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.
