INTERACTIVE BROKERS LLC AGREEMENTS AND

DISCLOSURE DOCUMENTS  Disclosure Regarding Leveraged & Inverse Funds

 ISE Disclosure for Option Orders Over 500

Contracts
The documents in this package contain the terms and
conditions of your customer account with Interactive  Disclosure Regarding Floor/Pit Based Exchanges
Brokers LLC and also contain important information
regarding the risks and characteristics of the securities,  Order Routing and Payment for Order Flow
commodities and other investment products that may be Disclosure
traded in your account. Please read all of these
documents carefully.  Notice Regarding Pre-Arranged Trades on U.S.
Futures Exchanges
This package contains:  Interactive Brokers LLC Australian Financial
Services Guide
 Interactive Brokers LLC Customer Agreement  Interactive Brokers LLC Australian Product
Disclosure Statement for Futures and ASX CFDs
 Futures Arbitration Agreement
 Interactive Brokers LLC Australian Product
 Options Clearing Corporation Characteristics and Disclosure Statement for Exchange Traded
Risks of Standardized Options Options
 Disclosure of Risks of Margin Trading  Interactive Brokers LLC Australian Product
Disclosure Statement for Foreign Exchange
 Portfolio Margin Risk Disclosure Statement Contracts
 Risk Disclosure Statement for Futures and  Trading on ASX 24 Customer Agreement
Options Pursuant to CFTC Rule 1.55(c)
 Supplemental Agreement & Disclosures for
 CFTC Rule 15.05 Notice to Non-U.S. Traders Trading on the Australian Stock Exchange Limited

 Disclosure Regarding IB’s Procedures for  ASX Explanatory Booklet: Understanding Options
Allocating Equity Option Exercise Notices Trading

 Day Trading Risk Disclosure  ASX Explanatory Booklet: Understanding CFDs

 Risks of After-Hours Trading
 Interactive Brokers LLC Australian Best Execution
Policy
 Disclosure Concerning Auto Trading Service
Providers  NYSE Euronext Risk Disclosure
 Master Securities Lending Agreement for  Hong Kong Additional Provisions
Interactive Brokers LLC Fully-Paid Lending
Program  Hong Kong Risk Disclosure Statements

 Agreement and Limited Power Of Attorney For  Hong Kong Client Standing Authorities
Participation in Interactive Brokers Stock Yield
Enhancement Program  Notice Regarding NFA’s BASIC System
 Disclosure Regarding Interactive Brokers Pre-
 FINRA Investor Protection Information Resources
Borrow Program
 Risk Disclosure Statement for Forex Trading and
 Disclosure Regarding IB’s Business Continuity IB Multi-Currency Accounts
Plan
 Anti-Money Laundering Notices
 Interactive Brokers Group Privacy Statement
Trustee Certification
 Required Disclosures and Supplemental
Agreement for Security Futures Trading at
Interactive Brokers

 FINRA/NFA Disclosure for Security Futures

Trading

 Disclosure for Bond Trading

 General Disclosure on Mutual Funds

For IRA Account Holders:

 Interactive Brokers LLC IRA Agreement

 Interactive Brokers LLC Roth IRA Agreement

 Principal Trust Company Disclosure Statement for

Traditional IRA, SEP-IRA and SIMPLE IRA
Accounts

 Principal Trust Company Disclosure Statement for

Roth IRA Accounts

 Principal Trust Company Self-Directed Individual

Retirement Trust Agreement & Amendment

 Privacy Notice of Principal Trust Company

 Internal Revenue Service letter dated 07/29/2003

approving the Delaware Charter Guarantee &
Trust Co. Traditional IRA and Roth IRA Trust
Notice Regarding Anti‐Money Laundering and Customer Identification Procedures: To help the U.S.
government fight the funding of terrorism and money laundering activities, Federal law requires all
financial institutions to obtain, verify, and record information that identifies each person or entity who
opens an account. We are required by law to ask you to provide your name, address, date of birth and
other information about you, your organization or persons related to your organization that will allow us
to identify you before we approve your account. We also will ask you to provide certain identifying
documents, such as your driver's license or passport or your organization's articles of incorporation and
may obtain credit and other consumer reports to assist us in verifying your identity and in determining
whether you satisfy our account criteria. Unless you provide the requested information and
documentation, we may not be able to open your account. By applying for an IB account, you agree to
provide accurate and truthful information as requested by IB and you consent to IB's acquisition of
credit and other consumer reports about you for the purposes described above.
Interactive Brokers LLC Customer Agreement

1. Customer Agreement: This Agreement ("Agreement") governs the relationship between Customer and
Interactive Brokers LLC ("IB"). If this Agreement varies from the IB website, this Agreement controls. This
Agreement cannot be amended or waived except in writing by an IB officer. Customer Service employees cannot
amend or waive any part of this Agreement. Customer acknowledges that IB may revise this Agreement by sending
notice of the revised Agreement by e-mail or upon Customer log-in. Customer's use of IB after such notice
constitutes acceptance of the revised Agreement.
2. No Investment, Tax or Trading Advice: IB representatives are not authorized to provide investment, tax or
trading advice or to solicit orders. Nothing on IB's website is a recommendation or solicitation to buy or sell
securities, futures or other investments.
3. Responsibility for Customer Orders/Trades: Customer acknowledges that IB does not know whether someone
entering orders with Customer's user name/password is Customer. Unless IB is notified and agrees, Customer will
not allow anyone to access Customer's account. Customer is responsible for the confidentiality and use of
Customer's user name/password and agrees to report any theft/loss of such user name/password, or any
unauthorized access to Customer's account, immediately by telephone or electronically through the IB website.
Customer remains responsible for all transactions entered using Customer's user name/password.
4. Order Routing: Unless otherwise directed, IB will select the market/dealer to which to route Customer's orders.
For products traded at multiple markets, IB may provide "Smart Routing", which seeks the best market for each
order through a computerized algorithm. Customer should choose Smart Routing if available. If Customer directs
orders to a particular market, Customer assumes responsibility for knowing and trading in accordance with the
rules and policies of that market (e.g., trading hours, order types, etc.). IB cannot guarantee execution of every order
at the best posted price: IB may not have access to every market/dealer; other orders may trade ahead; market
centers may not honor posted prices or may re-route orders for manual handling; or market rules, decisions or
system failures may prevent/delay execution of Customer's orders or cause orders not to receive the best price.
5. Order Cancellation/Modification: Customer acknowledges that it may not be possible to cancel/modify an order
and that Customer is responsible for executions notwithstanding a cancel/modify request.
6. Order Execution: IB shall execute Customer orders as agent, unless otherwise confirmed. IB can execute
Customer orders as principal. IB may use another broker, or an affiliate, to execute orders, and they have benefit of
all IB's rights hereunder. IB may decline any Customer order, or terminate Customer's use of IB's services at any
time in IB's discretion. All transactions are subject to rules and policies of relevant markets and clearinghouses, and
applicable laws and regulations. IB IS NOT LIABLE FOR ANY ACTION OR DECISION OF ANY EXCHANGE,
MARKET, DEALER, CLEARINGHOUSE OR REGULATOR.
7. Confirmations:
A. Customer agrees to monitor each order until IB confirms execution or cancellation. Customer acknowledges that
confirmations of executions or cancellations may be delayed or may be erroneous (e.g. due to computer system
issues) or may be cancelled/adjusted by an exchange. Customer is bound by the actual order execution, if consistent
with Customer's order. If IB confirms execution or cancellation in error and Customer delays reporting such error,
IB reserves the right to remove the trade from the account or require Customer to accept the trade, in IB's
discretion.

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B. Customer agrees to notify IB immediately by telephone or electronically through the IB website if: i) Customer
fails to receive an accurate confirmation of an execution or cancellation; ii) Customer receives a confirmation that is
different than Customer's order; iii) Customer receives a confirmation for an order that Customer did not place; or
iv) Customer receives an account statement, confirmation or other information reflecting inaccurate orders, trades,
balances, positions, margin status or transaction history. Customer acknowledges that IB may adjust Customer's
account to correct any error. Customer agrees to promptly return to IB any assets erroneously distributed to
Customer.
8. Proprietary Trading - Display of Customer Orders: Subject to all laws and regulations, Customer authorizes IB to
execute proprietary trades of itself and its affiliates, though IB may simultaneously hold unexecuted Customer
orders for the same products at the same price.
9. Customer Qualification: Customer warrants that his, her or its application is true and complete; will promptly
notify IB of any information changes; and authorizes IB to make any inquiry to verify information.
A. Natural Persons: Customer warrants that Customer is over 18; is under no legal incapacity; and has sufficient
knowledge and experience to understand the nature and risks of the products to be traded.
B. Organizations: Customer and its authorized representatives warrant that Customer: (i) is authorized under its
governing document(s) and in the jurisdictions in which it is organized and/or regulated to enter this Agreement and
trade (including on margin if applicable); (ii) is under no legal incapacity; and (iii) that persons identified to enter
orders have proper authority and have sufficient knowledge and experience to understand the nature and risks of
the products to be traded.
C. Trusts: "Customer" refers to the Trust and/or Trustees. Trustee(s) represent(s) that there are no Trustees other
than listed in the application and certifies(y) that IB may follow instructions from any Trustee and deliver funds,
securities, or any other assets to any Trustee or on any Trustee's instructions, including delivering assets to a Trustee
personally. IB, in its discretion, may require written consent of any or all Trustee(s) prior to following instructions of
any Trustee. Trustee(s) certify that Trustee(s) has (have) the power under the Trust documents and applicable law
to enter this Agreement, open the type of account applied for, and enter transactions and issue instructions. Such
powers include, without limit, authority to buy, sell (including short), exchange, convert, tender, redeem and
withdraw assets (including delivery of securities to/from the account) to trade securities on margin or otherwise
(including purchase/sale of options), and trade futures and/or options on futures, for the Trust. Should only one
Trustee execute this Agreement, Trustee represents that Trustee has the authority to execute this Agreement,
without consent by the other Trustees. Trustee(s) certifies(y) that all transactions for this account will comply with
the Trust documents and applicable law and that all trading in this Account will be consistent with the powers
delegated to the Trustee(s) by the Trust document(s) and with the fiduciary duties of the Trustee(s) to the Trust and/
or the beneficiary(ies) of the Trust. Trustee(s) also certifies(y) that Trustee(s) will inform any beneficiary(ies) of the
Trust of the activity in the Trust's account(s) as required by the Trust document and applicable law. Trustee(s),
jointly and severally, shall indemnify IB and hold IB harmless from any claim, loss, expense or liability for effecting
any transactions, and acting upon any instructions given by the Trustee(s). Trustee(s) will notify Interactive
promptly if the authority of the Trustee(s) change in any manner material to this Agreement, including but not
limited to any change affecting the accuracy of any warrants made herein.
D. Regulated Persons and Entities: Unless Customer notifies IB otherwise, Customer represents that Customer is not
a broker-dealer; futures commission merchant; or affiliate, associated person or employee thereof. Customer agrees
to notify IB immediately by telephone or electronically through the IB website if Customer becomes employed or
associated with a broker-dealer or futures commission merchant.
10. Joint Accounts: Each joint account holder agrees that each joint holder has authority, without notice to the
other, to: (i) buy/sell securities, futures or other products (including on margin); (ii) receive account confirmations
and correspondence; (iii) receive and dispose of money, securities or other assets; (iv) enter, terminate, or agree to
modify this Agreement; (v) waive any part of this Agreement; and (vi) deal with IB as if each joint holder was the
sole holder. Notice to any joint holder constitutes notice to all joint holders. Each joint account holder is jointly and
severally liable to IB for all account matters. IB may follow instructions of any joint holder and make delivery to any
joint account holder individually of any account property.

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Upon death of any joint holder, the surviving holder shall give IB notice by telephone or electronically through the
IB website and IB may, before or after notice, initiate proceedings, require documents, retain assets and/or restrict
transactions as it deems advisable to protect itself against any liability or loss. The estate of any deceased joint
account holder shall be liable and each survivor will be liable, jointly and severally, to IB for any debt or loss in the
account or upon liquidation of the account. Unless Customers indicate otherwise, IB may presume that account
holders are joint tenants with rights of survivorship. Upon death of any joint holder, the account shall be vested in
the surviving holders, without in any manner releasing the deceased joint holder's estate from liability.
11. Margin:
A. Risk of Margin Trading: Margin trading is highly risky and may result in a loss of funds greater than Customer
has deposited in the account. Customer represents that he or she has read the "Disclosure of Risks of Margin
Trading" provided separately by IB.
B. Requirement to Maintain Sufficient Margin Continuously: Margin transactions are subject to initial and
maintenance margin requirements of exchanges, clearinghouses and regulators and also to any additional margin
requirement of IB, which may be greater ("Margin Requirements"). IB MAY MODIFY MARGIN
REQUIREMENTS FOR ANY OR ALL CUSTOMERS FOR ANY OPEN OR NEW POSITIONS AT ANY TIME,
IN IB'S SOLE DISCRETION. Customer shall monitor his, her or its account so that at all times the account
contains sufficient equity to meet Margin Requirements. IB may reject any order if the account has insufficient
equity to meet Margin Requirements, and may delay processing any order while determining margin status.
Customer shall maintain, without notice or demand, sufficient equity at all times to continuously meet Margin
Requirements. Formulas for calculating Margin Requirements on the IB website are indicative only and may not
reflect actual Margin Requirements. Customer must at all times satisfy whatever Margin Requirement is calculated
by IB.
C. IB Will Not Issue Margin Calls: IB does not have to notify Customer of any failure to meet Margin Requirements
prior to IB exercising its rights under this Agreement. Customer acknowledges that IB generally will not issue
margin calls; generally will not credit Customer's account to meet intraday or overnight margin deficiencies; and is
authorized to liquidate account positions in order to satisfy Margin Requirements without prior notice.
D. Liquidation of Positions and Offsetting Transactions:
i. IF AT ANY TIME CUSTOMER'S ACCOUNT HAS INSUFFICIENT EQUITY TO MEET MARGIN
REQUIREMENTS OR IS IN DEFICIT, IB HAS THE RIGHT, IN ITS SOLE DISCRETION, BUT NOT THE
OBLIGATION, TO LIQUIDATE ALL OR ANY PART OF CUSTOMER'S POSITIONS IN ANY OF
CUSTOMER'S IB NON-IRA ACCOUNTS, INDIVIDUAL OR JOINT, AT ANY TIME AND IN ANY MANNER
AND THROUGH ANY MARKET OR DEALER, WITHOUT PRIOR NOTICE OR MARGIN CALL TO
CUSTOMER. CUSTOMER SHALL BE LIABLE AND WILL PROMPTLY PAY IB FOR ANY DEFICIENCIES
IN CUSTOMER'S ACCOUNT THAT ARISE FROM SUCH LIQUIDATION OR REMAIN AFTER SUCH
LIQUIDATION. IB HAS NO LIABILITY FOR ANY LOSS SUSTAINED BY CUSTOMER IN CONNECTION
WITH SUCH LIQUIDATIONS (OR IF THE IB SYSTEM DELAYS EFFECTING, OR DOES NOT EFFECT,
SUCH LIQUIDATIONS) EVEN IF CUSTOMER RE-ESTABLISHES ITS POSITION AT A WORSE PRICE.
ii. IB may allow Customer to pre-request the order of liquidation in event of a margin deficiency, but such requests
are not binding on IB and IB retains sole discretion to determine the assets to be liquidated and the order/manner of
liquidation. IB may liquidate through any market or dealer, and IB or its affiliates may take the other side of the
transactions consistent with laws and regulations. If IB liquidates any/all positions in Customer's account, such
liquidation shall establish Customer's gain/loss and remaining indebtedness to IB, if any. Customer shall reimburse
and hold IB harmless for all actions, omissions, costs, fees (including, but not limited to, attorney's fees), or liabilities
associated with any such transaction undertaken by IB. If IB executes an order for which Customer did not have
sufficient equity, IB has the right, without notice, to liquidate the trade and Customer shall be responsible for any
resulting loss and shall not be entitled to any resulting profit.
iii. If IB does not, for any reason, liquidate under-margined positions, and issues a margin call, Customer must
satisfy such call immediately by depositing funds. Customer acknowledges that even if a call is issued, IB still may
liquidate positions at any time.

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iv. Customer acknowledges that IB also has the right to liquidate all or part of Customer's positions without prior
notice: (i) if any dispute arises concerning any Customer trade, (ii) upon any "Default" as described in 16 below, or
(iii) whenever IB deems liquidation necessary or advisable for IB's protection.
12. Universal Accounts: An IB Universal Account is two underlying accounts: an SEC-regulated securities account
and a CFTC-regulated commodity account. Customer authorizes transfers between the securities and commodity
accounts to cover Margin Requirements and other obligations, and acknowledges IB may liquidate positions to cover
obligations in the other account. Customer authorizes IB to provide combined confirmations/statements for both
accounts. Customer acknowledges that only assets in the securities account are covered by SIPC protection and
excess coverage and not assets in the commodity account.
13. Short Sales: Customer acknowledges that short sales must be done in a margin account, subject to Margin
Requirements; that prior to selling short, IB must believe it can borrow stock for delivery; and that if IB cannot
borrow stock (or re-borrow after a recall notice) IB may buy-in stock on Customer's behalf, without notice to
Customer, to cover short positions and Customer is liable for any losses/costs.
14. IB's Right to Loan/Pledge Customer Assets: As allowed by law, IB is authorized by Customer to lend to itself or
others Customer securities or assets. IB may, without notice, pledge, re-pledge, hypothecate or re-hypothecate
Customer's securities and assets, separately or together with those of other customers, for any amount due in any IB
account in which Customer has an interest, without retaining in IB's possession or control a like amount of assets.
For loans of securities, IB may receive financial and other benefits to which Customer is not entitled. Such loans
could limit Customer's ability to exercise securities' voting rights.
15. Security Interest: All assets of any kind held by or on behalf of IB for Customer's account are hereby pledged to
IB and are subject to a perfected first priority lien and security interest in IB's favor to secure performance of
obligations and liabilities to IB arising under this or any other Agreement.
16. Event of Default: A "Default" occurs automatically, without notice upon: (i) Customer breach/repudiation of any
agreement with IB; (ii) Customer failure to provide assurance satisfactory to IB of performance of an obligation,
after request from IB in IB's sole discretion; (iii) proceedings by/against Customer under any bankruptcy,
insolvency, or similar law; (iv) assignment for the benefit of Customer's creditors; (v) appointment of a receiver,
trustee, liquidator or similar officer for Customer or Customer property; (vi) Customer representations being
untrue or misleading when made or later becoming untrue; (vii) legal incompetence of Customer; (viii) proceeding
to suspend Customer's business or license by any regulator or organization; (ix) IB having reason to believe that any
of the foregoing is likely to occur imminently.
Customer unconditionally agrees that, upon a Default, IB may terminate any or all IB's obligations to Customer and
IB shall have the right in its discretion, but not the obligation, without prior notice, to liquidate all or any part of
Customer's positions in any IB account, individual or joint, at any time and any manner and through any market or
dealer. Customer shall reimburse and hold IB harmless for all actions, omissions, costs, fees (including, but not
limited to, attorney's fees), or liabilities associated with any Customer Default or any transaction undertaken by IB
upon Default.
17. Suspicious Activity: If IB in its sole discretion believes that a Customer account has been involved in any fraud or
crime or violation of laws or regulations, or has been accessed unlawfully, or is otherwise involved in any suspicious
activity (whether victim or perpetrator or otherwise), IB may suspend or freeze the account or any privileges of the
account, may freeze or liquidate funds or assets, or may utilize any of the remedies in this Agreement for a
"Default".
18. Multi-Currency Function in IB Accounts:
A. Customers may be able to trade products denominated in different currencies using a base currency chosen by
Customer. Upon purchase of a product denominated in a different currency from the base currency, a margin loan
is created to fund the purchase, secured by the assets in Customer's accounts. If Customer maintains positions
denominated in foreign currencies, IB will calculate Margin Requirements by applying exchange rates specified by
IB. IB WILL APPLY "HAIRCUTS" (A PERCENTAGE DISCOUNT ON THE FOREIGN CURRENCY EQUITY
AMOUNT) TO REFLECT THE POSSIBILITY OF FLUCTUATING EXCHANGE RATES BETWEEN THE

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BASE CURRENCY AND THE FOREIGN CURRENCY. CUSTOMER MUST CLOSELY MONITOR MARGIN
REQUIREMENTS AT ALL TIMES, PARTICULARLY FOR POSITIONS DENOMINATED IN FOREIGN
CURRENCIES, BECAUSE FLUCTUATION IN THE CURRENCY AND THE VALUE OF THE UNDERLYING
POSITION CAN CAUSE A MARGIN DEFICIT.
B. Customer agrees that IB’s obligations to Customer shall be denominated in: (i) the United States dollar; (ii) a
currency in which funds were deposited by Customer or were converted at the request of Customer, to the extent of
such deposits and conversions; or (iii) a currency in which funds have accrued to the customer as a result of trading
conducted on a designated contract market or registered derivatives transaction execution facility, to the extent of
such accruals. Information regarding Customer’s currency conversions is provided on the IB customer statements.
Customer further agrees that IB may hold customer funds in: (i) the United States; (ii) a money center country as
defined by the US Commodity Exchange Act & regulations thereunder; or (iii) the country of origin of the currency.
In addition, Customer acknowledges and authorizes IB to hold Customer’s funds outside the United States, in a
jurisdiction that is neither a money center country nor the country of origin of the currency in order to facilitate
Customer’s trading in investments denominated in that currency.
19. Foreign Currency Exchange ("Forex") Transactions:
A. HIGH RISKS OF FOREX TRADING: FOREX TRADING IS GENERALLY UNREGULATED, IS HIGHLY
RISKY DUE TO THE LEVERAGE (MARGIN) INVOLVED, AND MAY RESULT IN LOSS OF FUNDS
GREATER THAN CUSTOMER DEPOSITED IN THE ACCOUNT. Customer represents that he or she has read
and acknowledges the "Risk Disclosure Statement for Forex Trading and Multi-Currency Accounts" provided
separately by IB.
B. For Forex transactions, IB generally will act as agent or riskless principal and charge a fee. IB may effect Forex
transactions through an affiliate or third party, which may profit or lose from such transactions. Customer agrees
that IB may transfer to or from Customer's regulated futures or securities account(s) from or to any of Customer's
non-regulated Forex account any funds or assets that may be required to avoid margin calls, reduce debit balances
or for any other lawful reason.
C. Netting: (i) Netting by Novation. Each Forex transaction between Customer and IB will immediately be netted
with all then-existing Forex transactions between Customer and IB for the same currencies to constitute one
transaction. (ii) Payment Netting. If on any delivery date more than one delivery of a currency is due, each party
shall aggregate the amounts deliverable and only the difference shall be delivered. (iii) Close-Out Netting. If
Customer: (a) incurs a margin deficit in any IB account, (b) defaults on any obligation to IB, (c) becomes subject to
bankruptcy, insolvency or other similar proceedings, or (d) fails to pay debts when due, IB has the right but not the
obligation to close out Customer's Forex transactions, liquidate all or some of Customer's collateral and apply the
proceeds to any debt to IB. (iv) Upon Close-Out Netting or any "Default", all outstanding Forex transactions will be
deemed terminated as of the time immediately preceding the triggering event, petition or proceeding. (v) IB's rights
herein are in addition to any other rights IB has (whether by agreement, by law or otherwise).
D. Nothing herein constitutes a commitment of IB to offer Forex transactions generally or to enter into any specific
Forex transaction. IB reserves the unlimited right to refuse any Forex order or to decline to quote a two-way market
in any currency.
20. Commodity Options and Futures Not Settled in Cash: Customer acknowledges that: (A) commodity options
cannot be exercised and must be closed out by offset; and (B) for futures contracts that settle not in cash but by
physical delivery of the commodity (including currencies not on IB's Deliverable Currency List), Customer cannot
make or receive delivery. If Customer has not offset a commodity option or physical delivery futures position prior
to the deadline on the IB website, IB is authorized to roll or liquidate the position or liquidate any position or
commodity resulting from the option or futures contract, and Customer is liable for all losses/costs.
21. Commissions and Fees, Interest Charges, Funds: Commissions and fees are as specified on the IB website unless
otherwise agreed in writing by an officer of IB. Customer acknowledges that IB deducts commissions/fees from
Customer accounts, which will reduce account equity. Positions will be liquidated if commissions or other charges
cause a margin deficiency. Changes to commissions/fees are effective immediately upon either of: posting on the IB
website or email or other written notice to Customer. IB shall pay credit interest to and charge debit interest from

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Customer at interest rates and terms on the IB website. Customer funds will not be disbursed until after transactions
are settled. Terms and conditions for deposit and withdrawal of funds (including holding periods) are as specified on
the IB website.
22. Account Deficits: If a cash account incurs a deficit, margin interest rates will apply until the balance is repaid,
and IB has the right, but not the obligation, to treat the account as a margin account. Customer agrees to pay
reasonable costs of collection for any unpaid Customer deficit, including attorneys' and collection agent fees.
23. Risks of Foreign Markets; After Hours Trading: Customer acknowledges that trading securities, options,
futures, currencies or any product on a foreign market is speculative and involves high risk. There also are special
risks of trading outside ordinary market hours, including risk of lower liquidity, higher volatility, changing prices,
un-linked markets, news announcements affecting prices and wider spreads. Customer represents that Customer is
knowledgeable and able to assume these risks.
24. Knowledge of Securities, Warrants and Options; Corporate Actions: Customer acknowledges Customer's
responsibility for knowing the terms of any securities, options, warrants or other products in Customer's account,
including upcoming corporate actions (e.g., tender offers, reorganizations, stock splits, etc.). IB has no obligation to
notify Customer of deadlines or required actions or dates of meetings, nor is IB obligated to take any action without
specific written instructions sent by Customer to IB electronically through the IB website.
25. Quotes, Market Information, Research and Internet Links: Quotes, news, research and information accessible
through IB (including through links to outside websites) ("Information") may be prepared by independent
Providers. The Information is the property of IB, the Providers or their licensors and is protected by law. Customer
agrees not to reproduce, distribute, sell or commercially exploit the Information in any manner without written
consent of IB or the Providers. IB reserves the right to terminate access to the Information. None of the Information
constitutes a recommendation by IB or a solicitation to buy or sell. Neither IB nor the Providers guarantee accuracy,
timeliness, or completeness of the Information, and Customer should consult an advisor before making investment
decisions. RELIANCE ON QUOTES, DATA OR OTHER INFORMATION IS AT CUSTOMER'S OWN RISK. IN
NO EVENT WILL IB OR THE PROVIDERS BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL
OR INDIRECT DAMAGES ARISING FROM USE OF THE INFORMATION. THERE IS NO WARRANTY OF
ANY KIND, EXPRESS OR IMPLIED, REGARDING THE INFORMATION, INCLUDING WARRANTY OF
MERCHANTIBILITY, WARRANTY OF FITNESS FOR A PARTICULAR USE OR WARRANTY OF NON-
INFRINGEMENT.
26. License to Use IB Software: IB grants Customer a non-exclusive, non-transferable license to use IB Software
solely as provided herein. Title to IB Software and updates shall remain the sole property of IB, including all
patents, copyrights and trademarks. Customer shall not sell, exchange or transfer the IB Software to others.
Customer shall not copy, modify, translate, decompile, reverse engineer, disassemble or reduce to a human readable
form, or adapt, the IB Software or use it to create a derivative work, unless authorized in writing by an officer of IB.
IB is entitled to immediate injunctive relief for threatened breaches of these undertakings.
27. LIMITATION OF LIABILITY AND LIQUIDATED DAMAGES PROVISION: CUSTOMER ACCEPTS THE
IB SYSTEM "AS IS", AND WITHOUT WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
USE, PURPOSE OR APPLICATION; TIMELINESS; FREEDOM FROM INTERRUPTION; OR ANY IMPLIED
WARRANTIES ARISING FROM TRADE USAGE, COURSE OF DEALING OR COURSE OF PERFORMANCE.
UNDER NO CIRCUMSTANCES SHALL IB BE LIABLE FOR ANY PUNITIVE, INDIRECT, INCIDENTAL,
SPECIAL OR CONSEQUENTIAL LOSS OR DAMAGES, INCLUDING LOSS OF BUSINESS, PROFITS OR
GOODWILL. IB SHALL NOT BE LIABLE TO CUSTOMER BY REASON OF DELAYS OR INTERRUPTIONS
OF SERVICE OR TRANSMISSIONS, OR FAILURES OF PERFORMANCE OF THE IB SYSTEM,
REGARDLESS OF CAUSE, INCLUDING, BUT NOT LIMITED TO, THOSE CAUSED BY HARDWARE OR
SOFTWARE MALFUNCTION; GOVERNMENTAL, EXCHANGE OR OTHER REGULATORY ACTION; ACTS
OF GOD; WAR, TERRORISM, OR IB'S INTENTIONAL ACTS. CUSTOMER RECOGNIZES THAT THERE
MAY BE DELAYS OR INTERRUPTIONS IN THE USE OF THE IB SYSTEM, INCLUDING, FOR EXAMPLE,
THOSE CAUSED INTENTIONALLY BY IB FOR PURPOSES OF SERVICING THE IB SYSTEM. IN NO
EVENT SHALL IB'S LIABILITY, REGARDLESS OF THE FORM OF ACTION AND DAMAGES SUFFERED

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BY CUSTOMER, EXCEED THE HIGHEST TOTAL MONTHLY COMMISSIONS PAID BY CUSTOMER TO IB
OVER THE 6 MONTHS PRIOR TO ANY INCIDENT.
28. Customer Must Maintain Alternative Trading Arrangements: Computer-based systems such as those used by IB
are inherently vulnerable to disruption, delay or failure. CUSTOMER MUST MAINTAIN ALTERNATIVE
TRADING ARRANGEMENTS IN ADDITION TO CUSTOMER'S IB ACCOUNT FOR EXECUTION OF
CUSTOMER'S ORDERS IN THE EVENT THAT THE IB SYSTEM IS UNAVAILABLE. By signing this
Agreement, Customer represents that Customer maintains alternative trading arrangements.
29. IB and Its Affiliates: A copy of IB's audited financial statements shall be posted on the IB website and, upon
request, mailed to Customer. Customers shall rely only on the financial condition of IB, and not on its affiliates,
which are not liable for IB's acts and omissions.
30. DISCLOSURE STATEMENT: THIS STATEMENT IS FURNISHED TO YOU BECAUSE RULE 190.10(c) OF
THE COMMODITY FUTURES TRADING COMMISSION REQUIRES IT FOR REASONS OF FAIR NOTICE
UNRELATED TO IB'S CURRENT FINANCIAL CONDITION: (A) YOU SHOULD KNOW THAT IN THE
UNLIKELY EVENT OF THIS COMPANY'S BANKRUPTCY, PROPERTY, INCLUDING PROPERTY
SPECIFICALLY TRACEABLE TO YOU, WILL BE RETURNED, TRANSFERRED OR DISTRIBUTED TO
YOU, OR ON YOUR BEHALF, ONLY TO THE EXTENT OF YOUR PRO RATA SHARE OF ALL PROPERTY
AVAILABLE FOR DISTRIBUTION TO CUSTOMERS; (B) NOTICE CONCERNING THE TERMS FOR THE
RETURN OF SPECIFICALLY IDENTIFIABLE PROPERTY WILL BE MADE BY PUBLICATION IN A
NEWSPAPER OF GENERAL CIRCULATION; (C) THE COMMISSION'S REGULATIONS CONCERNING
BANKRUPTCIES OF COMMODITY BROKERS CAN BE FOUND AT TITLE 17 OF THE CODE OF FEDERAL
REGULATIONS PART 190.
31. Consent To Accept Electronic Records And Communications
IB provides electronic trade confirmations, account statements, tax information and other Customer records and
communications (collectively, "Records and Communications") in electronic form. Electronic Records and
Communications may be sent to Customer's Trader Workstation ("TWS") or to Customer's e-mail address, or for
security purposes may be posted on the IB website and customer will need to log in and retrieve the Communication.
By entering into this Agreement, Customer consents to the receipt of electronic Records and Communications. Such
consent will apply on an ongoing basis and for every tax year unless withdrawn by Customer. Customer may
withdraw such consent at any time by providing electronic notice to IB through the IB website. If Customer
withdraws such consent, IB will provide required tax documents in paper form upon request by telephone or via the
IB website. However, IB reserves the right to require Customer to close Customer's account.
In order to trade using the IB TWS, and to receive Records and Communications through the TWS, there are
certain system hardware and software requirements, which are described on the IB website at
www.interactivebrokers.com. Since these requirements may change, Customer must periodically refer to the IB
website for current system requirements. To receive electronic mail from IB, Customer is responsible for
maintaining a valid Internet e-mail address and software allowing customer to read, send and receive e-mail.
Customer must notify IB immediately of a change in Customer's e-mail address by using those procedures to change
a Customer e-mail address that may be available on the IB website.
32. Miscellaneous:
A. This Agreement is governed by the laws of the State of New York, without giving effect to conflict of laws
provisions. Courts of New York have exclusive jurisdiction over disputes relating to this Agreement, except when
arbitration is provided. IN ALL JUDICIAL ACTIONS, ARBITRATIONS OR DISPUTE RESOLUTION
METHODS, THE PARTIES WAIVE ANY RIGHT TO PUNITIVE DAMAGES.
B. Customer agrees to the provision of this Agreement in English and represents that Customer understands its
terms and conditions. This Agreement contains the entire agreement between the parties, who have made no other
representations or warranties. If any provision of this Agreement is unenforceable, it shall not invalidate other
provisions. Failure of IB to enforce any term or condition of this Agreement is not a waiver of the term/condition.

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C. Customer consents to recording of all telephone conversations. Customer acknowledges the IBG Privacy
Statement and consents to collection/use of Customer information as described therein.
D. Customer may not assign or transfer any rights or obligations hereunder without the prior written consent of IB.
Upon notice to Customer IB may assign this Agreement to another broker-dealer or futures commission merchant.
This Agreement shall inure to the benefit of IB's successors and assigns. IB may terminate this Agreement or its
services to Customer at any time. Customer may close its account upon notice to IB electronically through the IB
website, but only after all positions are closed and all other requirements specified on the IB website regarding
account closure are satisfied.
E. Customer authorizes IB, directly or through third parties, to make any inquiries that IB considers necessary to
conduct business with Customer. This may include ordering a credit report and performing other credit checks in
the event of any default or breach of the obligations herein by Customer, or verifying the information Customer
provides against third party databases. Any information obtained is maintained in accordance with the Interactive
Brokers Group Privacy Statement.
33. Mandatory Arbitration:
A. This agreement contains a pre-dispute arbitration clause. By signing an arbitration agreement the parties agree
as follows:

• ALL PARTIES TO THIS AGREEMENT ARE GIVING UP THE RIGHT TO SUE EACH OTHER IN COURT,
INCLUDING THE RIGHT TO A TRIAL BY JURY, EXCEPT AS PROVIDED BY THE RULES OF THE
ARBITRATION FORUM IN WHICH A CLAIM IS FILED.

• ARBITRATION AWARDS ARE GENERALLY FINAL AND BINDING; A PARTY'S ABILITY TO HAVE A
COURT REVERSE OR MODIFY AN ARBITRATION AWARD IS VERY LIMITED.

• THE ABILITY OF THE PARTIES TO OBTAIN DOCUMENTS, WITNESS STATEMENTS AND OTHER
DISCOVERY IS GENERALLY MORE LIMITED IN ARBITRATION THAN IN COURT PROCEEDINGS.

• THE ARBITRATORS DO NOT HAVE TO EXPLAIN THE REASON(S) FOR THEIR AWARD. UNLESS, IN AN
ELIGIBLE CASE, A JOINT REQUEST FOR AN EXPLAINED DECISION HAS BEEN SUBMITTED BY ALL
PARTIES TO THE PANEL AT LEAST 20 DAYS PRIOR TO THE FIRST SCHEDULED HEARING DATE.

• THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO

WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY.

• THE RULES OF SOME ARBITRATION FORUMS MAY IMPOSE TIME LIMITS FOR BRINGING A CLAIM IN
ARBITRATION.

• IN SOME CASES, A CLAIM THAT IS INELIGIBLE FOR ARBITRATION MAY BE BROUGHT IN COURT.

• THE RULES OF THE ARBITRATION FORUM IN WHICH THE CLAIM IS FILED, AND ANY AMENDMENTS
THERETO, SHALL BE INCORPORATED INTO THIS AGREEMENT.

B. Customer agrees that any controversy, dispute, claim, or grievance between IB, any IB affiliate or any of their
shareholders, officers, directors employees, associates, or agents, on the one hand, and Customer or, if applicable,
Customer's shareholders, officers, directors employees, associates, or agents on the other hand, arising out of, or
relating to, this Agreement, or any account(s) established hereunder in which securities may be traded; any
transactions therein; any transactions between IB and Customer; any provision of the Customer Agreement or any
other agreement between IB and Customer; or any breach of such transactions or agreements, shall be resolved by
arbitration, in accordance with the rules then prevailing of any one of the following: (a) The Financial Industry
Regulatory Authority; or (b) any other exchange of which IB is a member, as the true claimant-in-interest may elect.
If Customer is the claimant-in-interest and has not selected an arbitration forum within ten days of providing notice

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of Customer's intent to arbitrate, IB shall select the forum. The award of the arbitrators, or a majority of them, shall
be final, and judgment upon the award rendered may be entered in any court, state or federal, having jurisdiction.
C. No person shall bring a putative or certified class action to arbitration, nor seek to enforce any pre-dispute
arbitration agreement against any person who has initiated in court a putative class action; or who is a member of a
putative class who has not opted out of the class with respect to any claims encompassed by the putative class action
until:

• the class certification is denied; or

• the class is decertified; or
• the customer is excluded from the class by the court. Such forbearance to enforce an agreement to arbitrate shall not
constitute a waiver of any rights under this Agreement except to the extent stated herein.

THIS AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE IN PARAGRAPH 33. BY

SIGNING THIS AGREEMENT I ACKNOWLEDGE THAT THIS AGREEMENT CONTAINS A PRE-DISPUTE
ARBITRATION CLAUSE AND THAT I HAVE RECEIVED, READ AND UNDERSTOOD THE TERMS
THEREOF.

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 Interactive Brokers Futures Arbitration Agreement

Any controversy or claim between Interactive Brokers LLC ("IB") and the undersigned ("Customer") arising out of or relating to Customer's Account with
IB, to transactions between IB and Customer, to the Customer Agreement with IB or any other agreement between IB and Customer, or to the breach of
any such transaction or agreement shall, except as provided below, be resolved by arbitration before a forum chosen in accordance with the procedure
set out below. If, by reason of any applicable statute, regulation, exchange rule or otherwise, Customer's advance agreement to submit a controversy to
arbitration would not be enforceable by IB, this provision shall not permit Customer to enforce IB's advance agreement to submit to arbitration. Any
award rendered in any arbitration conducted pursuant to this agreement shall be final, binding and enforceable in accordance with the laws of the State
of Connecticut and judgment may be entered on any such award by any court having jurisdiction thereof.

At such time as Customer notifies IB that Customer intends to submit a controversy to arbitration, or at such time as IB notifies Customer that IB intends
to submit a controversy to arbitration, Customer will have the opportunity to choose a forum from a list of three or more qualified forums provided by IB.
A "qualified forum" is an organization whose procedures for conducting arbitrations meet Acceptable Practices established by the Commodity Futures
Trading Commission ("CFTC").

As required by CFTC Rule 166.5, IB will pay any incremental fees which may be assessed by a qualified forum for provision of a mixed arbitration panel,
unless the arbitrators hearing the controversy determine that Customer has acted in bad faith in initiating or conducting the arbitration. A "mixed
arbitration panel" is an arbitration panel composed of one or more persons, a majority of whom are not members or associated with a member, or an
employee of the designated contract market (upon which the transaction giving rise to the dispute was executed or could have been executed) and who
are not otherwise associated with the designated contract market.

In connection with this Arbitration Agreement, IB is required to furnish to Customer the following statement, pursuant to Rule 166.5 of the CFTC (for the
purposes of the following, "you" or "your" means IB's Customer):

THREE FORUMS EXIST FOR THE RESOLUTION OF COMMODITY DISPUTES: CIVIL COURT LITIGATION, REPARATIONS AT THE COMMODITY
FUTURES TRADING COMMISSION ("CFTC"), AND ARBITRATION CONDUCTED BY A SELF-REGULATORY OR OTHER PRIVATE
ORGANIZATION.

THE CFTC RECOGNIZES THAT THE OPPORTUNITY TO SETTLE DISPUTES BY ARBITRATION MAY IN SOME CASES PROVIDE MANY
BENEFITS TO CUSTOMERS, INCLUDING THE ABILITY TO OBTAIN AN EXPEDITIOUS AND FINAL RESOLUTION OF DISPUTES WITHOUT
INCURRING SUBSTANTIAL COSTS. THE CFTC REQUIRES, HOWEVER, THAT EACH CUSTOMER INDIVIDUALLY EXAMINE THE RELATIVE
MERITS OF ARBITRATION AND THAT YOUR CONSENT TO THIS ARBITRATION AGREEMENT BE VOLUNTARY.

BY SIGNING THIS AGREEMENT, YOU: (1) MAY BE WAIVING YOUR RIGHT TO SUE IN A COURT OF LAW; AND (2) ARE AGREEING TO BE
BOUND BY ARBITRATION OF ANY CLAIMS OR COUNTERCLAIMS WHICH YOU OR IB MAY SUBMIT TO ARBITRATION UNDER THIS
AGREEMENT. YOU ARE NOT, HOWEVER, WAIVING YOUR RIGHT TO ELECT INSTEAD TO PETITION THE CFTC TO INSTITUTE REPARATIONS
PROCEEDINGS UNDER SECTION 14 OF THE COMMODITY EXCHANGE ACT WITH RESPECT TO ANY DISPUTE WHICH MAY BE ARBITRATED
PURSUANT TO THIS AGREEMENT. IN THE EVENT A DISPUTE ARISES, YOU WILL BE NOTIFIED IF IB INTENDS TO SUBMIT THE DISPUTE TO
ARBITRATION. IF YOU BELIEVE A VIOLATION OF THE COMMODITY EXCHANGE ACT IS INVOLVED AND IF YOU PREFER TO REQUEST A
SECTION 14 "REPARATIONS" PROCEEDING BEFORE THE CFTC, YOU WILL HAVE 45 DAYS FROM THE DATE OF SUCH NOTICE IN WHICH
TO MAKE THAT ELECTION.

YOU NEED NOT SIGN THIS AGREEMENT TO MAINTAIN AN ACCOUNT WITH IB. HOWEVER, DECLINING THIS AGREEMENT MAY RESULT IN
REDUCED TRADING LIMITS.
DISCLOSURE OF RISKS OF MARGIN TRADING
Interactive Brokers (“IB”) is furnishing this document to you to provide some basic facts about purchasing securities
and futures contracts on margin, and to alert you to the risks involved with trading in a margin account. “Margin
trading” can mean engaging in a transaction in which securities are purchased partially through a margin loan
extended to you by IB, for which the securities act as collateral. Margin trading can also mean trading investment
products such as futures or options in which an initial “margin” deposit is made to secure your obligations and
further margin may be required to secure your obligations as the value of your positions changes.
This document also describes special risks associated with trading on margin in an IRA account, as described below.
Before trading stocks, futures or other investment products in a margin account, you should carefully review the
margin agreement provided by IB and you should consult IB 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 IB. If you choose to borrow funds from IB, you will open a margin account with the firm. The securities
purchased are IB’s collateral for the loan to you. If the securities or futures contracts in your account decline in
value, so does the value of the collateral supporting your loan, and, as a result, IB can take action, such as sell
securities or other assets in any of your accounts held with IB or issue a margin call, in order to maintain the
required equity in the account.
You should understand that pursuant to the IB Margin Agreement, IB generally will not issue margin calls, that IB
will not credit your account to meet intraday margin deficiencies, and that IB generally will liquidate positions in
your account in order to satisfy margin requirements without prior notice to you and without an opportunity for you
to choose the positions to be liquidated or the timing or order of liquidation.
In addition, it is important that you fully understand the risks involved in trading securities or futures contracts 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 or futures
contracts that are purchased on margin may require you to provide additional funds to IB or you must put up margin
to avoid the forced sale of those securities or futures contracts or other assets in your account(s).

• IB 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 if IB has higher “house” requirements, IB can sell the securities or futures
contracts or other assets in any of your accounts held at the firm to cover the margin deficiency. You also will be
responsible for any shortfall in the account after such a sale.

• IB 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. As noted above, IB generally
will not issue margin calls and can immediately sell your securities or futures contracts without notice to you in the
event that your account has insufficient margin.

• You are not entitled to choose which securities or futures contracts or other assets in your account(s) are liquidated or
sold to meet a margin call. IB has the right to decide which positions to sell in order to protect its interests.

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• IB 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. Your failure to maintain adequate
margin in the event of an increased margin rate generally will cause IB to liquidate or sell securities or futures
contracts in your account(s).

• If IB chooses to issue a margin call rather than immediately liquidating undermargined positions, you are not entitled
to an extension of time on the margin call.

• Special Risks of Trading on Margin in an IRA Account:

◦ Margin Trading in an IRA Account May Not Be Suitable Depending on Your Financial Circumstances. Trading
requiring margin (including futures trading and short option trading) involves a high degree of risk and may
result in a loss of funds greater than the amount you have deposited in your IRA account. You must determine
whether trading on margin in an IRA account is advisable based on your financial circumstances, your tolerance
for risk, the number of years until your retirement, and other factors. You should consult a professional financial
advisor to determine if margin trading in your IRA account is consistent with your financial goals.

◦ You Must Closely Monitor Your Account and Your Trading to Avoid Adverse Tax Consequences: Trading
requiring margin (including futures trading and short option trading) may require the deposit of additional
funds to your account to maintain sufficient margin. At the same time, provisions of the Internal Revenue Code
place limits on the amount of funds that can be deposited to an IRA account. Deposits to the account in excess of
such limits may cause adverse tax consequences, including but not limited to, forfeiture of the tax-advantaged
status of the IRA account and/or penalties. As described above, IB will liquidate positions in your account in the
event that you cannot or do not deposit sufficient funds to satisfy margin requirements.

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Portfolio Margin Risk Disclosure Statement
OVERVIEW OF PORTFOLIO MARGINING
1. Portfolio margining is a margin methodology that sets margin requirements for an account using a "risk-based"
pricing model that calculates the largest potential loss of all positions in a product class or group across a range of
underlying prices and volatilities. This model, known as the Theoretical Intermarket Margining System ("TIMS"),
is applied each night to U.S. stocks, OCC stock and index options, and U.S. single stock futures positions by the
federally-chartered Options Clearing Corporation ("OCC") and is disseminated by the OCC to participating
brokerage firms each night. Interactive Brokers evaluates margin compliance throughout the trading day based on
the current positions in the account and current market prices, but the margin calculations are based on TIMS
parameters received the prior evening.
2. The goal of portfolio margining is to set levels of margin that more precisely reflect actual net risk. The customer
may benefit from portfolio margining in that margin requirements that are calculated based on net risk are
generally lower than alternative “position” or “strategy” based methodologies for determining margin requirements.
Lower margin requirements allow the customer more leverage in an account.
CUSTOMERS ELIGIBLE FOR PORTFOLIO MARGINING
3. To be eligible for portfolio margining, customers (other than broker-dealers or members of a national futures
exchange) must be approved for writing uncovered options. If a customer (other than a broker-dealer or member of
a national futures exchange) wishes to trade in unlisted derivatives, the customer must have and maintain at all
times account equity of not less than five million dollars, aggregated across all accounts under identical ownership at
the carrying broker-dealer and/or its US-regulated affiliated broker-dealers or Futures Commission Merchants.
This identical ownership requirement excludes accounts held by the same customer in different capacities (e.g., as a
trustee and as an individual) and accounts where ownership is overlapping but not identical (e.g., individual
accounts and joint accounts). In addition to the requirements of the self-regulatory organization rule, carrying
broker-dealers may have their own minimum equity requirement and possibly other eligibility requirements.
POSITIONS ELIGIBLE FOR A PORTFOLIO MARGIN ACCOUNT
4. All margin equity securities (as defined in Section 220.2 of Regulation T of the Board of Governors of the Federal
Reserve System), warrants on margin equity securities or on eligible indices of equity securities, equity-based or
equity-index based listed options, and security futures products (as defined in Section 3(a)(56) of the Securities
Exchange Act of 1934) are eligible to be margined in a portfolio margin account. In addition, a customer that has an
account with equity of at least five million dollars may establish and maintain positions in unlisted derivatives (e.g.,
OTC swaps, options) on a margin equity security or an eligible index of equity securities that can be priced by a
theoretical pricing model approved by the Securities and Exchange Commission (“SEC”).
SPECIAL RULES FOR PORTFOLIO MARGIN ACCOUNTS
5. A portfolio margin account may be either a separate account or a sub-account of a customer’s standard margin
account. In the case of a sub-account, equity in the standard account may be available to satisfy any margin
requirement in the portfolio margin sub-account without transfer to the sub-account.
6. A portfolio margin account or sub-account will be subject to a minimum margin requirement of $.375 for each
listed option, unlisted derivative and security futures product, multiplied by the contract’s or instrument’s
multiplier, carried long or short in the account. Other eligible products are not subject to a minimum margin
requirement.

