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Notice I-19-30

December 17, 2019

Effective Date for Amendments to NFA's Interpretive Notice: NFA Compliance Rule 2-13: Break-Even Analysis

NFA Compliance Rule 2-13 and the related Interpretive Notice entitled Compliance Rule 2-13: Break-Even Analysis require commodity pool operator (CPO) Members using a disclosure document under CFTC Regulation 4.21 to include a specified break-even analysis in that document. NFA recently amended the Interpretive Notice to provide additional guidance for preparing and presenting this break-even analysis and to update the break-even analysis example to illustrate these clarifications. These amendments will become effective on February 1, 2020 and accomplish the following:

  • Clarify that only interest expected to be earned by a pool's investment in high credit quality, short-duration instruments or deposits associated with the pool's buy-and-hold cash management strategies may be used to offset expenses in the break-even analysis;

  • Clarify that the break-even analysis must be based on the minimum initial investment amount for a participant and the minimum total subscription amount required for a pool to commence trading;

  • Specify that additional break-even presentations may be included using a higher amount of anticipated total funds raised if the CPO anticipates that fees and expenses per participant will be affected;

  • Specify that fees and expenses incurred in connection with a pool's participation in other non-commodity interest related investments must be included in the break-even analysis;

  • Clarify how redemption fees should be reflected in a break-even analysis; and

  • Clarify how to calculate the incentive fee when a pool or participant expects to incur an incentive fee prior to breaking even.

More information on these amendments is available in the August 29, 2019 submission letter to the CFTC. If you have any questions regarding these amendments, please contact Mary McHenry, Associate Director, Compliance (312-781-1420 or or Kaitlan Chi, Manager II, Compliance (312-781-1219 or

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