NFA Notifies Members of Effective Date for Compliance Rules on CTA Reporting

NFA changes to performance reporting and disclosure requirements for CTAs will become effective on February 1, 2020.

As previously covered, the NFA proposed amending NFA Compliance Rule 2-34, as well as the related Interpretive Notice titled "NFA Compliance Rule 2-34: Performance Reporting and Disclosures" (the "Performance Reporting and Disclosures Notice"), to provide additional guidance. The amendments to Compliance Rule 2-34 and the Performance Reporting and Disclosures Notice will, among other things:

  • extend confirmation requirements to accounts that have amounts exceeding that which the CTA is directed to use as the base for trading decisions; and

  • require that written confirmation provided to clients include an explanation of the impact that cash additions, cash withdrawals and net performance will have on the nominal account size.

In addition, the Performance Reporting and Disclosures Notice will provide further guidance on existing requirements under Compliance Rule 2-34, such as that monthly performance returns must be summed rather than compounded when calculating rates of return for certain programs (i.e., those where net performance does not affect the nominal account size).

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