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7. A margin deficiency in the portfolio margin account or sub-account, regardless of whether due to new
commitments or the effect of adverse market movements on existing positions, must be met within three business
days. Failure to meet a portfolio margin deficiency by the end of the third business day will result in a prohibition on
entering any new orders, with the exception of new orders that reduce the margin requirement. Failure to meet a
portfolio margin deficiency by the end of the third business day will result in the prompt liquidation of positions on
the fourth business day, to the extent necessary to eliminate the margin deficiency.
8. Any shortfall in aggregate equity across accounts, when required, must be met within three business days. Failure
to meet a minimum equity deficiency by the end of the third business day will result in a prohibition on entering any
new orders, with the exception of new orders that reduce the margin requirement, beginning on the fourth business
day and continuing until such time as the minimum equity requirement is satisfied, or if applicable, all unlisted
derivatives are liquidated or transferred out of the portfolio margin account.
**Please note that pursuant to the IB Customer Agreement, IB reserves theright to liquidate positions prior to the
fourth business day. **
SPECIAL RISKS OF PORTFOLIO MARGIN ACCOUNTS
9. Portfolio margining generally permits greater leverage in an account, and greater leverage creates greater losses
in the event of adverse market movements.
10. Because the maximum time limit for meeting a margin deficiency is shorter than in a standard margin account,
there is increased risk that a customer’s portfolio margin account will be liquidated involuntarily, possibly causing
losses to the customer.
11. Because portfolio margin requirements are determined using sophisticated mathematical calculations and
theoretical values that must be calculated from market data, it may be more difficult for customers to predict the
size of future margin deficiencies in a portfolio margin account. This is particularly true in the case of customers
who do not have access to specialized software necessary to make such calculations or who do not receive theoretical
values calculated and distributed periodically by an approved vendor of theoretical values.
12. Trading of margin equity securities, warrants on margin equity securities or on eligible indices of equity
securities, listed options, unlisted derivatives on margin equity securities or an eligible index of equity securities, and
security futures products in a portfolio margin account is generally subject to all the risks of trading those same
products in a standard securities margin account. Customers should be thoroughly familiar with the risk disclosure
materials applicable to those products, including the booklets entitled “Characteristics and Risks of Standardized
Options” and “Security Futures Risk Disclosure Statement”. Because this disclosure statement does not disclose the
risks and other significant aspects of trading in security futures and options, customers should review those
materials carefully before trading these products in a portfolio margin account.
13. Customers should consult with their tax advisers to be certain that they are familiar with the tax treatment of
transactions in margin equity securities, warrants on margin equity securities or on eligible indices of equity
securities, listed options, unlisted derivatives on margin equity securities or an eligible index of equity securities, and
security futures products, including tax consequences of trading strategies involving both security futures and option
contracts.
14. The descriptions in this disclosure statement relating to eligibility requirements for portfolio margin accounts,
and minimum equity and margin requirements for those accounts, are minimums imposed under the self-regulatory
organization rules. Time frames within which margin and equity deficiencies must be met are maximums imposed
under the self-regulatory organization rules. Broker-dealers may impose their own more stringent requirements.
15. Customers should bear in mind that the discrepancies in the cash flow characteristics of security futures and
certain options are still present even when those products are carried together in a portfolio margin account. In
addition, discrepancies in the cash flow characteristics of certain unlisted derivatives may also be present when those
products are carried in a portfolio margin account. Both security futures and options contracts are generally
marked to the market at least once each business day. Similarly, certain unlisted derivatives may also be marked to
the market on a daily basis. However, there may be incongruity between the marking to the market of each eligible
product in that marks may take place with different frequency and at different times within the day. For example,

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when a security futures contract is marked to the market, the gain or loss is immediately credited to or debited from,
respectively, the customer’s account in cash. While a change in the value of a long option contract may increase or
decrease the equity in the account, the gain or loss is not realized until the option is liquidated, exercised or assigned.
Accordingly, a customer may be required to deposit cash in the account in order to meet a variation payment on a
security futures contract even though the customer is in a hedged position and has experienced a corresponding (but
yet unrealized) gain on an option. Alternatively, a customer who is in a hedged position and would otherwise be
entitled to receive a variation payment on a security futures contract may find that the cash is required to be held in
the account as margin collateral on an offsetting option position.
The general provisions governing portfolio margining (including definitions used in this document) are set forth in
NYSE Rule 431(g) and FINRA Rule 4210(g), which can be found at http://nyserules.nyse.com/NYSE/Rules and
www.finra.org.
ACKNOWLEDGEMENT FOR CUSTOMERS UTILIZING A PORTFOLIO MARGINACCOUNT
BY SIGNING BELOW, I/WE AFFIRM THAT I/WE HAVE READ AND UNDERSTOOD THE
PORTFOLIOMARGINING RISK DISCLOSURE STATEMENT.
CUSTOMER NAME:
BY: DATE

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 Appendix A to CFTC Rule 1.55(c) - Generic Risk Disclosure Statement

Risk Disclosure Statement for Futures and Options

This brief statement does not disclose all of the risks and other significant aspects of trading in
futures and options. In light of the risks, you should undertake such transactions only if you
understand the nature of the contracts (and contractual relationships) into which you are
entering and the extent of your exposure to risk. Trading in futures and options is not suitable for
many members of the public. You should carefully consider whether trading is appropriate for
you in light of your experience, objectives, financial resources and other relevant circumstances.

Futures

1. Effect of "Leverage" or "Gearing"

Transactions in futures carry a high degree of risk. The amount of initial margin is small relative
to the value of the futures contract so that transactions are 'leveraged' or 'geared'. A relatively
small market movement will have a proportionately larger impact on the funds you have
deposited or will have to deposit: this may work against you as well as for you. You may sustain
a total loss of initial margin funds and any additional funds deposited with the firm to maintain
your position. If the market moves against your position or margin levels are increased, you may
be called upon to pay substantial additional funds on short notice to maintain your position. If
you fail to comply with a request for additional funds within the time prescribed, your position
may be liquidated at a loss and you will be liable for any resulting deficit.

2. Risk-reducing orders or strategies

The placing of certain orders (e.g. 'stop-loss' orders, where permitted under local law, or 'stop-
limit' orders) which are intended to limit losses to certain amounts may not be effective because
market conditions may make it impossible to execute such orders. Strategies using
combinations of positions, such as 'spread' and 'straddle' positions may be as risky as taking
simple 'long' or 'short' positions.

Options

3. Variable degree of risk

Transactions in options carry a high degree of risk. Purchasers and sellers of options should
familiarize themselves with the type of option (i.e. put or call) which they contemplate trading
and the associated risks. You should calculate the extent to which the value of the options must
increase for your position to become profitable, taking into account the premium and all
transaction costs.

The purchaser of options may offset or exercise the options or allow the options to expire. The
exercise of an option results either in a cash settlement or in the purchaser acquiring or
delivering the underlying interest. If the option is on a future, the purchaser will acquire a futures
position with associated liabilities for margin (see the section on Futures above). If the
purchased options expire worthless, you will suffer a total loss of your investment which will
consist of the option premium plus transaction costs. If you are contemplating purchasing deep-
out-of-the-money options, you should be aware that the chance of such options becoming
profitable ordinarily is remote.

Selling ('writing' or 'granting') an option generally entails considerably greater risk than
purchasing options. Although the premium received by the seller is fixed, the seller may sustain
a loss well in excess of that amount. The seller will be liable for additional margin to maintain the
position if the market moves unfavorably. The seller will also be exposed to the risk of the
purchaser exercising the option and the seller will be obligated to either settle the option in cash
or to acquire or deliver the underlying interest. If the option is on a future, the seller will acquire
a position in a future with associated liabilities for margin (see the section on Futures above). If
the option is 'covered' by the seller holding a corresponding position in the underlying interest or
a future or another option, the risk may be reduced. If the option is not covered, the risk of loss
can be unlimited.

Certain exchanges in some jurisdictions permit deferred payment of the option premium,
exposing the purchaser to liability for margin payments not exceeding the amount of the
premium. The purchaser is still subject to the risk of losing the premium and transaction costs.
When the option is exercised or expires, the purchaser is responsible for any unpaid premium
outstanding at that time.

Additional risks common to futures and options

4. Terms and conditions of contracts

You should ask the firm with which you deal about the terms and conditions of the specific
futures or options which you are trading and associated obligations (e.g. the circumstances
under which you may become obligated to make or take delivery of the underlying interest of a
futures contract and, in respect of options, expiration dates and restrictions on the time for
exercise). Under certain circumstances the specifications of outstanding contracts (including the
exercise price of an option) may be modified by the exchange or clearing house to reflect
changes in the underlying interest.

5. Suspension or restriction of trading and pricing relationships

Market conditions (e.g. illiquidity) and/or the operation of the rules of certain markets (e.g. the
suspension of trading in any contract or contract month because of price limits or "circuit
breakers") may increase the risk of loss by making it difficult or impossible to effect transactions
or liquidate/offset positions. If you have sold options, this may increase the risk of loss.
Further, normal pricing relationships between the underlying interest and the future, and the
underlying interest and the option may not exist. This can occur when, for example, the futures
contract underlying the option is subject to price limits while the option is not. The absence of an
underlying reference price may make it difficult to judge "fair" value.

6. Deposited cash and property

You should familiarize yourself with the protections accorded money or other property you
deposit for domestic and foreign transactions, particularly in the event of a firm insolvency or
bankruptcy. The extent to which you may recover your money or property may be governed by
specific legislation or local rules. In some jurisdictions, property which had been specifically
identifiable as your own will be pro-rated in the same manner as cash for purposes or
distribution in the event of a shortfall.
7. Commission and other charges

Before you begin to trade, you should obtain a clear explanation of all commission, fees and
other charges for which you will be liable. These charges will affect your net profit (if any) or
increase your loss.

8. Transactions in other jurisdictions

Transactions on markets in other jurisdictions, including markets formally linked to a domestic

market, may expose you to additional risk. Such markets may be subject to regulation which
may offer different or diminished investor protection. Before you trade you should enquire about
any rules relevant to your particular transactions. Your local regulatory authority will be unable
to compel the enforcement of the rules of regulatory authorities or markets in other jurisdictions
where your transactions have been effected. You should ask the firm with which you deal for
details about the types of redress available in both your home jurisdiction and other relevant
jurisdictions before you start to trade.

9. Currency risks

The profit or loss in transactions in foreign currency-denominated contracts (whether they are
traded in your own or another jurisdiction) will be affected by fluctuations in currency rates
where there is a need to convert from the currency denomination of the contract to another
currency.

10. Trading facilities

Most open-outcry and electronic trading facilities are supported by computer-based component
systems for the order-routing, execution, matching, registration or clearing of trades. As with all
facilities and systems, they are vulnerable to temporary disruption or failure. Your ability to
recover certain losses may be subject to limits on liability imposed by the system provider, the
market, the clearing house and/or member firms. Such limits may vary: you should ask the firm
with which you deal for details in this respect.

11. Electronic trading

Trading on an electronic trading system may differ not only from trading in an open-outcry
market but also from trading on other electronic trading systems. If you undertake transactions
on an electronic trading system, you will be exposed to risks associated with the system
including the failure of hardware and software. The result of any system failure may be that your
order is either not executed according to your instructions or is not executed at all.

12. Off-exchange transactions

In some jurisdictions, and only then in restricted circumstances, firms are permitted to effect off-
exchange transactions. The firm with which you deal may be acting as your counterparty to the
transaction. It may be difficult or impossible to liquidate an existing position, to assess the value,
to determine a fair price or to assess the exposure to risk. For these reasons, these transactions
may involve increased risks. Off-exchange transactions may be less regulated or subject to a
separate regulatory regime. Before you undertake such transactions, you should familiarize
yourself with applicable rules and attendant risks.
I hereby acknowledge that I have received and understood this risk disclosure statement.
 CFTC RULE 15.05 NOTICE TO NON-U.S. TRADERS

In accordance with Rules 15.05 and 21.03 of the Commodity Futures Trading Commission
("CFTC"), 17 C.F.R. §§15.05 and 21.03, Interactive Brokers is required to notify you that we are
considered to be your agent for purposes of accepting delivery and service of communications
from or on behalf of the CFTC regarding any commodity futures contracts or commodity option
contracts which are or have been maintained in your account(s) with us.

In the event that you are acting as agent or broker for any other person(s), we are also
considered to be their agent, and the agent of any person(s) for whom they may be acting as
agent or broker, for purposes of accepting delivery and service of such communications. Service
or delivery to us of any communication issued by or on behalf of the CFTC (including any
summons, complaint, order, subpoena, special call, request for information, notice,
correspondence or other written document) will be considered valid and effective service or
delivery upon you or any person for whom you may be acting, directly or indirectly, as agent or
broker.

You should be aware that Rule 15.05 also provides that you may designate an agent other than
Interactive Brokers. Any such alternative designation of agency must be evidenced by a written
agency agreement which you must furnish to us and which we, in turn, must forward to the
CFTC. If you wish to designate an agent other than us, please contact us in writing. You should
consult 17 C.FR. § 15.05 for a more complete explanation of the foregoing.

Upon a determination by the CFTC that information concerning your account(s) with us may be
relevant in enabling the CFTC to determine whether the threat of a market manipulation, corner,
squeeze, or other market disorder exists, the CFTC may issue a call for specific information
from us or from you. In the event that the CFTC directs a call for information to us, we must
provide the information requested within the time specified by the CFTC. If the CFTC directs a
call for information to you through us as your agent, we must promptly transmit the call to you,
and you must provide the information requested within the time specified by the CFTC. If any
call by the CFTC for information regarding your account(s) with us is not met, the CFTC has
authority to restrict such account(s) to trading for liquidation only. You have the right to a hearing
before the CFTC to contest any call for information concerning your account(s) with us, but your
request for a hearing will not suspend the CFTC's call for information unless the CFTC modifies
or withdraws the call. Please consult 17 C.F.R. §21.03 for a more complete description of the
foregoing (including the type of information you may be required to provide).

Certain additional regulations may affect you. Part 17 of the CFTC Regulations, 17 C.F.R. Part
17, requires each futures commission merchant and foreign broker to submit a report to the
CFTC with respect to each account carried by such futures commission merchant or foreign
broker which contains a reportable futures position. (Specific reportable position levels for all
futures contracts traded on U.S. exchanges are established in Rule 15.03.) In addition, Part 18
of the CFTC Regulations, 17 C.F.R. Part 18, requires all traders (including foreign traders) who
own or control a reportable futures or options position and who have received a special call from
the CFTC to file certain reports with the CFTC, including, but not limited to, a Statement of
Reporting Trader (Form 40). Please consult 17 C.F.R. Parts 17 and 18 for more complete
information with respect to the foregoing.

CFTC RULE 15.05 NOTICE TO NON-U.S. TRADERS – January 16, 2013 Revision
 DISCLOSURE REGARDING INTERACTIVE BROKERS’ assigned sequence range into which the Random Number falls; and
PROCEDURES FOR ALLOCATING EQUITY OPTION (b) select contracts to be assigned in increments of one, beginning
ASSIGNMENT NOTICES FROM OCC with the contract that correlates with the Random Number until the
total number of contracts assigned has been satisfied.
As described in the Options Clearing Corporation (“OCC”)
Publication "Characteristics and Risks of Standardized Options", the 6. The IB LLC System will then process the assigned positions by (a)
OCC assigns exercise notices to clearing firms such as Interactive removing the options positions from customers’ accounts and (b) if
Brokers LLC (“IB LLC”), [the US-located affiliate of Interactive the option delivers underlying stock, entering the corresponding
Brokers (U.K.) Limited (“IB UK”) and Interactive Brokers Canada, Inc. stock trades at the strike price or (c) if the option assignment settles
(“IBC”) that arranges for the execution and clearing of IB UK and IBC in cash, entering the corresponding cash debit.
customer trades] using a specified assignment procedure. IB LLC, in
turn, is required to maintain a procedure to allocate such exercise notices EXHIBIT “A”
to those customer accounts carried by IB LLC that hold short positions
in the relevant options. Upon assignment, customers whose accounts are Assume there are 1186 options contracts held at OCC for 10 customers
carried by IB LLC shall be required: (1) in the case of an equity option, and that 50 contracts are assigned to IB LLC by OCC.
to deliver or accept the required number of shares of the underlying
security, or (2) in the case of an equity index option, to pay or receive 1. Assign sequence numbers to each security:
the settlement price, in cash. Customer understands that it may not
receive notice of an assignment until one or more days following the No. of Contracts Assigned Sequence Numbers
date of the initial assignment by OCC to IB LLC and that the lack of Customer Accounts held at OCC 1st Range 2nd Range
such notice creates a special risk for uncovered writers of physical A 1 0001 1187
delivery call stock options. B 50 0002-0051 1188-1237
C 100 0052-0151 1238-1337
Described below are IB LLC’s procedures for allocation of D 2 0152-0153 1338-1339
exercise notices, which are based on a random selection process: E 1 0154 1340
F 1 0155 1341
Steps G 100 0 0156-1155 1342-2341
1. Each night, IB LLC receives from the OCC the “OCC E&A” H 1 1156 2342
(exercise and assignment activity) file in machine-readable format I 10 1157-1166 2343-2352
setting forth, on a per contract basis, the aggregate exercise and J 20 1167-1186 2353-2372
assignment quantities to IB LLC.
Total in OCC 1186
2. For each contract assignment record, the IB LLC System compiles a

list, in ascending account number order, of all customer accounts 2. FIND A STARTING RANDOM NUMBER BETWEEN 0001 AND
held at IB LLC with short positions in the relevant contract. 1186 using the Oracle random number generator.

3. If only one customer holds a short position in the contract assigned, 3. ASSUMING THE RANDOM NUMBER GENERATED WAS 0396,
that customer is automatically allocated the assignment and no ALLOCATE THE 50 CONTRACTS TO CUSTOMERS STARTING
lottery is needed. AT CONTRACT NUMBER 0396.
SUMMARY OF ALLOCATION
4. If more than one customer holds a short position in the contract
assigned, the IB LLC System runs an automated random lottery to
determine the allocation of quantities that are to be assigned to each No of Contracts Allocation of Assigned
customer. The IB LLC System shall: Customer Accounts Held at OCC Options Contracts
A 1 0
a. Assign two sequence ranges to each customer’s holdings B 50 0
(see Exhibit A). C 100 0
D 2 0
b. Generate a random number to find a “Starting Point”. The E 1 0
Starting Point is the customer contract sequence number F 1 0
from which the allocation of the assignment quantity G 1000 50
begins. To generate a Random Number, the IB System H 1 0
will: I 10 0
J 20 0
Initialize the Oracle random number generator with the
system time (HH24MISS) Total at OCC 1186 50

Find the Random Number by taking the MOD (random

number, total position) + 1 to ensure that the Random
Number is between one and the total number of short
contracts.

(Note: the IB System will generate a new Random Number for

each lottery to be run.)
5. The IB LLC System will then (a) find the account that has the
 Day Trading Risk Disclosure Statement

This Day Trading Risk Disclosure Statement is being provided to you in the event your
Interactive Brokers (IB) margin account becomes, or already is, classified as a Pattern Day
Trader account. As required by current SEC and SRO rules and regulations, IB will classify an
account that effects three (3) day trades within a five (5) day period as a Pattern Day Trader
account. (A day trade is a buy and sell of the same security on the same day). The regulations
prohibit IB from permitting a Pattern Day Trader account from effecting any transactions unless
such account maintains a Minimum Equity Requirement of at least $25,000.

You should consider the following points before engaging in a day-trading strategy. For
purposes of this notice, a "day-trading strategy" means an overall trading strategy characterized
by the regular transmission by a customer of intra-day orders to effect both purchase and sale
transactions in the same security or securities.

Day trading can be extremely risky. Day trading generally is not appropriate for someone of
limited resources and limited investment or trading experience and low risk tolerance. You
should be prepared to lose all of the funds that you use for day trading. In particular, you should
not fund day-trading activities with retirement savings, student loans, second mortgages,
emergency funds, funds set aside for purposes such as education or home ownership, or funds
required to meet your living expenses. Further, certain evidence indicates that an investment of
less than $50,000 will significantly impair the ability of a day trader to make a profit. Of course,
an investment of $50,000 or more will in no way guarantee success.

Be cautious of claims of large profits from day trading. You should be wary of
advertisements or other statements that emphasize the potential for large profits in day trading.
Day trading can also lead to large and immediate financial losses.

Day trading requires knowledge of securities markets. Day trading requires in-depth
knowledge of the securities markets and trading techniques and strategies. In attempting to
profit through day trading, you must compete with professional, licensed traders employed by
securities firms. You should have appropriate experience before engaging in day trading.

Day trading requires knowledge of a firm's operations. You should be familiar with a
securities firm's business practices, including the operation of the firm's order execution systems
and procedures. Under certain market conditions, you may find it difficult or impossible to
liquidate a position quickly at a reasonable price. This can occur, for example, when the market
for a stock suddenly drops, or if trading is halted due to recent news events or unusual trading
activity. The more volatile a stock is, the greater the likelihood that problems may be
encountered in executing a transaction. In addition to normal market risks, you may experience
losses due to systems failures.

Day trading will generate substantial commissions, even if the per trade cost is low. Day
trading involves aggressive trading, and generally you will pay commission on each trade. The
total daily commissions that you pay on your trades will add to your losses or significantly
reduce your earnings. For instance, assuming that a trade costs $16 and an average of 29
transactions are conducted per day, an investor would need to generate an annual profit of
$111,360 just to cover commission expenses.
Day trading on margin or short selling may result in losses beyond your initial
investment. When you day trade with funds borrowed from a firm or someone else, you can
lose more than the funds you originally placed at risk. A decline in the value of the securities
that are purchased may require you to provide additional funds to the firm to avoid the forced
sale of those securities or other securities in your account. Short selling as part of your day-
trading strategy also may lead to extraordinary losses, because you may have to purchase a
stock at a very high price in order to cover a short position.

Potential Registration Requirements. Persons providing investment advice for others or

managing securities accounts for others may need to register as either an "Investment Advisor"
under the Investment Advisors Act of 1940 or as a "Broker" or "Dealer" under the Securities
Exchange Act of 1934. Such activities may also trigger state registration requirements.
Risks of After-Hours Trading
There are special characteristics and unique risks associated with trading in securities at times that are outside
the ordinary trading hours for the exchange(s) upon which such securities are traded ("After-Hours Trading"
or “Extended Hours Trading”). Customers must familiarize themselves with these risks and determine whether
After-Hours Trading is appropriate in light of their objectives and experience. Customers are responsible for
familiarizing themselves with the hours of the relevant markets upon which they trade and for determining
when to place orders for particular securities, how they wish to direct those orders, and what types of orders to
use. Interactive Brokers' offer of After-Hours Trading does not constitute a recommendation or conclusion that
After-Hours Trading will be successful or appropriate for all customers or trades.
Some risks associated with After-Hours Trading are as follows:

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

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7. Risk of Lack of Calculation or Dissemination of Underlying Index Value or Intraday Indicative Value ("IIV").
For certain Derivative Securities Products, an updated underlying index value or IIV may not be calculated or
publicly disseminated in extended trading hours. Since the underlying index value and IIV are not calculated or
widely disseminated during the pre-market and post-market sessions, an investor who is unable to calculate
implied values for certain Derivative Securities Products in those sessions may be at a disadvantage to market
professionals. Additionally, securities underlying the indexes or portfolios will not be regularly trading as they
are during Regular Trading Hours, or may not be trading at all. This may cause prices during Extended Trading
Hours to not reflect the prices of those securities when they open for trading.

8. Index Values.The Exchange will not report a value of an index underlying an index option trading during
Extended Trading Hours, because the value of the underlying index will not be recalculated during or at the close
of Extended Trading Hours.

During After-Hours Trading, Interactive Brokers ("IB") may provide quotations from and execute Customer
trades through various Electronic Communications Networks ("ECNs"), exchanges or other trading systems
("After-Hours Trading Facilities"). Quotations provided during After-Hours Trading may be different than
quotations provided during exchange trading hours. Likewise, it is possible that the quotations displayed by IB
from After-Hours Trading Facilities on which IB can execute Customer trades may be less favorable than those
on other After-Hours Trading Facilities to which IB does not have access. Last sale information provided by IB
may not reflect the prices of the most recent trades on all of the various After-Hours Trading Facilities.
For a list of trading hours for exchanges and ECNs, click here.

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Disclosure Concerning Auto Trading Service Providers
The U.S. Securities & Exchange Commission (the "SEC") has provided investors with the following information
concerning Auto-Trading on the SEC's website at http://www.sec.gov/investor/pubs/autotrading.htm:
All About Auto-Trading

If you subscribe, or are thinking about subscribing to, an investment newsletter service that offers "auto-trading,"
please read this investor alert. Investment newsletters market "auto-trading" programs as a way to receive quick
execution of trades recommended by the investment newsletter. In an "auto-trading" program, you establish an
account at a brokerage firm that has agreed to accept trading instructions from the investment newsletter. In order to
allow "auto-trading" in your account, you must sign an agreement with the broker authorizing it to accept trading
instructions directly from the investment newsletter and to execute trades in your account without first getting your
permission. The broker will make trades in your account without consulting you about the price, the type of security,
the amount and when to buy or sell.

"Auto-trading," like any other arrangement that allows someone else to trade in your account without first asking
your permission, can be highly risky. Here are some steps you'll want to take to check out an auto-trading program,
before you hand over any money:

Check Out the Newsletter — Find out whether the firm that's selling the investment newsletter is registered to do
business as an investment adviser. You can do this by \u0000\u0000siting the SEC website and clicking on the words
" Check Out Your Broker or Adviser." Generally, the SEC considers firms that publish investment newsletters and
that also engage in "auto-trading" to be investment advisers. If you cannot find proof that the firm is registered as
an investment adviser, please let us know by using our online Center for Complaints and Enforcement Tips.

Independently Confirm Performance — Be wary of claims of superior performance, especially ones that rely upon
"cherry picking" successful recommendations and ignoring those that generated losses. You'll want to see a complete
track record of how the firm's recommendations fared over several months to evaluate whether it is living up to its
promises. If the firm isn't willing to provide this information, think twice about entrusting your accounts and your
money to them.

Steer Clear of Testimonials — Watch out if the investment newsletter's promotional materials, such as its website,
contain "testimonials" from supposedly satisfied clients, especially if all the "testimonials" are full of praise. The
SEC forbids registered investment advisers from advertising their services using testimonials.

Follow the Money — Find out whether the firm offering the investment newsletter is being paid by others to
recommend particular stocks. This is particularly important because you are giving the firm the ability to make
trades in your brokerage account without asking your permission. You'll want to evaluate any conflicts of interest
they might have in making recommendations.

Fully Vet the Broker — Before you establish a brokerage account with the firm the newsletter recommends, be sure
to thoroughly check out the disciplinary history of both the brokerage firm and any sales representative assigned to
your account. You can do this by using FINRA's free BrokerCheck service and by calling your state securities
regulator.

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* * *

Be very wary if any firm claims to always make profits investing in the stock market, or if the firm claims to make
extraordinarily high profits for customers. If it sounds too good to be true, it usually is! For more information on how
to invest wisely and avoid costly mistakes, please visit the Investor Information section of our website.

www.interactivebrokers.com Page 2 / 2
4060 | 02/28/2017

Master Securities Lending Agreement for Interactive Brokers LLC Fully-Paid LendingProgram
This Master Securities Lending Agreement ("Agreement") is entered into by and between Interactive Brokers LLC ("IB") and the undersigned party or parties
("Counterparty").

1. Applicability.

From time to time the parties hereto may enter into transactions in which one party ("Lender") will lend to the other party ("Borrower") certain Securities (as defined herein)
against a transfer of Collateral (as defined herein). Each such transaction shall be referred to herein as a "Loan" and, unless otherwise agreed in writing, shall be governed
by this Agreement, including any supplemental terms or conditions contained in an Annex or Schedule hereto and in any other annexes identified herein or therein as
applicable hereunder); provided however that Securities borrowed by Counterparty from IB, and Securities borrowed by IB from Counterparty, pursuant to a margin account
agreement between IB and Counterparty shall not be subject to this Agreement. Capitalized terms not otherwise defined herein shall have the meanings provided in Section
25.

2. Loans of Securities.

1. Subject to the terms and conditions of this Agreement, Borrower or Lender may, from time to time, seek to initiate a transaction in which Lender will lend Securities to
Borrower. Borrower and Lender shall agree on the terms of each Loan (which terms may be amended during the Loan), including the issuer of the Securities, the
amount of Securities to be lent, the basis of compensation, the amount of Collateral to be transferred by Borrower, and any additional terms. Such agreement shall be
confirmed (a) by a schedule and receipt listing the Loaned Securities provided by Borrower to Lender in accordance with Section 3.2, (b) through any system that
compares Loans and in which Borrower and Lender are participants, or (c) in such other manner as may be agreed by Borrower and Lender in writing. Such
confirmation (the "Confirmation"), together with the Agreement, shall constitute conclusive evidence of the terms agreed between Borrower and Lender with respect to
the Loan to which the Confirmation relates, unless with respect to the Confirmation specific objection is made promptly after receipt thereof. In the event of any
inconsistency between the terms of such Confirmation and this Agreement, this Agreement shall prevail unless each party has executed such Confirmation.

2. Notwithstanding any other provision in this Agreement regarding when a Loan commences, unless otherwise agreed, a Loan hereunder shall not occur until the
Loaned Securities and the Collateral therefore have been transferred in accordance with Section 15.

3. Transfer of Loaned Securities.

1. Unless otherwise agreed, Lender shall transfer Loaned Securities to Borrower hereunder on or before the Cutoff Time on the date agreed to by Borrower and Lender
for the commencement of the Loan.

2. Unless otherwise agreed, Borrower shall provide Lender, for each Loan in which Lender is a Customer, with a schedule and receipt listing the Loaned Securities. Such
schedule and receipt may consist of (a) a schedule provided to Borrower by Lender and executed and returned by Borrower when the Loaned Securities are received,
(b) in the case of Securities transferred through a Clearing Organization which provides transferors with a notice evidencing such transfer, such notice, or (c) a
confirmation or other document provided to Lender by Borrower.

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 3. Notwithstanding any other provision in this Agreement, the parties hereto agree that they intend the Loans hereunder to be loans of Securities. If, however, any Loan is
deemed to be a loan of money by Borrower to Lender, then Borrower shall have, and Lender shall be deemed to have granted, a security interest in the Loaned
Securities and the proceeds thereof.

4. Collateral.

1. Unless otherwise agreed, Borrower shall, prior to or concurrently with the transfer of the Loaned Securities to Borrower, but in no case later than the Close of Business
on the day of such transfer, transfer to Lender Collateral with a Market Value at least equal to the Margin Percentage of the Market Value of the Loaned Securities.

2. Borrower shall be deemed to have transferred Collateral to Lender by crediting Lender's account carried by Borrower with Collateral with a Market Value at least equal
to the Margin Percentage of the Market Value of the Loaned Securities. The Collateral transferred by Borrower to Lender, as adjusted pursuant to Section 9, shall be
security for Borrower's obligations in respect of such Loan and for any otherobligations of Borrower to Lender hereunder. Borrower hereby pledges with, assigns to,
and grants Lender a continuing first priority security interest in, and a lien upon, the Collateral, which shall attach upon the transfer of the Loaned Securities by Lender
to Borrower and which shall cease upon the transfer of the Loaned Securities by Borrower to Lender. Lender will be deemed to have transferred Loaned Securities to
Borrower on the date Borrower treats such securities as having been borrowed pursuant to Exchange Act rule 15c3-3(b)(3) and therefore not subject to the general
possession or control requirements of Exchange Act rule 15c3-3(b). Borrower will be deemed to have transferred Loaned Securities to Lender on the date Borrower
treats such securities as customer securities subject to the general possession or control requirements of Exchange Act Rule 15c3-3(b), without giving effect to
Exchange Act rule 15c3-3(b)(3), without regard to whethersuch securities are thereby returned to Lender or continue to be borrowed by Borrower pursuant to any
hypothecation agreement between Lender and Borrower.

3. Except as otherwise provided herein, upon transfer to Lender of the Loaned Securities on the day a Loan is terminated pursuant to Section 6, Lender shall be
obligated to transfer, and hereby authorizes Borrower to effect the transfer of, the Collateral (as adjusted pursuant to Section9) to Borrower on such day or, if such day
is not a day on which a transfer of such Collateral may be effected under Section 15, the next day on which such a transfer may be effected.

4. If Borrower transfers Collateral to Lender, as provided in Section 4.1, and Lender does not transfer the Loaned Securities to Borrower, Borrower shall have the
absolute right to the return of the Collateral; and if Lender transfers Loaned Securities to Borrower and Borrower does not transfer Collateral to Lender as provided in
Section 4.1, Lender shall have the absolute right to the return of the Loaned Securities.

5. Borrower may, upon reasonable notice to Lender (taking into account all relevant factors, including industry practice, the type of Collateral to be substituted, and the
applicable method of transfer), substitute Collateral for Collateral securing any Loan or Loans; provided, however, that such substituted Collateral shall (a) consist only
of cash, securities or other property that Borrower and Lender agreed would be acceptable Collateral prior to the Loan or Loans and (b) have a Market Value such that
the aggregate Market Value of such substituted Collateral, together with all other Collateral for Loans in which the party substituting such Collateral is acting as
Borrower, shall equal or exceed the agreed upon Margin Percentage of the Market Value of the Loaned Securities.

6. In the event Borrower and Lender agree to a Loan of Securities collateralized by a Letter of Credit, in order to enable the Issuing Bank to identify Lender and issue the
Letter of Credit in favor of Lender, Lender hereby agrees that Borrower may provide information in its possession concerning Lender's identity to the Issuing Bank.
Prior to the expiration of any letter of credit supporting Borrower's obligations hereunder, Borrower shall, no later than the Extension Deadline, (a) obtain an extension
of the expiration of such letter of credit, (b) replace such letter of credit by providing Lender with a substitute letter of credit in an amount at least equal to the amount of
the letter of credit for which it is substituted, or (c) transfer such other Collateral to Lender as may be acceptable to Lender.

5. Income for Loan.

1. Unless otherwise agreed, Borrower agrees to pay Lender interest on the cash Collateral securing each Loan ("Interest "), computed daily as further described in the
Borrower's Important Characteristics and Risks of Participating in Borrower's Fully-Paid Securities Lending Program as it may be amended from time to time by
Borrower. Interest on non-cash Collateral will be paid as agreed upon by the parties.

2. Unless otherwise agreed, Interest payable hereunder shall be payable within fifteen (15) Business Days following the last Business Day of the calendar month in which
such Interest was incurred.

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6. Termination of the Loan.

1.

1. (a) Unless otherwise agreed, either party may terminate a Loan on a termination date established by notice given to the other party prior to the Close of Business
on a Business Day. Unless an earlier date is agreed by the Parties, the termination date established by a termination notice shall be a date no earlier than the
standard settlement date that would apply to a purchase or sale of the Loaned Securities (in the case of a notice given by Lender) or the non-cash Collateral
securing the Loan (in the case of a notice given byBorrower) entered into at the time of such notice, which date shall, unless Borrower and Lender agree to the
contrary, be (a) in the case of Government Securities, the next Business Day following such notice and (b) in the case of all other Securities, the third Business
Day following such notice.

2. (b) Notwithstanding paragraph (a) and unless otherwise agreed, Borrower may terminate a Loan on any Business Day, effective as of such Business Day, by
transferring the Loaned Securities to Lender on such Business Day. Borrower will be deemed to have transferred Loaned Securities by the end of a Business
Day if it treats such securities as customer securities subject to the general possession or control requirements of Exchange Act Rule 15c3-3(b), without giving
effect to Exchange Act rule 15c3-3(b)(3), without regard to whether such securities are thereby returned to Lender or may continue to be borrowed by Borrower
pursuant to any hypothecation agreement between Lender and Borrower.

3. (c) The execution by Borrower of an order to sell the Loaned Securities by Lender shall constitute notice of termination by Lender to Borrower. The termination
date established by such a sale of the Loaned Securities shall be the settlement date of such sale of the Loaned Securities or any earlier date on which Borrower
is deemed to have transferred Loaned Securities to Lender under paragraph (b) of this Section.

2. Unless otherwise agreed, Borrower shall, on or before the Cutoff Time on the termination date of a Loan, transfer the Loaned Securities to Lender; provided, however,
that upon such transfer by Borrower, Lender shall transfer the Collateral (as adjusted pursuant to Section 9) to Borrower in accordance with Section 4.3.

7. Rights in Respect of Loaned Securities and Collateral.

1. Except as set forth in Sections 8.1 and 8.2 and as otherwise agreed by Borrower and Lender, until Loaned Securities are required to be redelivered to Lender upon
termination of a Loan hereunder, Borrower shall have all of the incidents of ownership of the Loaned Securities, including the right to transfer the Loaned Securities to
others. Lender hereby waives the right to vote, or to provide any consent or to take any similar action with respect to, the Loaned Securities in the event that the record
date or deadline for such vote, consent or other action falls during the term of the Loan.

8. Distributions.

1. Lender shall be entitled to receive all Distributions made on or in respect of the Loaned Securities which are not otherwise received byLender, to the full extent it would
be so entitled if the Loaned Securities had not been lent to Borrower.

2. Any cash Distributions made on or in respect of the Loaned Securities, which Lender is entitled to receive pursuant to Section 8.1, shall be paid by the transfer of cash
to Lender by Borrower, on the date any such Distribution is paid, in an amount equal to such cash Distribution, so long as Lender is not in Default at the time of such
payment. Non-cash Distributions that Lender is entitled to receive pursuant to Section8.1 shall be added to the Loaned Securities on the date of distribution and shall
be considered such for all purposes, except that if the Loan has terminated, Borrower shall forthwith transfer the same to Lender.

3. Borrower shall be entitled to receive all Distributions made on or in respect of non-cash Collateral which are not otherwise received by Borrower, to the full extent it
would be so entitled if the Collateral had not been transferred to Lender.

4. Any cash Distributions made on or in respect of such Collateral, which Borrower is entitled to receive pursuant to Section 8.3, shall be paid by the transfer of cash to
Borrower by Lender, on the date any such Distribution is paid, in an amount equal to such cash Distribution, so long as Borrower is not in Default at the time of such
payment. Non-cash Distributions that Borrower is entitled to receive pursuant to Section 8.3 shall be added to the Collateral on the date of distribution and shall be
considered such for all purposes, except that if each Loan secured by such Collateral has terminated, Lender shall forthwith transfer the same to Borrower.

5. Unless otherwise agreed by the parties:

a. If (i) Borrower is required to make a payment (a "Borrower Payment") with respect to cash Distributions on Loaned Securities underSections 8.1 and 8.2
("Securities Distributions"), or (ii) Lender is required to make a payment (a "Lender Payment") with respect tocash Distributions on Collateral under Sections 8.3
and 8.4 ("Collateral Distributions"), and (iii) Borrower or Lender, as the case may be ("Payor"), shall be required by law to collect any withholding or other tax,
duty, fee, levy or charge required to be deducted or withheld from such Borrower Payment or Lender Payment ("Tax"), then Payor shall (subject to subsections
(b) and (c) below), pay suchadditional amounts as may be necessary in order that the net amount of the Borrower Payment or Lender Payment received by the
Lender or Borrower, as the case may be ("Payee"), after payment of such Tax equals the net amount of the Securities Distribution or Collateral Distribution that

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 would have been received if such Securities Distribution or Collateral Distribution had been paid directly to the Payee.

b. No additional amounts shall be payable to a Payee under subsection (a) above to the extent that Tax would have been imposed on aSecurities Distribution or
Collateral Distribution paid directly to the Payee.

c. No additional amounts shall be payable to a Payee under subsection (a) above to the extent that such Payee is entitled to an exemption from, or reduction in the
rate of, Tax on a Borrower Payment or Lender Payment subject to the provision of a certificate or other documentation, but has failed timely to provide such
certificate or other documentation.

d. Each party hereto shall be deemed to represent that, as of the commencement of any Loan hereunder, no Tax would be imposed on any cash Distribution paid
to it with respect to (i) Loaned Securities subject to a Loan in which it is acting as Lender or (ii) Collateral for any Loan in which it is acting as Borrower, unless
such party has given notice to the contrary to the other party hereto (which notice shall specify the rate at which such Tax would be imposed). Each party agrees
to notify the other of any change that occurs during the term of a Loan in the rate of any Tax that would be imposed on any such cash Distributions payable to it.

6. To the extent that, under the provisions of Sections 8.1 through 8.5, (a) a transfer of cash or other property by Borrower would give rise to a Margin Excess or (b) a
transfer of cash or other property by Lender would give rise to a Margin Deficit, Borrower or Lender (as the case may be) shall not be obligated to make such transfer
of cash or other property in accordance with such Sections, but shall in lieu of such transfer immediately credit the amounts that would have been transferable under
such Sections to the account of Lender or Borrower (as the case may be)..

9. Mark to Market.

1. If Lender is a Customer, Borrower shall daily mark to market any Loan hereunder and in the event that at the Close of Trading on any Business Day the Market Value
of the Collateral for any Loan to Borrower shall be less than 100% of the Market Value of all the outstanding Loaned Securities subject to such Loan, Borrower shall
transfer additional Collateral no later than the Close of Business on the next Business Day so that the Market Value of such additional Collateral, when added to the
Market Value of the other Collateral for such Loan, shallequal at least 100% of the Market Value of the Loaned Securities. As agreed by the parties or if Borrower
determines in its discretion that applicable laws or market custom so require, Borrower may deposit additional collateral greater than 100% of the market value of the
Loaned Securities.

2. In addition to any rights of Lender under Section 9.1, if at any time the aggregate Market Value of all Collateral for Loans by Lender shall be less than the Margin
Percentage of the Market Value of all the outstanding Loaned Securities subject to such Loans (a "Margin Deficit"), Borrower shall transfer additional Collateral no later
than the Close of Business on the next Business Day so that the Market Value of such additional Collateral, when added to the Market Value of the other Collateral for
such Loan, shall equal or exceed the Margin Percentage of the Market Value of the Loaned Securities.

3. Subject to Borrower's obligations under Section 9.1, if at any time the Market Value of all Collateral for Loans to Borrower shall be greater than the Margin Percentage
of the Market Value of all the outstanding Loaned Securities subject to such Loans (a "Margin Excess"), Lender hereby authorizes Borrower to transfer to Borrower
such amount of the Collateral selected by Borrower so that the Market Value of the Collateral for such Loans, after deduction of such amounts, shall thereupon not
exceed the Margin Percentage of the Market Value of the Loaned Securities.

4. Borrower and Lender may agree, with respect to one or more Loans hereunder, to mark the values to market pursuant to Sections 9.2 and 9.3 by separately valuing
the Loaned Securities lent and the Collateral given in respect thereof on a Loan-by-Loan basis.

5. Borrower and Lender may agree, with respect to any or all Loans hereunder, that the respective rights of Lender and Borrower under Sections 9.2 and 9.3 may be
exercised only where a Margin Excess or Margin Deficit exceeds a specified dollar amount or a specified percentage of the Market Value of the Loaned Securities
under such Loans (which amount or percentage shall be agreed to by Borrower and Lender prior to entering into any such Loans).

10. Representations.

The parties to this Agreement hereby make the following representations and warranties, which shall continue during the term of any Loan hereunder:

1. Each party hereto represents and warrants that (a) it has the power to execute and deliver this Agreement, to enter into the Loans contemplated hereby and to perform
its obligations hereunder, (b) it has taken all necessary action to authorize such execution, delivery and performance, and (c) this Agreement constitutes a legal, valid
and binding obligation enforceable against it in accordance with its terms.

2. Each party hereto represents and warrants that it has not relied on the other for any tax or accounting advice concerning this Agreement and that it has made its own
determination as to the tax and accounting treatment of any Loan and any dividends, remuneration or other funds received hereunder.

3. Each party hereto represents and warrants that it is acting for its own account unless it expressly specifies otherwise in writing and complies with Section 11.1(b).

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 4. To the extent applicable, Borrower represents and warrants that it has, or will have at the time of transfer of any Collateral, the right to grant a first priority security
interest therein subject to the terms and conditions hereof.

5.

a. Borrower represents and warrants that it (or the person to whom it relends the Loaned Securities) is borrowing or will borrow Loaned Securities that are Equity
Securities for the purpose of making delivery of such Loaned Securities in the case of short sales, failure to receive securities required to be delivered, or as
otherwise permitted pursuant to Regulation T as in effect from time to time.

b. Borrower and Lender may agree, as provided in Section 24.2, that Borrower shall not be deemed to have made the representation or warranty in subsection (a)
with respect to any Loan. By entering into any such agreement, Lender shall be deemed to have represented and warranted to Borrower (which representation
and warranty shall be deemed to be repeated on each day during the term of the Loan) that Lender is either (i) an "exempted borrower" within the meaning of
Regulation T or (ii) a member of a national securities exchange or a broker or dealer registered with the U.S. Securities and Exchange Commission that is
entering into such Loan to finance its activities as a market maker or an underwriter.

6. Lender represents and warrants that it has, or will have at the time of transfer of any Loaned Securities, the right to transfer the Loaned Securities subject to the terms
and conditions hereof.

11. Covenants.

1. Each party agrees either (a) to be liable as principal with respect to its obligations hereunder or (b) to execute and comply fully with the provisions of Annex I (the terms
and conditions of which Annex are incorporated herein and made a part hereof).

12. Events of Default.

All Loans hereunder may, at the option of the non-defaulting party (which option shall be deemed to have been exercised immediately upon the occurrence of an Act of
Insolvency), be terminated immediately upon the occurrence of any one or more of the following events (individually, a "Default"):

1. if any Loaned Securities shall not be transferred to Lender upon termination of the Loan as required by Section 6;

2. if any Collateral shall not be transferred to Borrower upon termination of the Loan as required by Sections 4.3 and 6;

3. if either party shall fail to transfer Collateral as required by Section 9;

4. if either party (a) shall fail to transfer to the other party amounts in respect of Distributions required to be transferred by Section 8, (b) shall have been notified of such
failure by the other party prior to the Close of Business on any day, and (c) shall not have cured such failure by the Cutoff Time on the next day after such Close of
Business on which a transfer of cash may be effected in accordance with Section 15;

5. if an Act of Insolvency occurs with respect to either party;

6. if any representation made by either party in respect of this Agreement or any Loan or Loans hereunder shall be incorrect or untrue in any material respect during the
term of any Loan hereunder;

7. if either party notifies the other of its inability to or its intention not to perform its obligations hereunder or otherwise disaffirms, rejects or repudiates any of its
obligations hereunder; or

8. if either party (a) shall fail to perform any material obligation under this Agreement not specifically set forth in clauses 12.1 through 12.7, above, including but not
limited to the payment of Interest as required by Section 5, and the payment of transfer taxes as required by Section 14, (b) shall have been notified of such failure by
the other party prior to the Close of Business on any day, and (c) shall not have cured such failure by the Cutoff Time on the next day after such Close of Business on
which a transfer of cash may be effected in accordance with Section 15.

