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April 22, 2020
CTA Members: Amendments to NFA Compliance Rule 2-29 and related Interpretive Notice now effective
NFA Compliance Rule 2-29 and Interpretive Notice 9003 – NFA Compliance Rule 2-29: Communications with the Public and Promotional Material require, among other things, that past performance used in promotional material be presented net of all commission, fees and expenses. NFA recently amended these requirements to allow commodity trading advisor (CTA) Members that are also SEC registered investment advisers (RIA) to present past performance to eligible contract participants (ECP) on a gross basis in non-public, one-on-one presentations. To rely on this limited exception, a CTA Member/RIA must:
- Provide the ECP client with a written disclosure that the performance results are presented on a gross basis and do not reflect the deduction of fees and expenses, which will reduce the client's returns; and
- Offer to provide the ECP client with the performance results net of any fees and expenses agreed upon by the CTA Member and the ECP client at or prior to exercising discretion over the client's account.
These amendments are effective immediately.
More information on these amendments is available in the March 5, 2020 submission letter to the CFTC. If you have any questions regarding these amendments, please contact Mary McHenry, Associate Director, Compliance (312-781-1420 or email@example.com).