not improperly disclosed by employees, Board members, committee members and consultants. For example, NFA Bylaw 514 prohibits Directors from using or disclosing non-public information for any purpose other than their official NFA duties.

In addition, all NFA employees must complete NFA's Code of Professional Conduct, which includes a number of inquiries asking employees if they have ever disclosed any confidential non-public information. Employees complete, sign and date the Code when they are hired and annually thereafter.

"Each department also has its own policies and procedures specific to its own operations for maintaining the confidentiality of information," says Driscoll, "and we update these policies and procedures as necessary. Basically, we follow a very simple and straightforward policy: if the information is not disclosed through our BASIC system, it is not appropriate for public dissemination."

One of the most important company-wide safeguards addresses the protection of NFA's computer networks and the information in the Association's databases. NFA has a number of computer security standards and practices in place and annually contracts with an outside security professional to perform a network assessment of NFA's computer systems.

As part of its review of the effectiveness of self-regulation in the futures industry, the CFTC recently asked SROs to reexamine their policies and procedures developed to protect the confidential information obtained in the course of performing their SRO activities. They also encouraged SROs to publicize their policies and safeguards so market participants can continue to have faith in the integrity of the self-regulatory process.

"Our review of our policies and procedures has underscored our continued commitment to guarding confidential information," says Driscoll. "We have always given the task a high priority and we always will."

NFA is the premier independent provider of efficient and innovative regulatory programs that safeguard the integrity of the derivatives markets.
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