National Futures Association throws the rule book at social networkers
10 December 2009 | 6346 views | 0
The US National Futures Association has set out highly restrictive compliance rules on the use of social networking channels such as blogs, chatrooms, forums, facebook and Twitter by member financial firms.
In a letter to the Commodity Futures and Trading Commission, NFA SVP and general counsel Thomas Sexton, promises to take a tough line on the use of emerging social media channels by the self-regulatory body's 4200 member firms and 55,000 associates.
Following a year-long review, the NFA contends that online social networking groups have changed the way people make trading decisions, and as such present opportunities for posters to "spread unsubstantiated rumors and intentional misrepresentations".
The watchdog proposes that blogs and facebook pages hosted by members should be tightly supervised to monitor all incoming and outgoing communications, status updates and off-site hyperlinks.
The NFA says firms should also introduce strict policies regarding employee conduct.
"These policies could require employees to notify the employer if they participate in any on-line trading or financial communities and provide screen names so that the employer can monitor employees' posts periodically," states the notice. "Alternatively, the policy could simply prohibit participation in such communities."
The updated guidance comes just weeks after US regulatory body Finra formed a Social Networking Task Force to explore the compliance challenges posed by the explosion of interest in Web 2.0 communications, noting that personal and corporate interest in the use of such sites for financial information sharing and networking could not be abated.