Promotional Material Guidelines

When National Futures Association (“NFA”) member firms advertise they open themselves up to regulatory risk. Without proper consideration, even the most innocent and well-intended efforts to promote a business can land CFTC registered firms in hot water.  Back in 2020, the NFA adopted changes to rules 2-29 and 2-36, both of which aim to protect customers from misleading or fraudulent promotional material. All member firms are strongly encouraged to read the entirety of NFAs rule and interpretive notice adjustments.

Audio and Visual Promotional Material

Historically only television and/or radio advertisements which made a specific trade recommendation or reference to profit potential had to be submitted to the NFA for review prior to first use. Starting in 2020 however, the NFA requires ANY “Audio and Video” materials that make specific trade recommendations or profit references subject to review at least ten (10) days prior to use. In making this change NFA cited the significant expansion of media distribution platforms over the past 10 years. According to the NFA, these platforms have allowed some members to avoid the intended pre-review obligation and allowed some firms the ability to use mass media distribution to mislead the public.

NFA’s adjustment of the pre-review obligation to include any “Audio and Video” materials may impact a wide number of firms.  This includes groups that produce daily market commentaries using video services, audio streaming services, or other various online broadcast mediums.  Now more than ever it is also important for firms to re-familiarize themselves with NFA Interpretive Notice 9039.  Any CFTC registrant subject to NFA’s promotional material rules that is having difficulty in discerning whether or not current marketing behavior may be subject to NFAs new audio and video pre-review obligations should contact Turnkey for assistance.

Hypothetical Trading Results & 4.7 Exempt Firms

Another significant change NFA made relates to the use of hypothetical trading results. This also includes results which are marketed and solicited exclusively toward Qualified Eligible Participants (“QEP”) under CFTC regulation 4.7.  Exempt Commodity Trading Advisors (“CTA”) and Commodity Pool Operators (“CPO”) need to ensure they take note of this significant change.

Although promotional material directed exclusively toward QEPs is not specifically required to comply with Compliance Rule 2-29(c)(3), the presentation of hypothetical performance results in promotional material is subject to all other NFA rules. Specifically, NFA cites Compliance Rule 2-29(b)(1), which prohibits the use of misleading or deceptive promotional material. NFA goes on to state that even promotional material directed exclusively to QEPs, if it does not include past performance information as required under Compliance Rule 2-29(c)(3), would be seen as misleading to NFA.

Similarly, Introducing Brokers (“IB”) and funds that utilize hypothetical allocations across multiple trading advisors in promotional materials must be careful. NFA has stated that these types of presentations can no longer be labeled “pro-forma” as it believes this term to be misleading. Even if the underlying returns of CTAs are factual, the combination of these returns in a unique portfolio with no trading history is viewed as being hypothetical. As such, any presentation of this type must conform to NFA’s applicable hypothetical presentation rules.  It is critical that firms review NFA Interpretive Notice 9025 on this topic.

Changed Definitions

NFA has been harmonizing its rules with the Dodd Frank Wallstreet Reform Act for the last several years. As with other rules, NFA has done away with the blanket use of the word “Futures” to apply to activities under its jurisdiction. Rather, NFA is now using the term “commodity interest” to ensure that all promotional material subject to its review falls under its regulatory authority. Firms should consider this change in verbiage and adjust marketing materials and procedures accordingly.

Claims Regarding Seasonal Trades

Some Members and APs utilize promotional material which emphasizes that the seasonal nature of supply and demand drives prices higher or lower. These discussions can be misleading and violate NFA Compliance Rules 2-29 and 2-36 when: They fail to mention that futures prices have already factored in the seasonal aspects of supply and demand; The communication cites historic data which appears to demonstrate that certain trades produce dramatic profits year in and year out; or actual customers have not experienced the types of profits touted in the material.


If you would like to discuss any promotional materials dos and don’ts with our experienced staff, Turnkey would be happy to assist. Please contact us today (312) 324-0040 or please click here today!