The non-defaulting party shall (except upon the occurrence of an Act of Insolvency) give notice as promptly as practicable to the defaulting party of the exercise of its option
to terminate all Loans hereunder pursuant to this Section 12.

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13. Remedies.

1. Upon the occurrence of a Default under Section 12 entitling Lender to terminate all Loans hereunder, Lender shall have the right, in addition to any other remedies
provided herein, (a) to purchase a like amount of Loaned Securities ("Replacement Securities") in the principal market for such Loaned Securities in a commercially
reasonable manner, (b) to sell any Collateral in the principal market for such Collateral in a commercially reasonable manner and (c) to apply and set off the Collateral
and any proceeds thereof (including any amounts drawn under a letter of credit supporting any Loan) against the payment of the purchase price for such Replacement
Securities and any amounts due to Lender under Sections 5, 8, 14 and 16. In the event that Lender shall exercise such rights, Borrower's obligation to return a like
amount of the Loaned Securities shall terminate. Lender may similarly apply the Collateral and any proceeds thereof to any other obligation of Borrower under this
Agreement, including Borrower's obligations with respect to Distributions paid to Borrower (and not forwarded to Lender) in respect of Loaned Securities. In the event
that (i) the purchase price of Replacement Securities (plus all other amounts, if any, due to Lender hereunder) exceeds (ii) the amount of the Collateral, Borrower shall
be liable to Lender for the amount of such excess together with interest thereon at a rate equal to (A) in the case of purchases of Foreign Securities, LIBOR, (B) in the
case of purchases of any other Securities (or other amounts, if any, due to Lender hereunder), the Federal Funds Rate or (C) such other rate as may be specified in
Schedule B, in each case as such rate fluctuates from day to day, from the date of such purchase until the date of payment of such excess. As security for Borrower's
obligation to pay such excess, Lender shall have, and Borrower hereby grants, a security interest in any property of Borrowerthen held by or for Lender and a right of
setoff with respect to such property and any other amount payable by Lender to Borrower. The purchase price of Replacement Securities purchased under this Section
13.1 shall include, and the proceeds of any sale of Collateral shall be determined after deduction of, broker's fees and commissions and all other reasonable costs,
fees and expenses related to such purchase or sale (as the case may be). In the event Lender exercises its rights under this Section 13.1, Lender may elect in its sole
discretion, in lieu of purchasing all or a portion of the Replacement Securities or selling all or a portion of the Collateral, to be deemed to have made, respectively, such
purchase of Replacement Securities or sale of Collateral for an amount equal to the price therefor on the date of such exercise obtained from a generally recognized
source or the last bid quotation from such a source at the most recent Close of Trading. Subject to Section 18, upon the satisfaction of all obligations hereunder, any
remaining Collateral shall be returned to Borrower.

2. Upon the occurrence of a Default under Section 12 entitling Borrower to terminate all Loans hereunder, Borrower shall have the right, in addition to any other remedies
provided herein, (a) to purchase a like amount of Collateral ("Replacement Collateral") in the principalmarket for such Collateral in a commercially reasonable manner,
(b) to sell a like amount of the Loaned Securities in the principal market for such Loaned Securities in a commercially reasonable manner and (c) to apply and set off
the Loaned Securities and any proceeds thereof against (i) the payment of the purchase price for such Replacement Collateral, (ii) Lender's obligation to return any
cash or other Collateral, and (iii) any amounts due to Borrower under Sections 5, 8 and 16. In such event, Borrower may treat the Loaned Securities as its own and
Lender's obligation to return a like amount of the Collateral shall terminate; provided, however, that Lender shall immediately return any letters of credit supporting any
Loan upon the exercise or deemed exercise by Borrower of its termination rights under Section 12. Borrower may similarly apply the Loaned Securities and any
proceeds thereof to any other obligation of Lender under this Agreement, including Lender's obligations with respect to Distributions paid to Lender (and not forwarded
to Borrower) in respect of Collateral. In the event that (i) the sales price received from such Loaned Securities is less than (ii) the purchase price of Replacement
Collateral (plus the amount of any cash or other Collateral not replaced by Borrower and all other amounts, if any, due to Borrower hereunder), Lender shall be liable to
Borrower for the amount of any such deficiency, together with interest on such amounts at a rate equal to (A) in the case of Collateral consisting of Foreign Securities,
LIBOR, (B) in the case of Collateral consisting of any other Securities (or other amounts due, if any, to Borrower hereunder), the Federal Funds Rate or (C) such other
rate as may be specified in Schedule B, in each case as such rate fluctuates from day to day, from the date of such sale until the date of payment of such deficiency.
As security for Lender's obligation to pay such deficiency, Borrower shall have, and Lender hereby grants, a security interest in any property of Lender then held by or
for Borrower and a right of setoff with respect to such property and any other amount payable by Borrower to Lender. The purchase price of any Replacement
Collateral purchased under this Section shall include, and the proceeds of any sale of Loaned Securities shall be determined after deduction of, broker's fees and
commissions and all other reasonable costs, fees and expenses related to such purchase or sale (as the case may be). In the event Borrower exercises its rights
under this Section 13.2, Borrower may elect in its sole discretion, in lieu of purchasing all or a portion of the Replacement Collateral or selling all or a portion of the
Loaned Securities, to be deemed to have made, respectively, such purchase of Replacement Collateral or sale of Loaned Securities for an amount equal to the price
therefor on the date of such exercise obtained from a generally recognized source or the last bid quotation from such a source at the most recent Close of Trading.
Subject to Section 18, upon the satisfaction of all Lender's obligations hereunder, any remaining Loaned Securities (or remaining cash proceeds thereof) shall be
returned to Lender.

3. Unless otherwise agreed, the parties acknowledge and agree that (a) the Loaned Securities and any Collateral consisting of Securities are of a type traded in a
recognized market, (b) in the absence of a generally recognized source for prices or bid or offer quotations for any security, the non-defaulting party may establish the
source therefor in its sole discretion, and (c) all prices and bid and offer quotations shall be increased to include accrued interest to the extent not already included
therein (except to the extent contrary to market practice with respect to the relevant Securities).

4. In addition to its rights hereunder, the non-defaulting party shall have any rights otherwise available to it under any other agreement or applicable law. In addition to
any other remedies to which a non-defaulting party may be entitled under the Agreement, the defaulting party shall, with respect to an individual Loan or with respect to
a class of Loans, be liable to the non-defaulting party for (a) the amount of all reasonable legal or other expenses incurred by the non-defaulting party in connection
with or as a result of a Default, (b) damages in an amount equal to the cost (including all payments, expenses and commissions) of entering into replacement
transactions and entering into or terminating hedge transactions in connection with or as a result of a Default, and (c) any other loss, damage, cost or expense directly
arising or resulting from the occurrence of a Default in respect of a Loan.

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14. Transfer Taxes.

All transfer taxes with respect to the transfer of the Loaned Securities by Lender to Borrower and by Borrower to Lender upon termination of the Loan and with respect to the
transfer of Collateral by Borrower to Lender and by Lender to Borrower upon termination of the Loan or pursuant to Section 4.5 or Section 9 shall be paid by Borrower.

15. Transfers.

1. All transfers by either Borrower or Lender of Loaned Securities or Collateral consisting of "financial assets" (within the meaning of theUCC) hereunder shall be by (a) in
the case of certificated securities, physical delivery of certificates representing such securities together with duly executed stock and bond transfer powers, as the case
may be, with signatures guaranteed by a bank or a member firm of the New York Stock Exchange, Inc., (b) registration of an uncertificated security in the transferee's
name by the issuer of such uncertificated security, (c)the crediting by a Clearing Organization of such financial assets to the transferee's "securities account" (within
the meaning of the UCC) maintained with such Clearing Organization, (d) such other means as specified in this Agreement, including but not limited to those means
specified in Sections 3.2(c) and 6.1(b), or (e) such other means as Borrower and Lender may agree.

2. All transfers of cash hereunder shall be by (a) wire transfer in immediately available, freely transferable funds, (b) crediting Lender's account carried by Borrower or (c)
such other means as Borrower and Lender may agree.

3. All transfers of letters of credit from Borrower to Lender shall be made by physical delivery to Lender of an irrevocable letter of credit issued by a "bank" as defined in
Section 3(a)(6)(A)-(C) of the Exchange Act. Transfers of letters of credit from Lender to Borrower shall be made by causing such letters of credit to be returned or by
causing the amount of such letters of credit to be reduced to the amount required after such transfer.

4. A transfer of Securities, cash or letters of credit may be effected under this Section 15 on any day except (a) a day on which the transferee is closed for business at its
primary place of business or (b) a day on which a Clearing Organization or wire transfer system is closed, if the facilities of such Clearing Organization or wire transfer
system are required to effect such transfer.

5. For the avoidance of doubt, the parties agree and acknowledge that the term "securities," as used herein (except in this Section 15), shall include any "security
entitlements" with respect to such securities (within the meaning of the UCC). In every transfer of "financialassets" (within the meaning of the UCC) hereunder, the
transferor shall take all steps necessary (a) to effect a delivery to the transferee under Section 8-301 of the UCC, or to cause the creation of a security entitlement in
favor of the transferee under Section 8-501 of the UCC, (b) to enable the transferee to obtain "control" (within the meaning of Section 8-106 of the UCC), and (c) to
provide the transferee with comparable rights under any applicable foreign law or regulation.

16. Contractual Currency.

1. Borrower and Lender agree that (a) any payment in respect of a Distribution under Section 8 shall be made in the currency in which the underlying Distribution of cash
was made, (b) any return of cash shall be made in the currency in which the underlying transfer of cash was made, and (c) any other payment of cash in connection
with a Loan under this Agreement shall be in the currency agreed upon by Borrower and Lender in connection with such Loan (the currency established under clause
(a), (b) or (c) hereinafter referred to as the "Contractual Currency"). Notwithstanding the foregoing, the payee of any such payment may, at its option, accept tender
thereof in any other currency; provided, however, that, to the extent permitted by applicable law, the obligation of the payor to make such payment will be discharged
only to the extent of the amount of Contractual Currency that such payee may, consistent with normal banking procedures, purchase with such other currency (after
deduction of any premium and costs of exchange) on the banking day next succeeding its receipt of such currency.

2. If for any reason the amount in the Contractual Currency received under Section 16.1, including amounts received after conversion of any recovery under any
judgment or order expressed in a currency other than the Contractual Currency, falls short of the amount in the Contractual Currency due in respect of this Agreement,
the party required to make the payment will (unless a Default has occurred and such party is the non-defaulting party) as a separate and independent obligation and to
the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for the shortfall.

3. If for any reason the amount in the Contractual Currency received under Section 16.1 exceeds the amount in the Contractual Currency due in respect of this
Agreement, then the party receiving the payment will (unless a Default has occurred and such party is the non-defaulting party) refund promptly the amount of such
excess.

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17. ERISA.

Lender shall, if any of the Securities transferred to the Borrower hereunder for any Loan have been or shall be obtained, directly or indirectly, from or using the assets of any
Plan, so notify Borrower in writing upon the execution of this Agreement or upon initiation of such Loan under Section 2.1. If Lender so notifies Borrower, then Borrower and
Lender shall conduct the Loan in accordance with the terms and conditions of Department of Labor Prohibited Transaction Exemption 81-6 (46 Fed. Reg. 7527, Jan. 23,
1981; as amended, 52 Fed. Reg. 18754, May 19, 1987), or any successor thereto (unless Borrower and Lender have agreed prior to entering into a Loan that such Loan will
be conducted in reliance on another exemption, or without relying on any exemption, from the prohibited transaction provisions of Section 406 of the Employee Retirement
Income Security Act of 1974, as amended, and Section 4975 of the Internal Revenue Code of 1986, as amended). Without limiting the foregoing and notwithstanding any
other provision of this Agreement, if the Loan will be conducted in accordance with Prohibited Transaction Exemption 81-6, then:

1. Borrower represents and warrants to Lender that it is either (a) a bank subject to federal or state supervision, (b) a broker-dealer registered under the Exchange Act or
(c) exempt from registration under Section 15(a)(1) of the Exchange Act as a dealer in Government Securities.

2. Borrower represents and warrants that, during the term of any Loan hereunder, neither Borrower nor any affiliate of Borrower has any discretionary authority or control
with respect to the investment of the assets of the Plan involved in the Loan or renders investment advice (within the meaning of 29 C.F.R. Section 2510.3-21(c)) with
respect to the assets of the Plan involved in the Loan. Lender agrees that, prior to or at the commencement of any Loan hereunder, it will communicate to Borrower
information regarding the Plan sufficient to identify to Borrower any person or persons that have discretionary authority or control with respect to the investment of the
assets of the Plan involved in the Loan or that render investment advice (as defined in the preceding sentence) with respect to the assets of the Plan involved in the
Loan.In the event Lender fails to communicate and keep current during the term of any Loan such information, Lender rather than Borrower shall be deemed to have
made the representation and warranty in the first sentence of this Section 17.2.

3. Borrower shall mark to market daily each Loan hereunder pursuant to Section 9.1 as is required if Lender is a Customer.

4. Borrower and Lender agree that:

a. the term "Collateral" shall mean cash, securities issued or guaranteed by the United States government or its agencies or instrumentalities, or irrevocable bank
letters of credit issued by a person other than Borrower or an affiliate thereof;

b. prior to the making of any Loans hereunder, Borrower shall provide Lender with (i) the most recent available audited statement of Borrower's financial condition
and (ii) the most recent available unaudited statement of Borrower's financial condition (if more recent than the most recent audited statement), and each Loan
made hereunder shall be deemed a representation by Borrower that there has been no material adverse change in Borrower's financial condition subsequent to
the date of the latest financial statements or information furnished in accordance herewith;

c. the Loan may be terminated by Lender at any time, whereupon Borrower shall deliver the Loaned Securities to Lender within the lesser of (i) the customary
delivery period for such Loaned Securities, (ii) five Business Days, and (iii) the time negotiated for such delivery between Borrower and Lender; provided,
however, that Borrower and Lender may agree to a longer period only if permitted by Prohibited Transaction Exemption 81-6; and

d. the Collateral transferred shall be security only for obligations of Borrower to the Plan with respect to Loans, and shall not be security for any obligation of
Borrower to any agent or affiliate of the Plan.

18. Single Agreement.

Borrower and Lender acknowledge that, and have entered into this Agreement in reliance on the fact that, all Loans hereunder constitute a single business and contractual
relationship and have been entered into in consideration of each other. Accordingly, Borrower and Lender hereby agree that payments, deliveries and other transfers made
by either of them in respect of any Loan shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Loan
hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted. In addition, Borrower and Lender
acknowledge that, and have entered into this Agreement in reliance on the fact that, all Loans hereunder have been entered into in consideration of each other. Accordingly,
Borrower and Lender hereby agree that (a) each shall perform all of its obligations in respect of each Loan hereunder, and that a default in the performance of any such
obligation by Borrower or by Lender (the "Defaulting Party") in any Loan hereunder shall constitute a default by the Defaulting Party under all such Loans hereunder, and (b)
the non-defaulting party shall be entitled to set off claims and apply property held by it in respect of any Loan hereunder against obligations owing to it in respect of any other
Loan with the Defaulting Party.

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19. APPLICABLE LAW.

THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAW PRINCIPLES THEREOF.

20. Waiver.

The failure of a party to this Agreement to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. All waivers in respect of a Default must be in writing.

21. Survival of Remedies.

All remedies hereunder and all obligations with respect to any Loan shall survive the termination of the relevant Loan, return of Loaned Securities or Collateral and
termination of this Agreement.

22. Notices and Other Communications.

Any and all notices, statements, demands or other communications hereunder may be given by Interactive Brokers LLC to the undersigned party by telephone, mail,
facsimile, e-mail, electronic message, telegraph, messenger or otherwise at the phone and facsimile numbers provided by the undersigned party and maintained by
Interactive Brokers LLC in its books and records for such party. Any and all notices, statements, demands or other communications hereunder may be given by the
undersigned party to Interactive Brokers LLC in writing electronically via the secure electronic message center maintained by Interactive Brokers for the account of the
undersigned party. Any notice, statement, demand or other communication hereunder will be deemed effective on the day and at the time on which it is received or, if not
received, on the day and at the time on which its delivery was in good faith attempted; provided, however, that any notice by a party to the other party by telephone shall be
deemed effective only if (a) such notice is followed by written confirmation thereof and (b) at least one of the other means of providing notice that are specifically listed above
has previously been attempted in good faith by the notifying party.

23. MANDATORY ARBITRATION.

1. THE PARTIES HEREBY AGREE THAT ANY DISPUTE, CONTROVERSY OR CLAIM BETWEEN THE PARTIES ARISING OUT OF THIS AGREEMENT OR ANY
LOAN HEREUNDER SHALL BE SUBJECT TO THE MANDATORY ARBITRATION PROVISION CONTAINED IN ANY CUSTOMER ACCOUNT OR SIMILAR
AGREEMENT ENTERED INTO BETWEEN SUCH PARTIES.

24. Miscellaneous.

1. Except as specified in Section 1 or as otherwise agreed by the parties, this Agreement supersedes any other agreement between the parties hereto concerning loans
of Securities between Borrower and Lender. This Agreement shall not be assigned by either party without the prior written consent of the other party and any
attempted assignment without such consent shall be null and void. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of
Borrower and Lender and their respective heirs, representatives, successors and assigns. This Agreement may be terminated by either party upon notice to the other,
subject only to fulfillment of any obligations then outstanding. This Agreement shall not be modified, except by an instrument in writing signed by the party against
whom enforcement is sought. The parties hereto acknowledge and agree that, in connection with this Agreement and each Loan hereunder, time is of the essence.
Each provision and agreement herein shall be treated as separate and independent from any other provision herein and shall be enforceable notwithstanding the
unenforceability of any such other provision or agreement.

2. Any agreement between Borrower and Lender pursuant to Section 10.5(b) or Section 25.37 shall be made (a) in writing, (b) orally, if confirmed promptly in writing or
through any system that compares Loans and in which Borrower and Lender are participants, or (c) in such other manner as may be agreed by Borrower and Lender
in writing.

25. Definitions.

For the purposes hereof:

1. "Act of Insolvency" shall mean, with respect to any party, (a) the commencement by such party as debtor of any case or proceeding under any bankruptcy, insolvency,
reorganization, liquidation, moratorium, dissolution, delinquency or similar law, or such party's seeking the appointment or election of a receiver, conservator, trustee,
custodian or similar official for such party or any substantial part of its property, or the convening of any meeting of creditors for purposes of commencing any such
case or proceeding or seeking such an appointment or election, (b) the commencement of any such case or proceeding against such party, or another seeking such
an appointment or election, or the filing against a party of an application for a protective decree under the provisions of the Securities Investor Protection Act of 1970,
which (i) is consented to or not timely contested by such party, (ii) results in the entry of an order for relief, such an appointment or election, the issuance of such a
protective decree or the entry of an order having a similar effect, or (iii) is not dismissed within 15 days, (c) the making by such party of a general assignment for the
benefit of creditors, or (d) the admission in writing by such party of such party's inability to pay such party's debts as they become due.

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 2. "Bankruptcy Code" shall have the meaning assigned in Section 26.1

3. "Borrower" shall have the meaning assigned in Section 1.

4. "Borrower Payment" shall have the meaning assigned in Section 8.5(a).

5. "Broker-Dealer" shall mean any person that is a broker (including a municipal securities broker), dealer, municipal securities dealer, government securities broker or
government securities dealer as defined in the Exchange Act, regardless of whether the activities of such person are conducted in the United States or otherwise
require such person to register with the U.S. Securities and Exchange Commission or other regulatory body.

6. "Business Day" shall mean, with respect to any Loan hereunder, a day on which regular trading occurs in the principal market for the Loaned Securities subject to such
Loan, provided, however, that for purposes of determining the Market Value of any Securities hereunder, such term shall mean a day on which regular trading occurs
in the principal market for the Securities whose value is being determined. Notwithstanding the foregoing, (a) for purposes of Section 9, "Business Day" shall mean any
day on which regular trading occurs in the principal market for any Loaned Securities or for any Collateral consisting of Securities under any outstanding Loan
hereunder and "next Business Day" shall mean the next day on which a transfer of Collateral may be effected in accordance with Section 15, and (b) in no event shall
a Saturday or Sunday be considered a Business Day.

7. "Clearing Organization" shall mean (a) The Depository Trust Company, or, if agreed to by Borrower and Lender, such other "securities intermediary" (within the
meaning of the UCC) at which Borrower (or Borrower's agent) and Lender (or Lender's agent) maintain accounts, or (b) a Federal Reserve Bank, to the extent that it
maintains a book-entry system.

8. "Close of Business" shall mean 4:00 p.m. (New York City time).

9. "Close of Trading" shall mean, with respect to any Security, the end of the primary trading session established by the principal market for such Security on a Business
Day, unless otherwise agreed by the parties.

10. "Collateral" shall mean, whether now owned or hereafter acquired and to the extent permitted by applicable law, (a) any property which Borrower and Lender agree
prior to the Loan shall be acceptable collateral and which is transferred to Lender pursuant to Sections 4 or 9 (including as collateral, for definitional purposes, any
letters of credit mutually acceptable to Lender and Borrower), (b) any property substituted therefor pursuant to Section 4.5, (c) all accounts in which such property is
deposited and all securities and the like in which any cash collateral is invested or reinvested, and (d) any proceeds of any of the foregoing; provided, however, that if
Lender is a Customer, "Collateral" shall (subject to Section 17.4(a), if applicable) be limited to cash, U.S. Treasury bills and notes, an irrevocable letter of credit issued
by a "bank" (as defined in Section 3(a)(6)(A)-(C) of the Exchange Act), and any other property permitted to serve as collateral securing a loan of securities under Rule
15c3-3 under the Exchange Act or any comparable regulation of the Secretary of the Treasury under Section 15C of the Exchange Act (to the extent that Borrower is
subject to such Rule or comparable regulation) pursuant to exemptive, interpretive or no-action relief or otherwise. If any new or different Security shall be exchanged
for any Collateral by recapitalization, merger, consolidation or other corporate action, such new or different Security shall, effective upon such exchange, be deemed to
become Collateral in substitution for the former Collateral for which such exchange is made. For purposes of return of Collateral by Lender orpurchase or sale of
Securities pursuant to Section 13, such term shall include Securities of the same issuer, class and quantity as the Collateral initially transferred by Borrower to Lender,
as adjusted pursuant to the preceding sentence.

11. "Collateral Distributions" shall have the meaning assigned in Section 8.5(a).

12. "Confirmation" shall have the meaning assigned in Section 2.1.

13. "Contractual Currency" shall have the meaning assigned in Section 16.1.

14. "Customer" shall mean any person that is a customer of Borrower under Rule 15c3-3 under the Exchange Act or any comparable regulation of the Secretary of the
Treasury under Section 15C of the Exchange Act (to the extent that Borrower is subject to such Rule or comparable regulation).

15. "Cutoff Time" shall mean a time on a Business Day by which a transfer of cash, securities or other property must be made by Borrower orLender to the other, as shall
be agreed by Borrower and Lender in Schedule B, or shall be as specified in the policies and proceduresdescribed on IB's website or as agreed otherwise orally or in
writing or, in the absence of the above, as shall be determined in accordance with market practice.

16. "Default" shall have the meaning assigned in Section 12.

17. "Defaulting Party" shall have the meaning assigned in Section 18.

18. "Distribution" shall mean, with respect to any Security at any time, any distribution made on or in respect of such Security, including, but not limited to: (a) cash and all
other property, (b) stock dividends, (c) Securities received as a result of split ups of such Security and distributions in respect thereof, (d) interest payments, (e) all
rights to purchase additional Securities, and (f) any cash or other consideration paid or provided by the issuer of such Security in exchange for any vote, consent or the
taking of any similar action in respect of such Security (regardless of whether the record date for such vote, consent or other action falls during the term of the Loan). In
the event that the holder of a Security is entitled to elect the type of distribution to be received from two or more alternatives, such election shall be made by Lender, in
the case of a Distribution in respect of the Loaned Securities, and by Borrower, in the case of a Distribution in respect of Collateral.

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19. "Equity Security" shall mean any security (as defined in the Exchange Act) other than a "nonequity security," as defined in Regulation T.

20. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

21. "Extension Deadline" shall mean, with respect to a letter of credit, the Cutoff Time on the Business Day preceding the day on which the letter of credit expires.

22. "FDIA" shall have the meaning assigned in Section 26.4.

23. "FDICIA" shall have the meaning assigned in Section 26.5.

24. "Federal Funds Rate" shall mean the rate of interest (expressed as an annual rate), as published in Federal Reserve Statistical Release H.15 (519) or any publication
substituted therefor, charged for federal funds (dollars in immediately available funds borrowed by banks on an overnight unsecured basis) on that day or, if that day is
not a banking day in New York City, on the next preceding banking day.

25. "Foreign Securities" shall mean, unless otherwise agreed, Securities that are principally cleared and settled outside the United States.

26. "Government Securities" shall mean government securities as defined in Section 3(a)(42)(A)-(C) of the Exchange Act.

27. "Interest" shall have the meaning assigned in Section 5.1.

28. "Lender" shall have the meaning assigned in Section 1.

29. "Lender Payment" shall have the meaning assigned in Section 8.5(a).

30. "LIBOR" shall mean for any date, the offered rate for deposits in U.S. dollars for a period of three months which appears on the ReutersScreen LIBO page as of 11:00
a.m., London time, on such date (or, if at least two such rates appear, the arithmetic mean of such rates).

31. "Loan" shall have the meaning assigned in Section 1.

32. "Loaned Security" shall mean any Security transferred in a Loan hereunder until such Security (or an identical Security) is transferred back to Lender hereunder,
except that, if any new or different Security shall be exchanged for any Loaned Security by recapitalization, merger, consolidation or other corporate action, such new
or different Security shall, effective upon such exchange, be deemed to become a Loaned Security in substitution for the former Loaned Security for which such
exchange is made. For purposes of return of Loaned Securities by Borrower or purchase or sale of Securities pursuant to Section 13, such term shall include
Securities of the same issuer, class and quantity as the Loaned Securities, as adjusted pursuant to the preceding sentence.

33. "Margin Deficit" shall have the meaning assigned in Section 9.2.

34. "Margin Excess" shall have the meaning assigned in Section 9.3.

35. "Margin Notice Deadline" shall mean the time agreed to by the parties in the relevant Confirmation, Schedule B hereto or otherwise as the deadline for giving notice
requiring same-day satisfaction of mark-to-market obligations as provided in Section 9 hereof (or, in the absence of any such agreement, the deadline for such
purposes established in accordance with market practice).

36. "Margin Percentage" shall mean, with respect to any Loan as of any date, 100%, unless (a) Borrower and Lender agree otherwise, asprovided in Section 24.2, or
Borrower in its discretion determines that applicable laws or market custom require greater THAN 100% and (b) Lender is not a Customer. Notwithstanding the
previous sentence, in the event that the writing or other confirmation evidencing theagreement described in clause (a) does not set out such percentage with respect to
any such Loan, the Margin Percentage shall not be a percentage less than the percentage obtained by dividing (i) the Market Value of the Collateral required to be
transferred by Borrower to Lender with respect to such Loan at the commencement of the Loan by (ii) the Market Value of the Loaned Securities required to be
transferred by Lender to Borrower at the commencement of the Loan.

37. "Market Value" shall have the meaning set forth in Annex II or otherwise agreed to by Borrower and Lender in writing. Notwithstanding the previous sentence, in the
event that the meaning of Market Value has not been set forth in Annex II or in any other writing, as described inthe previous sentence, Market Value shall be
reasonably determined by Interactive Brokers LLC in accordance with its standard practices for valuing Securities. The determinations of Market Value provided for in
Annex II or in any other writing described in this Section 25.38 shall apply for all purposes under this Agreement, except for purposes of Section 13.

38. "Payee" shall have the meaning assigned in Section 8.5(a).

39. "Payor" shall have the meaning assigned in Section 8.5(a).

40. "Plan" shall mean: (a) any "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 which is subject to Part 4 of
Subtitle B of Title I of such Act; (b) any "plan" as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986;or (c) any entity the assets of which are deemed
to be assets of any such "employee benefit plan" or "plan" by reason of the Department ofLabor's plan asset regulation, 29 C.F.R. Section 2510.3-101.

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 41. "Regulation T" shall mean Regulation T of the Board of Governors of the Federal Reserve System, as in effect from time to time.

42. "Retransfer" shall mean, with respect to any Collateral, to pledge, repledge, hypothecate, rehypothecate, lend, relend, sell or otherwise transfer such Collateral, or to
re-register any such Collateral evidenced by physical certificates in any name other than Borrower's.

43. "Securities" shall mean securities or, if agreed by the parties in writing, other assets.

44. "Securities Distributions" shall have the meaning assigned in Section 8.5(a).

45. "Tax" shall have the meaning assigned in Section 8.5(a).

46. "UCC" shall mean the New York Uniform Commercial Code.

26. Intent.

1. The parties recognize that each Loan hereunder is a "securities contract," as such term is defined in Section 741 of Title 11 of the United States Code (the "Bankruptcy
Code"), as amended (except insofar as the type of assets subject to the Loan would render such definition inapplicable).

2. It is understood that each and every transfer of funds, securities and other property under this Agreement and each Loan hereunder is a"settlement payment" or a
"margin payment," as such terms are used in Sections 362(b)(6) and 546(e) of the Bankruptcy Code

3. It is understood that the rights given to Borrower and Lender hereunder upon a Default by the other constitute the right to cause the liquidation of a securities contract
and the right to set off mutual debts and claims in connection with a securities contract, as such terms are used in Sections 555 and 362(b)(6) of the Bankruptcy Code.

4. The parties agree and acknowledge that if a party hereto is an "insured depository institution," as such term is defined in the Federal Deposit Insurance Act, as
amended ("FDIA"), then each Loan hereunder is a "securities contract" and "qualified financial contract," as such terms are defined in the FDIA and any rules, orders
or policy statements thereunder (except insofar as the type of assets subject to the Loan would render such definitions inapplicable).

5. It is understood that this Agreement constitutes a "netting contract" as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act
of 1991 ("FDICIA") and each payment obligation under any Loan hereunder shall constitute a "covered contractual payment entitlement" or "covered contractual
payment obligation," respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a "financial institution" as that term is defined
in FDICIA).

6. Except to the extent required by applicable law or regulation or as otherwise agreed, Borrower and Lender agree that Loans hereunder shall in no event be "exchange
contracts" for purposes of the rules of any securities exchange and that Loans hereunder shall not be governed by the buy-in or similar rules of any such exchange,
registered national securities association or other self-regulatory organization.

27. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS.

1. WITHOUT WAIVING ANY RIGHTS GIVEN TO LENDER HEREUNDER, IT IS UNDERSTOOD AND AGREED THAT THE
PROVISIONS OF THE SECURITIES INVESTOR PROTECTION ACT OF 1970 MAY NOT PROTECT LENDER WITH RESPECT TO
LOANED SECURITIES HEREUNDER AND THAT, THEREFORE, THE COLLATERAL DELIVERED TO LENDER MAY CONSTITUTE
THE ONLY SOURCE OF SATISFACTION OF BORROWER'S OBLIGATIONS IN THE EVENT BORROWER FAILS TO RETURN THE
LOANED SECURITIES.

2. LENDER ACKNOWLEDGES THAT, IN CONNECTION WITH LOANS OF GOVERNMENT SECURITIES AND AS OTHERWISE
PERMITTED BY APPLICABLE LAW, SOME SECURITIES PROVIDED BY BORROWER AS COLLATERAL UNDER THIS
AGREEMENT MAY NOT BE GUARANTEED BY THE UNITED STATES.

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 Executed and Agreed By:
INTERACTIVE BROKERS LLC
By providing this Agreement to eligible IB Customers who are applying to participate in IB’s Fully Paid Lending Program, IB
agrees to the terms and conditions specified herein.
COUNTERPARTY:

Annex I-A
"Party acting as Agent" hereby does not apply.
Annex II
Market Value Shall not apply.
Annex III
Term Loans
This Annex sets forth additional terms and conditions governing Loans designated as "Term Loans" in which Lender lends to Borrower a specific amount of Loaned
Securities ("Term Loan Amount") against a pledge of cash Collateral by Borrower for an agreed upon rate of Interest until a scheduled termination date ("Termination
Date"). Unless otherwise defined, capitalized terms used but not defined in this Annex shall have the meanings assigned in the Securities Loan Agreement of which it
forms a part (such agreement, together with this Annex and any other annexes, schedules or exhibits, referred to as the "Agreement").

1. The terms of this Annex shall apply to Loans of Equity Securities only if they are designated as Term Loans in a Confirmation therefor provided pursuant to the Agreement
and executed by each party, in a schedule to the Agreement or in this Annex. All Loans of Securities other than Equity Securities shall be "Term Loans" subject to this
Annex, unless otherwise agreed in a Confirmation or other writing.
2. The Confirmation for a Term Loan shall set forth, in addition to any terms required to be set forth therein under the Agreement, the Term Loan Amount, rate of Interest and
the Termination Date. Lender and Borrower agree that, except as specifically provided in this Annex, each Term Loan shall be subject to all terms and conditions of the
Agreement, including, without limitation, any provisions regarding the parties' respective rights to terminate a Loan.
3. In the event that either party exercises its right under the Agreement to terminate a Term Loan on a date (the "Early Termination Date") prior to the Termination Date, Lender
and Borrower shall, unless otherwise agreed, use their best efforts to negotiate in good faith a new Term Loan (the "Replacement Loan") of comparable or other Securities,
which shall be mutually agreed upon by the parties, with a Market Value equal to the Market Value of the Term Loan Amount under the terminated Term Loan (the
"Terminated Loan") as of the Early Termination Date. Such agreement shall, in accordance with Section 2 of this Annex, be confirmed in a new Confirmation at the
commencement of the Replacement Loan and be executed by each party. Each Replacement Loan shall be subject to the same terms as the corresponding Terminated
Loan, other than with respect to the commencement date and the identity of the Loaned Securities. The Replacement Loan shall commence on the date on which the parties
agree which Securities shall be the subject of the Replacement Loan and shall be scheduled to terminate on the scheduled TerminationDate of the Terminated Loan.
4. Borrower and Lender agree that, except as provided in Section 5 of this Annex, if the parties enter into a Replacement Loan, the Collateral for the related Terminated Loan
need not be returned to Borrower and shall instead serve as Collateral for such Replacement Loan.
5. If the parties are unable to negotiate and enter into a Replacement Loan for some or all of the Term Loan Amount on or before the Early Termination Date, (a) the party
requesting termination of the Terminated Loan shall pay to the other party a Breakage Fee computed in accordance with Section 6 of this Annex with respect to that portion
of the Term Loan Amount for which a Replacement Loan is not entered into and (b) upon the transfer by Borrower to Lender of the Loaned Securities subject to the
Terminated Loan, Lender shall transfer to Borrower Collateral for the Terminated Loan in accordance with and to the extent required under the Agreement, provided that no
Default has occurred with respect to Borrower.
6. For purposes of this Annex, the term "Breakage Fee" shall mean a fee agreed by Borrower and Lender in the Confirmation or otherwise orally or in writing. In the absence of
any such agreement, the term "Breakage Fee" shall mean, with respect to Loans of Government Securities, a feeequal to the sum of (a) the cost to the non-terminating party
(including all payments, expenses and commissions) of entering into replacement transactions and entering into or terminating hedge transactions in connection with or as a
 result of the termination of the Terminated Loan, and (b) any other loss, damage, cost or expense directly arising or resulting from the termination of the Terminated Loan
that is incurred by the non- terminating party (other than consequential losses or costs for lost profits or lost opportunities), as determined by the non-terminating party in a
commercially reasonable manner, and (c) any other amounts due and payable by the terminating party to the non-terminating party under the Agreement on the Early
Termination Date.

Schedule A
Names and Addresses for Communications Between Parties Shall not apply.
Schedule B Defined Terms and Supplemental Provisions
None.

Annex I-A
"Party acting as Agent" hereby does not apply.

Annex II
Market Value
Shall not apply

Annex III
Term Loans
This Annex sets forth additional terms and conditions governing Loans designated as "Term Loans" in which Lender lends to Borrower a specific amount of Loaned
Securities ("Term Loan Amount") against a pledge of cash Collateral by Borrower for an agreed upon Cash Collateral Fee until a scheduled termination date ("Termination
Date"). Unless otherwise defined, capitalized terms used but not defined in this Annex shall have the meanings assigned in the Securities Loan Agreement of which it
forms a part (such agreement, together with this Annex and any other annexes, schedules or exhibits, referred to as the "Agreement").

1. The terms of this Annex shall apply to Loans of Equity Securities only if they are designated as Term Loans in a Confirmation therefor provided pursuant to the Agreement
and executed by each party, in a schedule to the Agreement or in this Annex. All Loans of Securities other than Equity Securities shall be "Term Loans" subject to this
Annex, unless otherwise agreed in a Confirmation or other writing.

2. The Confirmation for a Term Loan shall set forth, in addition to any terms required to be set forth therein under the Agreement, the Term Loan Amount, the Cash Collateral
Fee and the Termination Date. Lender and Borrower agree that, except as specifically provided in this Annex, each Term Loan shall be subject to all terms and conditions of
the Agreement, including, without limitation, any provisions regarding the parties' respective rights to terminate a Loan.

3. In the event that either party exercises its right under the Agreement to terminate a Term Loan on a date (the "Early Termination Date") prior to the Termination Date, Lender
and Borrower shall, unless otherwise agreed, use their best efforts to negotiate in good faith a new Term Loan (the "Replacement Loan") of comparable or other Securities,
which shall be mutually agreed upon by the parties, with a Market Value equal to the Market Value of the Term Loan Amount under the terminated Term Loan (the
"Terminated Loan") as of the Early Termination Date. Such agreement shall, in accordance with Section 2 of this Annex, be confirmed in a new Confirmation at the
commencement of the Replacement Loan and be executed by each party. Each Replacement Loan shall be subject to the same terms as the corresponding Terminated
Loan, other than with respect to the commencement date and the identity of the Loaned Securities. The Replacement Loan shall commence on the date on which the parties
agree which Securities shall be the subject of the Replacement Loan and shall be scheduled to terminate on the scheduled Termination Date of the Terminated Loan.

4. Borrower and Lender agree that, except as provided in Section 5 of this Annex, if the parties enter into a Replacement Loan, the Collateral for the related Terminated Loan
need not be returned to Borrower and shall instead serve as Collateral for such Replacement Loan.

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 5. If the parties are unable to negotiate and enter into a Replacement Loan for some or all of the Term Loan Amount on or before the Early Termination Date, (a) the party
requesting termination of the Terminated Loan shall pay to the other party a Breakage Fee computed in accordance with Section 6 of this Annex with respect to that portion
of the Term Loan Amount for which a Replacement Loan is not entered into and (b) upon the transfer by Borrower to Lender of the Loaned Securities subject to the
Terminated Loan, Lender shall transfer to Borrower Collateral for the Terminated Loan in accordance with and to the extent required under the Agreement, provided that no
Default has occurred with respect to Borrower.

6. For purposes of this Annex, the term "Breakage Fee" shall mean a fee agreed by Borrower and Lender in the Confirmation or otherwise orally or in writing. In the absence of
any such agreement, the term "Breakage Fee" shall mean, with respect to Loans of Government Securities, a fee equal to the sum of (a) the cost to the non-terminating
party (including all fees, expenses and commissions) of entering into replacement transactions and entering into or terminating hedge transactions in connection with or as a
result of the termination of the Terminated Loan, and (b) any other loss, damage, cost or expense directly arising or resulting from the termination of the Terminated Loan
that is incurred by the non-terminating party (other than consequential losses or costs for lost profits or lost opportunities), as determined by the non-terminating party in a
commercially reasonable manner, and (c) any other amounts due and payable by the terminating party to the non-terminating party under the Agreement on the Early
Termination Date.

Schedule A
Names and Addresses for Communications Between Parties
Shall not apply

Schedule B

Defined Terms and Supplemental Provisions

None.

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 6109 | 02/28/2017

Agreement and Limited Power Of Attorney For Participation in Interactive Brokers Stock
Yield Enhancement Program ("Agreement and Power of Attorney")

1. General:

A. Interactive Brokers LLC ("IB" or "Interactive Brokers") offers eligible customers the ability to lend out certain of their fully-paid and
excess margin securities (collectively "Fully-Paid Securities" or "Fully-Paid Shares") to IB, who may "on-lend" these securities to other
IB customers or to other market participants who wish to use these shares for short selling or other purposes. "Fully-paid securities"
are securities in a customer's account that have been completely paid for. "Excess-margin securities" are securities that have not
been completely paid for, but whose market value exceeds 140% of the customer's margin debit balance.

B. Customer wishes to participate in the Interactive Brokers Stock Yield Enhancement Program, under which Customer will grant
discretion to Interactive Brokers LLC to initiate, borrow and terminate Fully-Paid Securities loans between Customer and IB. IB will
pay interest on the cash collateral posted to Customer's account.

C. Customer represents that Customer has received and read the separate disclosure document provided by IB entitled Important
Characteristics and Risks of Participating in Interactive Brokers Fully-Paid Securities Lending Programs, and that Customer has
determined that the benefits and risks of participating in the program are consistent with Customer's financial circumstances,
investment objectives and risk tolerance.

D. In order to participate in the IB Stock Yield Enhancement Program, Customer must execute this Agreement and Power of Attorney
and Customer must also execute the Interactive Brokers Customer Agreement and the Interactive Brokers Master Securities Lending
Agreement for Fully-Paid Lending. All of the terms of the Interactive Brokers Customer Agreement and the Interactive Brokers Master
Securities Lending Agreement for Fully-Paid Lending are applicable to transactions between Customer and IB pursuant to the IB
Stock Yield Enhancement Program, but if this Agreement and Power of Attorney is inconsistent with any terms in those agreements,
this Agreement is controlling and takes precedence.

2. Limited Power of Attorney/Discretionary Authorization for Interactive Brokers to Initiate, Borrow and
Terminate Loans of Customer Fully-Paid Securities Between Customer as Lender and IB as Borrower:

A. The undersigned Customer hereby authorizes Interactive Brokers as Customer's agent and attorney-in-fact to use its discretion to
examine the Fully-Paid Securities in Customer's account and to take all necessary steps to initiate, borrow and terminate loans of
Fully-Paid Securities between Customer as Lender and IB as Borrower pursuant to the Interactive Brokers Master Securities Lending
Agreement for Fully-Paid Lending.

B. The undersigned Customer grants Interactive Brokers sole discretion to evaluate factors that IB considers relevant in determining
whether any of the Fully-Paid Securities in Customer's account can be loaned to IB on terms that are mutually advantageous to

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 Customer and to IB, taking into account various factors affecting the market and the potential transaction, such as potential size and
duration of the loan, the nature of the security and of various market factors affecting the security, prevailing market rates, other IB
customers' positions and lending interests, identity and availability of potential secondary borrowers of the shares from IB in the
securities lending markets, and other conditions relevant to the potential loan.

C. The undersigned Customer grants Interactive Brokers sole discretion to determine the terms and rates at which IB will borrow Fully-
Paid Shares from Customer, taking into account factors such as prevailing rates in the market for loans of various sizes, rates that IB
may be paid by its affiliates or third parties for IB lending the shares on to the securities lending markets, payments that IB may make
to third parties (such as Customer's financial advisor or introducing brokers who introduce accounts to IB), other IB customers', IB's
affiliates' or third parties' needs for the securities, and other relevant factors. Customer authorizes IB to change the rate IB will pay on
the cash collateral at IB's sole discretion based on changes in the above factors. Rates may change frequently (as often as daily) due
to the nature of the securities lending markets and may involve changes downward (or upward) by 50% or more.

D. This Power of Attorney and Discretionary Authorization shall continue and remain in full force and effect unless and until Customer
terminates Customer's participation in the program by providing a written notice of termination through the means provided on the IB
website.

3. Interest Paid To Customer and Rate Spreads:

A. IB will pay Customer interest on the cash collateral posted to the Customer's account when it borrows Fully-Paid Shares. Ordinarily IB
will pay Customer a rate that approximates a specified percentage of the net income earned by IB for relending the securities. The
net income received by IB and used to calculate Customer's interest rate may be less than the gross income received by IB for
relending the securities because of certain deductions and charges, including payments to affiliates and third parties.

B. Customer understands and agrees that IB may borrow shares from Customer or third parties and then lend those shares to one of its
affiliates, such as its market making affiliate Timber Hill LLC ("Timber Hill"), for the affiliate's own purposes (including short selling). In
the United States, IB typically also uses Timber Hill as a "conduit" to the securities lending markets. This means that IB may lend the
shares to Timber Hill, which will then lend the shares out to other parties in the securities lending market.

C. Customer understands that IB may pay part of the net income earned from lending a Customer's shares to third parties such as
Customer's financial advisor or introducing brokers who may introduce accounts to IB. These payments may reduce the interest rate
IB will pay on Customer's collateral for the entire duration of the loan.

4. Rights and Obligations of Customer and IB:

A. When a loan is initiated or terminated by IB, IB shall confirm this to the Customer on the Customer's daily Interactive Brokers
statement. Customer agrees to log in to the IB website and to review Customer's daily statements and the confirmations contained
therein.

B. Customer may sell Fully-Paid Shares that have been loaned to IB at any time, and IB will be responsible for terminating the loan,
settling the sale of the shares, and providing the proceeds of the sale to Customer by the normal settlement date for the sale.

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 C. Nothing in this Agreement guarantees that Customer will receive the best possible income for Customer's Fully-Paid Shares.
Customer understands and agrees that the securities lending market is not a standardized or transparent market, that there are no
rules or mechanisms that guarantee or require that any given participant in the marketplace will receive the best rate for lending
shares, and that Interactive Brokers cannot and does not guarantee it will pay the highest rate for borrowing Customer's shares.

D. Nothing in this Agreement obligates IB to borrow specific Fully-Paid Shares, or any Fully-Paid Shares. IB cannot and does not
guarantee that all of Customer's Fully-Paid Shares that possibly could be loaned out will be loaned out. There may not be a market to
lend Customer's Fully-Paid Shares at a rate that is advantageous, or IB may not have access to a market with willing borrowers. IB,
or other IB customers or IB's affiliates might have shares that may be loaned out that will satisfy available borrowing interest and
therefore IB may not borrow shares from Customer. Customer understands and agrees that nothing in this Agreement requires IB to
place Customer's interest in lending shares ahead of IB's own interests, or those of other IB customers or those of IB's affiliates.

E. Customer may terminate this Agreement and Customer's participation in the Interactive Brokers Stock Yield Enhancement Program
at any time upon written notice to IB through the IB website. After Customer's notice of termination, all outstanding loans of Fully-Paid
Securities will be terminated and the shares returned to Customer by the deadlines specified in the Interactive Brokers Master
Securities Lending Agreement for Fully-Paid Lending (generally, at most three business days from termination).

F. Customer acknowledges that if Customer signs this Agreement and Power Of Attorney and participates in the IB Stock Yield
Enhancement Program, Customer will not have the ability or right to approve specific loans before or after they are initiated, will not
have the ability to approve or reject interest rate changes and will not have the right to terminate specific loans (except if Customer
sells the shares that are being loaned or if Customer terminates Customer's participation in the Program). If Customer is dissatisfied
with a particular loan or loans or the rate(s) Customer is receiving or the income earned by IB, Customer may terminate participation
in the Program at any time as specified in the preceding paragraph.

G. IB may terminate this Agreement and Power of Attorney and Customer's participation in the IB Stock Yield Enhancement Program at
any time upon written notice to Customer. After such termination, all outstanding loans of Fully-Paid Securities will be terminated and
the shares returned to Customer by the deadlines specified in the Interactive Brokers Master Securities Lending Agreement for Fully-
Paid Lending (generally, at most three business days from termination).

