Notices to Members
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August 17, 2020
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 became effective on August 14, 2020.
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 recent amendments to CFTC Regulation 41.25, which governs position limits and position accountability for SFPs. Additionally, NFA made other minor, technical updates to the statement.
The updated risk disclosure statement replaces the prior statement. NFA also created a 2020 supplement to the security futures risk disclosure statement (2020 Supplement), which only addresses the amendments described above. Members and associates must distribute either the updated risk disclosure statement or the 2020 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 May 29, 2020 submission letter to the CFTC.