Legal notices

(Section 1a (18) of the Commodity Exchange Act, 7 U.S.C. 1a (18))

(18) Eligible contract participant

The term ―eligible contract participant means—

(A) Acting for its own account—

(I) A financial institution;

(II) An Insurance company that is regulated by a State, or that is regulated by a foreign government and is subject to comparable regulation as determined by the [Commodity Futures Trading] Commission, including a regulated subsidiary or affiliate of such an insurance company;

(III) An investment company subject to regulation under the Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) or a foreign person performing a similar role or function subject as such to foreign regulation (regardless of whether each investor in the investment company or the foreign person is itself an eligible contract participant);

(IV) A commodity pool that—

(I) That has total assets exceeding $5,000,000; and

(II) is formed and operated by a person subject to regulation under this Act or a foreign person performing a similar role or function subject as such to foreign regulation (regardless of whether each investor in the commodity pool or the foreign person is itself an eligible contract participant) provided however, that for purposes of section 2(c)(2)(B)(vi) and section 2(c)(2)C)(vii), the term ‗eligible contract participant‘; shall not include a commodity pool in which any participant is not otherwise an eligible contract participant;

(v) A corporation, partnership, proprietorship, organization, trust, or other entity—

(I) that has total assets exceeding $10,000,000;

(II) the obligations of which under an agreement, contract, or transaction are guaranteed or otherwise supported by a letter of credit or keepwell, support, or other agreement by an entity described in sub-clause (I), in clause (i), (ii), (iii), (iv), or (vii), or in subparagraph (C); or

(III) that—

(aa) has a net worth exceeding $1,000,000; and

(bb) enters into an agreement, contract, or transaction in connection with the conduct of the entity‘s business or to manage the risk associated with an asset or liability owned or incurred or reasonably likely to be owned or incurred by the entity in the conduct of the entity‘s business;

(VI) An employee benefit plan

subject to the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.), a governmental employee benefit plan, or a foreign person performing a similar role or function subject as such to foreign regulation—

(I) that has total assets exceeding $5,000,000; or

(II) the investment decisions of which are made by—

(aa) an investment adviser or commodity trading adviser subject to regulation under the Investment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) or this Act;

(bb) a foreign person performing a similar role or function subject as such to foreign regulation;

(cc) a financial institution; or

(dd) an insurance company described in clause (ii), or a regulated subsidiary or affiliate of such an insurance company;

(VII)

(I) A governmental entity (including the United States, a State, or a foreign government) or political subdivision of a governmental entity;

(II) A multinational or supranational government entity; or

(III) An instrumentality, agency, or department of an entity described in sub-clause (I) or (II);

except that such term does not include an entity, instrumentality, agency, or department referred to in sub-clause (I) or (III) of this clause unless (aa) the entity, instrumentality, agency, or department is a person described in clause (i), (ii), or (iii) of paragraph (17)(A); (bb) the entity, instrumentality, agency, or department owns and invests on a discretionary basis $50,000,000 or more in investments; or (cc) the agreement, contract, or transaction is offered by, and entered into with, an entity that is listed in any of sub-clauses (I) through (VI) of section 2 (c)(2)(B)(ii);

(VII)

(I) A broker or dealer subject to regulation under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) or a foreign person performing a similar role or function subject as such to foreign regulation, except that, if the broker or dealer or foreign person is a natural person or proprietorship, the broker or dealer or foreign person shall not be considered to be an eligible contract participant unless the broker or dealer or foreign person also meets the requirements of clause (v) or (xi);

(II) An associated person of a registered broker or dealer concerning the financial or securities activities of which the registered person makes and keeps records under section 15C(b) or 17(h) of the Securities Exchange Act of 1934 (15 U.S.C. 78o–5 (b), 78q (h));

(III) An investment bank holding company (as defined in section 17(i) of the Securities Exchange Act of 1934 (15 U.S.C. 78q (i));

