NFA Interpretive Notices on Advertising Practices – Applicable to NFA Forex Members

Earlier we discussed a release by the NFA in which they expressed the desire to apply the NFA Compliance Rule 2-29 to current NFA Members who are involved in the off-exchange forex markets (see NFA Proposes Rule 2-29 Apply to Forex Members).  We believe that the CFTC will approve the NFA’s request and thus certain aspects of Compliance Rule 2-29 will apply to NFA Members who trade forex.  We also believe that once the forex registration provisions are promulgated by the CFTC, this compliance rule will also apply to those forex managers.  In anticipation of such developments, we’ve summarized below (and linked to) the major interpretive notices that the NFA has released on Compliance Rule 2-29.

The NFA released seven different interpretive notices dealing with certain items related to NFA Compliance Rule 2-29.  Many of the comments were re-iterations of what commodity pool operators or commodity trading advisors should not do when they market their investment programs.  Some of the information presented was new and informative. We believe the following interpretive notices are important for CPOs and CTAs to read and understand as well as future forex registrants.

NFA Interpretive Notices on Compliance Rule 2-29

(links to articles at

Filing of promotional material with the NFA – In this interpretive notice the NFA outlines its review program for promotional materials submitted by NFA members prior to the first use of the promotional materials.  Generally the NFA will review the promotional materials and get back to the member within 21 calendar days.

NFA release on hypothetical performance results – The release below presents a non-exclusive list of practices which the NFA believes deserve special attention when drafting marketing materials which contain hypothetical performance results.

NFA on Deceptive Advertising – Here the NFA provides specific examples of advertising which it believes misleads potential investors.

NFA on Deceptive Advertising II – This notice goes further than the first notice and defines more practices which the NFA believes are deceptive.  These practices include: certain marketing practices which discuss leverage and providing historical pricing information on products which the advisory is not soliciting.   This notice makes clear that it will be wise to have your attorney review all marketing material before it goes out to potential investors.

NFA on High Pressure Sales Tactics – The NFA interpretive notice provides a few non-exclusive examples of conduct which would fall under the “high pressure sales tactics” category.  These include: creating a sense of undue emergency for the customer, dissuading customers from seeking outside advice, threatening customers, and making phone calls to potential customers at unusual times or with unusual frequency.

NFA on Radio and TV ads – the interpretive notice below the requirement for Members to submit all radio and television ads to the NFA for review within 10 days of the anticipated distribution date.  Additionally, the notice reminds members that their advertising cannot contain a variety of misleading information as detailed in other interpretive notices.  These prohibited practices include certain claims involving: seasonal trades, historic price moves, certain profit projections, and “cherry picked” trades.  Additional, the NFA discusses its view on “blind ads.”

NFA on Past or Projected Performance – This interpretive notice is generally directed at those NFA Members who are also registered as broker-dealers with the SEC.  The notice is designed to give these Members an overview of the requirements for past and projected performance.

If you have any questions on this interpretive notice or if it applies to your firm, please contact us to discuss your situation.  Other related forex law articles include (many from our sister site, Forex Law Blog):

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