It can be difficult to keep track the various regulatory announcements and changes that occur during a month.  To better assist you Turnkey Trading Partners has put together a summary of the various regulatory notices and adjustments which have occurred since our last newsletter.

Effective Date for Amendments to NFA’s Promotional Material Rules and Interpretive Notices

NFA Compliance Rules 2-29 and 2-36 and related Interpretive Notices establish requirements for a Member’s communications with the public and use of promotional material. NFA recently amended these requirements to clarify their applicability, better reflect current technology and business practices and address the use of hypothetical performance in promotional material by commodity pool operator (CPO) Members operating pursuant to a CFTC Regulation 4.7 exemption. These amendments will become effective on January 1, 2020.

NFA amended Compliance Rule 2-29 to accomplish the following:

  • Clarify that the Rule is limited to futures commission merchant (FCM), introducing broker, CPO and commodity trading advisor Members1;
  • Expand the scope of the Rule to specifically apply to all commodity interest (not just futures-related) activities;
  • Update the definition section to replace the term “futures” with the term “commodity interest” and specify that promotional material includes communications disseminated through electronic communications;
  • Specify that a Member must submit to NFA for review and approval all forms of audio and video promotional material that make specific trade recommendations or discuss profit achieved in the past or that can be achieved in the future; and
  • Modify existing relief available to CPO Members operating pursuant to a CFTC Regulation 4.7 exemption to require those Members to generally comply with the Rule’s hypothetical performance disclaimer requirements, including certain requirements set forth in the NFA Interpretive Notice entitled Compliance Rule 2-29: Use of Promotional Material Containing Hypothetical Performance Results(e.g., requirements related to extracted performance and composite performance).

NFA also amended Compliance Rule 2-36(g) to specify that forex dealer members (FDM) and Associates of FDMs must comply with certain provisions of Compliance Rule 2-29 and related Interpretive Notices. Finally, NFA made corresponding amendments to the related NFA Interpretive Notices.

1Any Member firm that is dually registered as a swap dealer and an FCM is required to comply with these provisions with respect to its FCM activities.

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