(ix) A futures commission merchant subject to regulation under this chapter or a foreign person performing a similar role or function subject as such to foreign regulation, except that, if the futures commission merchant or foreign person is a natural person or proprietorship, the futures commission merchant or foreign person shall not be considered to be an eligible contract participant unless the futures commission merchant or foreign person also meets the requirements of clause (v) or (xi);

(X) A floor broker or floor trader subject to regulation under this Act in connection with any transaction that takes place on or through the facilities of a registered entity (other than an electronic trading facility with respect to a significant price discovery contract) or an exempt board of trade, or any affiliate thereof, on which such person regularly trades; or

(XI) An individual who has amounts invested on a discretionary basis, the aggregate of which is in excess of—

(I) $10,000,000; or

(II) $5,000,000 and who enters into the agreement, contract, or transaction in order to manage the risk associated with an asset owned or liability incurred, or reasonably likely to be owned or incurred, by the individual;

(B)

(i) A person described in clause (i), (ii), (iv), (v), (viii), (ix), or (x) of subparagraph (A) or in subparagraph (C), acting as broker or performing an equivalent agency function on behalf of another person described in subparagraph (A) or (C); or

(ii) An investment adviser subject to regulation under the Investment Advisers Act of 1940 [15 U.S.C. 80b–1 et seq.], a commodity trading adviser subject to regulation under this Act, a foreign person performing a similar role or function subject as such to foreign regulation, or a person described in clause (i), (ii), (iv), (v), (viii), (ix), or (x) of subparagraph (A) or in subparagraph (C), in any such case acting as investment manager or fiduciary (but excluding a person acting as broker or performing an equivalent agency function) for another person described in subparagraph (A) or (C) and who is authorized by such person to commit such person to the transaction; or

(C) Any other person that the Commission determines to be eligible in light of the financial or other qualifications of the person.

The purpose of this Online Trading Risk Disclosure Statement is to advise market participants of the general features of Online Trading and the principal risk factors related to the use of the Online Trading, either directly or as alternative order entry method. However, Edge Clear LLC cannot describe all aspects of Online Trading risk or can it identify all of the potential risk factors. Market users should review the full set of Risk Disclosures in their Commodity Customer Agreement Account forms and contact their brokers for any further information which may be needed in order to evaluate the possible uses of, and the risks associated with Online Trading.

With respect to electronic trading Accounts, Edge Clear LLC or the third party provider will assign the Customer a unique confidential user identification name (“User ID”) and password (“Password”) which must be used solely by Customer in order to access their Online Trading Account. Customer agrees that the User ID and Password may not be disclosed to, or used by, any other person or party, for any purpose whatsoever. Customer hereby agrees that all orders placed through and instructions given to Edge Clear LLC are Customer’s sole responsibility. Customer will indemnify and otherwise hold Edge Clear LLC harmless from and against any and all liability, costs or damages of any kind arising by virtue of any unauthorized use of Customer’s User ID or Password. Customer will notify Edge Clear LLC immediately if a customer becomes aware of any loss, theft or unauthorized use of customer’s User ID or Password.

All orders that customer initiates, irrespective of mode of order entry, are customer’s responsibility and are done at customer’s sole risk. If a customer does not receive notification that an order has been either accepted or rejected for placement, it is the Customer’s responsibility to notify Edge Clear LLC immediately by calling the Customer’s Account Executive.

It is customer’s duty, and not Edge Clear LLC, to monitor their trading activity while open orders and positions are pending. Edge Clear LLC is not responsible for delays or errors. Whether electronic or “voice”, it is customer’s obligation, and not Edge Clear LLC, to monitor the account’s status and the status of any open orders or positions in the account and to take appropriate action to minimize loss or maximize gain.

Customer shall be responsible for monitoring all of the customer’s orders until execution is confirmed or cancellation is acknowledged by Edge Clear LLC by updating the Account electronically, in writing or by telephone and/or e-mail. Edge Clear LLC is not responsible for any loss due to customer’s failure to cancel, replace or cover a trade.

