Margin & Online Usage

When you place a market order, your broker-dealer and/or its clearing firm will transmit the order to a market center for full and prompt execution without regard to price. Therefore, in a volatile market, a market order may receive an execution price significantly different from the price of that security quoted when the order was entered. Additionally, if you place a market order when the markets are closed (e.g., nights or weekends), your order will be executed at the prevailing price when the market next opens. There can be substantial changes between the most recent closing price of a security and the next opening or available price. If you have limited assets to allocate to a transaction, you should consider placing a limit order, whether during the trading day or extended hours. For example, your ability to make additional contributions to your retirement account is subject to certain requirements. Therefore, transactions in retirement accounts are generally limited to the assets available in the account. If your transaction price exceeds your available account balance and you cannot otherwise pay for the transaction, your broker/dealer and/or its clearing firm will be required to liquidate all or a portion of the transaction or other account assets to the extent necessary to satisfy your financial obligation. Any losses or costs of such liquidation will be your responsibility.

Since market orders are executed as promptly as possible, it is generally not feasible to cancel a market order even if you have not received an execution report. Your request to attempt to cancel a market order will be handled on a best-efforts basis. Although you may receive an electronic notice or verbal confirmation that we have received your request for the attempted cancellation, do not assume that it means that the trade was cancelled. Your broker-dealer and/or its clearing firm are not responsible in cases where a replacement order is placed and executed prior to your receiving confirmation of the cancellation of a prior order. In addition, due to the queuing of orders, if a market order is entered near the close of trading it may not be eligible to receive an execution.

A limit order will only be executed at a specific price or better. With a limit order to buy, the stock is eligible to be purchases at or below your limit price, but never above it. Similarly, with a limit order to sell, the stock is eligible to be sold at or above your limit price, but never below it. By placing a limit order instead of a market order you protect yourself from buying the stock at a price higher or selling at a price lower than you had expected. However, in volatile markets, although your limit order receives price protection, due to priority of other orders your order may not be executed even if the security is trading at your limit or better after your order is entered. Similarly, the security price may move away from your limit after your order is entered in which case your order will not be executed.

Stop orders are available on certain securities to buy or sell after a stock has reached a certain specified price. A buy-stop order is placed above the current market price and automatically becomes a market order to buy when the "stop" price is reached. A sell-stop order is placed below the current market price and automatically becomes a market order to sell when the "stop" price is reached. As with any market order in volatile markets, the market order triggered at the stop price may receive an execution price significantly different from the quoted price of that security when the order is triggered. Market makers' procedures vary with respect to the handling of stop orders that have already hit the stop price. In addition, some market makers may not be willing to accept stop orders under certain market conditions and this practice varies among market makers. When this occurs, your broker-dealer and/or its clearing firm may not accept certain stop orders.

Due to the extreme volatility that is sometimes associated with trading an IPO in the secondary market (particularly one that is trading at a price much higher than the initial offering price), a customer who places a market order for such a security is at risk of receiving an execution price that is substantially different from the market price at the time the order was placed. As discussed above, this risk can be reduced by appropriate use of limit orders. The placement of a limit order in such situations would address the risk of receiving an execution that is substantially away from the market price that was quoted at the time the order was placed. However, as with any limit order in a volatile market, due to order imbalances and fast markets, a limit order may not receive an execution even if the security is trading at your limit or better after your order was entered.

Please note that margin requirements may be raised during periods of market volatility. Factors considered in raising the margin requirement for a particular stock include price fluctuations, market capitalization and volatility. The increase of the amount of equity that must be maintained in margin accounts protects you, your broker/dealer and its clearing firm in the event of a large change in the value of the stock by decreasing the chance that account positions will be liquidated to meet a margin call. Some volatile securities may also be designated "not marginable" (100% initial margin with payment within three days of settlement) or "cash on hand" (100% of the purchase price must be in the account prior to execution of the trade).

Your broker-dealer and/or its clearing firm have an ongoing commitment to provide the highest level of service and technology to enable you to access your account, obtain market information and to enter your orders quickly, easily, and efficiently. However, during periods of extraordinary volatility and volume, customers using online or automated trading services may experience delays in accessing their account due to high Internet traffic or systems capacity limitations. Similarly, customers may experience delays in reaching telephone representatives. Please be aware that market conditions, including stock and bond prices, may change during these periods. Multiple channels are available through which you may place orders or access information, including the Web touch-tone phone, and telephone representatives, so you have alternative ways to do business. For more information on trading in fast changing markets, contact your Investment Professional.

¹There may be additional fees for limit and stop orders.

National Financial Services LLC, Member NYSE, SIPC

This document is being furnished to you to provide some basic information about purchasing securities on margin, and to alert you to the risks involved with trading securities in a margin account. Before trading securities in a margin account, you should carefully review the margin terms in your account application and agreement. Please contact your broker dealer 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 all or part of the purchase price from your brokerage firm. If you choose to borrow funds from your firm, you will open a margin account with National Financial Services LLC ("NFS"). The securities in your accounts are NFS' 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, NFS and your broker dealer can take action, such as issue a margin call and/or sell securities or other assets in any of your accounts held with NFS through your broker dealer, in order to maintain the required equity in the account. NFS may also take action to sell securities or other assets in your accounts held with NFS and with certain NFS affiliates.

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 you purchased on margin may require you to provide additional funds or margin-eligible securities to NFS to avoid the forced sale of any securities or assets in your account(s).
• NFS and your broker dealer can force the sale of securities or other assets in your account(s). If the equity in your account falls below the maintenance margin requirements or NFS' higher "house" requirements, NFS or your broker dealer can sell the securities or other assets in any of your accounts held at NFS through your broker dealer to cover the margin deficiency. NFS may also take action to sell securities or other assets in your accounts held with NFS and certain NFS affiliates. You also will be responsible for any short fall in the account after such a sale, possibly including NFS' and/or your broker dealer's costs related to collecting the short fall.
• NFS and your broker dealer can sell your securities or other assets 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 or other assets 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. In addition, 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 prior to that date, including immediately selling the securities without notice to the customer.
• You are not entitled to choose which securities or other assets in your account(s) are liquidated or sold to meet a margin call. Because the securities and any other assets in your account(s) are collateral for the margin loan, NFS or your broker dealer has the right to decide which assets to sell in order to protect its interests.
• NFS can increase its "house" maintenance margin requirements at any time and is not required to provide you advance 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 NFS or your broker dealer to liquidate or sell securities or any other assets in your account(s).
• 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.
• Short selling is a margin account transaction and entails the same risks as described above. NFS or your broker dealer can buy in your account securities to cover a short position without contacting you and may use all or any portion of the assets in your account to make such a purchase. If the assets in your account are not sufficient to cover the cost of such a purchase, you will be responsible for any shortfall, possibly including NFS and/or your broker dealer's costs in collecting the shortfall.
• In addition to market volatility, the use of bank card, check writing and similar features with your margin account may increase the risk of a margin call.

Margin credit extended by National Financial Services LLC, Member NYSE, SIPC or sale would be unlawful under the securities laws of such jurisdiction.

Use of this site involves the electronic transmission of personal financial information. Using this product is consent to such transmission of this information and terms of the User Agreement; such consent is effective at all times when using this site. Usage of this site constitutes your agreement to the terms of the User Agreement which can be found in the Important Legal Information link.

The services and products described on this web site are intended to be made available only to persons in the United States, and the information on this web site is only for such persons. Nothing on this web site shall be considered a solicitation to buy or an offer to sell a security to any person in any jurisdiction where such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction.