Newedge Disclosures for Americas
Newedge USA, LLC (“NUSA”) is required to provide you with the following disclosures.
PAYMENT FOR ORDER FLOW (SEC RULE 607)
NUSA receives payment for order flow in return for routing customer orders in equity and equity options securities (“Covered Securities”) to certain market centers for execution. Such payments typically take the form of liquidity rebates and credits. While NUSA may consider payment for order flow in making routing decisions involving Covered Securities, we are committed to providing our customers with best execution. A more complete description of the Firm’s payment for order flow practices may be found using the “Disclosure” tab on its website, www.newedge.com.
DISCLOSURE OF ORDER ROUTING INFORMATION (SEC RULE 606)SEC Rule 606 requires all US-registered broker-dealers that route orders in equity and equity option securities to make available quarterly reports that present a general overview of their routing practices. The reports must identify the significant venues to which customer orders were routed for execution during the applicable quarter, and disclose the material aspects of the broker-dealer's relationship with such venues. In addition, the rule requires broker-dealers to disclose, upon customer request, the venues to which the customer's individual orders were routed.
- Material Aspects of Relationships with Market Centers
- SEC Rule 606 Report Disclosure
- SEC Rule 606 Q4 2013
FINRA PUBLIC DISCLOSURE PROGRAM (FINRA RULE 2267)
FINRA’s BrokerCheck Hotline provides certain information regarding the disciplinary history of FINRA members and their associated persons in response to written inquiries, electronic inquiries, or telephonic inquiries via FINRA’s (1) toll-free telephone listing (1-800-289-9999), or (2) website (www.finra.org). Additionally, FINRA has prepared an investor brochure that includes information describing BrokerCheck.
SECURITIES INVESTOR PROTECTION CORPORATION
NUSA is a member of the Securities Investor Protection Corporation (“SIPC”), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org.
NYSE FLOOR DISCLOSUREAs a member of the New York Stock Exchange (“NYSE”), NUSA is required to make the following disclosure to you regarding orders it may transmit on your behalf to the floor of the NYSE for execution. Specifically, after transmitting such an order to the NYSE, the floor broker handling the order may permit the appropriate specialist to trade on parity with the order for some or all of the executions associated with filling that order, where such permission would not be inconsistent with the floor broker’s best execution obligations.
OPTIONS SOLICITATIONS NOTICE
Newedge USA, LLC (“NUSA”) provides you with the following regulatory disclosure relating to your purchase and sale of US-listed equity options.
INTERNATIONAL SECURITIES EXCHANGE ("ISE") NOTICE
When handling an order of 500 contracts or more on your behalf, NUSA may solicit other parties to execute against your order and may thereafter execute your order using the International Securities Exchange’s (“ISE”) Solicited Order Mechanism. This functionality provides a single-price execution only, so that your entire order may receive a better price after being exposed to the ISE’s participants, but will not receive partial price improvement. For further details on the operation of this ISE Mechanism, please refer to ISE Rule 716, which is available at www.ise.com under “Membership, Rules and Fees – Regulatory – ISE Rules.”
CHICAGO BOARD OPTIONS EXCHANGE ("CBOE") NOTICE
When handling an order of 500 contracts or more, NUSA may solicit other parties to execute against your order and may thereafter execute your order using the Chicago Board Options Exchange’s (“CBOE”) AON AIM Solicitation Mechanism. This functionality provides a single-priced execution, unless the order results in price improvement for the entire quantity, in which case multiple prices may result. For further details on the operation of this mechanism, please refer to CBOE Rule 6.74B, which is available at www.cboe.org/Legal.
EXTENDED HOURS TRADING DISCLOSURENUSA would like to advise clients of the risks associated in all markets with trading outside of normal market hours. Customers should be aware of these risks prior to placing orders in the extended hours sessions. As such, please be aware of the following when trading during extended hours trading sessions:
You may place orders as and when permitted by NUSA for execution outside of regular trading hours (i.e., the hours of 9:30 a.m. to 4:00 p.m. Eastern Time) except on those days on which NUSA chooses not to accept orders outside of regular trading hours. NUSA may, at any time and without notice, change or modify its hours of operation (including the hours during which it accepts orders outside of regular trading hours) or amend the terms that apply to orders accepted outside of regular trading hours.