Edge Clear LLC, in its sole discretion, may establish limits on the maximum number of contracts per order, the maximum number of contracts per position, and/or any other type of trading limit based upon:

1. Government or exchange imposed position limits;
2. Exchange margin requirements;
3. Position limits imposed by Edge Clear LLC in its sole discretion;
4. Margin requirements imposed by FCMs in their sole discretion;
5. Market conditions or
6. Risk of accounts going debit or under-margined.
7. Any other criterion as Edge Clear LLC may see fit will be reviewed by upper management and in most cases discussed with the customer first.

Any orders that may cause the customer’s account to exceed the limits set by Edge Clear LLC will be rejected by the System. Acceptance of an order for placement does not constitute an agreement or representation by Edge Clear LLC that there is sufficient margin in Customer’s account to support the resulting position. Customer hereby acknowledges it is the customer’s responsibility to keep current margin requirements in connection with all trading activities and, that the customer remains liable for the losses incurred on all customer’s trades, regardless of whether there is sufficient margin posted at the time the trade is ordered.

As with any electronic system it is possible that service could be interrupted. In that event, depending on the type of failure, it may or may not be possible to access the Trading Platform to enter a new orders, and/or modify or cancel orders previously entered. Edge Clear LLC shall not be liable for any loss resulting from system failure, breakdown of electronic or mechanical equipment or communication lines, telephone or other interconnection problems, unauthorized access to customer’s User ID or Password, customer’s operating errors or any other condition over which Edge Clear LLC does not otherwise control.

Customer acknowledges that the accuracy, completeness, timeliness and correct sequencing of the real-time information concerning customer’s trading and Account activity, quotes and market information (the “Information”) are not guaranteed by Edge Clear LLC. Customer agrees that Edge Clear LLC shall not have any liability for the accuracy, completeness, timeliness or correct sequencing of the Information or for any decision made or action taken by customer in reliance upon the information or for any interruption of any data or Information.

Customer assumes the financial and other known risks involved in online trading and the products traded through the different platforms offered by Edge Clear LLC. Customer understands that on certain specific trading dates, trading in options or futures may cease to trade when the contract expires. Online trading on exchanges outside the United States, may result in trading days and hours that may not coincide with domestic trading days or hours and that these factors may result in financial disadvantage to the customer. Customer freely assumes these risks and holds Edge Clear LLC, its employees, agents, officers and owners harmless against any such loss resulting from these risks mentioned in this Online Trading Disclosure section of the Website.

An Exchange for Related Position (“EFRP”) transaction is governed by the rules and regulations of the exchange(s) listing the product. Before engaging in EFRPs customers should carefully review the rules and regulations of the exchange(s) listing the product(s) the customer intends to trade.

Definitions

Exchange for Physical (“EFP”) – A privately negotiated and simultaneous exchange of an Exchange futures position for a corresponding cash position.

Exchange for Risk (“EFR”) – A privately negotiated and simultaneous exchange of an Exchange futures position for a corresponding OTC swap or other OTC instrument.

For purposes of this document, and EFP, EFR or EOO shall be referred to as an EFRP.

Parties to an EFRP

One party to the EFRP must be the buyer of (or the holder of the long market exposure associated with) the related position and the seller of the corresponding exchange contract. The other party to the EFRP must be the seller of (or the holder of the short market exposure associated with) the related position and the buyer of the corresponding Exchange contract.

Independently Controlled Accounts

The opposing accounts to an EFRP transaction must be (a) independently controlled accounts with different beneficial ownership; (b) independently controlled accounts of separate legal entities with common beneficial ownership; or (c) independently controlled accounts of the same legal entity, provided that the account controllers operate in separate business units.

For EFRP transactions between accounts with common beneficial ownership, the parties to the trade must be able to demonstrate the independent control of the accounts and that the transaction had economic substance for each party to the trade.

