Security Futures Promotional Material

Promotional Material

• Standardized oral presentations

• Publications in newspapers or magazines

• Broadcasts over TV, radio, or other electronic medium

Promotional Material

• Standardized reports, letters, publications

• Any other written material

Security Futures Promotional Material

• Promotional material that specifically mentions security futures

• What it’s not:– Promotional material that only includes

reference to security futures as one of the services offered by the Member

Security Futures Promotional Material

• These rules apply to:– FCMs and IBs who are not NASDR

members– FCMs and IBs who advertise using security

futures promotional material

Case Study

Requirements

• For security futures promotional material:– That which reaches a mass audience– All other promotional material

Mass Audience

• Standard Promotional Material:– TV– Radio– Newspaper/Magazine advertisements– Mass mailings– Web sites or other similar electronic

communications

Mass Audience

• Security futures promotional material can only include:– A general description of the SF being

offered– Name of the Member– Contact information for obtaining SF

disclosure statement

Mass Audience

• A “General Description” includes:– Contract specifications– Margin requirements– How the products will be traded

• Screen-based vs. open outcry

• Futures or Securities account

Mass Audience

• Filing requirements:– Promotional material that reaches a mass

audience must be submitted for NFA review and approval 10 days prior to first use

All Other Promotional Material

• Security futures disclosure statement:– Must accompany or precede all other types

of promotional material

All Other Promotional Material

• Must include:– Name of Member– Date material was first used– A statement that security futures are not

suitable for all customers

All Other Promotional Material

• Must NOT include:– Any statement suggesting that SF positions

may be liquidated at any time

– Any cautionary statement, caveat or disclaimer that:

• Is not legible

• Attempts to disclaim responsibility for the content of the promotional material, or

• Is misleading or otherwise inconsistent with the content of the material

All Other Promotional Material

• Statistical tables, charts or graphs:– Must include the source of the information

All Other Promotional Material

• Claims, comparisons, recommendations or statistics:– Must state that supporting documentation is

available upon request

Case Study

All Other Promotional Material

• Trade recommendations– Past– Future

All Other Promotional Material

• Current trade recommendations must:– Have a reasonable basis for

recommendations

– Disclose any material conflicts of interest in the underlying security

– Provide contact information for obtaining a list of prior recommendations

– Offer to support the recommendation

All Other Promotional Material

• Past trade recommendations:– The SF

– The underlying security

– A derivative thereof

– The SF recommended

All Other Promotional Material

• Past trade recommendations:– Must set forth all recommendations

regarding the same SF within the last year

– The price at the time of the recommendation

– The price or price range within which the recommendation was to be acted upon

– The general market conditions during the period covered

All Other Promotional Material

• Soliciting for SF managed account programs:– The actual past performance of customer’s

trading the program

– If none, must state that the program is unproven and, if applicable, comply with hypothetical restrictions

Testimonials

• Testimonials must be representative of all reasonably comparable accounts

• Promotional material must state that the testimonial is not indicative of future performance or success

• Promotional material must state if the testimonial was paid for

All Other Promotional Material

• Supervisory requirements:– Promotional material must be reviewed and

approved in writing by a security futures principal

– All other aspects of NFA Compliance Rule 2-29 pertain to SF promotional material

QUESTIONS?