2. Risk Factors
a. Risk of Lower Liquidity. Liquidity refers to the ability of market participants to buy and sell securities. Generally, the more orders that are available in a market, the greater the liquidity. Liquidity is important because with greater liquidity it is easier for investors to buy or sell securities, and as a result, investors are more likely to pay or receive a competitive price for securities purchased or sold. There may be lower liquidity in extended hours trading as compared to regular market hours. As a result, your order may only be partially executed, or not at all.
b. Risk of Higher Volatility. Volatility refers to the changes in price that securities undergo when trading. Generally, the higher the volatility of a security, the greater its price swings. There may be greater volatility in extended hours trading than in regular market hours. As a result, your order may only be partially executed, or not at all, or you may receive an inferior price in extended hours trading than you would during regular markets hours.
c. Risk of Changing Prices. The prices of securities traded in extended hours trading may not reflect the prices either at the end of regular market hours, or upon the opening of the next morning. As a result, you may receive an inferior price in extended hours trading than you would during regular market hours.
d. Risk of Unlinked Markets. Depending on the extended hours trading system or the time of day, the prices displayed on a particular extended hours system may not reflect the prices in other concurrently operating extended hours trading systems dealing in the same securities. Accordingly, you may receive an inferior price in one extended hours trading system than you would in another extended hours trading system.
e. Risk of News Announcements. Normally, issuers make news announcements that may affect the price of their securities after regular market hours. Similarly, important financial information is frequently announced outside of regular market hours. In extended hours trading, these announcements may occur during trading, and if combined with lower liquidity and higher volatility, may cause an exaggerated and unsustainable effect on the price of a security.
f. Risk of Wider Spreads. The spread refers to the difference in price between what you can buy a security for and what you can sell it for. Lower liquidity and higher volatility in extended hours trading may result in wider than normal spreads for a particular security.
MARGIN DISCLOSURE STATEMENTPursuant to FINRA Rule 2264, NUSA is furnishing this document to you to provide some basic facts about purchasing securities on margin, and to alert you to the risks involved with trading securities in a margin account. Before trading stocks in a margin account, you should carefully review the margin agreement provided by NUSA. Consult your NUSA account representative regarding any questions or concerns you may have with your margin accounts.
When you purchase securities, you may pay for the securities in full or you may borrow part of the purchase price from NUSA. If you choose to borrow funds from NUSA, you will open a margin account with NUSA. The securities purchased are NUSA’s collateral for the loan to you. If the securities in your account decline in value, so does the value of the collateral supporting your loan, and, as a result, NUSA can take action, such as issue a margin call and/or sell securities in your account, in order to maintain the required equity in the account.
It is important that you fully understand the risks involved in trading securities on margin. These risks include the following:
- You can lose more funds than you deposit in the margin account. A decline in the value of securities that are purchased on margin may require you to provide additional funds to the firm that has made the loan to avoid the forced sale of those securities or other securities in your account(s).
- NUSA can force the sale of securities in your account(s). If the equity in your account falls below the maintenance margin requirements under the law, or the firm’s higher "house" requirements, NUSA can sell the securities in your account to cover the margin deficiency. You also will be responsible for any shortfall in the account after such a sale.
- NUSA can sell your securities without contacting you. Some investors mistakenly believe that a firm must contact them for a margin call to be valid, and that the firm cannot liquidate securities in their accounts to meet the call unless the firm has contacted them first. This is not the case. Most firms will attempt to notify their customers of margin calls, but they are not required to do so. However, even if a firm has contacted a customer and provided a specific date by which the customer can meet a margin call, the firm can still take necessary steps to protect its financial interests, including immediately selling the securities without notice to the customer.
- You are not entitled to choose which security in your margin account is liquidated or sold to meet a margin call. Because the securities are collateral for the margin loan, NUSA has the right to decide which security to sell in order to protect its interests.
- NUSA can increase its "house" maintenance margin requirements at any time and is not required to provide you with advance written notice. These changes in firm policy often take effect immediately and may result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause the member to liquidate or sell securities in your account.
- You are not entitled to an extension of time on a margin call. While an extension of time to meet margin requirements may be available to customers under certain conditions, a customer does not have a right to the extension.
NFA BASIC NOTICE
Pursuant to NFA Compliance Rule 2-4, NUSA is furnishing this document to you to provide information regarding the NFA’s Background Affiliation Status Information Center (“BASIC”). BASIC contains Commodity Futures Trading Commission (CFTC) registration and NFA membership information and futures-related regulatory and non-regulatory actions contributed by NFA, the CFTC and the U.S. futures exchanges. You can access BASIC by going to www.nfa.futures.org/basicnet.
To ensure the accuracy of your information on file, NUSA is furnishing this document to you to request that you notify your client services representative or account executive of any material changes to the following information:
- Name and address, and principal occupation or business;
- Current estimated annual income and net worth;
- Approximate age or date of birth;
- Previous investment and futures trading experience; and
- Other relevant information.