H. Customer is entitled to receive the amount of all dividends and distributions made on or in respect of loaned securities. These cash
payments may be characterized as payments "in lieu of" dividends. For U.S. taxpayers, payments in lieu of dividends do not qualify
for the preferential qualified dividend income rate (20% for 2016 but subject to change) and are taxed as normal ordinary income (up
to 39.6%). IB may be required to withhold tax on payments in lieu of dividends and interest paid on the collateral unless an exception
applies. IB may, but is not required to, recall loaned shares from the borrower prior to a dividend, so as to reduce potential negative
tax consequences. Customer is responsible for evaluating the tax consequences of participating in the IB Stock Yield Enhancement
Program and seeking the advice of a tax professional if needed.

5. Limited Role of Interactive Brokers - No Trading or Investment Advice or Discretion by IB:

A. The power of attorney and discretionary authorization granted by Customer to IB in this Agreement and Power of Attorney is limited to
the initiation, borrowing and termination of loans of Fully-Paid Securities as described herein and pursuant to the Interactive Brokers
Master Securities Lending Agreement for Fully-Paid Lending.

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 B. IB SHALL HAVE NO DISCRETION TO BUY OR SELL SECURITIES OR TO MAKE OTHER INVESTMENT DECISIONS FOR
CUSTOMER'S ACCOUNT. IB IS NOT OBLIGATED TO AND WILL NOT PROVIDE ANY TRADING OR INVESTMENT OR TAX
ADVICE OR RECOMMENDATIONS TO CUSTOMER. THE DECISION WHETHER TO BUY OR HOLD OR SELL FULLY-PAID
SHARES OR SECURITIES OF ANY KIND IS SOLELY CUSTOMER'S RESPONSIBILITY. IB'S INITIATION OR TERMINATION OF A
LOAN OF FULLY-PAID SECURITIES IS NOT A RECOMMENDATION AS TO THE LONG-TERM VALUE OF THE SECURITIES
AND LOANED SECURITIES MAY RISE OR FALL IN VALUE, WHICH IS SOLELY THE RESPONSIBILITY OF CUSTOMER.

6. Securities Loaned Out By Customer May Not Be Protected by SIPC:

The provisions of the Securities Investor Protection Act of 1970 may not protect Customer as a lender with respect to securities loan
transactions in which Customer lends to Interactive Brokers Customer's Fully-Paid Securities. Therefore, the collateral delivered to
Customer (and indicated on Customer's account statement) by Interactive Brokers may constitute the only source of satisfaction of IB's
obligation in the event that IB fails to return the securities.

7. Bankruptcy or Insolvency:
In the event that Interactive Brokers: (1) applies for or consents to a receiver, custodian, trustee or liquidator of itself or its property; (2)
admits in writing its inability, or becomes generally unable, to pay its debts as such debts become due; (3) makes a general assignment for
the benefit of its creditors; or (4) files, or has filed against it, a petition for a Chapter 11 bankruptcy filing or a protective decree under
Section 5 of the Securities Investor Protection Act of 1970 (SIPA), this Agreement and all outstanding loans shall be terminated and
Customer shall have the right to return of Customer's loaned shares or the right to the collateral securing such loaned shares as specified
in the Interactive Brokers Master Securities Lending Agreement for Fully-Paid Lending.

8. Arbitration:
The Interactive Brokers Customer Agreement contains arbitration clauses requiring Customer and IB to arbitrate any disputes. Such
arbitration clauses are incorporated herein by reference. Customer acknowledge and agrees that all disputes regarding this Agreement and
Power Of Attorney, Customer's account(s) or IB's provision of services to Customer are subject to arbitration.

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Disclosure Regarding Interactive Brokers
Pre-Borrow Program
Introduction: Interactive Brokers ("IB") offers eligible customers the ability to borrow shares in advance of selling
such shares short (a "pre-borrow" transaction). Please read the following disclosure carefully for important
information about the pre-borrow program.
Basic Nature of Transaction: When you pre-borrow shares through IB, you will be engaging in a securities
borrowing transaction with IB as your counterparty and you will be charged an interest rate each day for the
borrowed shares. The interest rate may change as often as daily based on changes in market conditions, changes in
demand for the shares in the securities lending market, and other factors.
All Borrow Rates Are Merely Indicative Until Confirmed on Daily Statement; Rates May Change Daily: IB may
provide indicative interest rates for pre-borrows, but such rates are indicative only and may be higher or lower by a
material amount than the actual rate that you will be charged if you borrow securities, which will be determined at
or near the end of the trading day and is subject to change each day thereafter.
By using the IB Trader Workstation or other means to initiate a pre-borrow transaction, you are agreeing to borrow
securities for at least one day and you are agreeing to pay whatever interest rate IB charges you in its sole discretion
for the loan of the securities (i.e., your request to pre-borrow shares is similar to a âmarket orderâ). The rate
for your loan will be determined by IB based on a number of factors, including but not limited to demand in the
securities lending market, rates charged to IB by its counterparties and borrowing and lending activity by other IB
customers. After you have requested a pre-borrow and IB has confirmed the loan to you of the shares during the
trading day, IB may provide you with an indicative rate for the loan. Again, this rate is only indicative and the final
interest rate is subject to change and will not be determined until at or near the end of the trading day. The interest
rate for each day and transaction is not final until it is reported to you on your daily IB statement.
Return of Borrowed Shares: If you wish to return shares after you have borrowed them, you may do so beginning on
the next trading day (you cannot return borrowed shares on the same day as the original pre-borrow). In order to
return shares on a given day and terminate the borrowing costs, you must initiate a return of the shares by the cut-
off time specified on the IB website or by 10:50 a.m. Eastern U.S. time, whichever is earlier.
Pre-Borrow Transactions And Short Sale Transactions Are Separate And Independent: When you pre-borrow
shares, the transaction does not automatically involve a short sale of such shares. You must engage in a separate
short sale trade to open a short position. Likewise, if you pre-borrow shares and then sell the shares short, and later
you cover the short sale by purchasing shares, this will not automatically extinguish the borrow transaction. I.e., you
will still be borrowing the shares and in order to return them and stop paying interest for borrowing them, you must
separately initiate a return of the borrowed shares using the Trader Workstation or other means specified by IB. If,
after pre-borrowing shares, you do not sell them short for settlement within 5 days of the pre-borrow, IB may, but is
not required to, terminate the loan and return the shares.
If you have an existing short sale position and you subsequently pre-borrow shares of the same security, IB may, but
is not required to, use the pre-borrow to support the existing short position (depending on when and if you engage in
other short sales).
No Guaranteed Term for Borrows; Borrowed Shares Subject to Recall at Any Time: Pre-borrowing shares does not
give you the right to keep the borrowed shares for any specific period of time. The loan can be terminated by IB at
any time and the borrowed shares will be taken from your account and returned. Among other reasons, this may
happen if IBâs external stock loan counterparties demand the shares back from IB. If you have pre-borrowed
shares and then sold the shares short and IB thereafter terminates your borrow, this will not automatically
terminate your short position (IB will not necessarily buy-in the shares you sold short). IB may be able to continue to
provide shares to support your short position. If you pre-borrow shares and the loan is later terminated and if IB
cannot otherwise find shares to continue to support your short position, you short position will be subject to being
bought-in.
Commissions and Interest Rates: In addition to the interest rate you pay for borrowing shares, you will be charged a
commission (at the commission rate described on IB's website) for each pro-borrow transaction. While IB will

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attempt to provide competitive interest rates for your pre-borrow transactions, IB does not guarantee that the rate
will be the most favorable rate available. When you pre-borrow shares, IB may lend you shares it has available or
may engage in separate transactions with external stock loan counterparties to support the loan to you. In either
instance IB and/or its affiliates may earn a profit and/or a spread over market interest rates on the loan of shares to
you.
Borrowing charges will be applied to your account on the same day that you initiate a pre-borrow transaction. This
is true even though a short sale of those same shares will not settle until three days after the trade date. Thus, pre-
borrowing before a short sale will lead you to incur several extra days of interest charges for the borrowed shares
compared to an ordinary short sale done without a pre-borrow.
No Voting Or Other Rights: You will not have the right to vote, or to provide any consent or to take any similar
action with respect to securities you borrow even if the record date or deadline for such vote, consent or other action
falls during the term of the loan.
SIPC May Not Protect Pre-Borrowed Shares Prior to a Short Sale: Prior to using pre-borrowed shares for a short
sale, such shares may not be protected under the provisions of the Securities Investor Protection Act of 1970.

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 3070 | 04/24/2017

Interactive Brokers LLC

Business Continuity Plan Disclosure

I. Introduction
In accordance with applicable regulations, Interactive Brokers LLC has developed a Business
Continuity Plan to assist the firm in appropriately responding to a significant business disruption
as promptly as possible under prevailing conditions. Among other things, IB's Business Continuity
Plan:

• Identifies Emergency Contact Personnel to the firm's regulators;

• Describes the systems infrastructure protections that the firm has established in an effort to
minimize the potential adverse effects of a disruption (for example, redundancy of
telecommunications and power generation, fire protection and building security);
• Describes the firm's daily back-up of specified data and records and maintenance of back-up
media at secure off-site locations;
• Identifies the firm's Disaster Recovery Site(s) and the methods that the firm would use to recover
particular data and operations at the site;
• Identifies important firm operations and, where applicable, describes how those operations could
be re-established in the event of a disruption;
• Identifies the means by which IB will provide customers prompt access to their funds and
securities; and
• Describes the means by which IB will communicate with its customers, employees, business
constituents and regulators in the event of a disruption.

In the event of a significant business disruption, IB intends to continue its operations to the
extent reasonable and practical under the circumstances and will place utmost priority in
reestablishing the data and operational systems necessary to provide its customers with prompt
access to their funds and securities.
IB intends to respond to disruptions of particular scope as follows:
II. Branch Office Disruption
Basic Access to Funds and Securities in the Event of a Branch Office Disruption: Critical
systems and personnel necessary to provide customers with access to their funds and securities
generally are not dependent on operation of IB's branch offices (i.e., the firm's offices in
Greenwich, Chicago, Hong Kong, Kwun Tong and Zug). Thus, IB does not anticipate that even a
significant disruption to the operations of a single IB branch office would have more than a
temporary impact - if any - on customers' basic access to their funds and securities.
Connection to IB Trading System for Certain Customers: In the event of a significant disruption
to certain branch offices, customers that connect to the IB online trading system (e.g., the IB
Trader Workstation) through a branch office location likely would temporarily lose the ability to
connect to the trading system. It is anticipated that this would last only briefly, as connections for
these customers could be re-established through other IB offices in as little as a matter of hours.

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 Recovery time probably would be minimal (measured in hours, though possibly within a day).
Customers would still have the ability to place orders by telephone during the temporary outage.
Customers' access to account functions other than trading (e.g., deposits and withdrawals,
account management, etc.) may be affected, as connections for many Internet-based functions
other than trading are location-dependent.
We remind our customers that electronic and computer-based facilities and systems such as
those provided by IB are inherently vulnerable to disruption, delay or failure. As specified in the IB
Customer Agreement, customers must maintain alternative trading arrangements in addition to
their IB accounts for the placement and execution of customer orders in the event that the IB
system is unavailable.
Connection to Market Centers in Same Region as Branch: A significant disruption in a branch
office could temporarily impact all IB customers' ability to execute trades on market centers in the
same geographic region as the branch office, because necessary communications lines or
personnel could be affected. In this case, IB would strive to reconnect to affected markets from its
Greenwich, CT headquarters, from another branch office, or through a third party. Recovery time
to restore some basic ability to trade on local markets probably would be minimal (measured in
hours or days).
Other Branch Office Functions: Most important operations performed in IB branch offices, such
as Customer Service, Account Application Processing, Compliance, etc. are also performed in
other IB offices and could be migrated to similarly-trained personnel in other branch offices
promptly. Accordingly, IB does not anticipate that a localized failure in a branch office would have
a substantial negative impact on the firm's ability to respond to customer needs and anticipates
that recovery time would be minimal.
III. Headquarters Disruption
In the Event of a Moderate Disruption at IB's Headquarters: IB has generally designed its
systems, procedures and personnel structure such that there is significant redundancy and cross
capability. Limited disruptions affecting particular communications lines, particular pieces of
computer hardware, or particular systems typically can be addressed quickly through use of
redundant systems with similar capability. Likewise, the firm has significant capacity and
capability in its branch offices, both in terms of systems and personnel, such that limited
disruptions in particular areas at the firm's headquarters may be ameliorated quickly.
In the Event of a Significant Disruption at IB's Headquarters: IB's response to a significant
disruption at its headquarters necessarily will depend on the extent of the damage caused
thereby. In the event of a total loss of IB's headquarters, or the data processing center at its
headquarters, IB runs a hot Disaster Recovery Site(s) with the relevant data and operational
systems (e.g., trade and account data and modified versions of its market data, credit vetting and
customer authentication capability) necessary to provide customers prompt access to their funds
and securities. IB's Disaster Recovery Site(s) are located in remote geographic locations that are
not likely to be not be subject to the same communications, electricity and/or transportation
restrictions that may be experienced in the firm's Greenwich headquarters.
During the immediate aftermath of a significant business disruption resulting in the destruction
of the firm's Greenwich headquarters, the firm anticipates that customers could continue to place
new orders through its Disaster Recovery Site(s) with minor recovery time. IB anticipates that it
could recover customer data and position information at its Disaster Recovery Site(s) and
establish basic customer access to funds and positions within approximately 1 day of a total loss
of its headquarters operations. Thus, while customers may not be able to trade, we anticipate
that, within this 1 day window after the loss of the headquarters facility, customers would be able
to request a withdrawal of funds or transfer of their positions to another broker whose operations

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 were unaffected by a significant disruption. Although IB's Business Continuity Plan is designed to
provide customer access to funds and securities within 1 day, the actual recovery time will
depend on the nature of the disruption, how many IB facilities and personnel are affected, the
state of the national and global financial and banking system, and a host of other factors.
In the event of a significant disruption or total loss of IB's headquarters facilities, IB anticipates
that IB customers may be able to access either of the following websites: www.ibgdr.com or
www.interactivebrokers.co.uk to obtain information about the extent of the disruption and the
state of IB's operations (assuming that the public Internet remained available). Likewise, because
most customer service personnel are in offices other than IB's headquarters, IB anticipates that
customers would continue to be able to contact IB by telephone. Of course, in the event of a
significant outage or major disaster affecting the markets, large numbers of customers would
likely try to contact IB at the same time, potentially causing significant delays.
Beyond the initial aftermath of a significant disruption or total loss of the firm's headquarters, the
firm would evaluate the nature of the disruption, the availability of its systems and personnel, its
financial condition, the condition of the national and global financial markets, and other factors,
and determine whether it could continue to provide full brokerage operations.
IV. City Wide Disruptions and Regional Disruptions
In the event of a significant city-wide or regional disruption in one of the cities in which an IB
branch office is located, IB would follow the procedures described in Section II (Branch Office
Disruption) above and we expect that the disruption's effects would be limited (see Section II
above). In the event of a significant city-wide or regional disruption, affecting the firm's
Greenwich, CT headquarters, IB would follow the procedures described in Section III
(Headquarters Disruption). IB's Disaster Recovery Site(s) are not located in the same city or region
as the firm's headquarters.
V. Important Disclosures
IB will adhere to the procedures set forth in its Business Continuity Plan and described in this
disclosure to the extent commercially reasonable and practicable under prevailing circumstances.
However, there are innumerable potential causes of a business disruption. In addition, disruptions
(and the events that caused them) may vary significantly in nature, size, scope, severity, duration
and geographic location and may result in distinct degrees of harm to human life; firm assets; the
banks, exchanges, clearing houses and depositories 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 the firm's recovery in vastly
disparate ways. In recognition of this, IB reserves the right to flexibly respond to particular
emergencies and business disruptions in a situation-specific manner which the firm deems
prudent, in its sole discretion. Nothing in this document is intended to provide a guarantee or
warranty regarding the actions or performance of IB, its computer systems, or its personnel
in the event of a significant disruption.
IB may modify its Business Continuity Plan and this disclosure at any time. IB will post updates to
its Business Continuity Plan Disclosure on its website. Should you wish to receive a copy of this
disclosure by mail, please contact the IB Document Processing Department at
newaccounts@interactivebrokers.com

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 Privacy Notice

Interactive Brokers Group Privacy Notice

At Interactive Brokers ("IB"), we understand that confidentiality and security of the personal information that you share with us is important.
That is why we have developed specific policies and practices designed to protect the privacy of your personal information.

By opening an account with IB or by utilizing the products and services available through IB, you have consented to the collection and use of
your personal information in accordance with the privacy notice set forth below. We encourage you to read this privacy notice carefully.

IB does not sell customer lists or customer email addresses to third party marketers.

In order to provide brokerage services and to comply with regulatory requirements, IB collects certain personal, nonpublic information from
you. This includes information:

Provided during the IB account application process (e.g., your name, e-mail address, telephone number, birth date, social security
number, investment objectives, etc.);
Acquired as a result of the transactions you conduct through the IB system;
Received from consumer-reporting agencies;
Collected through Internet "cookies."

Cookies are bits of textual information that are sent electronically from a web server to your browser and are stored on your computer. They
do not identify you individually or contain personal information about you, unless you have identified yourself or provided the information by,
for example, opening an account or registering for an online service. IB may use cookies to measure and identify website traffic patterns and
to track the performance of web features and advertisements. By providing IB with a better understanding of how you and others use IB's
website and other web services, cookies enable IB to improve the navigation and functionality of its website and to present you with the most
useful information and offers. IB may share information obtained from cookies with its employees, agents, and affiliates, but does not sell
such information to unaffiliated third parties. IB may permit other companies or their third party ad servers to set cookies on your browser
when you visit an IB website. Such companies generally use these cookies as we do. We also use cookies to improve the performance of our
advertising on other websites. Although you may not opt out of receiving online advertisements generally, you may control the collection of
data on our website that is used for targeted interactivebrokers.com advertising during your visits to other websites. To opt-out of data
collection by Interactive Brokers for targeted advertising on other websites visit http://media1.interactivebrokers.com/optout.html.

We safeguard the confidentiality of your information in a number of ways.

For example:

We do not sell or license lists of our customers or the personal, nonpublic information that you provide to us.
We restrict access to the personal, nonpublic information that you have shared with us to those IB employees, agents and affiliates who
need to know such information in connection with the services that IB provides to you.
We maintain strict employment policies that prohibit employees who have access to your personal, nonpublic information from using or
disclosing such information except for business purposes.
We take substantial precautions to safeguard your personal, nonpublic information. For example, the IB system can be accessed only by
authorized IB personnel via valid user names and passwords. In addition, our Internet-based systems include security measures such as
encryption and firewalls.
We do not disclose personal, nonpublic information to individuals or entities that are not affiliated with IB, except as provided by law. For
example, among other reasons, we may disclose or report such information: where necessary to authorize, effect, administer or enforce
transactions that you request or authorize; to maintain and administer your account; to provide you with account confirmations, statements
and records; to maintain appropriate archival records; where we believe that disclosure is required by applicable law, rules or regulations; to
cooperate with law enforcement, regulatory or self-regulatory organizations; to enforce our customer and other agreements; to meet our
obligations; or to protect our rights and property. As long as consistent with applicable securities laws and regulations, we may share
anonymized account information or anonymized delayed order information with third parties (and/or share such information among our
affiliates) for the purpose of analysis, research, market data compilation, product creation, establishing order routing and execution
relationships, or for any other lawful purpose.

Finally, if you choose to subscribe to any of Interactive Brokers Investors' Marketplace suite of third-party services that are provided through
the IB website, we may disclose such information to the service providers as necessary for them to provide the services that you have
requested. IB requires these service providers to enter into confidentiality agreements with IB that limit their use of the information that they
receive. Such agreements prohibit the service provider from using IB customer information that they receive other than to carry out the
purposes for which the information was disclosed.

If you have any questions about these policies, please contact IB Customer Service through the IB website at interactivebrokers.com/help.
REQUIRED DISCLOSURES AND SUPPLEMENTAL AGREEMENT
FOR SECURITY FUTURES TRADING AT INTERACTIVE
BROKERS

I. Introduction

This information is being provided to you by Interactive Brokers (“IB”) to ensure that you
understand the risks inherent in trading security futures and also so that you understand how
your security futures account is being handled by IB. You must review this document carefully
and sign it at the bottom in order to be approved to trade security futures products through
IB.

You should be aware that security futures are highly leveraged investments and the
risk of loss in trading these products can be substantial. Security futures are not
suitable for all investors and you must carefully review this document and consult
with a financial advisor, if necessary, to determine whether to trade security
futures. IB does not provide any investment advice or recommendations, and you
will be solely responsible for decisions regarding the security futures trading
conducted in your account.

II. Nature of Your Security Futures Account

Under the federal regulations that apply to security futures, security futures positions may be
held in a securities trading account subject to Securities and Exchange Commission (SEC)
regulations or in a commodities trading account subject to Commodity Futures Trading
Commission (CFTC) regulations.

Because IB is fully registered with both the SEC and the CFTC, IB offers both securities
accounts and commodities accounts. Most securities futures products are held in an IB
securities account and are subject to SEC customer protection rules. However, certain
securities futures products are held in a commodities account and are therefore subject to
CFTC customer protection rules. Additional information regarding whether a particular
securities future product is held in a securities or commodities account may be found on IB's
website.

The types of protections offered to investors for securities and commodities accounts are
different. The different protections available to securities accounts and commodities accounts
are described in Section 6 of the NASD/NFA Standardized Risk Disclosure for Security Futures
Contracts, below.

III. Standardized Risk Disclosure for Security Futures Contracts

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 The National Futures Association (NFA) and the NASD(1) have jointly prepared a Standardized
Risk Disclosure for Security Futures Contracts. It contains valuable information regarding
trading of security futures contracts and you should review it carefully before investing in
security futures.

To review the NASD/NFA Standardized Risk Disclosure for Security Futures Contracts, click
here.

NOTE: Viewing the Standardized Risk Disclosure requires Adobe Acrobat. To download Adobe
Acrobat, click here. If you wish to receive a hard copy of the disclosure, call IB Customer
Service at (877) 442-2757.

IV. Supplemental Agreement for Security Futures Trading

The Supplemental Agreement provisions below relate to security futures trading in Customer’s
IB account and are in addition to the terms and conditions of the IB Customer Agreement,
and the Customer Agreement is incorporated herein by reference.

By signing below, Customer acknowledges and agrees to the following:

A. Customer acknowledges that Customer's U.S. and non-U.S. securities futures positions may be
held in either a securities or commodities account, in IB's sole discretion. Customer
acknowledges that U.S. and non-U.S. listed securities futures held in an IB securities account
will receive the regulatory protections of a securities account. Customer acknowledges that
U.S. and non-U.S. listed securities futures held in an IB commodities account will receive the
regulatory protections of a commodities account.

B. Customer acknowledges that IB may in the future, at its sole discretion, decide to hold
customer security futures positions in IB securities accounts or commodities accounts and may
not allow customers to make this choice. If IB determines to do this, it will provide required
notice to customers of the change.

C. Customer represents that Customer has received and reviewed the NASD/NFA Standardized
Risk Disclosure for Security Futures Contracts.

D. Customer acknowledges that security futures are highly leveraged investments that are not
suitable for all investors. Customer acknowledges that IB representatives are not authorized to
provide investment, trading or tax advice and therefore will not provide advice or guidance on
trading or hedging strategies involving security futures. Customers who need advice or
guidance regarding security futures trading or investments should consult a financial advisor.

E. Customer acknowledges that Customer must review and be aware of, and that Customer is
bound by, the rules applicable to the trading of security futures, as established by the NASD,
the NFA and the security futures exchanges. Customer represents that it is aware of and
agrees not to violate any applicable position limits regarding security futures.

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(1)
In July 2007, the NASD was consolidated with the member regulation, enforcement and
arbitration functions of the New York Stock Exchange to form the Financial Industry
Regulatory Authority (FINRA).

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 RISK DISCLOSURE STATEMENT FOR
SECURITY FUTURES CONTRACTS

This disclosure statement discusses the characteristics and risks of standardized

security futures contracts traded on regulated U.S. exchanges. At present, regulated exchanges
are authorized to list futures contracts on individual equity securities registered under the
Securities Exchange Act of 1934 (including common stock and certain exchange-traded funds
and American Depositary Receipts), as well as narrow-based security indices. Futures on other
types of securities and options on security futures contracts may be authorized in the future.
The glossary of terms appears at the end of the document.

Customers should be aware that the examples in this document are exclusive of fees
and commissions that may decrease their net gains or increase their net losses. The examples
also do not include tax consequences, which may differ for each customer.

Section 1 – Risks of Security Futures

1.1. Risks of Security Futures Transactions

Trading security futures contracts may not be suitable for all investors. You may lose a
substantial amount of money in a very short period of time. The amount you may lose is
potentially unlimited and can exceed the amount you originally deposit with your broker. This is
because futures trading is highly leveraged, with a relatively small amount of money used to
establish a position in assets having a much greater value. If you are uncomfortable with this
level of risk, you should not trade security futures contracts.

1.2. General Risks

Trading security futures contracts involves risk and may result in potentially unlimited losses
that are greater than the amount you deposited with your broker. As with any high risk
financial product, you should not risk any funds that you cannot afford to lose, such as your
retirement savings, medical and other emergency funds, funds set aside for purposes such
as education or home ownership, proceeds from student loans or mortgages, or funds
required to meet your living expenses.

Be cautious of claims that you can make large profits from trading security futures contracts.
Although the high degree of leverage in security futures contracts can result in large and
immediate gains, it can also result in large and immediate losses. As with any financial
product, there is no such thing as a “sure winner.”

Because of the leverage involved and the nature of security futures contract transactions,
you may feel the effects of your losses immediately. Gains and losses in security futures
contracts are credited or debited to your account, at a minimum, on a daily basis. If
movements in the markets for security futures contracts or the underlying security decrease
the value of your positions in security futures contracts, you may be required to have or
make additional funds available to your carrying firm as margin. If your account is under the
minimum margin requirements set by the exchange or the brokerage firm, your position may

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be liquidated at a loss, and you will be liable for the deficit, if any, in your account. Margin
requirements are addressed in Section 4.

Under certain market conditions, it may be difficult or impossible to liquidate a position.

Generally, you must enter into an offsetting transaction in order to liquidate a position in a
security futures contract. If you cannot liquidate your position in a security futures contracts,
you may not be able to realize a gain in the value of your position or prevent losses from
mounting. This inability to liquidate could occur, for example, if trading is halted due to
unusual trading activity in either the security futures contract or the underlying security; if
trading is halted due to recent news events involving the issuer of the underlying security; if
systems failures occur on an exchange or at the firm carrying your position; or if the position
is on an illiquid market. Even if you can liquidate your position, you may be forced to do so
at a price that involves a large loss.

Under certain market conditions, it may also be difficult or impossible to manage your risk
from open security futures positions by entering into an equivalent but opposite position in
another contract month, on another market, or in the underlying security. This inability to
take positions to limit your risk could occur, for example, if trading is halted across markets
due to unusual trading activity in the security futures contract or the underlying security or
due to recent news events involving the issuer of the underlying security.

Under certain market conditions, the prices of security futures contracts may not maintain
their customary or anticipated relationships to the prices of the underlying security or index.
These pricing disparities could occur, for example, when the market for the security futures
contract is illiquid, when the primary market for the underlying security is closed, or when the
reporting of transactions in the underlying security has been delayed. For index products, it
could also occur when trading is delayed or halted in some or all of the securities that make
up the index.

You may be required to settle certain security futures contracts with physical delivery of the
underlying security. If you hold your position in a physically settled security futures contract
until the end of the last trading day prior to expiration, you will be obligated to make or take
delivery of the underlying securities, which could involve additional costs. The actual
settlement terms may vary from contract to contract and exchange to exchange. You should
carefully review the settlement and delivery conditions before entering into a security futures
contract. Settlement and delivery are discussed in Section 5.

You may experience losses due to systems failures. As with any financial transaction, you
may experience losses if your orders for security futures contracts cannot be executed
normally due to systems failures on a regulated exchange or at the brokerage firm carrying
your position. Your losses may be greater if the brokerage firm carrying your position does
not have adequate back-up systems or procedures.

All security futures contracts involve risk, and there is no trading strategy that can eliminate
it. Strategies using combinations of positions, such as spreads, may be as risky as outright
long or short positions. Trading in security futures contracts requires knowledge of both the
securities and the futures markets.

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Day trading strategies involving security futures contracts and other products pose special
risks. As with any financial product, persons who seek to purchase and sell the same
security future in the course of a day to profit from intra-day price movements (“day traders”)
face a number of special risks, including substantial commissions, exposure to leverage,
and competition with professional traders. You should thoroughly understand these risks
and have appropriate experience before engaging in day trading. The special risks for day
traders are discussed more fully in Section 7.

Placing contingent orders, if permitted, such as “stop-loss” or “stop-limit” orders, will not
necessarily limit your losses to the intended amount. Some regulated exchanges may permit
you to enter into stop-loss or stop-limit orders for security futures contracts, which are
intended to limit your exposure to losses due to market fluctuations. However, market
conditions may make it impossible to execute the order or to get the stop price.

You should thoroughly read and understand the customer account agreement with your
brokerage firm before entering into any transactions in security futures contracts.

You should thoroughly understand the regulatory protections available to your funds and
positions in the event of the failure of your brokerage firm. The regulatory protections
available to your funds and positions in the event of the failure of your brokerage firm may
vary depending on, among other factors, the contract you are trading and whether you are
trading through a securities account or a futures account. Firms that allow customers to
trade security futures in either securities accounts or futures accounts, or both, are required
to disclose to customers the differences in regulatory protections between such accounts,
and, where appropriate, how customers may elect to trade in either type of account.

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 Section 2 – Description of a Security Futures Contract

2.1. What is a Security Futures Contract?

A security futures contract is a legally binding agreement between two parties to

purchase or sell in the future a specific quantity of shares of a security or of the component
securities of a narrow-based security index, at a certain price. A person who buys a security
futures contract enters into a contract to purchase an underlying security and is said to be “long”
the contract. A person who sells a security futures contract enters into a contract to sell the
underlying security and is said to be “short” the contract. The price at which the contract trades
(the “contract price”) is determined by relative buying and selling interest on a regulated
exchange.

In order to enter into a security futures contract, you must deposit funds with your
brokerage firm equal to a specified percentage (usually at least 20 percent) of the current
market value of the contract as a performance bond. Moreover, all security futures contracts are
marked-to-market at least daily, usually after the close of trading, as described in Section 3 of
this document. At that time, the account of each buyer and seller reflects the amount of any gain
or loss on the security futures contract based on the contract price established at the end of the
day for settlement purposes (the “daily settlement price”).

An open position, either a long or short position, is closed or liquidated by entering into
an offsetting transaction (i.e., an equal and opposite transaction to the one that opened the
position) prior to the contract expiration. Traditionally, most futures contracts are liquidated prior
to expiration through an offsetting transaction and, thus, holders do not incur a settlement
obligation.

Examples:

Investor A is long one September XYZ Corp. futures contract. To liquidate the
long position in the September XYZ Corp. futures contract, Investor A would sell
an identical September XYZ Corp. contract.

Investor B is short one December XYZ Corp. futures contract. To liquidate the
short position in the December XYZ Corp. futures contract, Investor B would buy
an identical December XYZ Corp. contract.

Security futures contracts that are not liquidated prior to expiration must be settled in
accordance with the terms of the contract. Some security futures contracts are settled by
physical delivery of the underlying security. At the expiration of a security futures contract that is
settled through physical delivery, a person who is long the contract must pay the final settlement
price set by the regulated exchange or the clearing organization and take delivery of the
underlying shares. Conversely, a person who is short the contract must make delivery of the
underlying shares in exchange for the final settlement price.

Other security futures contracts are settled through cash settlement. In this case, the
underlying security is not delivered. Instead, any positions in such security futures contracts that
are open at the end of the last trading day are settled through a final cash payment based on a

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final settlement price determined by the exchange or clearing organization. Once this payment
is made, neither party has any further obligations on the contract.

Physical delivery and cash settlement are discussed more fully in Section 5.

2.2. Purposes of Security Futures

Security futures contracts can be used for speculation, hedging, and risk management.
Security futures contracts do not provide capital growth or income.

Speculation

Speculators are individuals or firms who seek to profit from anticipated increases or
decreases in futures prices. A speculator who expects the price of the underlying instrument to
increase will buy the security futures contract. A speculator who expects the price of the
underlying instrument to decrease will sell the security futures contract. Speculation involves
substantial risk and can lead to large losses as well as profits.

The most common trading strategies involving security futures contracts are buying with
the hope of profiting from an anticipated price increase and selling with the hope of profiting
from an anticipated price decrease. For example, a person who expects the price of XYZ stock
to increase by March can buy a March XYZ security futures contract, and a person who expects
the price of XYZ stock to decrease by March can sell a March XYZ security futures contract.
The following illustrates potential profits and losses if Customer A purchases the security futures
contract at $50 a share and Customer B sells the same contract at $50 a share (assuming 100
shares per contract).

Price of XYZ Customer A Customer B

at Liquidation Profit/Loss Profit/Loss

$55 $500 - $500

$50 $0 $0
$45 - $500 $500

Speculators may also enter into spreads with the hope of profiting from an expected
change in price relationships. Spreaders may purchase a contract expiring in one contract
month and sell another contract on the same underlying security expiring in a different month
(e.g., buy June and sell September XYZ single stock futures). This is commonly referred to as a
“calendar spread.”

Spreaders may also purchase and sell the same contract month in two different but
economically correlated security futures contracts. For example, if ABC and XYZ are both
pharmaceutical companies and an individual believes that ABC will have stronger growth than
XYZ between now and June, he could buy June ABC futures contracts and sell June XYZ
futures contracts. Assuming that each contract is 100 shares, the following illustrates how this
works.

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Opening Price at Gain or Price at Gain or
Position Liquidation Loss Liquidation Loss

Buy ABC at 50 $53 $300 $53 $300

Sell XYZ at 45 $46 - $100 $50 - $500

Net Gain or Loss $200 - $200

Speculators can also engage in arbitrage, which is similar to a spread except that the
long and short positions occur on two different markets. An arbitrage position can be
established by taking an economically opposite position in a security futures contract on another
exchange, in an options contract, or in the underlying security.

Hedging

Generally speaking, hedging involves the purchase or sale of a security future to reduce
or offset the risk of a position in the underlying security or group of securities (or a close
economic equivalent). A hedger gives up the potential to profit from a favorable price change in
the position being hedged in order to minimize the risk of loss from an adverse price change.

An investor who wants to lock in a price now for an anticipated sale of the underlying
security at a later date can do so by hedging with security futures. For example, assume an
investor owns 1,000 shares of ABC that have appreciated since he bought them. The investor
would like to sell them at the current price of $50 per share, but there are tax or other reasons
for holding them until September. The investor could sell ten 100-share ABC futures contracts
and then buy back those contracts in September when he sells the stock. Assuming the stock
price and the futures price change by the same amount, the gain or loss in the stock will be
offset by the loss or gain in the futures contracts.

Price in Value of 1,000 Gain or Loss Effective

September Shares of ABC on Futures Selling Price

$40 $40,000 $10,000 $50,000

$50 $50,000 $ 0 $50,000
$60 $60,000 -$10,000 $50,000

Hedging can also be used to lock in a price now for an anticipated purchase of the stock
at a later date. For example, assume that in May a mutual fund expects to buy stocks in a
particular industry with the proceeds of bonds that will mature in August. The mutual fund can
hedge its risk that the stocks will increase in value between May and August by purchasing
security futures contracts on a narrow-based index of stocks from that industry. When the
mutual fund buys the stocks in August, it also will liquidate the security futures position in the
index. If the relationship between the security futures contract and the stocks in the index is
constant, the profit or loss from the futures contract will offset the price change in the stocks,
and the mutual fund will have locked in the price that the stocks were selling at in May.

Although hedging mitigates risk, it does not eliminate all risk. For example, the
relationship between the price of the security futures contract and the price of the underlying

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security traditionally tends to remain constant over time, but it can and does vary somewhat.
Furthermore, the expiration or liquidation of the security futures contract may not coincide with
the exact time the hedger buys or sells the underlying stock. Therefore, hedging may not be a
perfect protection against price risk.

Risk Management

Some institutions also use futures contracts to manage portfolio risks without necessarily
intending to change the composition of their portfolio by buying or selling the underlying
securities. The institution does so by taking a security futures position that is opposite to some
or all of its position in the underlying securities. This strategy involves more risk than a
traditional hedge because it is not meant to be a substitute for an anticipated purchase or sale.

2.3. Where Security Futures Trade

By law, security futures contracts must trade on a regulated U.S. exchange. Each
regulated U.S. exchange that trades security futures contracts is subject to joint regulation by
the Securities and Exchange Commission (SEC) and the Commodity Futures Trading
Commission (CFTC).

A person holding a position in a security futures contract who seeks to liquidate the
position must do so either on the regulated exchange where the original trade took place or on
another regulated exchange, if any, where a fungible security futures contract trades. (A person
may also seek to manage the risk in that position by taking an opposite position in a comparable
contract traded on another regulated exchange.)

Security futures contracts traded on one regulated exchange might not be fungible with
security futures contracts traded on another regulated exchange for a variety of reasons.
Security futures traded on different regulated exchanges may be non-fungible because they
have different contract terms (e.g., size, settlement method), or because they are cleared
through different clearing organizations. Moreover, a regulated exchange might not permit its
security futures contracts to be offset or liquidated by an identical contract traded on another
regulated exchange, even though they have the same contract terms and are cleared through
the same clearing organization. You should consult your broker about the fungibility of the
contract you are considering purchasing or selling, including which exchange(s), if any, on
which it may be offset.

Regulated exchanges that trade security futures contracts are required by law to
establish certain listing standards. Changes in the underlying security of a security futures
contract may, in some cases, cause such contract to no longer meet the regulated exchange’s
listing standards. Each regulated exchange will have rules governing the continued trading of
security futures contracts that no longer meet the exchange’s listing standards. These rules
may, for example, permit only liquidating trades in security futures contracts that no longer
satisfy the listing standards.

2.4. How Security Futures Differ from the Underlying Security

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 Shares of common stock represent a fractional ownership interest in the issuer of that
security. Ownership of securities confers various rights that are not present with positions in
security futures contracts. For example, persons owning a share of common stock may be
entitled to vote in matters affecting corporate governance. They also may be entitled to receive
dividends and corporate disclosure, such as annual and quarterly reports.

The purchaser of a security futures contract, by contrast, has only a contract for future
delivery of the underlying security. The purchaser of the security futures contract is not entitled
to exercise any voting rights over the underlying security and is not entitled to any dividends that
may be paid by the issuer. Moreover, the purchaser of a security futures contract does not
receive the corporate disclosures that are received by shareholders of the underlying security,
although such corporate disclosures must be made publicly available through the SEC’s
EDGAR system, which can be accessed at www.sec.gov. You should review such disclosures
before entering into a security futures contract. See Section 9 for further discussion of the
impact of corporate events on a security futures contract.

All security futures contracts are marked-to-market at least daily, usually after the close
of trading, as described in Section 3 of this document. At that time, the account of each buyer
and seller is credited with the amount of any gain, or debited by the amount of any loss, on the
security futures contract, based on the contract price established at the end of the day for
settlement purposes (the “daily settlement price”). By contrast, the purchaser or seller of the
underlying instrument does not have the profit and loss from his or her investment credited or
debited until the position in that instrument is closed out.

Naturally, as with any financial product, the value of the security futures contract and of
the underlying security may fluctuate. However, owning the underlying security does not require
an investor to settle his or her profits and losses daily. By contrast, as a result of the mark-to-
market requirements discussed above, a person who is long a security futures contract often will
be required to deposit additional funds into his or her account as the price of the security futures
contract decreases. Similarly, a person who is short a security futures contract often will be
required to deposit additional funds into his or her account as the price of the security futures
contract increases.

Another significant difference is that security futures contracts expire on a specific date.
Unlike an owner of the underlying security, a person cannot hold a long position in a security
futures contract for an extended period of time in the hope that the price will go up. If you do not
liquidate your security futures contract, you will be required to settle the contract when it expires,
either through physical delivery or cash settlement. For cash-settled contracts in particular, upon
expiration, an individual will no longer have an economic interest in the securities underlying the
security futures contract.

2.5. Comparison to Options

Although security futures contracts share some characteristics with options on securities
(options contracts), these products are also different in a number of ways. Below are some of
the important distinctions between equity options contracts and security futures contracts.

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 If you purchase an options contract, you have the right, but not the obligation, to buy or
sell a security prior to the expiration date. If you sell an options contract, you have the obligation
to buy or sell a security prior to the expiration date. By contrast, if you have a position in a
security futures contract (either long or short), you have both the right and the obligation to buy
or sell a security at a future date. The only way that you can avoid the obligation incurred by the
security futures contract is to liquidate the position with an offsetting contract.

A person purchasing an options contract runs the risk of losing the purchase price
(premium) for the option contract. Because it is a wasting asset, the purchaser of an options
contract who neither liquidates the options contract in the secondary market nor exercises it at
or prior to expiration will necessarily lose his or her entire investment in the options contract.
However, a purchaser of an options contract cannot lose more than the amount of the premium.
Conversely, the seller of an options contract receives the premium and assumes the risk that he
or she will be required to buy or sell the underlying security on or prior to the expiration date, in
which event his or her losses may exceed the amount of the premium received. Although the
seller of an options contract is required to deposit margin to reflect the risk of its obligation, he or
she may lose many times his or her initial margin deposit.

By contrast, the purchaser and seller of a security futures contract each enter into an
agreement to buy or sell a specific quantity of shares in the underlying security. Based upon the
movement in prices of the underlying security, a person who holds a position in a security
futures contract can gain or lose many times his or her initial margin deposit. In this respect, the
benefits of a security futures contract are similar to the benefits of purchasing an option, while
the risks of entering into a security futures contract are similar to the risks of selling an option.

Both the purchaser and the seller of a security futures contract have daily margin
obligations. At least once each day, security futures contracts are marked-to-market and the
increase or decrease in the value of the contract is credited or debited to the buyer and the
seller. As a result, any person who has an open position in a security futures contract may be
called upon to meet additional margin requirements or may receive a credit of available funds.

Example:

Assume that Customers A and B each anticipate an increase in the market price
of XYZ stock, which is currently $50 a share. Customer A purchases an XYZ 50
call (covering 100 shares of XYZ at a premium of $5 per share). The option
premium is $500 ($5 per share X 100 shares). Customer B purchases an XYZ
security futures contract (covering 100 shares of XYZ). The total value of the
contract is $5000 ($50 share value X 100 shares). The required margin is $1000
(or 20% of the contract value).

Price of Customer Customer

XYZ at A B
expiration Profit/Loss Profit/Loss
65 1000 1500
60 500 1000
55 0 500
50 -500 0

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 45 -500 -500
40 -500 -1000
35 -500 -1500

The most that Customer A can lose is $500, the option premium. Customer A
breaks even at $55 per share, and makes money at higher prices. Customer B
may lose more than his initial margin deposit. Unlike the options premium, the
margin on a futures contract is not a cost but a performance bond. The losses for
Customer B are not limited by this performance bond. Rather, the losses or gains
are determined by the settlement price of the contract, as provided in the
example above. Note that if the price of XYZ falls to $35 per share, Customer A
loses only $500, whereas Customer B loses $1500.

2.6. Components of a Security Futures Contract

Each regulated exchange can choose the terms of the security futures contracts it lists,
and those terms may differ from exchange to exchange or contract to contract. Some of those
contract terms are discussed below. However, you should ask your broker for a copy of the
contract specifications before trading a particular contract.

2.6.1. Each security futures contract has a set size. The size of a security futures contract is
determined by the regulated exchange on which the contract trades. For example, a security
futures contract for a single stock may be based on 100 shares of that stock. If prices are
reported per share, the value of the contract would be the price times 100. For narrow-based
security indices, the value of the contract is the price of the component securities times the
multiplier set by the exchange as part of the contract terms.

2.6.2. Security futures contracts expire at set times determined by the listing exchange. For
example, a particular contract may expire on a particular day, e.g., the third Friday of the
expiration month. Up until expiration, you may liquidate an open position by offsetting your
contract with a fungible opposite contract that expires in the same month. If you do not liquidate
an open position before it expires, you will be required to make or take delivery of the underlying
security or to settle the contract in cash after expiration.

2.6.3. Although security futures contracts on a particular security or a narrow-based security

index may be listed and traded on more than one regulated exchange, the contract
specifications may not be the same. Also, prices for contracts on the same security or index
may vary on different regulated exchanges because of different contract specifications.

2.6.4. Prices of security futures contracts are usually quoted the same way prices are quoted in
the underlying instrument. For example, a contract for an individual security would be quoted in
dollars and cents per share. Contracts for indices would be quoted by an index number, usually
stated to two decimal places.

2.6.5. Each security futures contract has a minimum price fluctuation (called a tick), which may
differ from product to product or exchange to exchange. For example, if a particular security
futures contract has a tick size of 1¢, you can buy the contract at $23.21 or $23.22 but not at
$23.215.

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2.7. Trading Halts

The value of your positions in security futures contracts could be affected if trading is
halted in either the security futures contract or the underlying security. In certain circumstances,
regulated exchanges are required by law to halt trading in security futures contracts. For
example, trading on a particular security futures contract must be halted if trading is halted on
the listed market for the underlying security as a result of pending news, regulatory concerns, or
market volatility. Similarly, trading of a security futures contract on a narrow-based security
index must be halted under such circumstances if trading is halted on securities accounting for
at least 50 percent of the market capitalization of the index. In addition, regulated exchanges
are required to halt trading in all security futures contracts for a specified period of time when
the Dow Jones Industrial Average (“DJIA”) experiences one-day declines of 10-, 20- and 30-
percent. The regulated exchanges may also have discretion under their rules to halt trading in
other circumstances – such as when the exchange determines that the halt would be advisable
in maintaining a fair and orderly market.

A trading halt, either by a regulated exchange that trades security futures or an

exchange trading the underlying security or instrument, could prevent you from liquidating a
position in security futures contracts in a timely manner, which could prevent you from
liquidating a position in security futures contracts at that time.

2.8. Trading Hours

Each regulated exchange trading a security futures contract may open and close for
trading at different times than other regulated exchanges trading security futures contracts or
markets trading the underlying security or securities. Trading in security futures contracts prior
to the opening or after the close of the primary market for the underlying security may be less
liquid than trading during regular market hours.

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 Section 3 – Clearing Organizations and Mark-to-Market Requirements

Every regulated U.S. exchange that trades security futures contracts is required to have
a relationship with a clearing organization that serves as the guarantor of each security futures
contract traded on that exchange. A clearing organization performs the following functions:
matching trades; effecting settlement and payments; guaranteeing performance; and facilitating
deliveries.

Throughout each trading day, the clearing organization matches trade data submitted by
clearing members on behalf of their customers or for the clearing member’s proprietary
accounts. If an account is with a brokerage firm that is not a member of the clearing
organization, then the brokerage firm will carry the security futures position with another
brokerage firm that is a member of the clearing organization. Trade records that do not match,
either because of a discrepancy in the details or because one side of the transaction is missing,
are returned to the submitting clearing members for resolution. The members are required to
resolve such “out trades” before or on the open of trading the next morning.

When the required details of a reported transaction have been verified, the clearing
organization assumes the legal and financial obligations of the parties to the transaction. One
way to think of the role of the clearing organization is that it is the “buyer to every seller and the
seller to every buyer.” The insertion or substitution of the clearing organization as the
counterparty to every transaction enables a customer to liquidate a security futures position
without regard to what the other party to the original security futures contract decides to do.

The clearing organization also effects the settlement of gains and losses from security
futures contracts between clearing members. At least once each day, clearing member
brokerage firms must either pay to, or receive from, the clearing organization the difference
between the current price and the trade price earlier in the day, or for a position carried over
from the previous day, the difference between the current price and the previous day’s
settlement price. Whether a clearing organization effects settlement of gains and losses on a
daily basis or more frequently will depend on the conventions of the clearing organization and
market conditions. Because the clearing organization assumes the legal and financial
obligations for each security futures contract, you should expect it to ensure that payments are
made promptly to protect its obligations.

