Notices to Members

September 12, 2018

Effective date of amendments to the risk disclosure statement for security futures contracts

Amendments to NFA's Interpretive Notice entitled NFA Compliance Rule 2-30(b): Risk Disclosure Statement for Security Futures Contracts will become effective on October 12, 2018.

NFA Compliance Rule 2-30(b) requires Members and Associates who are registered as brokers or dealers under Section 15(b)(11) of the Securities Exchange Act of 1934 to provide a risk disclosure statement for security futures products (SFP) to a customer at or before the time the Member approves the account to trade SFPs. This statement describes the characteristics and risks of SFPs. NFA updated the security futures risk disclosure statement to reflect the securities industry's current T+2 settlement cycle for U.S. equity trades, as well as Securities Investor Protection Corporation's (SIPC) current coverage limit for cash protection of $250,000.

The updated risk disclosure statement replaces the prior statement. NFA also created a 2018 supplement to the security futures risk disclosure statement (2018 supplement), which is limited to the updates described above. Members and Associates must distribute either the updated risk disclosure statement or the 2018 supplement to all customers that have been approved to trade SFPs no later than the time an SFP transaction confirmation is delivered to a customer. Additionally, Members and Associates must provide the updated risk disclosure statement to all new customers at or before the time the Member approves the account to trade SFPs.

More information regarding these amendments can be found in NFA's June 7, 2018 and August 21, 2018 submission letters to the CFTC.