Related Positions

The related position must be the commodity underlying the exchange contract, or must be a derivative, by-product, or related product of such commodity that has a reasonable degree of price correlation to the commodity underlying the Exchange contract.

Each EFRP requires a bona-fide transfer of ownership of the underlying asset between the parties or a bona fide, legally binding contract between the parties consistent with relevant market conventions for the particular related position transaction

Document Retention and Production

The documentation for the related position must be prepared and executed at the time of the EFRP transaction. The documentation must then be retained by the parties to the EFRP for a minimum of five years pursuant to CFTC Regulation 1.35. All documents relevant to the related position leg of the EFRP trade, the exchange leg of the EFRP trade, and payments must be provided upon request. Communications (e.g., emails, instant messages) related to the trade negotiation and execution must also be retained and provided upon request. It is the responsibility of all participants, including brokers and customers, to retain and produce all documentation for the trade immediately upon request.

Relevant documents for the related position leg of the EFRP trade are those customarily generated in accordance with cash market and/or other relevant market practice. Examples include:

• Commercial Contract
• Cash Confirmation
• OTC Contract
• Signed Swap Agreement
• Transfer of Ownership of the related position transaction
• Invoices
• Warehouse Receipts
• Bills of Sale
• Order tickets, trade blotters, emails, instant messages, etc. related to the order placement, execution, and/or confirmation of the EFRP
• Proof of payment (e.g. canceled checks, bank statements, Fed wire confirms, Fixed Income Clearing Corporation documents, bills of lading, etc.)

If you trade on an exchange located in the European Union (“EU”) please take notice.

Futures exchanges located in the EU –and their customers- must comply with a new EU law that becomes effective January 2018 called the Markets in Futures Instruments Directive (“MiFID II”). One of the requirements under MiFID II is that firms trading on those EU exchanges must identify customers placing orders on those exchanges by using what is known as a legal entity identifier, or LEI. This is a twenty digit number that you must obtain and provide to Edge Clear that will be used by your FCM to identify you to the particular EU exchange whenever a trade is placed.

In order to protect your identity, the exchanges have developed secure database systems. Using these systems, they will receive your LEI number from your FCM, assign it a “short code” number, and then securely “re-convert” your short code number to your LEI and your actual name. When you place a trade the exchange will automatically report your LEI and name to the regulator in whatever (“EU”) country the exchange you are trading on is located.

If you trade on an exchange located in the European Union (“EU”) you must obtain an LEI. Because this law became effective in January 2018, we are providing you with this notice as you need to obtain your LEI as soon as possible. If in fact you already have an LEI, please provide it to Edge Clear now. Unfortunately, because the EU system is “LEI based”, if you do not supply Edge Clear with an LEI you will no longer be eligible to trade on any EU exchange after January 1, 2018.

The links provided below will take you to a website that will explain the need for an LEI and also where and how you can sign up and obtain an LEI.

https://www.financialresearch.gov (explanation of the LEI system- and why it’s necessary- by the U.S. Office of Financial Research)

https://www.gmeiutility.org (for U.S. entities to obtain an LEI)

https://www.leiroc.org (for non-U.S. entities to see a list of websites where they can obtain an LEI)

EDGE CLEAR LLC IS A MEMBER OF NFA AND IS SUBJECT TO NFA’S REGULATORY OVERSIGHT AND EXAMINATIONS. HOWEVER, YOU SHOULD BE AWARE THAT NFA DOES NOT HAVE REGULATORY OVERSIGHT AUTHORITY OVER UNDERLYING OR SPOT VIRTUAL CURRENCY PRODUCTS OR TRANSACTIONS OR VIRTUAL CURRENCY EXCHANGES, CUSTODIANS OR MARKETS.

IMPORTANT INFORMATION REGARDING THE NFA’S CRYPTOCURRENCY REGULATIONS:

• NFA Investor Advisory – Futures on Virtual Currencies Including Bitcoin
• CFTC Customer Advisory: Understand the Risks of Virtual Currency Trading