Gains and losses in security futures contracts are also reflected in each customer’s
account on at least a daily basis. Each day’s gains and losses are determined based on a daily
settlement price disseminated by the regulated exchange trading the security futures contract or
its clearing organization. If the daily settlement price of a particular security futures contract
rises, the buyer has a gain and the seller a loss. If the daily settlement price declines, the buyer
has a loss and the seller a gain. This process is known as “marking-to-market” or daily
settlement. As a result, individual customers normally will be called on to settle daily.

The one-day gain or loss on a security futures contract is determined by calculating the
difference between the current day’s settlement price and the previous day’s settlement price.

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 For example, assume a security futures contract is purchased at a price of $120.
If the daily settlement price is either $125 (higher) or $117 (lower), the effects
would be as follows:

(1 contract representing 100 shares)

Daily
Settlement Buyer’s Seller’s
Value Account Account

$125 $500 gain $500 loss

(credit) (debit)

$117 $300 loss $300 gain

(debit) (credit)

The cumulative gain or loss on a customer’s open security futures positions is generally
referred to as “open trade equity” and is listed as a separate component of account equity on
your customer account statement.

A discussion of the role of the clearing organization in effecting delivery is discussed in

Section 5.

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 Section 4 – Margin and Leverage

When a broker-dealer lends a customer part of the funds needed to purchase a security
such as common stock, the term “margin” refers to the amount of cash, or down payment, the
customer is required to deposit. By contrast, a security futures contract is an obligation and not
an asset. A security futures contract has no value as collateral for a loan. Because of the
potential for a loss as a result of the daily marked-to-market process, however, a margin deposit
is required of each party to a security futures contract. This required margin deposit also is
referred to as a “performance bond.”

In the first instance, margin requirements for security futures contracts are set by the
exchange on which the contract is traded, subject to certain minimums set by law. The basic
margin requirement is 20% of the current value of the security futures contract, although some
strategies may have lower margin requirements. Requests for additional margin are known as
“margin calls.” Both buyer and seller must individually deposit the required margin to their
respective accounts.

It is important to understand that individual brokerage firms can, and in many cases do,
require margin that is higher than the exchange requirements. Additionally, margin requirements
may vary from brokerage firm to brokerage firm. Furthermore, a brokerage firm can increase its
“house” margin requirements at any time without providing advance notice, and such increases
could result in a margin call.

For example, some firms may require margin to be deposited the business day following
the day of a deficiency, or some firms may even require deposit on the same day. Some firms
may require margin to be on deposit in the account before they will accept an order for a
security futures contract. Additionally, brokerage firms may have special requirements as to how
margin calls are to be met, such as requiring a wire transfer from a bank, or deposit of a certified
or cashier’s check. You should thoroughly read and understand the customer agreement with
your brokerage firm before entering into any transactions in security futures contracts.

If through the daily cash settlement process, losses in the account of a security futures
contract participant reduce the funds on deposit (or equity) below the maintenance margin level
(or the firm’s higher “house” requirement), the brokerage firm will require that additional funds
be deposited.

If additional margin is not deposited in accordance with the firm’s policies, the firm can
liquidate your position in security futures contracts or sell assets in any of your accounts at the
firm to cover the margin deficiency. You remain responsible for any shortfall in the account after
such liquidations or sales. Unless provided otherwise in your customer agreement or by
applicable law, you are not entitled to choose which futures contracts, other securities or other
assets are liquidated or sold to meet a margin call or to obtain an extension of time to meet a
margin call.

Brokerage firms generally reserve the right to liquidate a customer’s security futures
contract positions or sell customer assets to meet a margin call at any time without contacting
the customer. Brokerage firms may also enter into equivalent but opposite positions for your
account in order to manage the risk created by a margin call. Some customers mistakenly

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believe that a firm is required to contact them for a margin call to be valid, and that the firm is
not allowed to liquidate securities or other assets in their accounts to meet a margin call unless
the firm has contacted them first. This is not the case. While most firms notify their customers of
margin calls and allow some time for deposit of additional margin, they are not required to do
so. Even if a firm has notified a customer of a margin call and set a specific due date for a
margin deposit, the firm can still take action as necessary to protect its financial interests,
including the immediate liquidation of positions without advance notification to the customer.

Here is an example of the margin requirements for a long security futures position.

A customer buys 3 July EJG security futures at 71.50. Assuming each contract
represents 100 shares, the nominal value of the position is $21,450 (71.50 x 3 contracts x 100
shares). If the initial margin rate is 20% of the nominal value, then the customer’s initial margin
requirement would be $4,290. The customer deposits the initial margin, bringing the equity in
the account to $4,290.

First, assume that the next day the settlement price of EJG security futures falls to
69.25. The marked-to-market loss in the customer’s equity is $675 (71.50 – 69.25 x 3 contacts x
100 shares). The customer’s equity decreases to $3,615 ($4,290 – $675). The new nominal
value of the contract is $20,775 (69.25 x 3 contracts x 100 shares). If the maintenance margin
rate is 20% of the nominal value, then the customer’s maintenance margin requirement would
be $4,155. Because the customer’s equity had decreased to $3,615 (see above), the customer
would be required to have an additional $540 in margin ($4,155 – $3,615).

Alternatively, assume that the next day the settlement price of EJG security futures rises
to 75.00. The mark-to-market gain in the customer’s equity is $1,050 (75.00 – 71.50 x 3
contacts x 100 shares). The customer’s equity increases to $5,340 ($4,290 + $1,050). The new
nominal value of the contract is $22,500 (75.00 x 3 contracts x 100 shares). If the maintenance
margin rate is 20% of the nominal value, then the customer’s maintenance margin requirement
would be $4,500. Because the customer’s equity had increased to $5,340 (see above), the
customer’s excess equity would be $840.

The process is exactly the same for a short position, except that margin calls are
generated as the settlement price rises rather than as it falls. This is because the customer's
equity decreases as the settlement price rises and increases as the settlement price falls.

Because the margin deposit required to open a security futures position is a fraction of
the nominal value of the contracts being purchased or sold, security futures contracts are said to
be highly leveraged. The smaller the margin requirement in relation to the underlying value of
the security futures contract, the greater the leverage. Leverage allows exposure to a given
quantity of an underlying asset for a fraction of the investment needed to purchase that quantity
outright. In sum, buying (or selling) a security futures contract provides the same dollar and
cents profit and loss outcomes as owning (or shorting) the underlying security. However, as a
percentage of the margin deposit, the potential immediate exposure to profit or loss is much
higher with a security futures contract than with the underlying security.

For example, if a security futures contract is established at a price of $50, the contract
has a nominal value of $5,000 (assuming the contract is for 100 shares of stock). The margin

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requirement may be as low as 20%. In the example just used, assume the contract price rises
from $50 to $52 (a $200 increase in the nominal value). This represents a $200 profit to the
buyer of the security futures contract, and a 20% return on the $1,000 deposited as margin. The
reverse would be true if the contract price decreased from $50 to $48. This represents a $200
loss to the buyer, or 20% of the $1,000 deposited as margin. Thus, leverage can either benefit
or harm an investor.

Note that a 4% decrease in the value of the contract resulted in a loss of 20% of the
margin deposited. A 20% decrease would wipe out 100% of the margin deposited on the
security futures contract.

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 Section 5 – Settlement

If you do not liquidate your position prior to the end of trading on the last day before the
expiration of the security futures contract, you are obligated to either 1) make or accept a cash
payment (“cash settlement”) or 2) deliver or accept delivery of the underlying securities in
exchange for final payment of the final settlement price (“physical delivery”). The terms of the
contract dictate whether it is settled through cash settlement or by physical delivery.

The expiration of a security futures contract is established by the exchange on which the
contract is listed. On the expiration day, security futures contracts cease to exist. Typically, the
last trading day of a security futures contract will be the third Friday of the expiring contract
month, and the expiration day will be the following Saturday. This follows the expiration
conventions for stock options and broad-based stock indexes. Please keep in mind that the
expiration day is set by the listing exchange and may deviate from these norms.

5.1. Cash settlement

In the case of cash settlement, no actual securities are delivered at the expiration of the
security futures contract. Instead, you must settle any open positions in security futures by
making or receiving a cash payment based on the difference between the final settlement price
and the previous day’s settlement price. Under normal circumstances, the final settlement price
for a cash-settled contract will reflect the opening price for the underlying security. Once this
payment is made, neither the buyer nor the seller of the security futures contract has any further
obligations on the contract.

5.2. Settlement by physical delivery

Settlement by physical delivery is carried out by clearing brokers or their agents with
National Securities Clearing Corporation (“NSCC”), an SEC-regulated securities clearing
agency. Such settlements are made in much the same way as they are for purchases and sales
of the underlying security. Promptly after the last day of trading, the regulated exchange’s
clearing organization will report a purchase and sale of the underlying stock at the previous
day’s settlement price (also referred to as the “invoice price”) to NSCC. In general, if NSCC
does not reject the transaction by a time specified in its rules, settlement is effected pursuant to
the rules of the exchange and NSCC's Rules and Procedures within the normal clearance and
settlement cycle for securities transactions, which currently is three business days. However,
settlement may be effected on a shorter timeframe based on the rules of the exchange and
subject to NSCC's Rules and Procedures.

If you hold a short position in a physically settled security futures contract to expiration,
you will be required to make delivery of the underlying securities. If you already own the
securities, you may tender them to your brokerage firm. If you do not own the securities, you will
be obligated to purchase them. Some brokerage firms may not be able to purchase the
securities for you. If your brokerage firm cannot purchase the underlying securities on your
behalf to fulfill a settlement obligation, you will have to purchase the securities through a
different firm.

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 Section 6 – Customer Account Protections

Positions in security futures contracts may be held either in a securities account or in a

futures account. Your brokerage firm may or may not permit you to choose the types of account
in which your positions in security futures contracts will be held. The protections for funds
deposited or earned by customers in connection with trading in security futures contracts differ
depending on whether the positions are carried in a securities account or a futures account. If
your positions are carried in a securities account, you will not receive the protections available
for futures accounts. Similarly, if your positions are carried in a futures account, you will not
receive the protections available for securities accounts. You should ask your broker which of
these protections will apply to your funds.

You should be aware that the regulatory protections applicable to your account are not
intended to insure you against losses you may incur as a result of a decline or increase in the
price of a security futures contract. As with all financial products, you are solely responsible for
any market losses in your account.

Your brokerage firm must tell you whether your security futures positions will be held in a
securities account or a futures account. If your brokerage firm gives you a choice, it must tell
you what you have to do to make the choice and which type of account will be used if you fail to
do so. You should understand that certain regulatory protections for your account will depend on
whether it is a securities account or a futures account.

6.1. Protections for Securities Accounts

If your positions in security futures contracts are carried in a securities account, they are
covered by SEC rules governing the safeguarding of customer funds and securities. These rules
prohibit a broker/dealer from using customer funds and securities to finance its business. As a
result, the broker/dealer is required to set aside funds equal to the net of all its excess payables
to customers over receivables from customers. The rules also require a broker/dealer to
segregate all customer fully paid and excess margin securities carried by the broker/dealer for
customers.

The Securities Investor Protection Corporation (SIPC) also covers positions held in
securities accounts. SIPC was created in 1970 as a non-profit, non-government, membership
corporation, funded by member broker/dealers. Its primary role is to return funds and securities
to customers if the broker/dealer holding these assets becomes insolvent. SIPC coverage
applies to customers of current (and in some cases former) SIPC members. Most
broker/dealers registered with the SEC are SIPC members; those few that are not must disclose
this fact to their customers. SIPC members must display an official sign showing their
membership. To check whether a firm is a SIPC member, go to www.sipc.org, call the SIPC
Membership Department at (202) 371-8300, or write to SIPC Membership Department,
Securities Investor Protection Corporation, 805 Fifteenth Street, NW, Suite 800, Washington,
DC 20005-2215.

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 SIPC coverage is limited to $500,000 per customer, including up to $100,000 for cash.
For example, if a customer has 1,000 shares of XYZ stock valued at $200,000 and $10,000
cash in the account, both the security and the cash balance would be protected. However, if the
customer has shares of stock valued at $500,000 and $100,000 in cash, only a total of
$500,000 of those assets will be protected.

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 customer funds placed with a broker/dealer just to earn interest. Insiders of the
broker/dealer, such as its owners, officers, and partners, are not customers for purposes of
SIPC coverage.

6.2. Protections for Futures Accounts

If your security futures positions are carried in a futures account, they must be
segregated from the brokerage firm's own funds and cannot be borrowed or otherwise used for
the firm’s own purposes. If the funds are deposited with another entity (e.g., a bank, clearing
broker, or clearing organization), that entity must acknowledge that the funds belong to
customers and cannot be used to satisfy the firm’s debts. Moreover, although a brokerage firm
may carry funds belonging to different customers in the same bank or clearing account, it may
not use the funds of one customer to margin or guarantee the transactions of another customer.
As a result, the brokerage firm must add its own funds to its customers’ segregated funds to
cover customer debits and deficits. Brokerage firms must calculate their segregation
requirements daily.

You may not be able to recover the full amount of any funds in your account if the
brokerage firm becomes insolvent and has insufficient funds to cover its obligations to all of its
customers. However, customers with funds in segregation receive priority in bankruptcy
proceedings. Furthermore, all customers whose funds are required to be segregated have the
same priority in bankruptcy, and there is no ceiling on the amount of funds that must be
segregated for or can be recovered by a particular customer.

Your brokerage firm is also required to separately maintain funds invested in security
futures contracts traded on a foreign exchange. However, these funds may not receive the
same protections once they are transferred to a foreign entity (e.g., a foreign broker, exchange
or clearing organization) to satisfy margin requirements for those products. You should ask your
broker about the bankruptcy protections available in the country where the foreign exchange (or
other entity holding the funds) is located.

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 Section 7 – Special Risks for Day Traders

Certain traders who pursue a day trading strategy may seek to use security futures
contracts as part of their trading activity. Whether day trading in security futures contracts or
other securities, investors engaging in a day trading strategy face a number of risks.

Day trading in security futures contracts requires in-depth knowledge of the securities and
futures markets and of trading techniques and strategies. In attempting to profit through day
trading, you will compete with professional traders who are knowledgeable and
sophisticated in these markets. You should have appropriate experience before engaging in
day trading.

Day trading in security futures contracts can result in substantial commission charges, even
if the per trade cost is low. The more trades you make, the higher your total commissions
will be. The total commissions you pay will add to your losses and reduce your profits. For
instance, assuming that a round-turn trade costs $16 and you execute an average of 29
round-turn transactions per day each trading day, you would need to generate an annual
profit of $111,360 just to cover your commission expenses.

Day trading can be extremely risky. Day trading generally is not appropriate for someone of
limited resources and limited investment or trading experience and low risk tolerance. You
should be prepared to lose all of the funds that you use for day trading. In particular, you
should not fund day trading activities with funds that you cannot afford to lose.

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 Section 8 – Other

8.1. Corporate Events

As noted in Section 2.4, an equity security represents a fractional ownership interest in

the issuer of that security. By contrast, the purchaser of a security futures contract has only a
contract for future delivery of the underlying security. Treatment of dividends and other
corporate events affecting the underlying security may be reflected in the security futures
contract depending on the applicable clearing organization rules. Consequently, individuals
should consider how dividends and other developments affecting security futures in which they
transact will be handled by the relevant exchange and clearing organization. The specific
adjustments to the terms of a security futures contract are governed by the rules of the
applicable clearing organization. Below is a discussion of some of the more common types of
adjustments that you may need to consider.

Corporate issuers occasionally announce stock splits. As a result of these splits, owners
of the issuer’s common stock may own more shares of the stock, or fewer shares in the case of
a reverse stock split. The treatment of stock splits for persons owning a security futures contract
may vary according to the terms of the security futures contract and the rules of the clearing
organization. For example, the terms of the contract may provide for an adjustment in the
number of contracts held by each party with a long or short position in a security future, or for an
adjustment in the number of shares or units of the instrument underlying each contract, or both.

Corporate issuers also occasionally issue special dividends. A special dividend is an

announced cash dividend payment outside the normal and customary practice of a corporation.
The terms of a security futures contract may be adjusted for special dividends. The adjustments,
if any, will be based upon the rules of the exchange and clearing organization. In general, there
will be no adjustments for ordinary dividends as they are recognized as a normal and customary
practice of an issuer and are already accounted for in the pricing of security futures. However,
adjustments for ordinary dividends may be made for a specified class of security futures
contracts based on the rules of the exchange and the clearing organization.

Corporate issuers occasionally may be involved in mergers and acquisitions. Such

events may cause the underlying security of a security futures contact to change over the
contract duration. The terms of security futures contracts may also be adjusted to reflect other
corporate events affecting the underlying security.

8.2. Position Limits and Large Trader Reporting

All security futures contracts trading on regulated exchanges in the United States are
subject to position limits or position accountability limits. Position limits restrict the number of
security futures contracts that any one person or group of related persons may hold or control in
a particular security futures contract. In contrast, position accountability limits permit the
accumulation of positions in excess of the limit without a prior exemption. In general, position
limits and position accountability limits are beyond the thresholds of most retail investors.

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Whether a security futures contract is subject to position limits, and the level for such limits,
depends upon the trading activity and market capitalization of the underlying security of the
security futures contract.

Position limits apply are required for security futures contracts that overlie a security that
has an average daily trading volume of 20 million shares or fewer. In the case of a security
futures contract overlying a security index, position limits are required if any one of the securities
in the index has an average daily trading volume of 20 million shares or fewer. Position limits
also apply only to an expiring security futures contract during its last five trading days. A
regulated exchange must establish position limits on security futures that are no greater than
13,500 (100 share) contracts, unless the underlying security meets certain volume and shares
outstanding thresholds, in which case the limit may be increased to 22,500 (100 share)
contracts.

For security futures contracts overlying a security or securities with an average trading
volume of more than 20 million shares, regulated exchanges may adopt position accountability
rules. Under position accountability rules, a trader holding a position in a security futures
contract that exceeds 22,500 contracts (or such lower limit established by an exchange) must
agree to provide information regarding the position and consent to halt increasing that position if
requested by the exchange.

Brokerage firms must also report large open positions held by one person (or by several
persons acting together) to the CFTC as well as to the exchange on which the positions are
held. The CFTC’s reporting requirements are 1,000 contracts for security futures positions on
individual equity securities and 200 contracts for positions on a narrow-based index. However,
individual exchanges may require the reporting of large open positions at levels less than the
levels required by the CFTC. In addition, brokerage firms must submit identifying information on
the account holding the reportable position (on a form referred to as either an “Identification of
Special Accounts Form” or a “Form 102”) to the CFTC and to the exchange on which the
reportable position exists within three business days of when a reportable position is first
established.

8.3. Transactions on Foreign Exchanges

U.S. customers may not trade security futures on foreign exchanges until authorized by
U.S. regulatory authorities. U.S. regulatory authorities do not regulate the activities of foreign
exchanges and may not, on their own, compel enforcement of the rules of a foreign exchange or
the laws of a foreign country. While U.S. law governs transactions in security futures contracts
that are effected in the U.S., regardless of the exchange on which the contracts are listed, the
laws and rules governing transactions on foreign exchanges vary depending on the country in
which the exchange is located.

8.4. Tax Consequences

For most taxpayers, security futures contracts are not treated like other futures
contracts. Instead, the tax consequences of a security futures transaction depend on the status
of the taxpayer and the type of position (e.g., long or short, covered or uncovered). Because of

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the importance of tax considerations to transactions in security futures, readers should consult
their tax advisors as to the tax consequences of these transactions.

Section 9 – Glossary of Terms

This glossary is intended to assist customers in understanding specialized terms used in

the futures and securities industries. It is not inclusive and is not intended to state or suggest the
legal significance or meaning of any word or term.

Arbitrage – taking an economically opposite position in a security futures contract on another

exchange, in an options contract, or in the underlying security.

Broad-based security index – a security index that does not fall within the statutory definition
of a narrow-based security index (see Narrow-based security index). A future on a broad-based
security index is not a security future. This risk disclosure statement applies solely to security
futures and generally does not pertain to futures on a broad-based security index. Futures on a
broad-based security index are under exclusive jurisdiction of the CFTC.

Cash settlement – a method of settling certain futures contracts by having the buyer (or long)
pay the seller (or short) the cash value of the contract according to a procedure set by the
exchange.

Clearing broker – a member of the clearing organization for the contract being traded. All
trades, and the daily profits or losses from those trades, must go through a clearing broker.

Clearing organization – a regulated entity that is responsible for settling trades, collecting
losses and distributing profits, and handling deliveries.

Contract – 1) the unit of trading for a particular futures contract (e.g., one contract may be 100
shares of the underlying security), 2) the type of future being traded (e.g., futures on ABC
stock).

Contract month – the last month in which delivery is made against the futures contract or the
contract is cash-settled. Sometimes referred to as the delivery month.

Day trading strategy – an overall trading strategy characterized by the regular transmission by
a customer of intra-day orders to effect both purchase and sale transactions in the same
security or securities.

EDGAR – the SEC's Electronic Data Gathering, Analysis, and Retrieval system maintains
electronic copies of corporate information filed with the agency. EDGAR submissions may be
accessed through the SEC’s Web site, www.sec.gov.

Futures contract – a futures contract is (1) an agreement to purchase or sell a commodity for
delivery in the future; (2) at a price determined at initiation of the contract; (3) that obligates
each party to the contract to fulfill it at the specified price; (4) that is used to assume or shift risk;
and (5) that may be satisfied by delivery or offset.

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Hedging – the purchase or sale of a security future to reduce or offset the risk of a position in
the underlying security or group of securities (or a close economic equivalent).

Illiquid market – a market (or contract) with few buyers and/or sellers. Illiquid markets have
little trading activity and those trades that do occur may be done at large price increments.

Liquidation – entering into an offsetting transaction. Selling a contract that was previously
purchased liquidates a futures position in exactly the same way that selling 100 shares of a
particular stock liquidates an earlier purchase of the same stock. Similarly, a futures contract
that was initially sold can be liquidated by an offsetting purchase.

Liquid market – a market (or contract) with numerous buyers and sellers trading at small price
increments.

Long – 1) the buying side of an open futures contact, 2) a person who has bought futures
contracts that are still open.

Margin – the amount of money that must be deposited by both buyers and sellers to ensure
performance of the person’s obligations under a futures contract. Margin on security futures
contracts is a performance bond rather than a down payment for the underlying securities.

Mark-to-market – to debit or credit accounts daily to reflect that day’s profits and losses.

Narrow-based security index – in general, and subject to certain exclusions, an index that has
any one of the following four characteristics: (1) it has nine or fewer component securities; (2)
any one of its component securities comprises more than 30% of its weighting; (3) the five
highest weighted component securities together comprise more than 60% of its weighting; or (4)
the lowest weighted component securities comprising, in the aggregate, 25% of the index’s
weighting have an aggregate dollar value of average daily trading volume of less than $50
million (or in the case of an index with 15 or more component securities, $30 million). A security
index that is not narrow-based is a “broad based security index.” (See Broad-based security
index).

Nominal value – the face value of the futures contract, obtained by multiplying the contract
price by the number of shares or units per contract. If XYZ stock index futures are trading at
$50.25 and the contract is for 100 shares of XYZ stock, the nominal value of the futures contract
would be $5025.00.

Offsetting – liquidating open positions by either selling fungible contracts in the same contract
month as an open long position or buying fungible contracts in the same contract month as an
open short position.

Open interest – the total number of open long (or short) contracts in a particular contract
month.

Open position – a futures contract position that has neither been offset nor closed by cash
settlement or physical delivery.

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Performance bond – another way to describe margin payments for futures contracts, which are
good faith deposits to ensure performance of a person’s obligations under a futures contract
rather than down payments for the underlying securities.

Physical delivery – the tender and receipt of the actual security underlying the security futures
contract in exchange for payment of the final settlement price.

Position – a person’s net long or short open contracts.

Regulated exchange – a registered national securities exchange, a national securities

association registered under Section 15A(a) of the Securities Exchange Act of 1934, a
designated contract market, a registered derivatives transaction execution facility, or an
alternative trading system registered as a broker or dealer.

Security futures contract – a legally binding agreement between two parties to purchase or
sell in the future a specific quantify of shares of a security (such as common stock, an
exchange-traded fund, or ADR) or a narrow-based security index, at a specified price.

Settlement price – 1) the daily price that the clearing organization uses to mark open positions
to market for determining profit and loss and margin calls, 2) the price at which open cash
settlement contracts are settled on the last trading day and open physical delivery contracts are
invoiced for delivery.

Short – 1) the selling side of an open futures contract, 2) a person who has sold futures
contracts that are still open.

Speculating – buying and selling futures contracts with the hope of profiting from anticipated
price movements.

Spread – 1) holding a long position in one futures contract and a short position in a related
futures contract or contract month in order to profit from an anticipated change in the price
relationship between the two, 2) the price difference between two contracts or contract months.

Stop limit order – an order that becomes a limit order when the market trades at a specified
price. The order can only be filled at the stop limit price or better.

Stop loss order – an order that becomes a market order when the market trades at a specified
price. The order will be filled at whatever price the market is trading at. Also called a stop order.

Tick – the smallest price change allowed in a particular contract.

Trader – a professional speculator who trades for his or her own account.

Underlying security – the instrument on which the security futures contract is based. This
instrument can be an individual equity security (including common stock and certain exchange-
traded funds and American Depositary Receipts) or a narrow-based index.

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Volume – the number of contracts bought or sold during a specified period of time. This figure
includes liquidating transactions.

April 2014

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 INTERACTIVE BROKERS DISCLOSURE STATEMENT
FOR BOND TRADING

THIS DISCLOSURE STATEMENT DISCUSSES THE CHARACTERISTICS AND RISKS OF TRADING BONDS THROUGH INTERACTIVE BROKERS.
BEFORE TRADING BONDS YOU SHOULD CONSIDER CONSULTING A FINANCIAL ADVISOR, WHO CAN PROVIDE ADVICE ON WHETHER
PARTICULAR INVESTMENTS SUIT YOUR FINANCIAL GOALS.

INTERACTIVE BROKERS MERELY PROVIDES EXECUTION AND CLEARING SERVICES AND DOES NOT PROVIDE SPECIFIC TRADING OR
INVESTMENT ADVICE. INTERACTIVE BROKERS WILL NOT MONITOR YOUR TRADES AND INVESTMENTS TO DETERMINE IF THEY ARE
APPROPRIATE FOR YOUR FINANCIAL NEEDS.

BEFORE TRADING ANY PARTICULAR BOND, YOU SHOULD UNDERSTAND THE EXACT TERMS AND CONDITIONS OF THE BOND, INCLUDING
ITS CREDIT RATING, ITS M A T U R I T Y , I T S R A T E , W H E T H E R I T I S C A L L A B L E , A N D O T H E R R E L E V A N T INFORMATION.

More information on bond trading can be found on the following website sponsored by the Bond Market Association: www.investinginbonds.com.

Section 1 – Characteristics of Bonds

1.1 – What is a bond?

A bond is a type of interest-bearing or discounted security usually issued by a government or corporation that obligates the issuer to pay the holder an amount
(usually at set intervals) and to repay the entire amount of the loan at maturity. It is another way for the issuer to generate money as opposed to
issuing stock.

1.2 – What are the types of bonds?

A. U.S. Government Bonds

Bonds issued by the U.S. government are called Treasuries. These are grouped into three categories: (1) Treasury bills; (2) Treasury notes; and (3)
Treasury bonds. They each have a different length of time until maturity. Income earned on Treasuries is exempt from state and local taxes, but
taxable by the federal government. Treasuries are considered to be the safest bond investments since the U.S. government backs them and it
is highly unlikely that a situation of default will occur. However, Treasuries with long maturities have more potential for inflation and credit
risk.

B. Municipal Bonds

Municipal bonds are debt obligations of state or local governments. The funds may be used to support general governmental needs or special
projects. Municipal bonds are considered riskier investments than Treasuries, but they are exempt from taxing by the federal government and
local governments often exempt their own citizens from taxes on its bonds. However, municipal bonds often have a lower coupon rate because of the tax
break.

C. Corporate Bonds

Corporate bonds are debt instruments issued by private corporations. They usually have four distinguishing characteristics: (1) they are taxable; (2)
they usually have a par value of $1000; (3) they have a term maturity (they become due all at once) and are paid for out of a sinking fund for that
purpose; and (4) they are traded on major exchanges with prices published in newspapers. Corporate bonds come in various maturities.
They are considered the riskiest of the bonds because there is much more of a credit risk with corporate bonds, but this usually means that
the bondholder will be paid a higher interest rate. Corporations with low credit ratings issue bonds too, and these are speculative products
called junk bonds.

Par value, or face amount, is usually $1000, but bond prices are quoted on $100. For example, a quote of 80 is a bond selling for $800. Amounts less
than $10 are quoted in eighths ($1.25). Therefore, a quote of 80 1/8 is equal to $801.25.

Convertible Bonds are bonds that may be converted into another form of corporate security, usually shares of common stock. Conversion only occurs at
specific times at specific prices under specific conditions and this will all be detailed at the time the bond is issued.

C. Zero-Coupon Bonds

These are bonds that do not pay interest periodically, but instead pay a lump sum of the principal and interest at maturity. However, these are usually
aggressively priced and are good for people who will need one lump sum of money at a particular time (e.g., those saving for college). Investors,
however, must pay taxes on the interest as it accrues, not when they receive it.
1.3 – Bond Ratings

Standard & Poor’s and Moody’s Investors Service assign credit ratings to governments and corporations which help determine the amount of interest paid.
The ratings for bonds are in the chart below. The ratings represent greater default risk as you read down the chart (see Section 2 for credit and other
risks associated with bonds).

Quality Moody’s Standard & Poor’s

Best Quality Aaa AAA
High Quality Aa AA
Upper-medium grade A A
Medium grade Baa BBB
Ba, B, Caa, Ca BB, B, CCC, CC
Junk
Bonds/Speculative/High Yield

Default - D

It is a good idea to track a bond’s rating as they are subject to change by factors that affect the company’s credit.

The ratings that appear for the bonds Interactive Brokers LLC offers are from sources Interactive Brokers LLC believes to be reliable, however,
Interactive Brokers LLC cannot guarantee accuracy.

Section 2 – General Risks of Bond Trading

Trading bonds may not be suitable for all investors. Although bonds are often thought to be c o ns e rv ati v e i nv es tm ents , t he r e ar e
num e ro us ri s k s i nv ol v ed i n bon d tr adi ng . If you are uncomfortable with any of the risks involved, you should not trade bonds.

There is a credit risk involved with trading bonds. When you purchase a corporate bond, you are lending money to a company. There is always
the risk that the issuer will go bankrupt. If this happens, you will not receive your investment back. This is a risk of which you must be aware. Credit
risk is figured into the pricing of bonds.

There is a prepayment risk involved. Prepayment risk involves the scenario where an issuer “calls” a bond. If this happens, your investment will be
paid back early. Certain bonds are callable and others are not, and this information is detailed in the prospectus. If a bond is callable, the
prospectus will detail a “yield-to-call” figure. Corporations may call their bonds when interest rates fall below current bond rates.

A “put” provision allows a bondholder to redeem a bond at par value before it matures. Investors may do this when interest rates are rising and they
can get higher rates elsewhere. The issuer will assign specific dates to take advantage of a put provision.

Prepayment risk is figured into the pricing of bonds.

There is a significant inflation risk when trading bonds. Inflation risk is the risk that the rate of the yield to call or maturity of the bond will not provide
a positive return over the rate of inflation for the period of the investment. In other words, if the rate of inflation for the period of an investment is
six percent and the yield to maturity of a bond is four percent, you will receive more money in interest and principal than you invested, but the value of
that money returned is actually less than what was originally invested in the bond. As the inflation rate rises, so do interest rates. Although the
yield on the bond increases, the price of the actual bond decreases. This is a risk of which you must be aware.

There is an interest rate risk associated with bonds. Changes in interest rates during the term of any bond may affect the market value of the bond prior
to call or the maturity date.

Section 3 – Risks of Trading Bonds Electronically

Interactive Brokers is an online, direct access brokerage firm that executes virtually all trades on electronic market centers. Interactive Brokers will post bids
and offers for bonds from various information sources and markets and will allow you to execute trades against those electronically-
displayed bond quotes.

Unlike the practice of many other brokers, Interactive Brokers will not make telephone calls to various bond dealers in seeking to execute your bond
orders. Rather, Interactive Brokers will provide you with direct access to electronic bond trading platforms.
Electronic trading has a number of inherent advantages (such as speed, low cost, and a clear audit trail) but it also has certain inherent
disadvantages. You should be aware that electronic bond trading platforms may have less liquidity or less advantageous prices than could
be offered telephonically by a bond dealer. In addition, electronic trading platforms are inherently vulnerable to technical errors and outages.

Section 4 – Margin

When a broker-dealer lends a customer part of the funds needed to purchase a security such as a bond, the term “margin” refers to the amount of cash, or
down payment, the customer is required to deposit. Bonds, like equity securities, may be traded on margin. Trading on margin is inherently
more risky than trading in fully-paid-for securities. For risks associated with margin trading, please see Interactive Brokers LLC’s “DISCLOSURE OF
RISKS OF MARGIN TRADING.”

Section 5 – Commissions and Mark-Ups

You will be charged a commission for bond trades executed through Interactive Brokers LLC. Interactive Brokers may execute your bond trade through or
against an affiliate of Interactive Brokers (such as Timber Hill LLC or another affiliate), which may charge a markup on trades such affiliate executes
as principal against your bond order.
 Interactive Brokers LLC General Disclosure on Mutual Funds

Important Information Regarding Mutual Funds

1. Interactive Brokers offers customers the ability to invest in certain mutual funds. By making a mutual
fund or mutual fund family available to customers, IB does not guarantee the appropriateness or
suitability of any mutual fund investment nor do we make any recommendation of any kind.

2. A mutual fund’s past performance is no indication of future results. A mutual fund’s performance can
change over time depending upon a variety of market conditions and share prices can fluctuate on a daily
basis. Your investment may be worth more or less than your original cost when you redeem your shares.

3. IB recommends that customers carefully read the fund’s prospectus prior to investing in the shares of a
mutual fund. The prospectus contains important information about the fund’s objectives, investment
strategies, risks and expenses. Customers may obtain a copy of a fund’s prospectus by contacting the fund
or visiting the fund’s website. Customers may also contact IB Customer Service at (877) 442-2757 to
request a prospectus. Please note, IB cannot verify or otherwise guarantee the accuracy or completeness of
any mutual fund prospectus, statement of additional information, report to shareholders or proxy
solicitation materials.

4. Certain mutual funds made available through IB invest in international securities. Internationally invested
mutual funds can carry certain risks, including, but not limited to, political and economic instability,
fluctuations in currency exchange rates, foreign taxes, and differences in regulatory requirements and
financial accounting standards. Prior to making an investment decision, customers are encouraged to
carefully read the prospectus of any mutual fund that invests internationally.

5. Some funds may require a minimum holding period for their shares. Some funds charge an early
redemption fee if they are sold before a stated holding period ends. Please refer to the fund’s prospectus to
see if these conditions apply.

6. As a mutual fund shareholder, you may receive taxable dividends and/or capital gains on your mutual
fund investment. IB does not provide tax advice. Mutual fund investors should consult with their tax
advisor in order to determine the impact of taxes on their mutual fund investment.

7. In addition to Interactive Broker's transaction fee for mutual fund transactions, some mutual funds
impose marketing and shareholder servicing fees (e.g., 12b-1 fees). Interactive Brokers may receive a
portion of these fees as compensation for shareholder and marketing services rendered. For information
regarding a particular mutual fund's payment and compensation practices, please read the fund's
prospectus and statement of additional information or visit the fund's website. IB may share a portion of
the compensation received from fund companies with your financial advisor.

8. Mutual Fund Order Deadline. Please note that all mutual fund orders received prior to the close of the
New York Stock Exchange (generally, 4:00 p.m. EST) will receive the mutual fund’s NAV price for that
day provided the order is received on a trading day. Any mutual fund orders received after the close of the
New York Stock Exchange will receive the following trading day’s NAV share price. Any mutual fund
orders received on days when the New York Stock Exchange is closed (e.g., holidays) will receive the
following trading day’s NAV share price.

www.interactivebrokers.com Page 1 / 2
RISK DISCLOSURE REGARDING LEVERAGED AND INVERSE
FUNDS

Interactive Brokers ("IB") is furnishing this disclosure to customers in order to provide additional information
regarding the characteristics and risks associated with leveraged and inverse mutual funds and exchange
traded funds ("ETFs"). In addition to providing this disclosure, IB strongly encourages customers to carefully
review the fund's prospectus before investing in a specific fund.
LEVERAGED FUNDS

As the name implies, leveraged mutual funds and ETFs seek to provide leveraged returns at multiples of the
underlying benchmark or index they track. Leveraged funds generally seek to provide a multiple (i.e., 200%,
300%) of the daily return of an index or other benchmark for a single day excluding fees and other expenses. In
addition to using leverage, these funds often use derivative products such as swaps, options, and futures
contracts to accomplish their objectives. The use of leverage as well as derivative instruments can cause
leveraged funds to be more volatile and subject to extreme price movements.
INVERSE FUNDS
Inverse mutual funds and ETFs, which are sometimes referred to as "short" funds, seek to provide the opposite
of the performance of the index or benchmark they track. Inverse funds are often marketed as a way to profit
from, or hedge exposure to, downward moving markets. Some inverse funds also use leverage, such that they
seek to achieve a return that is a multiple of the opposite performance of the underlying index or benchmark
(i.e., -200%, -300%). In addition to leverage, these funds may also use derivative instruments to accomplish
their objectives. As such, inverse funds are volatile and provide the potential for significant losses.
RISKS ASSOCIATED WITH LEVERAGED AND INVERSE FUNDS
Leveraged and inverse funds are complicated instruments that should only be used by sophisticated investors
who fully understand the terms, investment strategy and risks associated with the funds. In particular,
customers should be aware of certain specific risks involved in trading in leveraged and inverse funds. These
risks include, but are not limited to:
Use of Leverage and Derivative Instruments: Many leveraged and inverse funds use leverage and derivative
instruments to achieve their stated investment objectives. As such, these funds can be extremely volatile and
carry a high risk of substantial losses. Such funds are considered speculative investments and should only be
used by investors who fully understand the risks and are willing and able to absorb potentially significant
losses.
Most Leveraged and Inverse Funds Seek Daily Target Returns: Most leveraged and inverse funds "reset" daily,
meaning that they are designed to achieve their stated objectives on a daily basis. Due to the effect of
compounding, the return for investors who invest for a period different than one trading day may vary
significantly from the fund's stated goal as well as the target benchmark's performance. This is especially true
in very volatile markets or if a leveraged fund is tracking a very volatile underlying index. Investments in
leveraged and inverse funds must be actively monitored on a daily basis and are typically not appropriate for a
buy-and-hold strategy.

www.interactivebrokers.com Page 1 / 2
Higher Operating Expenses and Fees: Investors should be aware that leveraged funds typically rebalance their
portfolios on a daily basis in order to compensate for anticipated changes in overall market conditions. This
rebalancing can result in frequent trading and increased portfolio turnover. Leveraged and inverse funds will
therefore generally have higher operating expenses and investment management fees than other funds.
Tax Treatment of Leveraged and Inverse Funds May Vary: In some cases, leveraged and inverse funds may
generate their returns through the use of derivative instruments. Because derivatives are taxed differently from
equity or fixed-income securities, investors should be aware that these funds may not have the same tax
efficiencies as other funds.

www.interactivebrokers.com Page 2 / 2
 ISE Disclosure for Option Orders Over 500 Contracts

Interactive Brokers is required to provide to you the following disclosure regarding option orders
of over 500 contracts that may be executed using the International Securities Exchange (ISE)
Block Order Solicitation Mechanism:

When handling an order of 500 contracts or more on your behalf, Interactive Brokers may solicit
other parties to execute against your order and may thereafter execute your order using the
ISE’s 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 Exchange’s
participants, but will not receive partial price improvement. For further details on the operation of
this Mechanism, please refer to ISE Rule 716, which is available at www.iseoptions.com under
"Regulation - Rules."
PLEASE READ THE FOLLOWING CAREFULLY. IT MAY SIGNIFICANTLY IMPACT THE
SUCCESS OF YOUR TRADING ACTIVITY ON OPEN OUTCRY (PIT) MARKETS.

Certain exchanges to which you may route orders through Interactive Brokers (“IB”) are non-
electronic, open outcry market places. On such exchanges, orders submitted via the TWS will
be routed to the floor electronically but are thereafter delivered into the trading pits manually and
are subject to time disadvantages inherent with such markets. Trades execute when 2 brokers
meet in the trading pit and verbally agree on a trade price and other trade details.

Traders acting on these exchanges must be aware of the following:

 All order actions (new orders, modifications, cancellations) are subject to delays relating to
the delivery process. The delays are usually 30-60 seconds but can last several/many
minutes in busy conditions such as at the open or close of the trading session.

 Frequent order modifications (price or quantity) will often result in poor executions since a
modification requires that the pre-existing order be cancelled and a new order instated. If
modifications are submitted faster than they can be processed, there is a strong likelihood of
poor or missed executions.

 There is no time or price priority for orders. It is possible that an order will not be executed
even though trades are reported at, or better than, the expected price.

 Market orders may be executed at unfavorable prices. Use of market orders is permitted, but
not recommended.

 Cancelled orders may be executed. It is not uncommon that the report of an executed order
is delayed due to market volume. When the cancel request is sent, the pit broker is then
forced to report the status which may be “filled, too late to cancel”.

IB recognizes the limitations of open outcry trading as compared to electronic trading and has
designed the TWS system to remove as many of the problems as possible. Nevertheless,
traders should not expect a similar performance from the IB brokerage system for floor-traded
markets as for electronic markets.

I acknowledge the limitations of floor-traded markets and agree that IB will not be liable for
delays and errors outside of its control relating to the manual open outcry trading process.
 3073 | 06/16/2015

Notice Regarding Pre-Arranged Trading On U.S. Futures

Exchanges
Pre-arranged trading results when a discussion is held by market participants prior to trade execution
to ensure that a contra party will take the opposite side of a particular order. U.S. futures exchanges,
including, but not limited to, CME, CBOT, NYMEX, ICE-US, CFE, OneChicago and Nasdaq OMX Futures
have regulations regarding the execution of pre-arranged trades. Interactive Brokers customers are
responsible to know and abide by ALL exchange restrictions regarding pre-arranged trading.
Interactive Brokers customers should not engage in pre-arranged trading unless such transactions are
permitted by the relevant exchange. Customers should review the rules of each exchange to
determine whether, and under what circumstances, such transactions are permitted. For your
reference, various exchange rulebooks can be found at the following websites:
CME, CBOT, NYMEX
http://www.cmegroup.com/market-regulation/rulebook/
ICE Futures U.S.
https://www.theice.com/futures-us/regulation#Rulebook
CFE
http://cfe.cboe.com/aboutcfe/rules.aspx
OneChicago
http://www.onechicago.com/?page_id=4
Nasdaq OMX Futures
http://nasdaqomxphlx.cchwallstreet.com/nasdaqomxphlx/nqf/

www.interactivebrokers.com Page 1 / 1
FINANCIAL SERVICES GUIDE
Interactive Brokers LLC

This Financial Services Guide ("FSG") is dated 12 February 2014 and is issued by
Interactive Brokers LLC (ARBN 091 191 141; AFSL 245574) ("IB", "we", "our", "us")
IB has prepared this document pursuant to the requirements of the Corporations Act 2001 (Cth).
Section 1: Purpose & Content of the FSG
This FSG contains information that has been prepared without taking into account your objectives, financial
situation or needs. Accordingly you should consider the information provided having regard to your own particular
circumstances.
This FSG is an important document. It provides you with information to assist you in deciding whether to use any of
the financial services offered by IB. You should read it carefully and make sure you understand it.
This FSG contains information about:

• Our name and contact details;

• The financial services that we are authorised to provide;
• The cost of any financial services we offer;
• Any remuneration, commissions or other benefits that we or any other relevant person may be paid in relation to the
financial services which we provide;
• Details of any associations or relationships between us and any related person and issuers of financial products that
might reasonably be expected to be capable of influencing how we provide the financial services offered;
• Details of the complaint handling and dispute resolution procedures that we have in place;
• How to instruct us; and
• Details of the kind of compensation arrangements that we have in place.

Other documents you may receive from us

In addition to this FSG, we may be required to provide you with other documents.
We must provide you with a Product Disclosure Statement ("PDS") about a financial product when we recommend
that you acquire, or offer to issue or arrange the issue of, a financial product.
A PDS contains important information about the features, benefits, risks, costs, and taxation implications of the
relevant financial product that should assist you in deciding whether to acquire that financial product. We are not
required to give you a PDS if you are dealing in certain financial products such as ASX-quoted equity securities and
warrants.
IB does not solicit orders from customers and does not offer any personal advice or recommendations to customers.
Accordingly we will not provide you with a Statement of Advice ("SOA").
Section 2: Overview of IB
and its Services
1. Who are we?
IB is an affiliate of Interactive Brokers Group ("IBG"), which comprises of a number of automated global electronic
market makers and brokers that specialise in routing orders and executing and processing trades in securities,
futures and foreign exchange instruments. IBG affiliates conduct business on more than 60 electronic exchanges and
trading venues around the world. IB, using its proprietary software, provides non-advisory brokerage services to
professional traders and investors with direct access to stocks, options, futures, forex and bonds from a single IB

www.interactivebrokers.com Page 1 / 5
Universal AccountSM.
IB is a market participant of the ASX 24 market and the Chi-X Australia market. IB is not an ASX Market
Participant, however it engages its proprietary trading affiliate, Timber Hill Australia Pty Limited (ABN 25 079 993
534) ("THA"), which is an ASX Market Participant, as its executing broker in respect of transactions to be executed
on ASX.
IB is a wholesale client of THA and all IB client orders for ASX financial products routed through THA's connection
to the ASX Integrated Trading System use an electronic communications process dedicated to the routing of only IB
customer orders. THA receives a set fee per trade from IB for this service.
A full list of the products IB offers and the worldwide exchanges on which they are offered is available on the IB
website at www.interactivebrokers.com.
2. Financial services and financial products we offer
IB holds an Australian Financial Services Licence, under which we are authorised to:

• deal in:

◦ Securities;
◦ Derivatives; and
◦ Foreign exchange contracts; and

• provide custodial and depository services.

IB is authorised to provide the above financial services to retail and wholesale clients.
In relation to the custody of customer's securities, IB acts as custodian for these securities. In markets where IB does
not have direct access to the settlement system for the relevant securities markets, IB may appoint a sub-custodian to
hold these securities. For example, in relation to ASX quoted securities, IB has appointed a third party clearing and
settlement participant's nominee to hold securities in the ASX Settlement system for the benefit of IB, which in turn
holds them as custodian for the benefit of its customers who are entitled to those securities. Similar arrangements
may apply in other jurisdictions outside Australia. In relation to customer's positions in exchange traded derivatives
(such as futures and options), positions are held by IB for the benefit of its customers through clearing participants
of the relevant exchanges, where IB is not itself a clearing participant.
3. How you can send IB instructions and contact information
IB's Customers may route orders to IB through their Trader Workstation ("TWS"), Computer to Computer
Interface or an Application Programming Interface, by logging in through a secure username and password. As set
forth in the IB Customer Agreement, IB does not know whether an unauthorised person is entering orders with a
customer's user name/password. Customers are fully responsible for the confidentiality and use of their user name/
password and remain responsible for all transactions entered using their user name/password.
Customers may also contact IB Customer Service using the details below:
IB Head Office - U.S.
One Pickwick Plaza
Greenwich, CT 06830, U.S.
Telephone Numbers: 1-877-442-2757 (from inside the U.S.); 312-542-6901 (from outside the U.S.)
IB Australian Office
Grosvenor Place
Level 42, 225 George Street,
Sydney, NSW 2000
Telephone number: +61 (2) 8093 7300
e-mail: help@interactivebrokers.com

www.interactivebrokers.com Page 2 / 5
Additional contact information, including issue-specific details, is available at www.interactivebrokers.com.
Section 3: Fees and Charges
1. Commission and Fees
IB charges commission and fees when you buy or sell or enter into or close out most financial products.
The amount of commission or fees payable to IB depends on the pricing structure selected and the product traded.
For example, commission may be calculated as a percentage of the trade value with a set minimum charge per order,
or as a dollar amount per contract. Current commission and fee information for each pricing structure and type of
products is available on the IB website at www.interactivebrokers.com.
You may also request particulars of remuneration (including commission) or other benefits within a reasonable time
after receiving this FSG and before any financial service is provided. No IB employee earns a commission for the
trades that are self-directed by IB customers. All commissions are earned by the firm.
2. Other Fees and Charges
2.1 Interest Payable and Interest Charged
In certain circumstances, interest may be paid to you or charged to you.
Interest may be payable on credit balances. Factors which affect the amount of interest payable include the currency
in which the account is denominated and the amounts held in excess of your margin requirements. No interest is
payable on credit balances less than $10,000.00 USD or equivalent.
IB uses internationally recognised benchmarks on overnight deposits as a basis for determining interest rates. We
then apply a spread around the benchmark interest rate in tiers, such that larger cash balances receive increasingly
better rates, to determine an effective rate.
IB accrues interest on a daily basis and posts actual interest at the end of each month on the monthly statement. For
detailed examples on how we calculate interest, and for further information on how to read interest on your
statement, please go to the IB website at www.interactivebrokers.com.
Interest is charged when your account balance is in debit. The spreads and effective rates on credit balances, debit
balances and short sale proceed balances are shown in the tables on the IB website at www.interactivebrokers.com.
We also provide detailed examples on how we calculate interest and information on how to read interest on your
statement on that website.

