United States:
Effective Date Set for NFA Amendments To Interpretive Notice On "Break-Even" Analysis
23 December 2019
Cadwalader, Wickersham & Taft LLP
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NFA's recently amended
Interpretive Notice Compliance Rule 2-13: Break-Even Analysis
will become effective on February 1, 2020. The
Interpretive Notice contains guidance for disclosing a fund's
break-even point to clients.
As
previously covered, a "break-even analysis" informs
CPOs' participants of how expenses and fees outlined in
CPOs' disclosure documents may impact the potential
profitability of participants' investments. The
amendments clarify, among other things, the types of interest
that may be used to offset expenses in such analysis, the minimum
investment amounts that must be included in calculating the
break-even point, and the fees and expenses that must be included
in such analysis, such as how such fees and expenses affect the
break-even analysis, and how they should be reflected in
presentations to participants.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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