ELECTRONIC TRADING AND ORDER ROUTING. Electronic Trading and Order Routing

Transcription

1 ELECTRONIC TRADING AND ORDER ROUTING Electronic Trading and Order Routing Electronic trading and order routing systems differ from traditional manual order routing methods. Transactions using an electronic system are subject to the rules and regulations of the trading centers offering the system and/or listing the contract. You are responsible for directing your trading in accordance with the relevant policies, procedures and trading rules of the trading centers or systems to which your orders are routed. Before you engage in transactions using an electronic system, you should carefully review the rules and regulations of the trading centers (ECN s, ATS, or other third party trading destinations) offering the system and/or listing the instruments you intend to trade. Differences Among Electronic Trading Systems: Trading or routing orders through electronic systems varies widely among the different electronic systems. You should consult the rules and regulations of the exchange offering the electronic system and/or listing the contract traded or order routed to understand, among other things, in the case of trading systems, the system's order matching procedure, opening and closing procedures and prices, error trade policies, and trading limitations or requirements, and, in the case of all systems, qualifications for access and grounds for termination and limitations on the types of orders that may be entered. Each of these matters may present different risk factors with respect to trading on or using a particular system. Each system may also present risks related to system access, varying response times, and security. In the case of Internet-based systems, there may be additional types of risks related to system access, varying response times and security, as well as risks related to service providers and the receipt and monitoring of electronic mail. Risks Associated with System Failure: Trading through an electronic trading or order routing system exposes you to risks associated with system or component failure. In the event of system or component failure, it is possible that, for a certain time period, you may not be able to enter new orders, execute existing orders, or modify or cancel orders that were previously entered. System or component failure may also result in loss of orders or order priority. In this regard, Customer must maintain alternative trading arrangements in addition to Customer's OpenBondX account in the event that the OpenBondX system is unavailable for any reason. Limitation of Liability: Trading centers offering an electronic trading or order routing system and/or listing the contract may have adopted rules to limit their liability, the liability of FCMs and software and communication system vendors, and the amount of damages you may collect for system failure and delays. These limitations of liability provisions vary among the trading centers. You should consult the rules and regulations of the relevant trading centers in order to understand these liability limitations. Internet and Telecommunication Services: To the extent that Customer or OpenBondX use Internet services to transport data or communications, OpenBondX disclaims any liability for interception of any such data or communications. OpenBondX is not responsible, and makes no warranties regarding, the access, speed, availability or security of Internet or network services. OPENBONDX LLC 1

2 BUSINESS CONTINUITY PLAN OpenBondX s Business Continuity Planning Overview Overview OPENBONDX has developed a Disaster Recovery and Business Continuity Plan ( Plan ) in the event that a function deemed critical to OPENBONDX s ongoing business operations fails. The plan will assist OPENBONDX to minimize any business operational issues that result from an unexpected event or disaster. OPENBONDX s policy is to respond to a Significant Business Disruption (SBD) by safeguarding employees lives and Company property, making a financial and operational assessment, quickly recovering and resuming operations, protecting all of the firm s books and records, and allowing customers to transact business. In the event that the Company determines that it is unable to continue business, OPENBONDX will assure customers prompt access to their funds and securities. Contacting Us If after a significant business disruption you cannot contact us as you usually do at /support@openbondx.com you should call our alternative number , or go to our website at If you cannot access us through either of those means, you should contact our Clearing Firm, SG Americas Securities, LLC at , and their BCP summary is at Types of disruptions OPENBONDX s plan anticipates two kinds of SBDs, internal and external. Internal SBDs affect only OPENBONDX s ability to communicate and do business, such as a failure of a critical system, or a fire in the OPENBONDX offices. External SBDs prevent the operation of the securities markets or a number of firms, such as a terrorist attack, a city flood, or a wide-scale, regional disruption. In the event of an SBD, OPENBONDX intends to continue its operations to the extent reasonable and practical under the circumstances and will place utmost priority in re-establishing the data and operational systems necessary to provide our customers with prompt access to their unsettled funds and securities, if applicable, and with the ability to close out open positions. We will continue to take orders through any of the methods that are available and reliable, and in addition, as communications permit, we will inform our customers what alternatives they have to send their orders to us. OPENBONDX does not maintain custody of customers funds or securities, as all securities are cleared on a DVP basis through our clearing firm. In the unlikely event that we determine we are unable to continue our business as a result of an SBD, we will assure customers prompt access to their unsettled funds and securities through our clearing firm. OPENBONDX S data-center is also in a separate location from its main office. OPENBONDX maintains a disaster recovery site ( DRS ) in Miami Beach, Florida which replicates much of the connectivity of our main office. In addition, OBX retains the services of a 3 rd provider to back up critical infrastructure and which backs up on a daily basis all intra-day tradingrelated records, and which has the ability to remotely add additional servers in various distributed locations. As well, our clearing broker has records of all customer activity that has been submitted to them. OPENBONDX LLC 2

