NFA Proposes Adoption Of CPO Internal Control Systems Interpretive Notice

The National Futures Association ("NFA") proposed adoption of an Interpretive Notice that requires commodity pool operators ("CPOs") to adopt internal control systems to deter fraud, protect customer funds and pool assets, and assure the accuracy of pool records.

The Interpretive Notice will become effective 10 days after receipt of the submission by the CFTC, unless otherwise determined. The principal requirements of the Interpretive Notice are set forth below.

Internal Controls: The Interpretive Notice requires that CPOs have a robust control environment, including by implementing written policies to comply with applicable NFA and CFTC requirements. A CPO's written internal control policies should (i) explain the firm's internal controls, (ii) subject all personnel, including senior management, to internal control procedures, (iii) include escalation procedures for reporting individuals seeking to circumvent internal control procedures, and (iv) include