2.2 Market Data, Fundamentals and News

If you require live data then depending on the product you are trading and where that product is based may then
you may be required to enter into a subscription agreement with the associated exchange. You are not required to
enter into a data subscription to open an account with IB.
Customers can subscribe to paid, real-time market data on exchanges around the world through Account
Management. The subscription fee for market data on each exchange offered through IB is listed on the IB website
at www.interactivebrokers.com.
In addition, IB provides free delayed data as available, for any product listed on an exchange to which you do not
subscribe. Delayed market data is managed in Trader Workstation ("TWS"), and ticker lines that use delayed data
are highlighted in yellow for emphasis. For details on managing delayed market data, see the TWS Users' Guide.
We also provide real-time fundamentals and news via subscription-activated Reuters Worldwide
Fundamentals and Reuters News Feed, along with various free RSS news feeds, all of which are seamlessly
integrated into the TWS trading application. The subscription fee for each of these services are listed on the IB
website at www.interactivebrokers.com.
There is no requirement to subscribe to market data in order to trade and customers are free to receive market data
from another IB account or data vendor, or to use only delayed market data.
Many exchanges classify customers as non-professional or professional. Exchange rules require that trusts and
organisations (e.g. corporations, partnerships, LLCs and unincorporated businesses) must be classified as
professional. NYSE and Amex Professional Market Data require prior approval from the exchange information.

www.interactivebrokers.com Page 3 / 5
2.3 Product-specific fees and charges
There may be fees and charges payable by you in respect of specific financial product which we issued to you. Our
PDS in respect of that financial product will contain information on any fees and charges relating to that financial
product.

2.4 Required Minimums

To use our service, there are certain "required minimums".There is arequired minimum deposit on opening an
account, a required minimum commission per month by way of an activity fee , and required minimum connection
fees for certain services as applicable. Details of these "required minimums" are as set out on the IB website at
www.interactivebrokers.com.

2.5 Advisor Client Markups

Advisors may charge their clients for services rendered either through automatic billing, electronic invoice or direct
billing. The available billing methods including caps and limitations are described at the IB website at
www.interactivebrokers.com.
Section 4: Associations/Relationships & Potential Conflicts of Interest
Neither IB nor any related bodies corporate have any relationships or associations with any product issuer that
could reasonably be expected to be capable of influencing us in the provision of financial services. Similarly, IB does
not act under any binder in providing any authorised services. Unless otherwise disclosed, IB generally acts on its
own behalf when providing financial services to you. The relationship between IB and THA is as disclosed in Section
2 of this FSG.
Section 5: Dispute Resolution
If you have a complaint about the services provided to you by IB, you should take the following steps to ensure that
your complaint is handled efficiently.
We encourage you to send your complaint via Account Management for the most expedient and efficient handling.
This can be done by clicking on "Inquiry Ticket." Under "New Ticket" select the following:
Category: Other Regulatory
Sub-category: Submit a Complaint
Alternatively, customers may send their complaints to:

• help@interactivebrokers.com;
• by telephone to the customer service telephone numbers listed on the IB website at www.interactivebrokers.com; or
• by hard copy addressed to:

The Complaint Officer

Legal & Compliance Department-Asia
Interactive Brokers Group
Grosvenor Place
Level 42, 225 George Street, Sydney, NSW 2000
IB will attempt to resolve your complaint and will notify you of any proposed resolution.
If your complaint is not resolved to your satisfaction, you may lodge a written complaint to the Financial
Ombudsman Service ("FOS") of which IB is a member. This service is provided to you free of charge and the FOS
can be contacted as below:
Financial Ombudsman Services:
GPO Box 3, Melbourne, Victoria 3001
Telephone 1300 780 808
Facsimile 9613 6399
Internet: www.fos.org.au
You may also refer the matter to the Australian Securities and Investments Commission ("ASIC"). ASIC may be
contacted on their Infoline on 1300 300 630.
Alternatively, customers who wish to file a complaint with, or initiate an arbitration or reparations proceeding

www.interactivebrokers.com Page 4 / 5
 against, IB, may consult the website of, or contact, a Self-Regulatory Organisation ("SRO"), e.g., the Securities and
Exchange Commission (www.sec.gov), the Financial Industry Regulatory Authority (www.finra.org), the National
Futures Association (www.nfa.futures.org), the Commodity Futures Trading Commission (www.cftc.gov).
Section 6: Compensation Arrangements
IB is covered by a professional indemnity insurance policy ("Policy") which satisfies the requirements of section
912B of the Corporations Act.
Subject to its terms and conditions, this Policy may cover losses or damages suffered by retail clients as a result of breaches
by IB of the relevant obligations of IB under its Australian Financial Services Licence.

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 FUTURES
PRODUCT DISCLOSURE STATEMENT

INTERACTIVE BROKERS LLC

ARBN 091 191 141
AFSL Number: 245 574

Date of Issue: 5 February 2015

1
 INDEX

1. INTRODUCTION ................................................................................................3

1.1 Important information ................................................................................3

1.2 Purpose of this PDS .................................................................................3

2. ABOUT INTERACTIVE BROKERS ..........................................................................3

2.1 The issuer – Interactive Brokers LLC .............................................................3

2.2 The Interactive Brokers Group .....................................................................4
2.3 Contact details ........................................................................................4

3. KEY FEATURES OF FUTURES..............................................................................5

3.1 What are Futures? ...................................................................................5

3.2 Deliverable and cash settled futures ..............................................................5
3.3 Futures are an international product ..............................................................6
3.4 Duration of Futures ..................................................................................6
3.5 Futures are standardised ...........................................................................6
3.6 Execution arrangements for Futures ..............................................................6
3.7 The role of the clearing house .....................................................................6
3.8 Closing out ............................................................................................8
3.9 Futures Options & Options over the Underlying ................................................8
3.10 Clearing House Margin ............................................................................ 10
3.11 Initial Margin ........................................................................................ 10
3.12 Variation Margin .................................................................................... 10
3.13 Liability ............................................................................................... 11
3.14 Profit &loss when trading Futures ............................................................... 11
3.15 Margins & liability on Futures option contracts ................................................ 12
3.16 Profit & loss when trading Futures options ..................................................... 12
3.17 Out of the money Futures options ............................................................... 12
3.18 Settlement ........................................................................................... 12

4. IB'S MARGIN REQUIREMENTS ........................................................................... 14

5. SIGNIFICANT BENEFITS EXPLAINED ................................................................... 16

6. SIGNIFICANT RISKS EXPLAINED ........................................................................ 18

7. FEES AND CHARGES ....................................................................................... 21

7.1 Commissions ....................................................................................... 21

7.2 Referral mark ups and billings ................................................................... 21
7.3 Interest ............................................................................................... 21
7.4 Administrative fees and charges................................................................. 21
7.5 Taxes................................................................................................. 21
7.6 Market data, fundamentals and news........................................................... 21

8. DISPUTE RESOLUTION .................................................................................... 22

9. TAXATION IMPLICATIONS ................................................................................. 22

10. COOLING-OFF ARRANGEMENTS ....................................................................... 22

11. ACCOUNT OPENING ........................................................................................ 22

11.1 Required Minimums ............................................................................... 22

2
1. INTRODUCTION

1.1 Important information

The information in this Product Disclosure Statement (PDS) does not take into account
your personal objectives, financial situation and needs. Before trading in the products
referred to in this PDS you should read this PDS and be satisfied that any trading you
undertake in relation to those products is appropriate in view of your objectives,
financial situation and needs.

We recommend that you consult your financial adviser before trading in the products
referred to in this PDS.

1.2 Purpose of this PDS

Under the Corporations Act 2001 (Cth) (Corporations Act), a retail client must receive a
Product Disclosure Statement (PDS) from a financial services licensee at or before the time
the personal advice recommendation to acquire the financial product is made. Where no
personal advice is given, the PDS should be given to the retail client before the offer to acquire
the product is made.

This PDS has been prepared by Interactive Brokers LLC (IB) (when we use terms ‘we’, ‘us’ or
‘our’ in this PDS, the reference is to IB). This PDS sets out the significant features of a financial
product, including its risks, benefits and cost. This document is the PDS for:

(a) Futures (and Future options)

Exchange traded derivatives known as futures (Futures), a type of financial product

traded on a range of exchanges, including the market operated by the Australian
Securities Exchange Limited (ASX). For details of the exchanges on which you can
trade Futures through us (Relevant Exchanges), please see our website at
https://www.interactivebrokers.com.hk/en/index.php?f=products&p=fut; and

Futures are "derivatives" under the Corporations Act. For the purpose of this PDS, Futures will
be referred to as "Exchange Traded Derivatives". See sections 3 for more details regarding
Futures.

Before you trade Exchange Traded Derivatives you should, in conjunction with your adviser,
give consideration to your objectives, financial situation and needs. You should also be aware
of the risks involved and be satisfied that trading in Exchange Traded Derivatives is suitable
for you in view of your financial circumstances.

Note: Information in this PDS may be updated from time to time where that information
is not materially adverse to clients. IB may provide updated information on its website
at www.interactivebrokers.com. A copy of the updated information is also available
upon request free of charge by contacting IB. IB may be required to issue a
supplementary PDS as a result of certain changes, in particular where the changes are
materially adverse to retail clients considering investing in Exchange Traded
Derivatives.

2. ABOUT INTERACTIVE BROKERS

2.1 The issuer – Interactive Brokers LLC

IB is the issuer of the Exchange Traded Derivatives offered under this PDS.

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 IB holds an Australian financial services licence, number 245574, which authorises IB to deal
in Exchange Traded Derivatives.

IB is also regulated in the USA (by the Securities and Exchange Commission, the Financial
Industry Regulatory Authority and the New York Stock Exchange), in the United Kingdom (by
the Financial Conduct Authority) and in Hong Kong (by the Securities and Futures
Commission).

IB is a trading participant of the ASX 24 market operated by ASX (ASX 24). It is also a trading
participant of the financial market operated by Chi-X Australia. For information on the
execution, clearing and settlement arrangements which IB has in place for Exchange Traded
Derivatives, see sections 3.

2.2 The Interactive Brokers Group

IB is an affiliate of the Interactive Brokers Group (IBG) which comprises of a number of

automated global electronic market makers and brokers that specialise in routing orders and
executing and processing trades in securities, futures and foreign exchange instruments. IBG
affiliates conduct business on more than 60 electronic exchanges and trading venues around
the world. IBG, using its proprietary software, provides non-advisory brokerage services to
professional traders and investors with direct access to stocks, options, futures, foreign
exchange contracts and bonds.

IBG's headquarter is in Greenwich Connecticut, and it has about 880 employees in its offices
in the USA, Switzerland, Canada, Hong Kong, UK, Australia, Hungary, Russia, India, China
and Estonia.

2.3 Contact details

Our contact details are below:

Interactive Brokers LLC Head Office

One Pickwick Plaza
Greenwich, CT 06830

Telephone Numbers:
1-877-442-2757 (from inside the U.S.)
+1-312-542-6901 (from outside the U.S.)

IB - Australian Contact

Grosvenor Place
Level 42, 225 George Street,
Sydney, NSW 2000

Telephone numbers:
+61 (2) 8093 7300
e-mail: help@interactivebrokers.com

Additional contact information, including issue-specific details, is available at

http://individuals.interactivebrokers.com/en/p.php?f=customerService.

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3. KEY FEATURES OF FUTURES

The risk of loss in trading in Exchange Traded Derivatives can be substantial. It is

important that you carefully consider whether trading in Exchange Traded Derivatives
is appropriate for you in light of your investment objectives and financial
circumstances. Exchange Traded Derivatives are not suitable for some retail investors.
You should only trade Exchange Traded Derivatives if you understand the nature of the
products and the extent of your exposure to risks.

A description of the significant risks associated with trading in Exchange Traded

Derivatives is set out in section 7 of this PDS.

3.1 What are Futures?

A Futures contract is an agreement to buy or sell something (the underlying asset) at a

specified time in the future.

The underlying asset may be, for example:

(a) a specified amount of a security, such as shares in a company or government bond,

(b) a financial instrument, such as a bank bill,

(c) a stock index, such as the ASX24 SPI 200®, or

(d) a commodity of a given grade or quality, such as greasy wool.

The parties to a Futures contract may be required to deliver or take delivery of the underlying
asset at the time specified in the contract, where the contract provides for this.

Alternatively, the contract may provide for a cash adjustment to be made, based on a change
in the price of the underlying asset.

3.2 Deliverable and cash settled futures

There are two main types of Futures contracts.

 Deliverable contracts – where the seller agrees to deliver to the buyer, and the buyer
agrees to take delivery of, the quantity of the commodity described in the contract.

 Cash settled contracts – where the two parties make a cash adjustment between them
according to whether the price of a commodity, financial instrument or index has risen
or fallen since the time the arrangement was made.

IB does not generally permit its customers to make or take delivery of the commodity
underlying the Futures contract. It is therefore not advisable to enter into deliverable contracts
in the last weeks before maturity. If you intend to make or take delivery, first check with IB.
See section 3.18 for further information.

A Futures contract's terms are generally set out in the operating rules of the Relevant
Exchange on which the contract was made, which might be in Australia or overseas. This
document is intended to apply to any Futures contracts traded on a computer based exchange
unless otherwise indicated. There may, however, be differences in procedure and regulation
of markets from one country to another and one exchange to another.

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3.3 Futures are an international product

As noted above, Futures contracts are traded on ASX 24 and a number of Relevant Exchanges
overseas. Your obligations and requirements may differ according to the specific rules of the
Relevant Exchange, and you will need to understand how this affects you. It is therefore
important that you ask your broker for information about any Relevant Exchange on which you
wish to trade. See also section 6 below for more information.

3.4 Duration of Futures

Futures contracts may be made for periods of up to several years in the future. Part of the
standardisation of Futures contracts is that the contract maturity dates follow a pre-determined
cycle (standardisation is discussed in the next section). For example, in the SPI-200® contract
traded on the ASX 24, contracts can be made for settlement only in March, June, September
or December, but for up to 18 months from the time of the trade.

3.5 Futures are standardised

Futures traded on an exchange are standardised and interchangeable, meaning that futures
contracts of a particular class are perfect substitutes for each other.

A consequence of contract standardisation is that the price is the only factor that remains to
be determined in the marketplace. For example, on ASX 24, Futures are quoted and traded
on an electronic trading platform, which provides a system of continuous price discovery. This
means that the price at which trades take place may continually change throughout a trading
session. Most international Relevant Exchanges also provide electronic trading platforms for
Futures trading.

Since all Futures contracts for a given future month in the same market are interchangeable,
they can be closed out against an opposite position in the same contract. A trader who has
bought a given Futures contract can cancel the position by selling the same contract. The net
result is that the trader no longer holds a position. Similarly, a trader who has sold a given
Futures contract can cancel the position by buying the same contract.

In each case there will be a profit or loss equal to the difference between the buying and selling
prices multiplied by the standard contract amount – minus any transaction costs. In practice,
the vast majority of Futures contracts are offset in this manner ahead of the contract maturity
date, the remainder being fulfilled by delivery or cash settlement at maturity.

3.6 Execution arrangements for Futures

IB is a trading participant of ASX 24 and some, but not all, of the Relevant Exchanges. In
relation to Relevant Exchanges where IB is a direct participant, IB executes your transactions
in Futures directly on the Relevant Exchange. Where IB is not a direct participant, it arranges
for the execution of your transactions in Futures by such a direct participant.

3.7 The role of the clearing house

Relevant Exchanges will generally have a clearing house to clear and settle Futures contracts
entered into on the Relevant Exchange (Clearing House). Clearing Houses clear and settle
Futures contracts executed on the exchange. The primary role of the Clearing House is to
guarantee the settlement of obligations arising under the Futures contracts registered with it.
This means that when your broker buys or sells a Futures contract on your behalf, neither you
nor your broker needs to be concerned with the credit worthiness of the broker taking the other
side of the contract. See below for further discussion on the novation process that occurs at
the Clearing House.

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 The Clearing House will never deal directly with you, rather the Clearing House will only ever
deal with a Participant or member of a Clearing House (Clearing Participant). IB is not a
Clearing Participant of all relevant Clearing Houses. Where it is not a Clearing Participant, it
has an arrangement with a Clearing Participant of the relevant Clearing House to clear your
Futures contracts. Clearing Participants are bound by the operating rules of the relevant
Clearing House (Clearing Rules).

ASX 24's Clearing House is ASX Clear (Futures) Pty Ltd (ASX Clear (Futures)).

When a Futures contract is registered with the Clearing House, it is novated. This means that
the contract between the two brokers who made the trade is replaced by one contract between
the buying broker (or its Clearing Participant) and the Clearing House as seller; and one
contract between the selling broker (or its Clearing Participant) and the Clearing House as
buyer.

In simple terms, the Clearing House becomes the buyer to the selling broker, and the seller to
the buying broker (see diagram below).

Original trade

Buyer Seller

(novation)

Clearing Clearing House as Clearing House as Clearing

Participant Seller Buyer Participant

The Clearing House ensures that it is able to meet its obligation to Clearing Participants by
calling a deposit known as the "Initial Margin" and additional deposits known as "Variation
Margin" to cover any unrealised losses in the market. See sections 3.10 to 3.15 for further
information on margins.

Generally your Futures contracts (and those of other clients) will be held separately from
Futures contracts entered into by your broker on its own account. If your broker were to default
on its obligations to the Clearing House in respect of its own futures contracts, your futures
contracts will not be used to meet the broker's default. Rather the Clearing House will either
close out your contracts or attempt to transfer them to another broker.

In Australia, IB has arranged for ABN AMRO Clearing Sydney Pty Limited ABN 36 081 279
889 (AACS) to be the Clearing Participant for your Futures contracts. AACS holds an
Australian financial services licence, number 225136 which authorises it to clear Futures. In
accordance with the arrangements described above, AACS is the party to ASX 24 Futures
contracts registered with ASX Clear (Futures). AACS regards IB as its customer in respect of
these positions, and IB in turn holds the benefit of these positions for you, in accordance with
the terms of your customer agreement with IB. In other jurisdictions where IB is not the
Clearing Participant of the relevant Clearing House, similar arrangements are in place for IB
to hold the benefit of your positions for you.

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3.8 Closing out

Because of the system of registration and novation referred to above, closing out can be
achieved without going back to the original party with whom the Futures contract was traded.

When an existing buyer sells to close out their position, the sale transaction is registered with
the Clearing House in the manner described above.

Example

First trade A sells to B at $100 per unit

Novation Clearing House is now buyer to A

and seller to B

Second B sells to C at $120 per unit

trade

Novation Clearing House is now buyer to B

and seller to C

Resulting A has an open sold position

Positions C has an open bought position
B no longer has a position and has
realised a profit of $20 per unit
(ignoring transaction costs)

The contracts which B held (one to buy and one to sell) have been settled in cash between B
and the Clearing House; B simply receives the net profit. Any profit due to B is paid out by the
Clearing House in cash, even though the original seller (A) remains in the market.

3.9 Futures Options & Options over the Underlying

What is an option?

Option contracts traded over Futures contracts are commonly known as Futures options.
These are the most common type of option traded on a Relevant Exchange. Options over the
underlying are less common with the ASX 24 traded Cash Settled Intraday Options over the
ASX 24 SPI 200® and Eurex DAX® options being examples.

Following is an explanation of the nature of an option contract and of the obligations assumed
by option traders. Several concepts referred to previously are applicable to options (for
example, the concept of closing out). These facts will not be repeated, but only the facts
particular to Futures options are discussed.

(a) The buyer of a Futures option has the right, but not the obligation, to enter into a Futures
contract1 at the exercise price of the Futures option. For this right, the buyer pays the
option seller an option premium.

1
A bought position in the case of a call option, and a sold position in the case of a put option.

8
 (b) The seller of a Futures option assumes the obligation to enter into a Futures contract2
at the exercise price of the Futures option if the option is validly exercised. For taking
on this obligation, the seller receives an option premium.

Like Futures contracts, options are standardised and interchangeable, so that having bought
or sold an option it is possible to close it out before its expiry or exercise.

You must distinguish between Futures options and options over the underlying. If a Futures
option is exercised it results in the establishment of a Futures contract. If an option over the
underlying is exercised, it results in the transfer of the actual commodity underlying the option
(in the case of deliverable contracts), or a cash adjustment (in the case of cash settled
contracts).

The following matters can apply both to Futures options and to options over the underlying.
However the discussion will centre on Futures options.

European options & American options

An option will be expressed to be either a European style option or an American style option.

(a) European options can be exercised only on the date on which the option expires
(Expiry Date), not before.

(b) American options can be exercised at any time up to and including the Expiry Date.

The majority of options traded on ASX 24 are American options. Because American options
can be exercised at any time before the Expiry Date, the seller of an option must be prepared
for that option to be exercised at any time. The decision to exercise is in the option buyer's
hands.

Call Options & Put Options

A call option gives the buyer the right to buy a Futures contract at a designated price at or
before the Expiry Date of the option (Call Option). The seller of a Call Option has the
obligation to sell a Futures contract if the Futures option is exercised by the buyer.

A put option gives the buyer the right to sell a Futures contract at the exercise price (Put
Option). The seller of a Put Option has the obligation to purchase the Futures contract if the
Put Option is exercised by the buyer.

Exercising Call Options & Put Options

The table below sets out the results from the buyer's and seller's viewpoint when the buyer
exercises a Futures Call Option or Put Option:

Example

Buyer Exercises Effect on Seller

Bought Call Option -> Bought Futures Sold Call Option -> Sold Futures (at
(at the exercise the exercise price
price of the of the option)
option)

2
A sold position in the case of a call option, and a bought position in the case of a put option.

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 Buyer Exercises Effect on Seller

Bought Put Option -> Sold Futures (at Sold Put Option -> Bought Futures (at
the exercise the exercise price
price of the of the option)
option)

More information

Information concerning international Relevant Exchanges and the types of Futures contracts
traded on those exchanges can be found by visiting the relevant exchange's website. Please
contact us if you require any international Futures information. For further information
concerning Futures contracts traded on the ASX 24 you are referred to the ASX website at
"www.asx.com.au", where brochures regarding the various Futures contracts can be
downloaded.

3.10 Clearing House Margin

Sections 3.11 to 3.17 below contain a description of the basis upon which a Clearing House
calls margin from its Clearing Participants. The operating rules of Relevant Exchange and
Clearing Houses generally require Trading Participants and Clearing Participants respectively
to call margin from their clients. The margins which the Clearing House calls from the Clearing
Participant, or which the Clearing Participant calls from us, may or may not correspond with
the margin we call from you. For a description of our margin requirements and arrangements,
see section 4.

3.11 Initial Margin

To protect the financial security of the Clearing House until Variation Margins (discussed
below) are paid, each Clearing Participant is required to pay Initial Margin.

(a) Minimum Initial Margins are set by the Clearing House or the Relevant Exchange or
both, and may vary from time to time according to the volatility of the market. This
means that an Initial Margin may change after a position has been opened, requiring a
further payment (or refund).

(b) Initial Margins are calculated to cover the maximum expected movement in the market
from one day to the next. A broker is entitled to call a higher Initial Margin than the
minimum set. Liability for Initial Margin occurs at the time of the trade and your broker
may require you to pay it before any trading is conducted on your behalf.

(c) Trading Participants such as IB are generally required under the operating rules of the
Relevant Exchange to call an Initial Margin on each trade equal to at least the minimum
Initial Margin set by the Clearing House.

3.12 Variation Margin

Variation Margin must be paid in respect of a Futures contract showing a loss; i.e. if the market
falls after a purchase or rises after a sale. Losses can be incurred before a contract is closed
out, if the market moves against the position. Futures positions are re-valued on a daily basis,
and any deterioration in the position will result in Variation Margin being called.

Variation Margin is also paid by the Clearing House if the Futures contract shows a profit.

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 Example

The Initial Margin payable per ASX 24 SPI 200® Index Futures contracts is $10,000. The
contracts are valued at $25 per index point.

In the below example, the Initial Margin amount is $10,000 (this is set by the Clearing House).
On day 1, the market moves against the position and there is a requirement to pay $3,175 in
Variation Margin call. On day 2, the market moves in favour of the position and a Variation
Margin amount of $5,625 is receivable. On day 3 you decide to close out your contract, as the
market is moving against you again. You close out at 3,550 which means that you are required
to pay a further Variation Margin of $1,250.

Once the position has been closed out, the Initial Margin of $10,000 is returned and a net
Variation Margin profit of $1,200 has been realised.

Trade Market Initial Variation Margin

Closing Price Margin

Day One Buy 1 contract at 3,375 points $10,000 -125 points x $25
3,500 payable = $3,175
payable

Day Two 3,600 points +225 points x

$25 =
$5,625
receivable

Day Three Sell 1 contract at $10,000 -50 points x $25 =

3,550 receivable $1,250 payable

3.13 Liability

Given the above margin requirements, the liability under a Futures contract is not limited to the
Initial Margin.

(a) If, after paying the Initial Margin, the price moves against the position, further margin
(eg. Variation Margin) will be required.

(b) Initial Margin (unless eroded by losses) can be returned on settlement of the contract.

(c) Variation Margins that become realised losses when the position is closed out or settled
are not refundable.

(d) Variation Margins covering unrealised losses are not refundable unless there is a
favourable change of direction in market prices before settlement or closing out of the
Futures contract.

3.14 Profit &loss when trading Futures

The table below sets out profit and loss situations when trading Futures contracts.

Profitable Trades Losing Trades

Buy low – Sell high Buy high – Sell low

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 Profitable Trades Losing Trades

Sell high – Buy low Sell low – Buy high

3.15 Margins & liability on Futures option contracts

For a bought Futures option, the loss is limited to the option premium which was paid, which
is non-refundable.

For a bought option, if the full premium is paid at the time the option is traded, margins will not
be called. If only an initial deposit is paid, your margins may be called up to the full value of
the option premium (but no more).

For a sold Futures option, there is a similar liability to a holder of the underlying Futures
contract – that is, potentially unlimited. However, there is limited profit potential, as a seller
cannot earn more than the premium for which the option is sold.

For further information on our margin requirements, see section 4 below.

3.16 Profit & loss when trading Futures options

The table below sets out profit and loss situations when trading Call Options and Put Options.
It sets out the levels of the underlying Futures contract at the time of opening and closing the
option trade that will be favourable and unfavourable for the four basic option strategies.

Option trading is a complex area, and an option trader can suffer losses even if the price of
the underlying asset (in this case a Futures contract) moves favourably.

Strategy Profitable trades Unprofitable trades

Futures price - Futures price - Futures price - Futures price -

opening trade closing trade opening trade closing trade

Bought Low High High Same or lower

call
Bought put High Low Low Same or higher

Sold call High Same or lower Low High

Sold put Low Same or higher High Low

3.17 Out of the money Futures options

This is a term used to describe an option that cannot be exercised at a profit. An out-of-the-
money option is a Call Option whose exercise price is higher than the current market level or
a Put Option whose exercise price is below market.

If you are contemplating purchasing a Futures option that is significantly out-of-the-money, you
should be aware that the chance of such an option becoming profitable at expiry is remote.

3.18 Settlement

If you have a deliverable Futures contract open at the close of trading on the last day of trading
you will be under an obligation to deliver, or take delivery of and pay for, the commodities
described in the specifications. It is IB's policy not to permit its clients to make or take delivery

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 under a deliverable Futures contract (except where required by the Clearing House). If you
wish us to vary our policy, and you specifically wish to make or take delivery you must obtain
our prior written consent. It is your responsibility to monitor your open positions as the
deliverable Futures contract approaches settlement date and to close out any open position at
least two weeks prior to the settlement date. IB reserves the right, in its absolute discretion,
to close out any open position you hold in a deliverable Futures contract if you have not closed
out that Futures contract.

If you have a cash settled Futures contract open at the close of trading on the last day of
trading you will be under an obligation to pay or have a right to receive an amount of money
depending on the price movement.

The settlement of Futures options is more complex. For example, on the ASX 24 all in-the-
money3 or at-the-money4 options are automatically exercised by the Clearing House. The
resulting position is settled as a Futures position. Not all exchanges automatically exercise at-
the-money or in-the-money options at expiry, particularly US exchanges. Check with your
broker before the Expiry Date, or the option may lapse with the result it will be worthless.

The settlement procedures for options over the underlying are different again. Because these
instruments can be traded on Relevant Exchanges and stock exchanges the procedures can
vary widely.

3
A put option with an exercise price above the price of the underlying asset or a call option with an exercise price below
the price of the underlying asset.
4
Is a put or call option with an exercise price equal to the price of the subject matter of the option.

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4. IB'S MARGIN REQUIREMENTS

We have discussed above the margin requirements which are imposed by Relevant
Exchanges and Clearing Houses on Clearing Participants respectively. Where IB is the
Clearing Participant, it must meet these requirements directly to the Clearing House. Where
IB is not the Clearing Participant, the Clearing Participant imposes margin requirements on IB.
In any event IB imposes its own margin requirements on you under its customer agreement
with you. We discuss these in this section.

(a) Single universal account

When you open an Account with IB, you open a single account through which you can
trade not only Exchange Traded Derivatives, but other products such as shares,
exchange traded options and FX contracts. When we calculate your margin
requirement, we have regard to the assets and liabilities in your account as a whole.

(a) Risk based portfolio analysis

We determine the margin requirement for your Account by risk based portfolio
analysis models, also having regard to the margin called by Relevant Exchanges and
Clearing Houses. A summary with examples on how IB calculates Futures margins is
available via the following link to IB’s website:
https://www.interactivebrokers.com/en/index.php?f=marginnew&p=opt.

(b) Regulatory requirements

IB is regulated by the US regulators and is subject to strict regulation regarding the
amount of leverage it can extend to its customer and the amount of margin it is
required to call from its customers.

(c) Real-time margining and real-time monitoring

The value of assets and positions held in your Account is marked to market by IB's real-
time credit management system. IB uses a real-time risk management system to allow
you to see your trading risk at any moment of the day. Our real-time margin system
calculates margin requirements throughout the day for new trades and trades already
on the books and enforces initial margin requirements at the end of the day, with real-
time liquidation of positions instead of delayed margin calls. Your margin requirement
and current equity is monitored by IB and displayed online in real time to you via the
various trading interfaces, as well as the online client portal. For more information about
real-time margin monitoring, please visit our margin information page at
https://www.interactivebrokers.com/en/index.php?f=margin&p=overview2.

It is your responsibility to actively monitor and manage your open positions and
ensuring that you meet your margin obligations. It is also your responsibility to ensure
that you are aware of any changes in margin obligations. All margin requirements must
be met immediately. This means that sufficient cleared funds must be on deposit in your
account to enable you to meet margin requirements immediately.

(d) New positions must be covered in advance

IB's real-time margining means that you will not be able to execute a transaction if to
do so would cause your Account to go into margin deficit. For example, if your margin
requirement would increase as a result of an initial margin obligation under a Futures
contract, and there were insufficient assets in the Account to cover the initial margin
obligation, IB's system would reject an order to execute the transaction concerned.

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(e) Consequences of a margin deficit
Pursuant to your customer agreement, if your Account goes into margin call (that is, if
there are insufficient assets in your Account to cover the margin requirement), IB is
authorised to liquidate all, or part of, the assets held in your account, or otherwise close
your open positions to eliminate the shortfall. IB WILL NOTIFY YOU WHEN A MARGIN
DEFICIENCY ARISES, BUT IS NOT OBLIGED TO GIVE YOU AN OPPORTUNITY TO
PROVIDE FURTHER FUNDS. IB WILL INSTEAD GENERALLY LIQUIDATE
POSITIONS IN YOUR ACCOUNT IN ORDER TO SATISFY MARGIN
REQUIREMENTS. Any losses resulting from IB closing out your positions will be
debited to your account and you may be required to provide additional funds to IB to
cover any shortfall.

(f) Clients' Segregated Monies

Funds deposited by you with us are required to be deposited into a clients' segregated
account in accordance with the requirements of the Corporations Act. Unless otherwise
agreed with us, you waive the right to any interest on funds deposited with us. Money
or property deposited with us may only be invested according to the Corporations Act,
and such investments are at your sole risk.

For money deposited in a clients' segregated account, you acknowledge that:

(i) individual client accounts are not separated from each other;

(ii) all clients' funds may be deposited into one or more clients' segregated account;

(iii) clients' segregated account provisions may not insulate any individual client's
funds from a default in the clients' segregated account. Such a default may arise
from any client's trading;

(iv) assets in the clients' segregated account belonging to non-defaulting clients are
potentially at risk, even though they did not cause the default;

(v) we have the right to apply all clients' monies held in our clients' segregated
account to meet the default in that account; and

(vi) the Clearing House (in the case of the ASX 24 market) has the right to apply all
monies in the client clearing account (or house clearing account) to meet any
liabilities in the client clearing account.

Clients who trade on foreign Relevant Exchanges may not have the benefit of protective
measures provided by the Corporations Act and the operating rules of Australian
exchanges. In particular, your funds may not have the same protection as funds
deposited in Australia in a clients’ segregated account. As a regulated financial
services provider in the US, IB is also subject to strict US client money rules.

15
5. SIGNIFICANT BENEFITS EXPLAINED

There are a number of benefits in trading Exchange Traded Derivatives, including the
following:

(a) (Standardisation) As discussed in sections 3, because Exchange Traded Derivatives

are standardised and therefore interchangeable, you may through the Relevant
Exchange or Clearing House open and close positions, depending on the liquidity of
the market in the relevant contract.

(b) (Risk Management) Through the processes of novation and margining, the Clearing
House assumes and manages the risk of Exchange Traded Derivatives entered into on
the Relevant Exchange. This reduces counterparty risk in a way which is not available
in over-the-counter (OTC) derivatives transactions. IB has certainty that the other side
of the Exchange Traded Derivatives will be honoured, and we (and therefore you) will
not be subject to risk that the counterparty to the original Exchange Traded Derivatives
contract may default in their obligations under the contract.

(c) (Hedging) You can use Exchange Traded Derivatives to hedge exposure in the
underlying commodity, instrument or security.

(d) (Speculation) You can use Exchange Traded Derivatives to speculate on market
movements. Exchange Traded Derivatives allow you to gain exposure to a particular
underlying commodity, instrument or security without the need to buy or sell the
underlying itself.

(e) (Range of market positions and strategies) You can potentially profit both from rising
and from falling markets depending on the strategy you have employed. Through the
use of Exchange Traded Derivatives, strategies can be tailored to suit almost any
market view.

(f) (Leverage) Exchange Traded Derivatives generally involve a high degree of leverage.
Exchange Traded Derivatives enable you to outlay a relatively small amount of money
(in the form of Initial Margin) to secure an exposure to the underlying commodity,
instrument or security.

For example, assume you have a positive view about the prospects of XYZ Ltd. You can either
buy 1,000 XYZ Ltd shares at $10.00 and pay your broker $10,000 (plus costs) or you could
buy a Futures contract over 1,000 XYZ Ltd shares, and pay an Initial Margin at the time the
Exchange Traded Derivative is entered (which is likely to be a small percentage of the contract
value (plus costs)).

The same amount of exposure to the underlying shares has been achieved, but for a much
smaller outlay. Given a movement in the price of XYZ shares, the percentage returns (positive
or negative) from the Exchange Traded Derivatives strategy are likely to be much higher.

Assume, for example, the Futures contract price is $10.10, and the Initial Margin payable on
the above Futures position is 10%. Each contract covers 1000 shares. The following table
compares the returns, assuming that the XYZ share price rises to $11.00 by maturity
(transaction costs are ignored).

[Note: the example provided is for illustrative purposes only and does not necessarily
reflect the outcome of any actual trading in Futures in similar circumstances.]

This leverage can work against you as well as for you. The use of leverage can lead to
large losses as well as large gains. See section 6 for further information on risks.

16
 Shares Futures

Opening Share price Futures price

trade $10.00 $10.10

Buy 1,000 shares @ Buy 1 Futures contract

$10.00 @ $10.10
= $10,000
Pay 10% Initial Margin
= $1,010

Maturity Share price Futures price

$11.00 $11.00

Sell 1,000 shares @ Sell 1 Futures contract

$11.00 @ $11.00
= $11,000

Profit $1.00 x 1,000 = $0.90 x 1,000

$1,000 = $900

Percentage 10% 89%

return

17
6. SIGNIFICANT RISKS EXPLAINED

The risk of loss in trading in Exchange Traded Derivatives can be substantial. It is important
that you carefully consider whether trading in Exchange Traded Derivatives is appropriate for
you in light of your investment objectives and financial circumstances. Exchange Traded
Derivatives are not suitable for some retail investors. You should only trade Exchange Traded
Derivatives if you understand the nature of the products and the extent of your exposure to
risks.

You should be aware of the following matters:

(a) (Loss of Initial Margin) You could sustain a total loss of the Initial Margin that you
deposit with your broker to establish or maintain an Exchange Traded Derivative.

(b) (Payment of Variation Margin) If the Exchange Traded Derivative moves against your
position, you may be required, at short notice, to deposit with your broker Variation
Margin in order to maintain your position. Those additional funds may be substantial.
If you fail to provide those additional funds within the required time, your position may
be liquidated at a loss and you will be liable for any shortfall in your account resulting
from that failure.

(c) (Losses beyond margin lodged) You may sustain a total loss of the funds (Initial
Margin and Variation Margin amounts) that you deposit with us to establish or maintain
an Exchange Traded Derivative position. You may incur losses beyond the amounts
that you lodge with us. You should not risk more funds than you can afford to lose. A
good general rule is never to speculate with money which, if lost, would alter your
standard of living.

(d) (Leverage) The high degree of leverage that is obtainable in trading Exchange Traded
Derivatives can work against you as well as for you. The use of leverage can lead to
large losses as well as large gains.

Returning to the example of a Futures contract over XYZ shares used previously,
consider the result if the share price, instead of rising to $11.00, fell to $8.00 at maturity.
The following table shows the results (transaction costs are ignored).

Shares Futures

Opening Share price Futures price

trade $10.00 $10.10
Buy 1,000 shares Buy 1 Futures contract
@ $10.00 @ $10.10
= $10,000
Pay 10% Initial Margin
= $1,010

Maturity Share price Futures price

$8.00 $8.00
Sell 1,000 shares Sell 1 Futures contract @
@ $8.00 $8.00
= $8,000
Loss $2.00 x 1,000 $2.10 x 1,000
= $2,000 = $2,100

Percentage -20% -208%

return

18
 Leverage has served to multiply the loss suffered in percentage terms.

(e) (Liquidity) Under certain market conditions, it could become difficult or impossible for
you to close out a position, and the relationship between the prices of the Exchange
Traded Derivative and the underlying market may be distorted or affected. Examples
of when this may happen are:

(i) if there is a significant change in the price of the underlying commodity,

instrument or security over a short period of time;

(ii) if there are insufficient willing buyers and sellers in either the Exchange Traded
Derivative market or the underlying market;

(iii) if the Exchange Traded Derivative market is suspended or disrupted for any
reason.

Similarly, events such as these in relation to the market for the underlying asset may
make it difficult for you to hedge or maintain your exposure under an Exchange Traded
Derivative.

(f) (Deliverable contracts and physical delivery) Where you have a position in a
deliverable Futures contract and you hold this open position to maturity, you must be
prepared to make or take physical delivery of the underlying asset if your position is
matched. See section 3.18 for further information on the position regarding open
positions at and approaching maturity.

(g) (Placing orders in a moving market) The placing of contingent orders (such as a
'stop-loss' order)5 may not always limit your losses to the amounts that you may want.
Market conditions may make it impossible to execute such orders. For example, if the
price of the underlying asset moves suddenly, your order may not be filled, or may be
filled at a different price to that specified by you, and you may suffer losses as a result.

(h) (Strategies) A "spread" position (which involves the simultaneous purchase and sale
of Exchange Traded Derivatives is not necessarily less risky than a simple "Long" or
"Short" position.6

(i) (Options risk profile) If you propose to trade in Futures options, the maximum loss in
buying an option is the premium paid, but the risks in selling an option are essentially
unlimited.

(j) (System failures) You may experience losses due to Relevant Exchange or Clearing
House system failures which may affect systems used by participants. Participant
systems may also fail which means your trades may not be executed.

(k) (Market emergencies) You may incur losses that are caused by matters outside the
broker's control. For example, a regulatory authority exercising its powers during a
market emergency may result in losses. A regulatory authority can, in extreme
situations, suspend trading or alter the price at which a position is settled. This could
also result in a loss.

5
Is an order that becomes a market order (and hence executed) when the derivatives market reaches the designated
price.
6
A spread is the holding of bought Futures contract for one delivery month and a sold Futures contract for another
delivery month in the same contract.

19
 (l) (Market disruption) A market disruption may mean that you are unable to deal in an
Exchange Traded Derivative when desired, and you may suffer a loss as a result.
Common examples of disruption include the “crash” of the exchange electronic trading
system, fire or other exchange or Clearing House emergency.

(m) (Discretionary powers of Exchange and Clearing House) The Relevant Exchange
or Clearing House could exercise discretionary powers under their operating rules in
relation to the market. They have powers to declare an undesirable situation has
developed in a particular Exchange Traded Derivative and suspend trading.

(n) (Disputes and trade cancellations) When a trade is subject to dispute, the Relevant
Exchange may have powers to request that participants amend or cancel a trade, which
will in turn result in the Exchange Traded Derivative with the investor being amended
or cancelled. Exchanges may also exercise discretionary powers to cancel transactions
under their operating rules. These actions can affect your Exchange Traded Derivative
positions.

In additional to the above, if you intend to deal in Exchange Traded Derivatives on any foreign
Relevant Exchanges, you should also be aware of the following matters:

(o) (Differing exchange rules) You should be aware that when we place an order for you
on any overseas Relevant Exchange, or clear a trade for you at an overseas clearing
house, that trade will be subject to that exchange's or clearing house's rules. These
rules may differ significantly from the rules of Australian exchanges or clearing houses.

(p) (Australian regulators may not have any jurisdiction) Neither the Australian
Securities and Investments Commission nor Australian exchanges regulate activities of
oversea Relevant Exchanges, nor do they have the power to compel enforcement of
the operating rules of an overseas Relevant Exchange or any applicable foreign laws.
Generally, the foreign transaction will be governed by applicable foreign law. This is
true even if the Relevant Exchange is formally linked with an exchange in Australia.

(q) (Foreign exchange movements) If you trade on a foreign Relevant Exchange, the
Exchange Traded Derivatives will be denominated in foreign currencies (i.e. non-
AUD) and you will be subject to market and volatility risk of the foreign exchange
market. Foreign exchange markets can be highly volatile and are subject to many
influences including unforeseen events or changes in political, economic and financial
conditions which may result in rapid currency fluctuations leading to substantial
losses. These losses may be in addition to any losses on the Exchange Traded
Derivative itself.

20
7. FEES AND CHARGES

The following is a summary of the fees and charges associated with trading in Exchange
Traded Derivatives.

The fees and charges differ depending on the Relevant Exchange and Clearing House
concerned. We set out below references to various links on our website which provide more
detailed information on these fees and charges.

7.1 Commissions

We charge commission, at set flat rates, for the execution and close out of Exchange Traded
Derivatives.

See https://www.interactivebrokers.com.au/en/index.php?f=commission&p=futures for further

information in relation to Futures commissions.

7.2 Referral mark ups and billings

Advisers and/or brokers may charge their clients for services rendered either through
automatic billing, electronic invoice or direct billing. Your advisor/broker determines the referral
mark-up at the time of the registration, and this mark-up can be modified from time to time. At
the time of your Account registration, you will be given a notice with the details of your referrer
as well as the details of any mark ups charged. The available billing methods including caps
and limitations are described at the IB website at www.interactivebrokers.com.

7.3 Interest

If you have a debit balance on your Account after all fees and costs have been deducted (in
other words, you owe money to meet the margin requirement and other amounts) you must
pay interest on the debit balance. Interest is calculated daily based on your positions, margin
requirement and balances on your daily statement for that date. Interest is usually posted once
a month on your Account. This generally occurs within five business days following the end of
the month.

See https://www.interactivebrokers.com/en/index.php?f=interest&p=schedule2 for further

information and examples.

7.4 Administrative fees and charges

IB charges certain administrative fees for matters such as order cancellation and modifications,
trade busts (cancellations) and adjustments, prime broker take-ups, deposits and withdrawals,
exercise and assignments, American Depository Receipts ("ADRs") and fees for bounced
checks, stop payments etc). The list of administrative fees and charges is available on the IB
website at https://www.interactivebrokers.com/en/index.php?f=1580.

7.5 Taxes

Transaction taxes, such as value added taxes may apply in some jurisdictions. The taxation
implications of trading in Exchange Traded Derivatives will depend on your particular
circumstances and it is recommended that you obtain your own independent taxation advice.
See section 9 for more details regarding taxation implications.

7.6 Market data, fundamentals and news

If you access market data, fundamentals or news through IB, there may be a cost to you to
subscribe for this information.

21
 See https://www.interactivebrokers.com.au/en/index.php?f=marketData&p=overview for
further information on the costs of accessing such data through IB.

8. DISPUTE RESOLUTION

If you have any concerns or comments about the financial service or financial products
provided to you, you should send your complaint in writing to:

Legal & Compliance Department

Interactive Brokers LLC
One Pickwick Plaza
Greenwich, CT 06830

If you have not received a satisfactory response or 45 days have elapsed you may refer the
matter to the Financial Ombudsman Service (FOS). IB is a member of FOS. FOS can be
contacted on 1300 08 08 or GPO Box 3, Melbourne, Victoria, 3001. This service is provided to
you free of charge.

If you require further information on how we handle complaints, please visit our website
www.interactivebrokers.com or refer to our Financial Services Guide.

9. TAXATION IMPLICATIONS

It is important to note that a client’s tax position when trading Exchange Traded Derivatives
will depend on their individual circumstances. The taxation consequences of dealing in
Exchange Traded Derivatives depend upon whether the taxpayer trades in derivatives, is
merely speculating in derivatives or is using derivatives to hedge against a particular exposure.
Care must be taken, as a particular derivative transaction may have elements of more than
one of the categories of trading, speculating or hedging or there may be other considerations
which are relevant in determining the taxation consequences of dealing in a particular
derivatives contract. Relevant factors include the purpose of the taxpayer in entering into the
derivative contract transaction, whether the taxpayer is involved in business or commerce, the
taxpayer’s overall activities and the place the particular futures contract has in relation to those
activities and the economic nature of the transactions.

Please note that IB does not provide taxation advice and that investors must consult their own
taxation adviser in relation to the tax consequences of trading in Exchange Traded Derivatives.

10. COOLING-OFF ARRANGEMENTS

There are no cooling-off arrangements for Exchange Traded Derivatives.

11. ACCOUNT OPENING

11.1 Required Minimums

Required balance, activity and commission minimums for retail and introducing broker
accounts and for customers using a dedicated line FIX connection are as set out on the IB
website at www.interactivebrokers.com.

