On May 28, the National Futures Association (NFA) submitted to the Commodity Futures Trading Commission (CFTC) proposed amendments to NFA Interpretive Notice 9050 regarding risk disclosure statements for security futures contracts. NFA Compliance Rule 2-30(b) and Interpretive Notice 9050 require NFA 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 uniform disclosure statement for security futures products (SFPs) to a customer at or before the time the Member approves the account to trade SFPs. The proposed amendments update the Risk Disclosure Statement section of the Interpretive Notice to account for a recent amendment to CFTC Regulation 41.25, which, among other things:
- increases the default maximum level of equity-based SFP limits and provides guidance as to when a designated contract market (DCM) may adopt position limits for non-equity based SFPs;
- modifies the criteria for setting a higher position limit and position accountability level based on estimated deliverable supply;
- adjusts the time during which position limits or position accountability must be in effect; and
- provides that a DCM may exercise discretion in applying limits to either a trader’s net position or a trader’s position on the same side of the market.
Absent additional review by the CFTC, the NFA may establish an effective date for the amendments as early as 10 days after receipt of the submission by the CFTC.
A copy of the proposed amendments is available here.