3 BUSINESS CONTINUITY PLAN OPENBONDX s Plan foresees three general classes of business disruptions: 1. Significant but not catastrophic disruption at OPENBONDX s main office 2. Catastrophic disruption at OPENBONDX s main office 3. City-wide, regional or other disruption that temporarily limits access to and/or the functioning of the OPENBONDX main office and data center ( Office ) Significant but not Catastrophic Disruption at OPENBONDX s Office OPENBONDX has generally designed its systems, procedures and personnel structure such that there is substantial redundancy and cross-capability. Limited disruptions affecting communications lines, computer hardware, or other related systems typically can be addressed through use of redundant systems with similar capability which are available both in our main data center, and at our Miami Beach office and DRS. As necessary, control of the OPENBONDX Trading System will be shifted to the DRS. It is OPENBONDX s goal to have full trading system capability restored within two hours; however, the actual recovery time will be dependent on the exact scope of the business disruption. Catastrophic Disruption at OPENBONDX s Office The Company s response to a catastrophic disruption at our Office will depend on the extent of the damage. In the event of a total loss of OPENBONDX s Office, control of the OPENBONDX Trading System will be shifted to the DRS and essentially full functionality should be restored within two hours. To the extent that the DRS is not able to assume the data-processing duties of OPENBONDX s main office, we will coordinate with our clearing firm to permit customers to close out open positions, or advise customers to trade with other providers. In addition, as communications permit, we will inform our customers what alternatives they have to send their orders to us. Beyond the initial aftermath of the total loss of OPENBONDX s Office, the Company would evaluate the nature of the disruption, the availability of our systems and personnel, our financial condition, the condition of the national and global financial markets, and other factors, as appropriate, to determine whether to restore full brokerage operations or to discontinue brokerage operations and assist customers in transferring their accounts elsewhere. City-Wide, Regional or Other Disruption that Temporarily Limits Access and/or the Functioning of the OPENBONDX Office For a city-wide, regional or other disruption that temporarily limits access to and/or the functioning of the OPENBONDX Office, the Company s response would vary dependent upon the exact nature of the disruption and its impact on the financial markets and our DRS. These types of disruptions include the Company having to evacuate the Office temporarily due to a bomb threat or smoke damage on another floor. OPENBONDX s response would be similar to a catastrophic disruption to the OPENBONDX offices; however, restoration of full services would be quicker, but resumption time is dependent upon the exact nature of the disruption. Ongoing Enhancements The disaster recovery center is in a geographically separate location and is intended to be able to fully assume the functions of our main office in the event that it is incapacitated for any reason. We are continually devoting substantial resources to the enhancement of our disaster preparedness and business continuity planning. Please contact OPENBONDX at or atclientservice@openbondx.com for further details about the disaster recovery center s capabilities. OPENBONDX LLC 3

4 BUSINESS CONTINUITY PLAN OPENBONDX s Disaster Recovery and Business Continuity Plan, including this disclosure, will be amended to reflect new capabilities and enhancements. Disclaimers There are innumerable potential causes of a business disruption, and the events that cause them may vary significantly in nature, size, scope, severity, duration and geographic location, and will result in distinct degrees of harm to human life; firm assets; the banks, trading centers, securities firms and ECNs with which the firm conducts business; and local, regional and national systems infrastructure (e.g., telecommunications, Internet connectivity, power generation and transportation) that could affect OPENBONDX s recovery in a variety of ways. OPENBONDX reserves the right to flexibly respond to business disruptions in a situation-specific manner which the Company deems appropriate. *Nothing in this document is intended to provide a guarantee or warranty regarding the actions or performance of OPENBONDX LLC, its computer systems, or its personnel in the event of a significant business disruption. *OPENBONDX may modify its Disaster Recovery and Business Continuity Plan and this disclosure at any time. The Company will post updates to this disclosure on our website. OPENBONDX LLC 4

5 EXTENDED HOURS TRADING Extended Hours Trading Risks Subscribers should be aware of the following risks that are associated with trading in extended hours sessions (e.g., before 9:30 AM and after 4:00 PM EST): Risk of Lower Liquidity. 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. Risk of Higher Volatility. There may be greater volatility during extended hours trading than during regular market hours. As a result, your order may only be partially executed, or not executed at all, or you may receive a worse price during extended hours trading than you would have received during regular market hours. 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 the next morning. As a result, you may receive a different, or worse, price in extended hours trading than you would have received during regular market hours. Risk of Unlinked Markets. Depending on the extended hours trading system or the time of day, the prices displayed on a particular extended hours trading system may not reflect the prices in other concurrently operating extended hours trading systems dealing in the same securities. Accordingly, you may receive a worse price in one extended hours trading system than you would in another extended hours trading system. Risk of News Announcements. Normally, issuers make news announcements that may affect the price of their securities during non-market hours. Similarly, important financial information is frequently announced outside of regular market hours. These announcements could occur during extended hours trading and could, if combined with lower liquidity and higher volatility, result in exaggerated and unsustainable effects on the price of a security. Risk of Wider Spreads. Lower volumes and higher price fluctuations in extended hours trading may result in wider-than-normal bid-ask spreads for a particular security. OPENBONDX LLC 5