The following minimums are required to open an account:

22
Category Required Deposit

All Individuals not listed below USD$10,000 (or non-USD equivalent)

Advisor and broker Clients USD$5,000 (or non-USD equivalent)

23
 EXCHANGE TRADED OPTIONS

PRODUCT DISCLOSURE STATEMENT

INTERACTIVE BROKERS LLC

ARBN 091 191 141

AFSL 245 574

Date of Issue: 12 February 2014

 INDEX

1. GENERAL INTRODUCTION 4
1.1 Important Information 4
1.2 Purpose of this PDS 4
1.3 About Interactive Brokers 4
1.4 What Products does this PDS cover? 6

2. WHAT ARE EXCHANGE TRADED OPTIONS? 7

2.1 Types of Exchange Traded Options 7
2.2 Uses of Exchange Traded Options 7
2.3 Understanding some concepts 8
2.4 Educational booklets for ASX Exchange Traded Options 8

3. BASIC FEATURES OF EXCHANGE TRADED OPTIONS 10

3.1 Standardised Contracts 10
3.2 Sellers (writers) and Buyers (takers) 11
3.3 Call options and put options 11
3.4 Exercise style – American or European 12
3.5 Premium 12
3.6 Adjustments 13
3.7 No Dividends or Entitlements 13
3.8 Expiry 14
3.9 Exercise by the Buyer (taker) and assignment to the Seller (writer) 14
3.10 Automatic exercise 15
3.11 Deliverable or cash settled 15
3.12 Settlement following exercise of Exchange Traded Option 15
3.13 Margin requirements 16
3.14 Cooling off period 16
3.15 Option contracts which are open for trading 16
3.16 Opening an Exchange Traded Option position 16
3.17 Closing out an Exchange Traded Option position 17
3.18 Information on trading strategies 17

4. EXECUTION, CLEARING AND SETTLEMENT ARRANGEMENTS 18

4.1 Execution arrangements for Exchange Traded Options 18
4.2 Clearing arrangements and the role of the Clearing House 18
4.3 Clearing House Margin 19
4.4 Collateral and the holding of securities 20
4.5 IB's margin requirements 21
4.6 Use of monies to meet other obligations in connection with derivatives 22
4.7 Compensation schemes 22

5. SIGNIFICANT BENEFITS OF EXCHANGE TRADED OPTIONS 24

6. SIGNIFICANT RISKS OF EXCHANGE TRADED OPTIONS 26

7. COSTS ASSOCIATED WITH EXCHANGE TRADED OPTIONS 30

Product Disclosure Statement

7.1 Premium 30
7.2 Margin requirements 30
7.3 Fees and charges 30

8. DISPUTE RESOLUTION SYSTEM 32

9. SIGNIFICANT TAXATION IMPLICATIONS 32

9.1 Implications for Australian resident investors 32
9.2 Rules for the Taxation of Financial Arrangement 35

227926075.02 Page 3
1. GENERAL INTRODUCTION

1.1 Important Information

The information in this Product Disclosure Statement (PDS) does not take into
account your personal objectives, financial situation and needs. Before trading in
the products referred to in this PDS you should read this PDS and be satisfied that
any trading you undertake in relation to those products is appropriate in view of
your objectives, financial situation and needs.

We recommend that you consult your financial adviser before trading in exchange
traded options.

1.2 Purpose of this PDS

This Product Disclosure Statement (PDS) has been prepared by Interactive Brokers LLC
(IB) the issuer of the exchange traded options. This PDS is designed to assist you in
deciding whether exchange traded options are appropriate for your needs and to assist
you in comparing it with other financial products you may be considering. This PDS is an
important document and we recommend you contact us should you have any questions.
Our contact details are set out at section 1.3 below.

Although the information in this PDS is up to date as at the date of publication, it is

subject to change from time to time. Where such information is not materially adverse, we
may provide updates on our website at www.interactivebrokers.com. A paper copy is also
available on request at no charge to you.

We may also be required to issue a new PDS or a supplementary PDS as a result of

certain changes, in particular where the changes are materially adverse to retail clients.
Any supplementary PDS will be posted on our website at www.interactivebrokers.com. A
paper copy will also available on request at no charge to you.

When we use terms ‘we’, ‘us’ or ‘our’ in this PDS, the reference is to IB.

1.3 About Interactive Brokers

(a) The issuer – Interactive Brokers LLC

IB is the issuer of exchange traded options offered under this PDS.

IB holds an Australian financial services licence, number 245574, which

authorises IB to deal in exchange traded options.

IB is also regulated in the USA (by the Securities and Exchange Commission, the
Commodities and Futures Trading Commission, the Financial Industry
Regulatory Authority and the New York Stock Exchange), in the United Kingdom

227926075.02
Product Disclosure Statement

(by the Financial Conduct Authority) and in Hong Kong (by the Securities and
Futures Commission).

IB is a trading participant of ASX 24 market operated by ASX and of the financial

market operated by Chi-X Australia. IB is not a trading participant of ASX. For
information on the execution, clearing and settlement arrangement which IB has
in place for exchange traded options, see section 4.

(b) The Interactive Brokers Group

IB is an affiliate of the Interactive Brokers Group (IBG) which comprises of a

number of automated global electronic market makers and brokers that specialise
in routing orders and executing and processing trades in securities, futures and
foreign exchange instruments. IBG affiliates conduct business on more than 60
electronic exchanges and trading venues around the world. IBG, using its
proprietary software, provides non-advisory brokerage services to professional
traders and investors with direct access to stocks, options, futures, foreign
exchange contracts and bonds.

IBG's headquarter is in Greenwich Connecticut, and it has about 880 employees

in its offices in the USA, Switzerland, Canada, Hong Kong, UK, Australia,
Hungary, Russia, India, China and Estonia.

(c) Contact details

Our contact details are below:

Interactive Brokers LLC Head Office

One Pickwick Plaza
Greenwich, CT 06830

Telephone Numbers:
1-877-442-2757 (from inside the U.S.)
+1-312-542-6901 (from outside the U.S.)

IB - Australian Contact
Grosvenor Place
Level 42, 225 George Street,
Sydney, NSW 2000

Telephone numbers:
+61 (2) 8093 7300

e-mail: help@interactivebrokers.com

5
Product Disclosure Statement

Additional contact information, including issue-specific details, is available

at http://individuals.interactivebrokers.com/en/p.php?f=customerService.

1.4 What Products does this PDS cover?

This PDS relates to exchange traded options traded on a range of exchanges, including
the market operated by Australian Securities Exchange Limited (ASX). For details of the
exchanges on which you can trade exchange traded options through us (Relevant
Exchanges), please see our website at
https://www.interactivebrokers.com.hk/en/index.php?f=products&p=opt.

Exchange traded options offered under this PDS include:

 equity options: options over quoted shares or interests in managed investment

schemes of a range of different companies and managed investment schemes
quoted on ASX and other Relevant Exchanges1.

 index options: options over an index (for example, in the case of ASX, the
S&P™/ASX 200™ Index or the S&P™/ASX 200™ Property Trust Index).

In this PDS, equity options and index options are collectively referred to as Exchange
Traded Options or ETOs.

If you received this document electronically or if you received any updated or new
information other than in writing, we will provide a paper copy free on request.

1
Note that ASX makes available for trading equity options over various financial products, including shares in companies
and interests in managed investment schemes. For ease of reference, we will refer in this PDS to underlying shares, but
investors should be aware that the underlying financial product may be another financial product in some cases.

6
Product Disclosure Statement

2. WHAT ARE EXCHANGE TRADED OPTIONS?

The risk of loss in trading in Exchange Traded Options can be substantial. It is

important that you carefully consider whether trading Exchange Traded Options is
appropriate for you in light of your investment objectives and financial
circumstances. Exchange Traded Options are not suitable for some retail
investors. You should only trade Exchange Traded Options if you understand the
nature of the products and the extent of your exposure to risks.
A description of the significant risks associated with trading in Exchange Traded
Options is set out in section 6 of this PDS.

2.1 Types of Exchange Traded Options

The types of Exchange Traded Options traded on Relevant Exchanges offered under this
PDS are equity options and index options. These are each discussed briefly below:

(a) Equity options

Equity options are options over financial products quoted on a Relevant

Exchange, for example shares of listed companies. On ASX, equity options are
"deliverable" options in the sense that, on exercise, one party must take "delivery"
of the underlying financial product.

(b) Index options

Index options are options over an index such as the S&P™/ASX 200™ Index or
the S&P™/ASX 200™ Property Trust Index. Index options are "cash settled"
options in the sense that, on exercise of an option, the buyer of the option will
have the right to receive an amount of money and the writer will have a
corresponding obligation to pay that amount (provided the option is "in-the-
money"). The amount of money will be determined by the difference between the
exercise level (set by the Relevant Exchange) and the settlement mechanism
determined by the Relevant Exchange or the clearing house of the Relevant
Exchange responsible for the clearing and settlement of Exchange Traded
Options (Clearing House).

2.2 Uses of Exchange Traded Options

Exchange Traded Options are a versatile financial product which can allow investors to:

 hedge against fluctuations in their underlying share portfolio;

 increase the income earned from their portfolio (through the earning of premium
income); and

7
Product Disclosure Statement

 profit from speculation.

Their flexibility stems from the ability to both buy (take) and sell (write) an Exchange
Traded Option contract and undertake multiple positions targeting specific movements in
the overall market and individual underlying shares. Index options can be used to trade a
view on the market as whole, or on the sector of the market that is covered by the
particular index.

The use of Exchange Traded Options within an investor's overall investment strategy can
provide flexibility to take advantage of rising, falling and neutral markets. However, both
the purchase and sale of Exchange Traded Options involves risks which are discussed in
more detail in section 6.

2.3 Understanding some concepts

Concepts which should be understood before trading in Exchange Traded Options are:

 The effect that time has on a position/strategy;

 How volatility changes, both up and down, may affect the price or value of an
option and the potential outcome;

 How to calculate margins and worst-case scenarios for any position;

 The likelihood of early exercise and the most probable timing of such an event;

 The effect of dividends and capital reconstructions on an options position;

 The liquidity of an option, the role of market makers, and the effect this may have
on your ability to enter and exit a position.

Whilst this PDS provides product information including information about the risks,
characteristics and benefits of Exchange Traded Options, investors should inform
themselves and if necessary obtain advice about the specific risks, characteristics and
benefits of the Exchange Traded Option they intend to trade and rules of the Relevant
Exchange.

2.4 Educational booklets for ASX Exchange Traded Options

In Australia, Exchange Traded Options have been traded in Australia since 1976 on the
ASX. ASX has prepared a number of educational booklets relating to Exchange Traded
Options. Their current booklets are available free of charge to you via their website at
http://www.asx.com.au/education/download-brochures.htm as set out below.

8
Product Disclosure Statement

This PDS refers to a number of ASX booklets, including:

 “Understanding Options Trading”- this booklet discusses the features and

contract specifications of Exchange Traded Options, risks and advantages in
trading options and gives examples of how Exchange Traded Options work and
basic option trading strategies. You can view this booklet online by using the
following link:

http://www.asx.com.au/documents/resources/UnderstandingOptions.pdf

 “Understanding Option Strategies” – this booklet describes in more detail how

Exchange Traded Options may be used in various trading strategies. You can
view this booklet online by using the following link:

http://www.asx.com.au/documents/resources/UnderstandingStrategies.pdf

 "Margins" – this booklet explains what margins are, how they are calculated by
the Clearing House and how a Clearing Participant may meet its margin
obligations to the Clearing House. You can view this booklet online by using the
following link:

http://www.asx.com.au/documents/resources/UnderstandingMargins.pdf

If you cannot access the ASX booklets via the ASX website, you should contact the ASX.
If you would like a hard copy of the "Understanding Options Trading" booklet, please
contact us and we will arrange to forward a copy of that booklet to you at no charge.

If you have any questions on any aspect of the booklets you should consult us before
making any investment decisions.

9
Product Disclosure Statement

3. BASIC FEATURES OF EXCHANGE TRADED OPTIONS

The following discussion is not intended to be a detailed discussion of the features of the
Exchange Traded Options, but rather to identify some of the key features of Exchange
Traded Options. For a more detailed description in relation to Exchange Traded Options
traded on ASX, you should refer to the ASX explanatory booklets referred to in the
previous section.

3.1 Standardised Contracts

The terms and specifications of Exchange Traded Options (other than the premium,
which is negotiated between the buyer and seller) are determined by the Relevant
Exchange in accordance with operating rules of the Relevant Exchange.

In relation to Exchange Traded Options traded on ASX, details of contract specifications

for Exchange Traded Options are published by the ASX on their website at
http://www.asx.com.au/products/equity-options/options-contract-specifications.htm. The
contract specifications detail the key standardised features of Exchange Traded Options
traded on ASX.

The Relevant Exchange determines the key contract specifications for each series of
Exchange Traded Options traded on the exchange.

For example, in the context of equity options the Relevant Exchange sets the following:

 the underlying share (eg. BHP);

 whether the option is a call option or a put option;

 the contract size (that is, the number of units of the underlying share to which the
option relates) – when an exchange traded equity option series is first opened by
ASX for trading, the contract size is usually 100 (eg. 100 BHP shares);

 exercise style – that is American style or European style;

 the exercise price (or strike price) – is the specified price at which the taker
(buyer) of an equity option can, if they exercise the option, buy (in the case of a
call option) or sell (in the case of a put option) the underlying shares; and

 the expiry date.

10
Product Disclosure Statement

Similarly, for index options, the relevant parameters will also be set by the Relevant
Exchange, including the underlying index, the index multiplier, the exercise style
(European), the exercise level of the option and the expiry date.

Some of the concepts referred to above, such as contract size, exercise style, exercise
price and expiry date are discussed in more detail below.

3.2 Sellers (writers) and Buyers (takers)

Every Exchange Traded Option contract has both a Seller (writer) and a Buyer (taker) .

Buyers are referred to as “takers” of an Exchange Traded Option as they take up the right
to exercise the option (for example, the right to exercise the option and either buy or sell
the underlying shares at the exercise price, in the case of an equity option).

Sellers of Exchange Traded Options are referred to as “writers” because they underwrite
(or willingly accept) the obligations which are required to be performed on exercise of the
option (for example, to buy or sell the underlying shares at the exercise price, in the case
of an equity option).

3.3 Call options and put options

Exchange Traded Options may be call options or put options. The nature of call options
and put options will depend on whether the options are equity options or index options.

(a) Equity options

Call options give the buyer (taker) the right, but not the obligation, to buy a
standard quantity of underlying shares at a predetermined price on or before a
predetermined date. If the taker exercises their right to buy, the seller (writer) to
which the exercise notice is assigned by the Clearing House is required to sell the
standard quantity of shares at the predetermined exercise price.

Put options give the buyer (taker) the right, but not the obligation to sell a
standard quantity of underlying shares at a predetermined price on or before a
predetermined date. If the taker exercises their right to sell, the seller (writer) to
which the exercise notice is assigned by the Clearing House is required to buy
the standard quantity of shares at the predetermined exercise price.

(b) Index options

Call options (in the case of index options) give the buyer (taker) the right, but not
the obligation to exercise the option. If the closing level of the index exceeds the
exercise level of the index option, the taker will, on exercise of the option, have

11
Product Disclosure Statement

the right to receive an amount of money which is determined by multiplying the

difference between the closing level and the exercise level by the index multiplier
specified by the Relevant Exchange. If the taker exercises the option, the seller
(writer) to which the exercise notice is assigned by the Clearing House is required
to pay the corresponding amount.

Put options (in the case of index options) give the buyer (taker) the right, but not
the obligation to exercise the option. If the closing level of the index is less than
the exercise level of the index option, the taker will, on exercise of the option,
have the right to receive an amount of money which is determined by multiplying
the difference between the closing level and the exercise level by the index
multiplier specified by the Relevant Exchange. If the taker exercises the option,
the seller (writer) to which the exercise notice is assigned by the Clearing House
is required to pay the corresponding amount.

3.4 Exercise style – American or European

Exchange Traded Options may be American or European exercise style. American style
options can be exercised at any time prior to and including the expiry day. European style
options can only be exercised on the expiry day and not before. Most ASX exchange
traded equity options are American style options. ASX exchange traded index options
are European style.

3.5 Premium

As noted above, the only term of an option contract an investor trades on a Relevant
Exchange which is not set and pre-determined by the Relevant Exchange is the price of
the contract. The price, known as the "Premium" is negotiated between the buyer and
seller of the Exchange Traded Option through the market.

The premium for an equity option is quoted on a cents per underlying share basis so the
dollar value payment is calculated by multiplying the premium amount by the number of
underlying shares. As discussed above, for ASX Exchange Traded Options this is
usually 100 at the time the option series is opened, but may be adjusted by ASX. For
example, if you buy a call option with a premium quoted at 25c per share and the contract
size is 100, the total premium is $25.00 (being $0.25 x 100).

The premium for an index option is calculated by multiplying the premium (specified in
terms of the number of points of the index) by the index multiplier. For example, a
premium of 30 points, with an index multiplier of $10, represents a total premium cost of
$300 per contract.

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Product Disclosure Statement

The value of an option will fluctuate during the option’s life depending on a range of
factors including the exercise price or, the price of the underlying share or the level of the
underlying index, the volatility of the underlying share or the underlying index, the time
remaining to expiry date, interest rates, dividends and general risks applicable to markets.

Most option pricing involves the use of a mathematical formula which includes calculating
the intrinsic and time value of the particular option. You should refer to the section entitled
“Option pricing fundamentals” in the ASX Booklet “Understanding Options Trading”
available at the link provided in section 2 above for more information regarding the
fundamentals of pricing options. ASX also provides a pricing calculator on the ASX
website at

http://www.asx.com.au/prices/calculators.htm.

You can obtain current price information from your adviser at IB.

For further information on trading index options and examples on how trading index
options can work for you, refer to the ASX booklet Understanding Options Trading
available at the link provided in section 2 above.

3.6 Adjustments

A Relevant Exchange or Clearing House may in accordance with its operating rules make
an adjustment to any of the specifications of an option to reflect corporate actions in
respect of the underlying shares, for example if the issuer makes a bonus issue, rights
issue, special dividend, capital reduction or other similar event. If a Relevant Exchange
does make an adjustment it will generally endeavour to do so in a way which puts the
writer and taker in substantially the same economic position they would have been in had
the adjustment event not occurred, so as to preserve the value of open positions of takers
and writers at the time of the adjustment. In some cases, a Relevant Exchange may
decide not to make an adjustment for a corporate action and, instead, direct that open
positions be terminated or closed out. When a Relevant Exchange makes an adjustment
to the terms of an option series, the Clearing House will make a corresponding
adjustment to the terms of contracts which are already open.

ASX has issued an Explanatory Note for Option Adjustments which can be found at
http://www.asx.com.au/documents/resources/explanatory_note_option_adjustments.pdf
which provides further information regarding ASX option adjustments.

3.7 No Dividends or Entitlements

The parties to an equity option do not, under the terms of the option, have any entitlement
to dividends, franking credits or other entitlements paid or made by the issuer of the

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Product Disclosure Statement

underlying shares. Of course, the seller of a call option or the buyer of a put option who
holds the underlying shares will have an entitlement to dividends, franking credits and
other entitlements, but these are entitlements of the holders of the shares, not through
the option contract.

If the buyer (taker) of a call option wants to participate in a prospective dividend or

entitlement, the buyer will need to first exercise the option, allowing sufficient time to
become the registered holder prior to the Ex Dividend or Ex Entitlement date. The
resulting sale and purchase of underlying shares on the exercise of an equity option will
settle on the third business day following the exercise of the option (see the discussion
below under the heading "Settlement following exercise of Exchange Traded Option").

3.8 Expiry

Exchange Traded Options have a limited life span. For example, for ASX Exchange
Traded Options, all Exchange Traded Options have an expiry month, which generally
follow one of three cycles, namely:

(i) January/April/July/October;

(ii) February/May/August/November; and

(iii) March/June/September/December.

The options expire on a specified day in the expiry month, as determined by ASX. For
equity options, the option expires on the Thursday preceding the last Friday in the expiry
month, as long as both the Thursday and Friday are full business days. Therefore if the
last day of the month is a Thursday the option will expire on the Thursday prior. Index
Options expire on the third Thursday of the contract month provided that day is a
business day. For ASX Exchange Traded Options, ASX's Clearing House, ASX Clear Pty
Ltd (ASX Clear) has the right to change these expiry dates should the need arise. Expiry
day information is available on the ASX website at http://www.asx.com.au/about/expiry-
calendar.htm.

3.9 Exercise by the Buyer (taker) and assignment to the Seller (writer)

The taker of an Exchange Traded Option has the right (but not the obligation) to exercise
the option contract. This means that the writer of an Exchange Traded Option may be
exercised against at any time prior to expiry (American style only). When the taker
exercises an option, the Clearing House will randomly assign that exercise to an open
position held by a writer in the relevant option series.

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Product Disclosure Statement

3.10 Automatic exercise

We will automatically exercise your taken exchange traded option contract if your contract
is one cent in the money or one point for indexes. For call options the option will be in the
money where the exercise price is below the price of the underlying shares. For put
options the option will be in the money where the exercise price is higher than the price of
the underlying shares. All unexercised option contracts will expire on the expiry date.

3.11 Deliverable or cash settled

Exchange Traded Options are either deliverable or cash settled.

Options are described as deliverable where the obligations of the buyer and seller are
settled by the "delivery" of the underlying share. Equity options are deliverable, because
on exercise, one party is required to transfer the underlying shares to the other at the
exercise price.

Options are described as cash settled where the obligations of the buyer and seller are
settled by the buyer and seller settling their obligations by the payment and receipt of a
cash amount. Index options are cash settled.

3.12 Settlement following exercise of Exchange Traded Option

When an equity option is exercised by a Buyer, and the exercise is assigned by the
Clearing House to an open position of a Seller, a contract for the sale and purchase of
the underlying shares at the exercise price will arise between the Seller and the Buyer.

Payment for, and the delivery of underlying shares occurs via the Relevant Clearing
House. For example, in relation to ASX Exchange Traded Options, settlement occurs
through ASX Settlement, the settlement facility for ASX transactions and settlement will
occur in accordance with the operating rules of ASX Settlement. Your obligations in
relation to settlement are set out in IB's terms and conditions.

Index options are cash settled. When an index option is exercised by a taker, and the
exercise is assigned by the Clearing House to an open position of a Seller, the Seller of
the option must pay the cash settlement amount to the Clearing House. For example, in
relation to ASX Exchange Traded Options, that amount will be determined by the
difference between the exercise level (set by ASX) and the Opening Index Price
Calculation (OPIC) as calculated by ASX on the expiry date. Cash settlement occurs in
accordance with the rules of the Clearing House. For more information on settlement of
ASX index options see the section entitled "Trading index options" in the ASX Booklet
“Understanding Options Trading” available at the link provided in section 2 above.

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Product Disclosure Statement

3.13 Margin requirements

Exchange Traded Options are subject to margin requirements. For a discussion of our
margin requirements, see section 4.

3.14 Cooling off period

There are no cooling-off arrangements for Exchange Traded Options.

3.15 Option contracts which are open for trading

Details of Exchange Traded Options available on the Relevant Exchanges are commonly
available on the websites of the Relevant Exchanges.

For example, details of Exchange Traded Options listed on ASX and expiry date
information can be found on the ASX website at http://www.asx.com.au/products/equity-
options.htm or alternatively through information vendors or newspapers. A list of current
option codes and delayed price information is available on the ASX website at
http://www.asx.com.au/products/equity-options/options-data.htm.

Details of the previous day’s trading for ASX Exchange Traded Options are published in
summary form in the Australian Financial Review and more comprehensively in The
Australian. If you cannot access the above information, please contact us and we will
arrange to provide you with the information.

3.16 Opening an Exchange Traded Option position

Unlike shares, Exchange Traded Options are not instruments which a person buys or
sells in the ordinary sense. The Relevant Exchange sets the terms of the Exchange
Traded Options and, if we enter into a contract for you as Buyer (taker) or Seller (writer) ,
we are regarded as having "opened" the contract for you.

If you have opened a position as the taker of an Exchange Traded Option, you have three
alternatives:

 You can exercise the option.

 You can hold the option to expiry and allow it to lapse.

 You can close out the position by selling (writing) an option in the same series
and instructing us to "close out" the open position.

Similarly, if you have opened a position as the writer of an Exchange Traded Option, you
have two alternatives:

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Product Disclosure Statement

 You can let the option go to expiry and risk being exercised against (if it is not
exercised against, it will expire without any further obligation or liability on the
writer).

 You can close out the option by buying (taking) an option in the same series
(provided it has not been exercised against).

3.17 Closing out an Exchange Traded Option position

An Exchange Traded Option may be "closed out" by entering into an option in the same
series, but in the opposite position. In other words, if you have an open position in an
option as a Buyer (taker) , you can close out that position by entering into an option in the
same series as a Seller (writer) . This effectively cancels out the open position. For
example, an investor might close out an open option contract in the following scenarios:

 The Seller (writer) of an option may want to close out the option (by taking an
option in the same series) to avoid the risk of having a Buyer’s (taker's) exercise
notice allocated to the Seller’s (writer's) option.

 The investor may want to take a profit. For example, the buyer of a call option
may have paid a premium of $1.00 per option, and the same option series may
now be able to be sold for a premium of $1.20, because the price of the
underlying shares has increased. The buyer may therefore close out his or her
position by selling an option in the same series, profiting from the difference of
$0.20 per underling share.

 The investor may want to limit a loss. For example, the buyer of a call option
may have paid a premium of $1.00 per option, and the same option series may
now be able to be sold for only $0.80, because the price of the underlying shares
has decreased or because the time to expiry has reduced. The buyer may
therefore close out his or her position by selling an option in the same series,
crystallising a loss of the difference of $0.20 per underling share.

It is important that you advise us if you are seeking to "close out" an existing position
when placing your order.

3.18 Information on trading strategies

For information and examples regarding trading strategies using Exchange Traded
Options, refer to the "Pay-off" section on page 24 of “Understanding Options Trading”
available at the link provided in section 2 above.

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Product Disclosure Statement

4. EXECUTION, CLEARING AND SETTLEMENT ARRANGEMENTS

4.1 Execution arrangements for Exchange Traded Options

IB is a trading participant of some, but not all, of the Relevant Exchanges. In relation to
Relevant Exchanges where IB is a direct participant, IB executes your transactions in
Exchange Traded Options directly on the Relevant Exchange. Where IB is not a direct
participant, it arranges for the execution of your transactions in Exchange Traded
Options.

In Australia, IB is not a participant of ASX which operates the Exchange Traded Options
market. IB therefore has an arrangement with its affiliated company, Timber Hill Australia
Pty Limited (ABN 25 079 993 534) (THA), through which IB executes Exchange Traded
Options on ASX for you. THA is a trading participant of ASX.

4.2 Clearing arrangements and the role of the Clearing House

Transactions in Exchange Traded Options on a market operated by a Relevant Exchange

are cleared through the Clearing House responsible for clearing those transactions. For
example, Exchange Traded Options traded on ASX are cleared through ASX Clear, a
wholly owned subsidiary of ASX and a licensed clearing and settlement facility under the
Corporations Act 2001 (Cth) (Corporations Act).

Interactive Brokers is not a participant (Clearing Participant) of all Relevant Clearing

Houses. Where it is not a Clearing Participant, it has an arrangement with a Clearing
Participant of the relevant Clearing House to clear your Exchange Traded Options
transactions. Clearing Participants are bound by the operating rules of the relevant
Clearing House (Clearing Rules).

When we arrange, or enter into an Exchange Traded Option for you, the transaction is
reported to the Clearing House for registration. On registration of a contract by the
Clearing House, the original traded contract is in most markets, such as ASX, terminated
and replaced by two contracts. One of those is between the Clearing Participant who
clears the contract for the taker of the option contract and the Clearing House. The other
is between the Clearing Participant who clears the contract for the writer of the option
contract and the Clearing House. This process of registration and creation of two new
contracts is known as "novation" and is described briefly in the section entitled "You and
your broker" in the ASX booklet, "Understanding Options Trading" available at the link
provided in section 2 above.

You, as the client, are not party to either of those contracts actually registered with the
Clearing House. Although we may act on your instructions or for your benefit, upon
registration of the Exchange Traded Option with the Clearing House in the name of the

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Product Disclosure Statement

Clearing Participant, the Clearing Participant incurs obligations to the Clearing House as
principal, even though the Exchange Traded Option may have been entered into on your
instructions.

In Australia, IB has arranged for ABN AMRO Clearing Sydney Pty Limited ABN 36 081
279 889 (AACS) to be the Clearing Participant for your ASX Exchange Traded Options
Transactions. AACS holds an Australian financial services licence, number 225136
which authorises it to clear Exchange Traded Options. In accordance with the
arrangements described above, AACS is the party to all ASX Exchange Traded Options
Transactions registered with ASX Clear. AACS regards IB as its customer in respect of
these positions, and IB in turn holds the benefit of these positions for you, in accordance
with the terms of your customer agreement with IB. In other jurisdictions where IB is not
the Clearing Participant of the Relevant Clearing House, similar arrangements are in
place for IB to hold the benefit of your positions for you.

4.3 Clearing House Margin

This section contains a description of the basis upon which a Clearing House calls margin
from its Clearing Participants. These margins may or may not correspond with the
margin we call from you. For a description of our margin requirements and
arrangements, see section 4.5.

As the Clearing House contracts with Clearing Participants as principals, where a

Clearing Participant has an exposure under an Exchange Traded Option contract to the
Clearing House, the Clearing House will call amounts of money known as "Margin" from
the Clearing Participant as cover. Margins are generally a feature of all exchange traded
derivative products and are designed to protect the Clearing House against default. A
margin is the amount calculated by the Clearing House as necessary to cover the risk of
financial loss on an Exchange Traded Option contract due to an adverse market
movement.

The writer of an Exchange Traded Option will ordinarily be required to pay margin in
respect of that contract or provide collateral acceptable to the Clearing House. That is
because the Clearing House is exposed to the risk that the writer will not perform its
obligations if and when the option is exercised. The taker of an Exchange Traded Option
will not be required to pay margin in respect of that contract, because they are not "at
risk" – they must pay the premium up front and that is the maximum amount the taker of
the option can lose in respect of that contract (plus transaction costs).

The total margin called by the Clearing House for Exchange Traded Options is generally
made up of two components, in each case, determined by the Clearing House:

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Product Disclosure Statement

 Variation margin (also known as premium margin) – this is determined by

reference to the market value of the underlying share at the close of business
each day.

 Initial margin (also known as risk margin) – this is the potential change in the
price of the option contract assuming a maximum probable inter-day price move
in the price of the underlying security or index.

Amounts of margin are determined daily by the Clearing House, following the close of
trading each day. In times of extreme volatility an intra day margin call may be made by
the Clearing House.

4.4 Collateral and the holding of securities

Clearing House margin obligations may be met by paying cash or by providing certain
types of eligible collateral (eg. shares). For example, in relation to ASX Exchange Traded
Options, shares (held by you) which are acceptable to the Clearing House may be lodged
with the Clearing House as collateral for margin obligations relating to Exchange Traded
Option positions. When shares are lodged with the Clearing House, the shares are held
by the Clearing House as ‘third party security’ in the sense that they represent collateral
provided by you to secure the obligations of the Clearing Participant to the Clearing
House. The lodged shares cannot be used by us or the Clearing Participant in relation to
our dealings or for our other clients in relation to their dealings unless authorised by you.

As a risk management tool, the Clearing House may apply a ‘haircut’ in relation to the
value of collateral lodged. For example, if you lodge $10,000 worth of collateral and the
Clearing House applies a 30% haircut, only $7,000 will be considered as collateral cover
for any margin obligations.

The margining process used by Clearing House is explained in detail in the ASX booklet
“Margins” which is available on the ASX website or by following the link below:

http://www.asx.com.au/documents/resources/UnderstandingMargins.pdf

Where you hold securities through us, we act as your custodian in relation to those
securities. In markets where IB does not have direct access to the settlement system for
the relevant securities markets, IB may appoint a sub-custodian to hold these securities.
For example, in relation to ASX quoted securities, IB has appointed a third party clearing
and settlement participant's nominee to hold securities in the ASX Settlement system for
the benefit of IB, which in turn holds them as custodian for the benefit of its customers
who are entitled to those securities. Similar arrangements may apply in other
jurisdictions outside Australia.

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Product Disclosure Statement

4.5 IB's margin requirements

We have discussed above the margin requirements which are imposed by Clearing
Houses on Clearing Participants. Where IB is the Clearing Participant, it must meet
these requirements directly. Where IB is not the Clearing Participant, the Clearing
Participant imposes margin requirements to IB. In any event IB imposes its own margin
requirements under its customer agreement with you. We discuss these in this section.

(a) Single universal account

When you open an Account with IB, you open a single account through which you
can trade not only Exchange Traded Options, but other products such as shares,
futures and foreign exchange contracts. When we calculate your margin
requirement, we have regard to the assets and liabilities in your Account as a
whole.

(b) Risk based portfolio analysis

We determine the margin requirement for your Account by risk based portfolio
analysis models, also having regard to the margin called by Relevant Exchanges
and Clearing Houses. A summary with examples on how IB calculates ETO
margins is available via the following link to IB’s website:
https://www.interactivebrokers.com/en/index.php?f=marginnew&p=opt.

(c) Regulatory requirements

IB is regulated by the US regulators and is subject to strict regulation regarding

the amount of leverage it can extend to its customer and the amount of margin it
is required to call from its customers.

(d) Real-time margining and real-time monitoring

The value of assets and positions held in your Account is marked to market by
IB's real-time credit management system. IB uses a real-time risk management
system to allow you to see your trading risk at any moment of the day. Our real-
time margin system calculates margin requirements throughout the day for new
trades and trades already on the books and enforces initial margin requirements
at the end of the day, with real-time liquidation of positions instead of delayed
margin calls. Your margin requirement and current equity is monitored by IB and
displayed online in real time to the customer via the various trading interfaces, as
well as the online client portal. For more information about real-time margin
monitoring, please visit our margin information page at
https://www.interactivebrokers.com/en/index.php?f=margin&p=overview2.

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Product Disclosure Statement

It is your responsibility to actively monitor and manage your open positions and
ensuring that you meet your margin obligations. It is also your responsibility to
ensure that you are aware of any changes in margin obligations. All margin
requirements must be met immediately. This means that sufficient cleared funds
must be on deposit in your account to enable you to meet margin requirements
immediately.

(e) New positions must be covered in advance

IB's real-time margining means that you will not be able to execute a transaction if
to do so would cause your Account to go into margin deficit. For example, if your
margin requirement would increase as a result of an initial margin obligation
under an Exchange Traded Option, and there were insufficient assets in the
Account to cover the initial margin obligation, IB's system would reject an order to
execute the transaction concerned.

(f) Consequences of a margin deficit

Pursuant to your customer agreement, if your Account goes into margin call (that
is, if there are insufficient assets in your Account to cover the margin
requirement), IB is authorised to liquidate all, or part of, the assets held in your
Account, or otherwise close your open positions to eliminate the shortfall. IB
WILL NOTIFY YOU WHEN A MARGIN DEFICIENCY ARISES, BUT IS NOT
OBLIGED TO GIVE YOU AN OPPORTUNITY TO PROVIDE FURTHER FUNDS.
IB WILL INSTEAD GENERALLY LIQUIDATE POSITIONS IN YOUR ACCOUNT
IN ORDER TO SATISFY MARGIN REQUIREMENTS. Any losses resulting from
IB closing out your positions will be debited to your Account and you may be
required to provide additional funds to IB to cover any shortfall.

4.6 Use of monies to meet other obligations in connection with derivatives

The Corporations Act provides that client money which you pay to us in connection with
derivatives (such as Exchange Traded Options) can be used by us for the purposes of
meeting margin obligations, guaranteeing, securing, transferring, adjusting or settling
dealings in derivatives (including dealings on behalf of our other clients).

4.7 Compensation schemes

Various Relevant Exchanges and Clearing Houses have compensation schemes in place
to compensate clients of Interactive Brokers and Clearing Members.

For example, in relation to ASX, the National Guarantee Fund (NGF) provides investors
with various protections. For example, if an equity option is exercised, the NGF

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Product Disclosure Statement

guarantees completion of the resulting trades in certain circumstances. Also, if property

is entrusted to a member of ASX (such as our designated Clearing Participant), and it
later becomes insolvent, you may, through us, have claim on the NGF. Interactive
Brokers is not a participant of ASX, and therefore does not itself have NGF coverage.
There are limits on claims to the NGF for property entrusted. For more information on the
possible protections offered by the NGF see http://www.segc.com.au./

IB is also regulated by the US Securities and Exchange Commission and Financial

Industry Regulatory Authority. IB is a member of the Securities Investor Protection
Corporation (SIPC), SIPC protects cash and securities held with IB as specified in the
Securities Investor Protection Act of the US. SIPC protects cash and securities held in
your Account for up to US$500,000 (US$100,000 for cash). Funds that are deposited in
your options trading account are not covered by SIPC.

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Product Disclosure Statement

5. SIGNIFICANT BENEFITS OF EXCHANGE TRADED OPTIONS

Exchange Traded Options have a number of advantages. These include the following:

(a) Hedging. Investors can hedge (protect) their share portfolio against a drop in
value by, for example, buying equity put options over particular shares.

(b) Income. Shareholders can earn income by writing call options over an
underlying shares they already hold. As a writer of options, the investor will
receive the premium amount up front, when the option is entered into. The risk is
that the writer will need to maintain margin obligations throughout the life of the
position and may be exercised against. This exercise will result in the writer
being required to deliver the underlying shares to the taker at the exercise price.

(c) Time to decide. By taking a call option, the purchase price for the underlying
shares is locked in. This gives the call option holder time to decide whether or
not to exercise the option and buy the shares. The holder has until the expiry
date to make his/her decision. Likewise the taker of a put option has time to
decide whether or not to sell the shares.

(d) Reduce risk. Exchange Traded Options benefit from standardisation and
registration with a clearing and settlement facility which reduces counterparty
default risk. The Clearing Participant's risk is to the Clearing House, not to a
third party. This process also provides the benefit that an open position can be
closed out without having to deal with the original counterparty.

(e) Speculation. Exchange Traded Options can be used for speculation where the
flexibility of entering and exiting the market prior to expiry (subject to liquidity)
permits an investor to take a view on market movements and trade accordingly.
In addition the variety of option combinations allows investors to develop
strategies regardless of the direction of the market.

(f) Profit in rising or falling market. Investors can profit from both rising and
falling markets depending on the strategy they have employed. Strategies may
be complex and strategies will have different levels of risk associated with each
strategy.

(g) Leverage. The initial outlay for an options contract is not as much as investing
directly in the underlying shares. Trading in options can allow investors to benefit
from a change in the price of the share without having to pay the full price of the
share. An investor can therefore purchase an option (representing a larger
number of underlying shares) for less outlay and still benefit from a price move in
the underlying shares. The ability to make a higher return for a smaller initial

24
Product Disclosure Statement

outlay is called leverage. Investors however, need to understand that leverage

can also produce increased risks (see below).

(h) Diversify portfolios. Given the lower initial outlay attaching to options, investors
can diversify their portfolios and gain a broad market exposure over a range
of shares or the index itself.

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Product Disclosure Statement

6. SIGNIFICANT RISKS OF EXCHANGE TRADED OPTIONS

The risk of loss in trading in Exchange Traded Options can be substantial. It is important
that you carefully consider whether trading Exchange Traded Options is appropriate for
you in light of your investment objectives and financial circumstances. Exchange Traded
Options are not suitable for some retail investors. You should only trade Exchange
Traded Options if you understand the nature of the products and the extent of your
exposure to risks. The risks attached to investing in Exchange Traded Options will vary in
degree depending on the option traded – see the risks outlined below.

This PDS does not cover every aspect of risk associated with Exchange Traded Options.
For further information concerning risks associated with Exchange Traded Option trading
you are referred to the ASX booklet “Understanding Options Trading” and in particular
the section entitled “Risks of options trading”. This booklet is available at the link provided
in section 2 above.

(a) Price sensitive announcements. As a general rule, price movements in the

underlying share can significantly affect the value of Exchange Traded Options.
The value of the underlying share is affected by information that is announced to
the Relevant Exchange in relation to the share. Accordingly, it is advisable that an
investor in Exchange Traded Options regularly reviews information announced to
the exchange in relation to relevant underlying shares. Price sensitive
announcements in relation to shares are available on the ASX website at:
http://www.asx.com.au/asx/statistics/todayAnns.do.

(b) High leverage. the high level of leverage that is obtainable in trading Exchange
Traded Options (due to the low level of initial capital outlay) can work against an
investor as well as for the investor. Depending on the market movement, the use
of leverage may lead to large losses as well as large gains.

(c) Limited life span. Exchange Traded Options have a limited life span as their
value erodes as the option reaches its expiry date. It is therefore important to
ensure that the option selected meets the investors investment objectives.

(d) Market movements. Exchange Traded Options are subject to movements in the
underlying market. Options may fall in price or become worthless at or before
expiry.

(e) Loss of premium for Buyers. The maximum loss in taking (buying) an
Exchange Traded Option is the amount of premium paid plus transaction costs. If
the option expires worthless, the taker will lose the total value paid for the option
(the premium) plus transaction costs.

26
Product Disclosure Statement

(f) Unlimited loss for Sellers. Whilst Sellers (writers) of Exchange Traded Options
earn premium income, they may also incur unlimited losses if the market moves
against the option position. The premium received by the writer is a fixed amount;
however the writer may incur losses greater than that amount. For example, the
writer of a call option has increased risk where the market rises and the writer
does not own the underlying shares. If the option is exercised, the writer of the
option is forced to buy the underlying shares at the current (higher) market price
in order to deliver them to the taker at the exercise price. Similarly where the
market falls, the writer of a put option that is exercised is forced to buy the
underlying shares from the taker at a price above the current market price.

(g) Loss of margin for Sellers. Sellers of options could sustain a total loss of
margin funds deposited with their broker where the market moves against the
option position. In addition, the writer may be obligated to pay additional margin
funds (which may be substantial) to maintain the option position or upon
settlement of the contract. Our margining requirements are discussed at 4.5
above.

(h) Close-out difficulties. Under certain conditions, it could become difficult or

impossible to close out a position and the relationship between the price of
Exchange Traded Options contracts and the underlying share may be distorted.
Examples of when this may happen are:

(i) if there is a significant change in the price of the underlying share over a
short period of time;

(ii) if there is an absence or reduction in the number of willing buyers and

sellers in either the Exchange Traded Options market or the underlying
market;

(iii) if the market is suspended or disrupted for any reason.

(i) Underlying market. Similarly, events such as these in relation to the underlying
market for the share may make it difficult for you to hedge or maintain your
exposure under an open Exchange Traded Option contract;

(j) Contingent orders difficult. The placing of contingent orders (such as a ‘stop-
loss’ order)2 may not always limit your losses to the amounts that you may want.
Market conditions may make it impossible to execute such orders. For
example, if the price of the underlying share moves suddenly, your order may not

2
Is an order that becomes a market order (and hence executed) when the derivatives market reaches the designated
price.

27
Product Disclosure Statement

be filled, or may be filled at a different price to that specified by you, and you may
suffer losses as a result.

(k) Exchange and Clearing House powers. Relevant Exchanges and Clearing
Houses commonly have discretionary powers in relation to the market and the
operation of the clearing facility. They have power to suspend the market
operation, or lift market suspension in options while the underlying securities are
in trading halt if the circumstances are appropriate, restrict exercise, terminate an
option position or substitute another underlying security (or securities), impose
position limits or exercise limits or terminate contracts - all to ensure fair and
orderly markets are maintained as far as practicable. These actions can affect an
investor’s option positions.

(l) Trading disputes. Trades effected on a Relevant Exchange may be subject to

dispute. When a trade is subject to a dispute the Relevant Exchange or Clearing
House commonly has powers, in accordance with its rules, to request that a
broker amend or cancel a trade, which will in turn result in the contract with the
client being amended or cancelled. In some situations, the Relevant Exchange or
Clearing House may also exercise powers to cancel or vary, or direct the
cancellation or variation, of transactions.

(m) Trade amendments and cancellations. Under our terms and conditions, we
have the ability to amend or cancel the trade. This could cause you to suffer
loss or increase your loss. A trade executed on your behalf can also be amended
or cancelled even where the trade has been confirmed to the client;

(n) System outages. Trades effected on a Relevant Exchange are traded on an

electronic trading platform and cleared through the Clearing House, which also
relies on electronic systems. As with all such electronic platforms and systems,
they are subject to failure or temporary disruption. If the system fails or is
interrupted we will have difficulties in executing all or part of your order according
to your instructions. An investor’s ability to recover certain losses in these
circumstances will be limited given the limits of liability commonly imposed by the
Relevant Exchange and the Clearing House. Any market disruption may mean a
client is unable to deal in Exchange Traded Options when desired, a client may
suffer a loss as a result. Common examples of disruption include a fire or other
exchange emergency. The exchange could, for example, declare an undesirable
situation has developed in a particular Exchange Traded Option contract and
suspend trading. Exchanges or participants may also be able to cancel
transactions under their operating rules.

(o) Capital loss. By trading in Exchange Traded Options, you are exposed to the
risk of losing capital. Speculators should not risk more capital than they can

28
Product Disclosure Statement

afford to lose. A good general rule is never to speculate with money which, if lost,
would alter your standard of living.

(p) Default. If you fail to meet your obligations to us under your customer agreement
with you, we may, in addition to any other rights which we may have against you,
and without giving prior notice to you, take any action, or refrain from taking
action, which we consider reasonable in the circumstances in connection with the
open positions in your Account with us and you must account to us as if those
actions were taken on your instructions and you are, without limitation, liable for
any deficiency and are entitled to any surplus which may result

(q) Automatic liquidation on margin shortfall. As discussed in section 4.5 above,

IB will generally liquidate positions automatically upon a margin deficit arising.
Whilst IB will notify you if a deficit arises, IB is not obliged to give you any
opportunity to deposit further funds to meet a shortfall.

(r) Dealing on markets outside Australia. The execution and clearing of Exchange
Traded Options on Relevant Exchanges outside of Australia are subject to the
rules of the Relevant Exchange and Clearing Houses, which may differ from the
rules of ASX and ASX Clear. Similarly, such execution and trading is subject to
then laws of the relevant jurisdictions, which may differ from Australian laws and
to the supervision and regulation by overseas regulators, whose functions and
powers may differ from those of Australian regulators such as the Australian
Securities and Investments Commission.

(s) Exchange rate risk. If you trade in Exchange Traded Options on Relevant
Exchanges outside of Australia, the positions are likely to be denominated in a
currency other than Australian dollars. The holding of positions denominated in a
foreign currency exposes you to the potential risk (and potential benefit) of
exchange rate fluctuations.

29
Product Disclosure Statement

7. COSTS ASSOCIATED WITH EXCHANGE TRADED OPTIONS

7.1 Premium

If you are the taker of an Exchange Traded Option, you will be required to pay a premium
in connection with the purchase of the Exchange Traded Option contract.

If you are the writer of an Exchange Traded Option, you will be entitled to receive a
premium in the connection with the sale of the Exchange Traded Option contract.

For further detailed information on the premium in respect of an Exchange Traded

Options contract, refer to "Option pricing fundamentals" on page 9 of the "Understanding
Options" booklet available following the link provided in section 2 above and also the
ASX's "Options Calculator" available by following the link below:

http://www.asx.com.au/prices/calculators.htm.

7.2 Margin requirements

If you the writer of an Exchange Traded Options contract, you will be required to meet our
margin requirements all times. See section 4.5 for a more detailed discussion of our
margining requirements.

7.3 Fees and charges

The following is a summary of the fees and charges associated with trading in Exchange
Traded Options.

The fees and charges differ depending on the Relevant Exchange and Clearing House
concerned. We set out below references to various links on our website which provide
more detailed information on these fees and charges.

(a) Commissions

We charge commission, at set flat rates, for the execution and close out of
Exchange Traded Option positions. See
https://www.interactivebrokers.com.au/en/index.php?f=commission&p=options for
further information.