DAILY MARK DISCLOSURE
Pursuant to CFTC Regulation 23.431(d), Newedge USA, LLC (the “Firm”) is furnishing you with the following information:
(1) For cleared swaps, the counterparty (other than a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant) has the right to receive, upon request, the daily mark from the appropriate derivatives clearing organization.
(2) For uncleared swaps, the counterparty (other than a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant) shall be provided with a daily mark, which shall be the mid-market mark of the swap. The mid-market mark of the swap shall not include amounts for profit, credit reserve, hedging, funding, liquidity, or any other costs or adjustments. The daily mark shall be provided to the counterparty during the term of the swap as of the close of business or such other time as the parties agree in writing.
(3) Below is general information regarding the methodologies and assumptions used to prepare the daily mark in respect to uncleared swaps:
(i) For FX and Metals swaps, the daily mark is calculated using spot and forward prices provided by a third-party vendor.
(ii) For Energy swaps, the daily mark is calculated using futures settlement prices and query of broker information provided by a third-party vendor.
(iii) For IRS products, the daily mark is calculated using market data and yield curve information provided by a third-party vendor.
(iv) For products based off exchange traded futures, the daily mark is calculated using futures pricing information provided by the exchanges.
(v) Please note that the information listed in (i-iv) of this section is only general information regarding the calculation of the daily mark and is subject to change. For more specific details regarding the calculation of the daily mark, please contact the Firm’s compliance department.
(4) Additional information regarding the daily mark in respect to uncleared swaps:
(i) The daily mark may not necessarily be a price at which the Firm would agree to replace or terminate the swap;
(ii) Calls for margin may be based on considerations other than the daily mark provided to the counterparty; and
(iii) The daily mark may not necessarily be the value of the swap that is marked on the books of the Firm.
PLEASE NOTE: This disclosure does not apply until Newedge USA, LLC registers as a Swap Dealer.
CUSTOMER COMPLAINT NOTICE
Customer Complaints regarding Newedge USA, LLC should be directed to the following:
The Compliance Department
Newedge USA, LLC
550 W. Jackson Blvd. Suite 500
Chicago, IL 60661
ICE FUTURES US REBATE DISCLOSURE
Newedge USA, LLC will receive a credit of 50 cent per side for each ICE Gran futures contract that it clears.
NOTICE RELATING TO FAILS TO DELIVER ARISING FROM CUSTOMER SALE TRANSACTIONS IN U.S. EQUITY SECURITIES
Please be advised that under Rule 204 of Regulation SHO, in connection with any customer sale transaction that results in a fail to deliver of a U.S. equity security at a registered clearing agency (FTD), prior to the open of trading on T+4 (in the case of short sales) or T+6 (in the case of long sales, or short sales in connection with bona-fide market making activity), NUSA will immediately seek to resolve the fail by borrowing securities to make delivery or by engaging in a “buy-in” transaction in which NUSA purchases the securities in the market in satisfaction of its delivery obligation. NUSA reserves the right to charge the seller for the cost of such close-out borrow or buy-in transactions. Clients may sustain a loss in connection with any buy-ins required to cover a FTD for your account. You will be held responsible for any costs and/or losses that NUSA may incur in connection with executing any buy-ins to close out open FTD positions or carrying costs to borrow security until FTD is cleaned up.
In some cases, though you may purchase securities to close out a short position prior to or on settlement date, the SEC specifically prohibits Newedge from reducing your short position by the amount of shares purchased. Therefore, in those cases Newedge may still be required to buy-in the entire amount of the short position. This may result in a net long position for your account.
DISCLOSURE OF MATERIAL CONFLICTS OF INTEREST
- Disclosure of FCM Material of Conflicts of Interest PDF
- Swap Dealer Material Conflicts of Interest PDF
Newedge USA, LLC may generally consider, among other items, the following factors in determining whether or not to accept a clearing customer for onboarding:
- Risk profile of the entity;
- Existing relationship and exposure of Newedge USA, LLC and its affiliates to the entity; and
- Legal jurisdiction of entity.
In addition, any customer considered for onboarding must have the required licenses and registrations and must be approved by the Firm’s AML/FCP department and the Firm’s credit committee prior to acceptance as a clearing customer.
VOICE RECORDING DISCLOSURE
In accordance with applicable laws and regulations, Newedge records certain telephone conversations with outside parties. By communicating with Newedge, you consent to the voice recording of conversations with personnel of Newedge. For the purposes of this disclosure “Newedge” refers to Newedge Group SA and all of its worldwide branches and subsidiaries.