6 CIP/AML Customer Information Protection Important Information You Need To Know About Opening a New Account To help the government fight the funding of terrorism and money laundering activities, federal law requires financial institutions to obtain, verify and record information that identifies each person who opens an account. This Notice answers some questions about OPENBONDX s Customer Identification Program. What types of information will you need to provide? When you open an account, OPENBONDX is required to collect information such as the following from you: Your Name Date of Birth Address Identification Number o US Citizen: taxpayer identification number (social security number or employer identification number). o Non-US Citizen: taxpayer identification number, passport number and country of issuance, alien identification card number, or government-issued identification showing nationality, residence and a photograph of you. *You may also need to show your driver's license or other identifying documents. A corporation, partnership, trust or other legal entity may need to provide other information, such as its principal place of business, local office, employer identification number, certified articles of incorporation, government-issued business license, a partnership agreement, or a trust agreement. US Department of the Treasury, Securities and Exchange Commission, FINRA, and New York Stock Exchange rules already require you to provide most of this information. These rules may also require you to provide additional information, such as your net worth, annual income, occupation, employment information, investment experience and objectives, and risk tolerance. What happens if you don't provide the information requested or your identity cannot be verified? OPENBONDX may not be able to open an account or carry out transactions for you. If OPENBONDX has already opened an account for you, it may have to be closed. We thank you for your patience and hope that you will support the financial industry's efforts to deny terrorists and money launderers access to America's financial system. OPENBONDX LLC 6

7 PRIVACY POLICY Privacy Policy It is our policy to respect the privacy of all Subscribers and to protect the security and confidentiality of nonpublic personal information relating to our Subscribers. Please note that this policy applies to former Subscribers as well as current Subscribers. Personal Information Collected Information is provided to the clearing broker in order to provide the financial services that you have requested. This information may come from the following sources: Information received from you, such as your name, address, telephone number, social security number, occupation, and income; Information relating to your transactions and trading activity; Information which may be received from consumer reporting agencies, such as credit bureau reports and other information relating to your creditworthiness; and Information which may be received from other sources with your consent. Sharing of Non-Public Personal Information OPENBONDX LLC has partnered with SG Americas Securities, LLC ("SGAS") who will be the clearing broker for all trading activity on the OBX trading platform. Subscriber forms and financial information may be shared with our non-affiliate partner, SGAS, to open up your account, comply with our mutual anti-money laundering obligations, to determine trading and risk limits, and to ensure trade-settlement is properly configured. Agreements between Subscribers and OBX will not be shared with SGAS. Security OPENBONDX strives to ensure that our systems are secure and that they meet industry standards. We protect personal information that is provided to us by maintaining physical, electronic and procedural safeguards that either meet or exceed applicable law. OPENBONDX has educated its staff with regard to this privacy policy and as a general policy, our staff will not discuss or disclose information regarding an account except with authorized personnel of the clearing broker or as required by law or pursuant to regulatory request and/or authority. Changes to OPENBONDX s Privacy Policy OPENBONDX reserves the right to make changes to this policy OPENBONDX LLC 7

8 ADDITIONAL DISCLOSURES SIPC Coverage OpenBondX is a member of SIPC. SIPC coverage is limited to $500,000 per customer, including up to $250,000 for cash. For purposes of SIPC coverage, customers are persons who have securities or cash on deposit with a SIPC member for the purpose of, or as a result of, securities transactions. SIPC does not protect against market risk, which is the risk inherent in a fluctuating market. It protects the value of the securities held by the broker-dealer as of the time that a SIPC trustee is appointed. Trustees are appointed through a SIPC-initiated court proceeding to supervise the liquidation of a SIPC member that is insolvent or cannot return customer cash or securities. Payment for Order Flow Disclosure OpenBondX subscribers will make all order routing decisions. OpenBondX may receive payment for routing orders to trading centers. Order-routing costs or rebates from external trading destinations will be passed through at cost. The source and amount of any compensation received in connection with your transaction and any additional information concerning the order flow payments will be furnished to you upon written request. FINRA BrokerCheck BrokerCheck is a free tool to help investors research the professional backgrounds of current and former FINRA-registered brokerage firms and brokers, as well as investment adviser firms and representatives. BrokerCheck information is drawn from filings by regulators, firms and investment professionals. It includes current licensing status and history, employment history and, if any, reported regulatory, customer dispute, criminal and other matters. It should be the first resource investors turn to when choosing whether to do business or continue to do business with a particular firm or individual. Subscribers may request a BrokerCheck request in the following ways: Visiting BrokerCheck at Calling the BrokerCheck toll-free Hotline at (800) ; Submitting a request via U.S. mail or fax. The BrokerCheck mailing address and fax number are: FINRA BrokerCheck P.O. Box 9495 Gaithersburg, MD Fax: (240) OPENBONDX LLC 8