(b) Referral mark ups and billings

Advisers and/or brokers may charge their clients for services rendered either
through automatic billing, electronic invoice or direct billing. Your advisor/broker
determines the referral mark-up at the time of the registration, and this mark-up
can be modified from time to time. At the time of your Account registration, you

30
Product Disclosure Statement

will be given a notice with the details of your referrer as well as the details of any
mark ups charged. The available billing methods including caps and limitations
are described at the IB website at www.interactivebrokers.com.

(c) Interest

If you have a debit balance on your Account after all fees and costs have been
deducted (in other words, you owe money to meet the margin requirement and
other amounts) you must pay interest on the debit balance. Interest is calculated
daily based on your positions, margin requirement and balances on your daily
statement for that date. Interest is usually posted once a month on your Account.
This generally occurs within five business days following the end of the month.
See https://www.interactivebrokers.com/en/index.php?f=interest&p=schedule2 for
further information and examples.

(d) Administrative fees and charges

IB charges certain administrative fees for matters such as order cancellation and
modifications, trade busts (cancellations) and adjustments, prime broker take-
ups, deposits and withdrawals, exercise and assignments, American Depository
Receipts (ADRs) and fees for bounced checks, stop payments. The list of
administrative fees and charges is available on the IB website at
https://www.interactivebrokers.com/en/index.php?f=1580.

(e) Taxes

Transaction taxes, such as value added taxes may apply in some jurisdictions.
The taxation implications of trading in Exchange Traded Options will depend on
your particular circumstances and it is recommended that you obtain your own
independent taxation advice. See section 9 for a more detailed discussion of
significant taxation implications.

(f) Market data, fundamentals and news

If you access market data, fundamentals or news through IB, there may be a cost
to you to subscribe for this information. See
https://www.interactivebrokers.com/en/index.php?f=1576 for further information
on the costs of accessing such data through IB.

Relevant fees and charges associated with a transaction will be disclosed on the
confirmation for the transaction.

31
Product Disclosure Statement

8. DISPUTE RESOLUTION SYSTEM

If you have any concerns or comments about the financial service or financial products
provided to you, you should send your complaint in writing to:

Legal & Compliance Department

Interactive Brokers LLC
One Pickwick Plaza
Greenwich, CT 06830

If you have not received a satisfactory response or 45 days have elapsed you may refer
the matter to the Financial Ombudsman Service (FOS). IB is a member of FOS. FOS
can be contacted on 1300 08 08 or GPO Box 3, Melbourne, Victoria, 3001. This service is
provided to you free of charge.

If you require further information on how we handle complaints, please visit our website
www.interactivebrokers.com or refer to our Financial Services Guide.

9. SIGNIFICANT TAXATION IMPLICATIONS

The information below is based on existing tax law and established interpretations as at
the date of this PDS.

The taxation information provided below is intended as a brief guide only and does not
cover every aspect of taxation related with the use of Exchange Traded Options. The
information applies to Australian resident investors only. It is important to note that your
tax position when trading Exchange Traded Options will depend on your individual
circumstances, in particular whether you are trading on revenue or capital account (refer
below for further discussion).

The taxation of options can be complex and may change over time. Accordingly, you
are recommended to seek professional tax advice before entering in to or disposing of
an Exchange Traded Option.

9.1 Implications for Australian resident investors

(a) Revenue account

(i) Writer of the option

Where a writer of an option writes an option in the ordinary course of

business or the option has been written over an underlying revenue
asset, the option will be treated as being on revenue account.

32
Product Disclosure Statement

The premium received by the writer of the option will be assessable on a

due and receivable basis. Where any premium is credited to the writer’s
Clearing House account the amount will still be assessable on this basis.

Any subsequent margin calls are not deductible when they are deposited
by the writer into their Clearing House account. These margins will
merely reduce any net position of the writer upon the close-out,
settlement or exercise of the option by the taker.

Where interest is received by the writer on the margins held in their

Clearing House account, this is required to be included in the writer’s
assessable income.

(ii) Taker of the option

A taker will generally hold an option on revenue account when it is held

or traded in the ordinary course of business, or the option is used to
hedge an underlying revenue asset.

Where this is the case, any premium paid by the taker is generally
regarded as being deductible on a due and payable basis. This will
generally be at the time the option is entered into.

Where an option on revenue account lapses, there are no further tax

implications. However, where an option on revenue account is
exercised, the option strike price will form part of the acquisition cost or
disposal proceeds for the underlying asset in question.

Alternatively, where the option is closed-out prior to its expiration, any

gain or loss on the option position will be treated as assessable or
deductible as the case may be.

(b) Capital account

(i) Writer of the option

Where a writer writes an option over an underlying capital transaction,

the option will be held on capital account. Consequently, any income tax
implications will be determined in accordance with the Capital Gains Tax
(CGT) provisions.

The premium received by the writer of the option will give rise to an
assessable capital gain on a received or a receivable basis. Where any

33
Product Disclosure Statement

premium is credited to the writer’s Clearing House account the amount

will still be assessable on this basis.

Any subsequent margin calls will merely reduce any net position of the
writer upon the close-out, settlement or exercise of the option by the
taker.

Where interest is received by the writer on the margins held in their

Clearing House account, this is required to be included in the writer’s
assessable income.

Exercise of a call option

Where a call option is exercised, the option premium and the proceeds
on the sale of the underlying asset should be treated as a single
transaction. Accordingly, both the premium and the proceeds received
will form part of the writer’s capital proceeds for CGT purposes.

This may have practical implications for writers of options where the
premium and sale proceeds are received in different financial years.

Exercise of a put option

Where a put option is exercised, the option premium paid and exercise
price will form part of the cost base of the underlying asset for the
investor. Accordingly, both the premium and the strike price paid will
form part of the writer's cost base of the underlying asset for CGT
purposes.

This may have practical implications for writers of options where the
premium is received in a different financial year to the payment of the
strike price and acquisition of the underlying capital asset.

(ii) Taker of the option

A taker will generally hold an option on capital account where an

underlying capital transaction is being hedged. Consequently, any
income tax implications will be determined in accordance with the CGT
provisions.

At the time the premium is paid, there are no taxation consequences for
the taker in respect of any premium paid for options which are held on
capital account.

34
Product Disclosure Statement

Where an option on capital account lapses, the taker will realise a capital
loss at this time, equal to the amount of the premium paid.

When an option is settled or closed-out, the taker will realise a capital

gain or loss depending on the amount paid (being the premium plus any
incidental costs) for the option and the amount received on settlement.

Exercising a call option

Where a call option is exercised, the option premium and exercise price
will form part of the cost base of the underlying asset for the taker.

Exercising a put option

Where a put option is exercised, the taker will generally deduct the option
price from the proceeds received on the disposal of the underlying asset.

(c) Goods and Services Tax

The purchase and disposal by investors of Exchange Traded Options over

financial products and indices is not subject to GST.

9.2 Rules for the Taxation of Financial Arrangement

The taxation of financial arrangements will change with the introduction of the new
Taxation of Financial Arrangements (TOFA) rules. ETOs covered by this PDS are
expected to qualify as financial arrangements and therefore the TOFA rules are likely to
have a significant impact on the taxation of ETOs. Briefly, the rules:

 will generally deem gains and losses from financial arrangements to be on

revenue account;

 are likely to impact on the timing of the recognition of the gains and losses; and

 may cause unrealised gains and losses to become subject to tax.

Below is a brief summary of the rules. The TOFA rules are complex and it is strongly
recommended that you seek specific tax advice on the application of the rules to your
dealings.

(a) Who will the TOFA rules apply to?

35
Product Disclosure Statement

Generally, the TOFA rules will not apply to individuals, small superannuation
funds and small securitisation vehicles. However, the rules will apply to these
taxpayers if the financial arrangement involves substantial tax deferral.

The TOFA rules do apply to most corporate taxpayers provided certain turnover
and other tests are met.

(b) When will the TOFA rules commence?

Generally, the TOFA rules apply from 1 July 2010. However, taxpayers may elect
for the rules to start applying from 1 July 2009.

If the taxpayer has a substituted accounting period for tax purposes, a later date
may apply, e.g. if the taxpayer has a 31 December year end, the new rules will
apply from 1 July 2011 (or from 1 January 2010 by election).

(c) How will the TOFA rules impact on the taxation of ETOs?

The TOFA rules allow taxpayers to make a number of elections that determine
how gains and losses from financial arrangements will be taxed. The elections
are generally irrevocable.

If you did not make any elections (other than the election to enter into the TOFA
regime early), the rules should treat most of the gains and losses from ETOs on a
realisation basis. Gains from exercising ETOs will not contribute to the cost base
of the assets received upon the exercise. However, the accruals method may
apply in some cases to spread the recognition of some gains and losses over the
life of the ETO.

The fair value and financial report elections include in the tax calculation gains
and losses from financial arrangements that are reflected in the profit and loss
statement (for example, financial arrangements that, for accounting purposes, are
classified as held for trading or designated as valued at fair value through profit
and loss). This means that unrealised gains and losses may be subject to tax. If
you made a valid fair value or financial reports election and it did not cease to
apply to you, the gains and losses from ETOs for tax will be aligned to the gains
and losses recognised in the profit and loss for accounts.

The hedging election allows tax matching of the gains and losses from the
underlying hedged item. The matching is both timing (i.e. over the time the
underlying item is held) and character (i.e. will take on tax character, revenue or
capital, of the underlying item). The Arrangement subject to the hedging election

36
Product Disclosure Statement

will not be subject to the fair value or financial reports elections, even if those are
made.

If you made a valid hedging election and an ETO qualifies for the hedging
election treatment, the gains and losses from the ETO will be matched to the
gains and losses from the underlying hedged item. The conditions for the hedging
election are complex and include documentation and hedge effectiveness
requirements.

37
 FOREIGN EXCHANGE

PRODUCT DISCLOSURE STATEMENT

INTERACTIVE BROKERS LLC

ARBN 091 191 141

AFSL 245 574

Date of Issue: 19 February 2014

 INDEX

1. GENERAL INTRODUCTION 4
1.1 Important Information 4
1.2 Purpose of this PDS 4
1.3 About Interactive Brokers 5

2. KEY FEATURES OF FOREIGN EXCHANGE 7

2.1 What is an FX contract? 7
2.2 What currencies are offered 7
2.3 Uses of FX Contracts 8
2.4 Spot exchange rates 8
IB determines the spot exchange rates it quotes to you by consolidating the pool of indicative
and firm quotes received from many of the world’s largest banks and liquidity
providers to display the best bid and the best offer from those banks and liquidity
providers. For large transactions greater than 7 million USD, the prices received
might be wider than the best quotes shown on the IB’s platform as banks and liquidity
providers compensate for their increased risk. 8
2.5 How does an FX Contract work 8
2.6 Margin requirements 9

3. SIGNIFICANT RISKS OF FX CONTRACTS 10

3.1 Opportunity loss 10
3.2 Market risk 10
3.3 Credit risk 10
3.4 Operational risk 11
3.5 Legal, tax and regulatory risks 11
3.6 Price slippage, order cancellation and adjustment risk 11
3.7 Cooling off period 12
3.8 Other risks 12

4. SIGNIFICANT BENEFITS OF FX CONTRACTS 13

5. TRADING FX WITH IB 14
5.1 How to trade FX Contracts with IB 14
5.2 Execution and settlement of FX Contract 14
5.3 Nature of your account with IB and potential SIPC cover 14
5.4 Nature of Foreign Exchange Transaction between Customer and IB 15
5.5 Prices quoted on the IB FX Platform 15
5.6 IB's margin requirements 16

6. FEES AND CHARGES 18

6.1 Commissions 18
6.2 Interest 18
6.3 Administrative fees and charges 18
6.4 Market data, fundamentals and news 18

7. DISPUTE RESOLUTION SYSTEM 19

Product Disclosure Statement

8. ACCOUNT OPENING 19
8.1 Required Minimums 19

9. SIGNIFICANT TAXATION IMPLICATIONS 19

9.1 Foreign exchange gains and losses 19

227352842.05 Page 3
1. GENERAL INTRODUCTION

1.1 Important Information

The information in this Product Disclosure Statement (PDS) does not take into
account your personal objectives, financial situation and needs. Before trading in
the products referred to in this PDS you should read this PDS and be satisfied that
any trading you undertake in relation to those products is appropriate in view of
your objectives, financial situation and needs.

We recommend that you consult your financial adviser before trading in fore ign
exchange.

The risk of loss in trading in FX contracts can be substantial. It is important that

you carefully consider whether trading FX contracts is appropriate for you in light
of your investment objectives and financial circumstances. FX contracts are not
suitable for some retail investors. You should only trade FX contracts if you
understand the nature of the products and the extent of your exposure to risks.
A description of the significant risks associated with trading in FX contracts is set
out in section 3 of this PDS.

1.2 Purpose of this PDS

This PDS has been prepared by Interactive Brokers LLC (IB) the issuer of the foreign
exchange (FX) contracts offered under this PDS. This PDS is designed to assist you in
deciding whether the FX contracts offered under this PDS are appropriate for your needs
and to assist you in comparing it with other financial products you may be considering.
This PDS is an important document and we recommend you contact us should you have
any questions. Our contact details are set out at section 1.3 below.

Although the information in this PDS is up to date as at the date of publication, it is

subject to change from time to time. Where such information is not materially adverse, we
may provide updates on our website at www.interactivebrokers.com. A paper copy is also
available on request at no charge to you.

We may also be required to issue a new PDS or a supplementary PDS as a result of

certain changes, in particular where the changes are materially adverse to retail clients.
Any supplementary PDS will be posted on our website at www.interactivebrokers.com. A
paper copy will also available on request at no charge to you.

When we use terms ‘we’, ‘us’ or ‘our’ in this PDS, the reference is to IB.

227352842.05
Product Disclosure Statement

1.3 About Interactive Brokers

(a) The issuer – Interactive Brokers LLC

IB is the issuer of the FX contracts offered under this PDS.

IB holds an Australian financial services licence, number 245574, which

authorises IB to deal in FX contracts.

IB is also regulated in the USA (by the Securities and Exchange Commission, the
Commodities and Futures Trading Commission, the Financial Industry
Regulatory Authority and the New York Stock Exchange), in the United Kingdom
(by the Financial Conduct Authority) and in Hong Kong (by the Securities and
Futures Commission).

(b) The Interactive Brokers Group

IB is an affiliate of the Interactive Brokers Group (IBG) which comprises of a

number of automated global electronic market makers and brokers that specialise
in routing orders and executing and processing trades in securities, futures and
foreign exchange instruments. IBG affiliates conduct business on more than 60
electronic exchanges and trading venues around the world. IBG, using its
proprietary software, provides non-advisory brokerage services to professional
traders and investors with direct access to stocks, options, futures, foreign
exchange contracts and bonds.

IBG's headquarter is in Greenwich Connecticut, and it has about 880 employees

in its offices in the USA, Switzerland, Canada, Hong Kong, UK, Australia,
Hungary, Russia, Japan, India, China and Estonia.

(c) Contact details

Our contact details are below:

Interactive Brokers LLC Head Office

One Pickwick Plaza
Greenwich, CT 06830

Telephone Numbers:
1-877-442-2757 (from inside the U.S.)
+1-312-542-6901 (from outside the U.S.)

IB - Australian Contact
Grosvenor Place

5
Product Disclosure Statement

Level 42, 225 George Street,

Sydney, NSW 2000

Telephone numbers:
+61 (2) 8093 7300

e-mail: help@interactivebrokers.com

Additional contact information, including issue-specific details, is available

at http://individuals.interactivebrokers.com/en/p.php?f=customerService.

6
Product Disclosure Statement

2. KEY FEATURES OF FOREIGN EXCHANGE

2.1 What is an FX contract?

An FX contract allows you to exchange one currency for another at an agreed exchange
rate with a specific settlement date. In the simplest form, we can consider standard
settlement (“spot exchange rate”), abbreviated settlement (“value today exchange rate” or
“value tomorrow exchange rate”) and prolonged settlement (“forward exchange rate”)
Exchange rates may be quoted as value today exchange rates, value tomorrow
exchange rates, spot exchange rates or forward exchange rates.

A spot exchange rate applies to an FX contract with a settlement date that is 2 business
days after the trade date. This type of FX transaction is commonly referred to as Spot.

IB only offers spot foreign exchange contracts; that is, FX transactions which typically
has a settlement date 2 business days after trade date (ie T+2), for certain currency
the standard settlement cycle is 1 business day. This type of FX transaction will be
referred to in this PDS as an "FX Contract". For informational purposes, the below is
the description for abbreviated and prolonged settlement cycles.A value today
exchange rate applies to an FX contract with a settlement date that is on the same date
as the trade date. This type of FX transaction is commonly referred to as Value Today;

A value tomorrow exchange rate applies to an FX contract with a settlement date that is 1
business day after the trade date. This type of FX transaction is commonly referred to as
Value Tomorrow.

A forward exchange rate applies to an FX contract with a settlement date that is more
than 2 business days after the trade date. This type of FX transaction is commonly
referred to as Forward.

2.2 What currencies are offered

FX Contracts are available in many currencies, including but not limited to the following:

Currencies Code

AUSTRALIAN DOLLARS AUD

EURO EUR

GREAT BRITISH POUNDS GBP

HONG KONG DOLLARS HKD

7
Product Disclosure Statement

JAPANESE YEN JPY

NEW ZEALAND DOLLARS NZD

SINGAPORE DOLLARS SGD

UNITED STATES DOLLARS USD

For a complete list of available currencies, currency pairs and their codes, please refer to
IB's website at https://www.interactivebrokers.com.au/en/index.php?f=products&p=fx.

2.3 Uses of FX Contracts

Activities for which FX Contracts may be useful include:

(a) foreign currency investing;

(b) foreign currency borrowing;

(c) repatriation of overseas profit or interest in foreign currencies back to Australia;

and

(d) general funding requirements in other currencies for a variety of purposes.

2.4 Spot exchange rates

IB determines the spot exchange rates it quotes to you by consolidating the pool
of indicative and firm quotes received from many of the world’s largest banks and
liquidity providers to display the best bid and the best offer from those banks and
liquidity providers. For large transactions greater than 7 million USD, the prices
received might be wider than the best quotes shown on the IB’s platform as banks
and liquidity providers compensate for their increased risk.

2.5 How does an FX Contract work

For example, you need to pay USD$1,000,000.00 to an offshore recipient in 2 business

days. You need to convert your AUD into USD to make this payment.

You wish to enter into an FX Contract with IB today to fix a spot exchange rate where you
buy USD$1,000,000.00 and sell AUD settling in 2 business days.

You log onto the IB’s TWS platform to review the spot exchange rate. IB quotes you a
spot exchange rate of AUD/USD0.9560. If you accept this quote, an FX Contract is
entered into between you and IB.

8
Product Disclosure Statement

The AUD equivalent is calculated by dividing the USD amount by the agreed AUD/USD
spot exchange rate quoted by IB:

USD$1,000,000.00 ÷ AUD/USD0.9560 = AUD$1,046,025.10

By entering into the FX Contract with IB, on T+2 you must buy USD$1,000,000.00 from
IB in exchange for AUD$1,046,025.10.

Examples are used for illustrative purposes only. The actual spot exchange rate will
depend on the actual market rates and on the date of calculation. The above example
does not include transaction costs. For a discussion on transaction costs see section 6 of
this PDS.

2.6 Margin requirements

FX Contracts with IB are subject to margin requirements (which are subject to change as
market conditions warrant). For a discussion of our margin requirements, see section 5.6
below.

9
Product Disclosure Statement

3. SIGNIFICANT RISKS OF FX CONTRACTS

Starting from the time at which you enter an FX Contract with IB, risk factors may lead to
changes in financial outcomes that are unfavourable to you.

Monitoring of any risks associated with this product is your responsibility (subject to the
responsibility of IB for its own operational systems under "Operational risk" – see section
3.4).

Prior to entering into FX Contracts, you should carefully consider the following risk factors
as well as other information either contained in this PDS or of which you are otherwise
aware and consider whether entering into FX Contract is suitable for you, given your
individual objective and circumstances. We recommend that you obtain independent
advice on the suitability of trading FX Contract for you.

3.1 Opportunity loss

You will forgo any benefit of a favourable FX movement between the time you enter into
an FX Contract and the settlement date.

The rate achieved with an FX Contract may not be as favourable as the rate you could
have achieved if you had not entered into an FX Contract at all.

3.2 Market risk

Markets can be volatile and are subject to a host of factors, including economic
conditions, government regulations, legislations, market sentiment, local and international
political events and environmental and technological issues.

Market risk is the risk that the value of your FX transaction will change as a result of a
movement in the underlying market price. Exchange rates between foreign currencies
can change rapidly due to a wide range of economic, political and other conditions,
exposing you to risk of exchange rate losses in addition to the inherent risk of loss from
trading the underlying financial product. If you deposit funds in a currency to trade
products denominated in a different currency, your gain or loss on the underlying
investment therefore may be affected by changes in the exchange rate between the
currencies.

3.3 Credit risk

Credit risk (also known as counterparty risk) is common to all financial markets products
that you may hold with IB. You are reliant on IB’s ability to meet its obligations to you
under the terms of each FX transaction.

10
Product Disclosure Statement

3.4 Operational risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes,
people, systems or external events.

You are reliant on the ability of IB to price and settle your transaction in a timely and
accurate manner. IB in turn is dependent on the reliability of its own operational
processes that include communications, computers and computer networks. Disruptions
in IB's processes may lead to delay in the execution and settlement of your transaction.
Such disruptions may result in contractual outcomes that are less favourable to you.

However, once you have entered into a transaction, the management of risks associated
with its own operational processes is the responsibility of IB.

3.5 Legal, tax and regulatory risks

Legal, tax and regulatory changes could occur during the term of an FX Contract, which
may adversely affect the FX transaction. You should seek independent tax advice before
entering into an FX transaction.

3.6 Price slippage, order cancellation and adjustment risk

Prices quoted on IB's system generally reflect the prices at which IB's FX Providers are
willing to trade. Prices quoted on IB's system reflect changing market conditions and
therefore quotes can and do change rapidly. As such, when your order is received and
processed by IB's system, the quote on IB's platform may be different from the quote
displayed when the order was sent by you. This change in price is commonly referred to
as “slippage". IB generally will not execute your order at a certain price unless IB is able
to trade at that price against one of IB's FX Providers. If you send an order for an FX
transaction to IB's system but your requested price is no longer available and therefore
the order is non-marketable, IB will not execute the order, but will place it in IB's limit
order book in accordance with your time-in-force instructions. IB may execute the order if
it becomes marketable based on prices received from IB's FX Providers. If you send an
order for an FX Contract to IB's system and the current price is more favourable for you
than what you have requested in the order, the order will generally be executed at the
available better price.

Although IB attempts to obtain the best price for your orders on FX Contracts, because of
the inherent possibility of transmission delays between and among yourself, IB and FX
Providers, or other technical issues, execution prices may be worse than the quotes
displayed on the IB platform.

To execute your order, IB engages in back-to-back transactions with one or more

counterparties. These counterparties on occasion may cancel or adjust FX trades with us

11
Product Disclosure Statement

in the event of market or technical problems. In these cases we may have to cancel or
adjust FX Contracts that you have executed.

3.7 Cooling off period

There are no cooling-off arrangements for FX Contracts.

3.8 Other risks

There are other risks that relate to trading in FX, foreign securities, options and futures
transactions which involve exposure to a combination of the following risk factors: market
risk, credit risk, settlement risk, liquidity risk, operational risk and legal risk. For example,
there can be serious market disruptions if economic or political or other unforeseen
events locally or overseas affect the market. Also, the settlement date of FX trades can
vary due to time zone differences and bank holidays. When trading across FX markets,
this may necessitate borrowing funds to settle FX trades. The interest rate on borrowed
funds must be considered when computing the cost of trades across multiple markets. In
addition to these types of risk there may be other factors such as accounting and tax
treatment issues that you should consider.

12
Product Disclosure Statement

4. SIGNIFICANT BENEFITS OF FX CONTRACTS

The benefits of entering into FX Contracts will depend on how it satisfies your risk
management strategy and financial circumstances. Various uses of FX Contracts were
discussed at section 2.3 of this PDS.

The benefits of an FX Contract include:

(a) Provides cash flow certainty – FX Contracts allow you to lock in an exchange
rate for the purchase or sale of foreign currency amounts on a certain date,
eliminating exchange rate uncertainty.

(b) Provides exchange rate protection – FX Contracts can help provide you with
protection against unfavourable FX movements between the time you enter into
an FX Contract and settlement date.

(c) Diversity – FX transactions can be executed in respect of a wide range of

currencies.

13
Product Disclosure Statement

5. TRADING FX WITH IB

5.1 How to trade FX Contracts with IB

You can trade with IB through one of the trading platforms that IB provides, including
Trader Workstation (TWS), WebTrader and mobileTWS. IB recommends that prior to
engaging in trading you open a paper trading account to conduct simulated trading to
become familiar with the platform. When trading you should keep aware of all risks and
benefits of trading FX Contracts (refer to sections 3 and 4 above).

IB customers may route orders to IB through one of the trading platforms that IB provides
by logging in through a secure username and password. As set out in IB's customer
agreement:

"IB does not know whether an unauthorized person is entering orders with a
customer’s user name/password. Customers are fully responsible for the
confidentiality and use of their user name/password and remain responsible for
all transactions entered using their user name/password. Customers may also
contact IB Customer Service using the details below should they experience
technical difficulties."

5.2 Execution and settlement of FX Contract

Through the TWS, you may ask IB for a spot exchange rate for a currency pair for a
specified transaction amount.
If IB offers you a spot exchange rate and if you accept the offer, provided that you have
sufficient equity in your account, an FX Contract is entered between you and IB.
IB will send you a confirmation document setting out the terms of your FX Contract.
Subject to the terms and conditions of the FX Contract, on the settlement date (ie T+2)
the currencies in the currency pair are exchanged. You must ensure that you have
sufficient funds in your account to settle the FX Contract. See further information
regarding IB's margin requirements in section 5.6 below.

5.3 Nature of your account with IB and potential SIPC cover

Trading in FX Contracts at IB takes place in a securities account. IB is regulated by the

Australian Securities and Investments Commission, the US Securities and Exchange
Commission and Financial Industry Regulatory Authority. In addition, IB observes the
rules of the National Futures Association in connection with trading in FX Contracts.

IB is a member of the Securities Investor Protection Corporation (SIPC). SIPC protects

cash and securities held with IB as specified in the Securities Investor Protection Act.
SIPC protects cash, including US dollars and foreign currencies, to the extent that the

14
Product Disclosure Statement

cash was deposited with IB for the purpose of purchasing securities. Whether foreign
currencies in your IB account would be protected by SIPC would depend in part on
whether the cash was considered to be deposited with IB for the purpose of purchasing
securities. IB expects that at least one factor in deciding this would be whether and the
extent to which you engage in securities trading in addition to or in conjunction with FX
trading.

5.4 Nature of Foreign Exchange Transaction between Customer and IB

When you enter into an FX Contract on IB’s platform, IB, as the counterparty to your
trade, may effectuate that transaction by entering into an offsetting transaction with one of
IB's affiliates, with another customer that enters quotes into IB's system, or with a third
party bank (IB's "FX Providers"). In such transactions, the FX Provider is not acting in
the capacity of a financial adviser or fiduciary to you or to IB, but rather, is taking the
other side of IB's offsetting trade in an arm's length contractual transaction. You should
be aware that the FX Provider may from time to time have substantial positions in, and
may make a market or otherwise buy or sell instruments similar or economically related
to, the FX Contracts entered into by you. IB's FX Providers may also undertake
proprietary trading activities, including hedging transactions related to the initiation or
termination of FX Contracts with IB, which may adversely affect the market price or other
factors underlying the FX Contract entered into by you and consequently, the value of
such transaction.

5.5 Prices quoted on the IB FX Platform

The prices quoted by IB to you for FX Contracts on IB's platform will be determined based
on FX Provider quotes and are not determined by a competitive auction as on an
exchange market. Prices quoted by IB for FX Contracts therefore may not be the most
competitive prices available. For purposes of maintaining adequate scale and competitive
spreads, a minimum size is imposed on FX orders (USD$25,000 as of March 2013 but
this is subject to change from time to time). Orders below the minimum size are
considered odd lots and limit prices for these odd lot-sized orders are not displayed.
While odd lot marketable orders are not likely to be executed at the interbank spreads,
they will generally be executed at prices only slightly inferior (1-3 ticks). IB will charge
transaction fees as specified by IB for FX Contracts. IB's FX Providers will try to earn a
spread profit on transactions with IB (differential between the bid and ask prices quoted
for various currencies).

Further information regarding how IB quote prices for FX Contracts is available via the
following link to IB’s website:
https://individuals.interactivebrokers.com/en/?f=%2Fen%2Ftrading%2Fexchanges.php%3
Fexch%3Dibfxpro%26amp%3Bshowcategories%3DFX%26amp%3Bib_entity%3Dllc.

15
Product Disclosure Statement

5.6 IB's margin requirements

If margin is enabled in you Account, IB may impose margin requirements under its
customer agreement with you in relation to your FX Contracts with IB. We discuss these
in this section.

(a) Single universal account

When you open an account (Account) with IB, you open a single account
through which you can trade not only FX Contracts, but other products such as
shares, futures and options. When we calculate your margin requirement, we
have regard to the assets and liabilities in your Account as a whole.

(b) Real-time margining and real-time monitoring

The value of assets and positions held in your Account is marked to market by
IB's real-time credit management system. IB uses a real-time risk management
system to allow you to see your trading risk at any moment of the day. Our real-
time margin system calculates margin requirements throughout the day for new
trades and trades already on the books and enforces initial margin requirements
at the end of the day, with real-time liquidation of positions instead of delayed
margin calls. Your margin requirement and current equity is monitored by IB and
displayed online in real time to you via the various trading interfaces, as well as
the online client portal. For more information about real-time margin monitoring,
please visit our margin information page at
https://www.interactivebrokers.com/en/index.php?f=margin&p=overview2

It is your responsibility to actively monitor and manage your Account and ensure
that you meet your margin obligations. It is also your responsibility to ensure that
you are aware of any changes in margin obligations. All margin requirements
must be met immediately. This means that sufficient cleared funds must be on
deposit in your account to enable you to meet margin requirements immediately.

(c) New FX Contracts must be covered in advance

IB's real-time margining means that you will not be able to execute a transaction,
if doing so would cause your Account to go into margin deficit. For example, if
your margin requirement would increase as a result of entering into an FX
Contract, and there were insufficient assets in the Account to cover the margin
obligation, IB would not enter into the FX transaction concerned.

16
Product Disclosure Statement

(d) Consequences of a margin deficit

Pursuant to your customer agreement, if your Account goes into margin call (that
is, if there are insufficient assets in your Account to cover the margin
requirement), IB is authorised to liquidate all, or part of, the assets held in your
account, or otherwise close your open positions to eliminate the shortfall. IB will
notify you when a margin deficiency arises, but is not obliged to giv e you an
opportunity to pr ovide further funds. IB will instead generally liquidate
positions in your account in order to satisfy margin requirements. Any losses
resulting from IB closing out your positions will be debited to your account and
you may be required to provide additional funds to IB to cover any shortfall.

17
Product Disclosure Statement

6. FEES AND CHARGES

The following is a summary of the fees and charges associated with FX transactions with
IB.

6.1 Commissions

We charge commission for entering into FX Contracts with you. See

https://individuals.interactivebrokers.com/en/index.php?f=commission&p=fx1 for further
information.

If your account is opened via an intermediary such as an adviser or broker, there could
be additional fees charged by the intermediary which is above what IB charges

The available billing methods including caps and limitations are described at the IB
website at www.interactivebrokers.com.

6.2 Interest

If you have a debit balance on your Account after all fees and costs have been deducted
(in other words, you owe money to meet the margin requirement and other amounts) you
must pay interest on the debit balance. Interest is calculated daily based on your
positions, margin requirement and balances on your daily statement for that date. Interest
is usually posted once a month on your Account. This generally occurs within five
business days following the end of the month. See
https://www.interactivebrokers.com/en/index.php?f=interest&p=schedule2 for further
information and examples.

6.3 Administrative fees and charges

IB charges certain administrative fees for matters such as order cancellation and
modifications, trade busts (cancellations) and adjustments, deposits and withdrawals. The
list of administrative fees and charges is available on the IB website at
https://www.interactivebrokers.com/en/index.php?f=1580.

6.4 Market data, fundamentals and news

If you access market data, fundamentals or news through IB, there may be a cost to you
to subscribe for this information. See
https://individuals.interactivebrokers.com/en/index.php?f=marketData&p=overview
for further information on the costs of accessing such data through IB.

18
Product Disclosure Statement

7. DISPUTE RESOLUTION SYSTEM

If you have any concerns or comments about the financial service or financial products
provided to you, you should send your complaint in writing to:

Legal & Compliance Department

Interactive Brokers LLC
One Pickwick Plaza
Greenwich, CT 06830

If you have not received a satisfactory response or 45 days have elapsed you may refer
the matter to the Financial Ombudsman Service (FOS). IB is a member of FOS. FOS
can be contacted on 1300 08 08 or GPO Box 3, Melbourne, Victoria, 3001. This service is
provided to you free of charge.

If you require further information on how we handle complaints, please visit our website
www.interactivebrokers.com or refer to our Financial Services Guide.

8. ACCOUNT OPENING

8.1 Required Minimums

Required balance, activity and commission minimums for retail and introducing broker
accounts and for customers using a dedicated line FIX connection are as set out on the
IB website at www.interactivebrokers.com.

9. SIGNIFICANT TAXATION IMPLICATIONS

Taxation law is complex and its application to this product will depend on your particular
circumstances. We make no claim that this product will provide a beneficial or
appropriate tax outcome for you. When determining whether this product is suitable for
your circumstances, you should consider the impact it will have on your own taxation
position and seek professional advice on the tax implication it may have.

The summary below is general in nature and does not take into account specific
circumstances of each individual customer.

9.1 Foreign exchange gains and losses

FX Contracts may give rise to taxable gains or deductible losses. The treatment of these
transactions for taxation purposes is complex and will depend on your individual
circumstances. Accordingly, you should seek appropriate tax advice.

There are particular provisions in Division 775 of the Income Tax Assessment Act 1997
(Cth) that can bring to account for tax purposes, foreign currency gains and losses when
realised and the Division sets forth a number of “realisation events” in this regard. The
Taxation of Financial Arrangements provisions can also have application to foreign

19
Product Disclosure Statement

exchange gains and losses and may have an impact on the time foreign exchange
transaction gains and losses are brought to tax and the measurement of the foreign
exchange gains and losses for income tax purposes.

The impact of the foreign exchange rules, subject to some exceptions, in general terms
is:

(a) if you make a gain from a foreign currency arrangement and part of that gain is
attributable to a currency exchange rate fluctuation, that part of the gain is
included in your assessable income as an FX realisation gain;

(b) if you make a loss from a foreign currency arrangement and part of that loss is
attributable to a currency exchange rate fluctuation, that part of the loss is
deducted from your assessable income as an FX realisation loss.

20
Trading on ASX 24

Customer Agreement

Minimum Terms
This Agreement is made between Customer and Interactive Brokers LLC:
A) Customer to provide information
In relation to the Customer's Trading on the ASX 24 Market, the Customer will upon Interactive Brokers LLC's
request, provide all information and documentation relevant to that Trading, to Interactive Brokers LLC and the
Interactive Brokers LLC is authorised by the Customer to provide the information and documentation to ASIC
(b) Margins
The Customer acknowledges that
(i) Interactive Brokers LLC may Call for payment of Margin such money or property (or Call for the lodgement of
Approved Securities in lieu thereof) as the Interactive Brokers LLC, in its absolute discretion, feels is necessary to
protect itself from the personal obligation incurred by Dealing in Contracts on behalf of the Customer .
(ii) should the Customer fail to meet the Call (or lodge Approved Securities) then Interactive Brokers LLC may
(without prejudice to any other rights or powers under the agreement) and without creating an obligation to do so,
Close Out, without notice, all or some of the Customer's Contracts.
(iii) the time for payment of Margins is of the essence and if no other time is stipulated by Interactive Brokers LLC
prior to Calling a Margin then the Customer is required to comply within twenty-four (24) hours.
(iv) liability to pay the Initial Margin accrues at the time the Trade is executed regardless of when a Call is made.
(v) liability to pay Margin accrues at the time the Margin comes into existence regardless of when a Call is made.
(vi) the Customer is responsible to pay in cash any deficit owing to Interactive Brokers LLC after closure and that if
the Customer defaults in payment of such deficit, the Interactive Brokers LLC may realise any securities held by the
Interactive Brokers LLC and apply the proceeds against that deficiency.
(c) Tape recordings
An acknowledgment by the Customer that the Customer's telephone conversations with the Interactive Brokers
LLC can be recorded by Interactive Brokers LLC. The Customer is to be given the right to listen to any recording in
the event of a dispute or anticipated dispute.
(d) Right to refuse to Deal
An acknowledgment by the Customer that Interactive Brokers LLC reserves the right to refuse to Deal on behalf of
the Customer in relation to any Dealings in Contracts (other than Closing Out existing Open Positions held in the
Interactive Brokers LLC's account on behalf of the Customer) or limit the number of Open Positions held on behalf
of the Customer or both. Interactive Brokers LLC will inform the Customer of any refusal at or before the time of
the Customer placing the Order or as soon as possible thereafter.

www.interactivebrokers.com Page 1 / 2
(e) Termination and Closing Out
An acknowledgment that:
(i) without affecting any existing obligations or liabilities, either the Customer or Interactive Brokers LLC may
terminate the agreement at any time by giving the other notice In Writing to that effect;
(ii) upon termination of the Customer agreement that unless otherwise agreed In Writing Interactive Brokers LLC
will Close Out all the Customer's Futures Contracts and Close Out, abandon or exercise any Options not yet
exercised.
This Agreement is Signed electronically by Customer

www.interactivebrokers.com Page 2 / 2
 INTERACTIVE BROKERS LLC SUPPLEMENTAL AGREEMENT & DISCLOSURES FOR TRADING ON THE AUSTRALIAN STOCK EXCHANGE
LIMITED

Effect of the Supplemental Agreement & Disclosures

This Supplemental Agreement & Disclosures for Trading on the Australian Stock Exchange Limited (“ASX”) (“the Agreement”) is in addition to the
Interactive Brokers (ARBN 091191141; AFSL 245574) (“IB”) Customer Agreement and forms part of the contract between IB and Customer (hereinafter,
“Customer” or “Client”) regarding transactions on ASX.

Market Transactions on ASX are entered into subject to the Rules, directions, decisions and requirements of ASX, and the Australian Clearing House
Pty Limited (“ACH”) Clearing Rules, and, where relevant, the ASX Settlement and Transfer Corporation Pty Limited (“ASTC”) Settlement Rules; the
customs and usages of the Market; and the correction of errors and omissions. Confirmations regarding Customer’s transactions are issued subject to
these terms.

ASX Authority Regarding Market Transactions

Customer understands and agrees that ASX has the power under the Rules to cancel or amend Market Transactions or Crossings.

Disclosures Regarding the Execution and Clearing of ASX Transactions

Pursuant to ASX Market Rule 7.1.1, IB provides you with the following information:

IB is not a participant on the ASX. IB’s proprietary trading affiliate, Timber Hill Australia Pty Limited (ABN 25079993534) (“THA”) is a participant on the
ASX. IB shall route customers’ ASX orders through THA’s connection to the ASX dedicated to the routing of only IB customer orders.

The business address and phone number for THA is:

Level 25
56 Pitt Street
Sydney
NSW, 2000, Australia
61 2 9240 5145

Orders executed for IB clients shall be cleared by Fortis Clearing Sydney Pty Ltd (“Fortis”), an ACH Clearing Participant. With respect to clients’ orders
executed on ASX and cleared by Fortis, Fortis carries the Clearing Obligations and any settlement obligations for all Market Transactions of THA and IB
(including those of Customer). As the Clearing Participant, Fortis must settle such transactions as principal with ACH or the relevant counter-party, even
though the Market Transaction may have been entered into on Customer’s behalf. The Clearing Obligations and any settlement obligations of Customer
are therefore owed directly to Fortis, as the Clearing Participant.

If Customer fails to pay the amounts due in respect of a Market Transaction; or if Customer fails to fulfill its settlement obligations in respect of a Market
Transaction, Fortis has direct rights against Customer, including the rights of sale under the Market Rules. As such, an agreement is deemed to have
been entered into between Fortis and Customer upon the terms included herein. Such deemed agreement comes into existence immediately upon the
receipt by IB of an order by Customer to enter into a Cash Market Transaction.

The business address and phone number for Fortis are below:

Level 8
50 Bridge Street
Sydney
NSW, 2000, Australia
61 2 8221 3000

National Guarantee Fund Coverage of ASX Market Transactions

IB is not a participant on the ASX and Customer’s market transactions are not covered by the National Guarantee Fund (“NGF”).

Contact

Customer may contact IB’s Customer Service Department with any questions regarding this document. The contact details to reach an IB Customer
Service Representative are available on the IB website at: www.interactivebrokers.com. IB’ s main customer service telephone numbers are as follows:

1-877-442-2757 (from inside the U.S.)

312-542-6901 (from outside the U.S.)

I have read, understand and agree to be bound by these terms.

IF YOUR INTERACTIVE BROKERS ACCOUNT CONFIGURATION WILL INCLUDE PERMISSIONS TO TRADE OPTIONS ON THE AUSTRALIAN
STOCK EXCHANGE LIMITED, YOUR ACCOUNT WILL ALSO BE SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS.
 INTERACTIVE BROKERS LLC AGREEMENT FOR CUSTOMERS TRADING OPTIONS ON THE AUSTRALIAN STOCK EXCHANGE LIMITED

The following terms and conditions are required by Australian Stock Exchange Limited (“ASX”) Market Rule 7.1.2 to be in place between
Market Participants and their customers who trade options on ASX. Though Interactive Brokers (ARBN 091191141) (“IB”) is not a participant
on the ASX, IB has implemented the below terms and conditions in accordance with ASX Market Rule 7.1.2.

1 Application of Market Rules

The Client and IB are bound by the Market Rules of Australian Stock Exchange Limited (“ASX”), the Corporations Act and the Procedures,
customs, usages and practices of ASX and its related entities, as amended from time to time, in so far as they apply to Options/derivative
instruments traded on ASX for the Client. Client authorizes IB to route Client’s orders for equity and index options to the ASX for execution.

2 Explanatory Booklet

The Client has received and read a copy of the current explanatory booklet published by ASX in respect of each ASX Derivative Market Contract.

3 Authority

The Client acknowledges that they are either:

(a) acting as principal; or

(b) acting as an intermediary on another’s behalf and are specifically authorized to transact the ASX Derivative Market Contracts, by the terms of:-

(i) a licence held by the Client;

(ii) a trust deed (if the Client is a trustee); or

(iii) an agency contract.

4 Nature of IB’s Obligations

Notwithstanding that IB may act in accordance with the instructions of, or for the benefit of, the Client, the Client acknowledges that any contract
arising from any order submitted to the Market, is entered into by IB as principal.

5 Dealing as principal

The Client acknowledges that IB or its affiliates, including Timber Hill Australia Pty Limited (ABN 25079993534) (“THA”), may, in certain
circumstances permitted under the Corporations Act and the Market Rules, take the opposite position in a transaction in the ASX Derivative Market
Contracts, either acting for another client or on its own account.

6 Commissions and fees

The Client must pay to IB commissions, fees, taxes and charges in connection with dealings for the Client in ASX Derivative Market Contracts at
the rates determined by IB from time to time and notified to the Client in writing.

7 Tape recording of conversations

The Client acknowledges that IB may record telephone conversations between the Client and IB. If there is a dispute between the Client and IB,
the Client has the right to listen to any recording of those conversations.

8 Client to provide information

The Client will take all reasonable steps to deliver information or documentation to IB, or cause information or documentation to be delivered to IB
concerning Option Transactions which are requested by a person having a right to request such information or documentation. IB is authorized to
produce the information or documentation to the person making the request.

9 Right to refuse to deal

IB is not an ASX participant. IB’s proprietary trading affiliate, THA, is an ASX participant. For clients wishing to execute trades on ASX, IB shall
route such orders through THA’s connection to the ASX Integrated Trading System (‘ITS”).

The Client acknowledges that IB may at any time refuse to deal in, or may limit dealings in, the ASX Derivative Market Contracts for the Client.
Neither IB nor its affiliate, THA, the ASX Trading Participant, are required to act in accordance with the Client’s instructions where to do so would
constitute a breach of the Market Rules, the Clearing Rules, or the Corporations Act. IB will notify the Client of any refusal or limitation as soon as
practicable.
10 Termination of Agreement

Either the Client or IB may terminate this Agreement by giving notice in writing to the other. Termination will be effective upon receipt of the notice
by the other party.

11 Effect of termination

Termination does not affect the existing rights and obligations of the Client or IB at termination.

12 Revised terms prescribed by ASX

If ASX prescribes amended minimum terms for a Client Agreement for the ASX Derivative Market Contracts for the purposes of the Rules (the
“New Terms”), to the extent of any inconsistency between these minimum terms and the New Terms, the New Terms will override the terms of this
Agreement and apply as if the Client and IB had entered into an agreement containing the New Terms.

13 Market Participant to provide Client with copy of changes

IB will provide a copy of the New Terms to the Client as soon as practicable after ASX prescribes the New Terms.

14 Application of Clearing Rules

The Client acknowledges that each Option registered with an Approved Clearing Facility is subject to operating rules and the practices, directions,
decisions and requirements of that Approved Clearing Facility.

15 Authority of ASX Regarding Market Transactions

Customer understands and agrees that ASX has the power under the Rules to cancel or amend Market Transactions or Crossings.

I have read, understand and agree to be bound by these terms.

____________________________________ _______________
Customer Signature Date
 Understanding
Options Trading

ASX.
The Australian Sharemarket
Disclaimer of Liability

Information provided is for educational purposes and does not constitute financial product advice. You
should obtain independent advice from an Australian financial services licensee before making any financial
decisions. Although ASX Limited ABN 98 008 624 691 and its related bodies corporate (“ASX”) has
made every effort to ensure the accuracy of the information as at the date of publication, ASX does not
give any warranty or representation as to the accuracy, reliability or completeness of the information.
To the extent permitted by law, ASX and its employees, officers and contractors shall not be liable for
any loss or damage arising in any way (including by way of negligence) from or in connection with any
information provided or omitted or from any one acting or refraining to act in reliance on this information.

No part of this Booklet may be copied, reproduced, published, stored in a retrieval system or transmitted
in any form or by any means in whole or in part without the prior written permission of the ASX Group.

For these product/s the market is operated by ASX Limited ACN 008 624 691.

Edition 16 printed November 2011

© Copyright 2011 ASX Limited ABN 98 008 624 691. All rights reserved 2011

Exchange Centre, 20 Bridge Street, Sydney NSW 2000 Telephone: 131 279 www.asx.com.au
Contents
Before you begin 2 Taxation 16

What is an option? 3 Tradeability 17

Call options 3
Put options 4 How can options
Advantages of option trading 5 work for you? 18
Risk management 5
Time to decide 5
Speculation 5 Trading index options 20
Leverage 5 How are index options different? 20
Diversification 5 Settlement method 20
Income generation 5 Some key advantages of
trading index options 21
Option features 6 Examples of how trading index
options can work for you 22
The 5 components of an option contract 6 Differences between equity
1. Underlying securities/approved indices 6 options and index options 23
2. Contract size 6
3. Expiry day 6 Pay-off diagrams 24
4. Exercise (or strike) price 7
Call option taker 24
5. Premium 7
Call option writer 24
Put option taker 25
Adjustments to option
Put option writer 25
5
contracts 8
Summary 26

Option pricing fundamentals 9 Risks of options trading 27

Intrinsic value 9
Call options 9
You and your broker 28
Put options 9
Time value 10 Your relationship with your broker 28
The role of dividends in The paperwork: Client Agreement forms 28
pricing and early exercise 10
Instructing a broker to trade options 29
Role of Market Makers 30
Parties to an option contract 11
ASX Clear Pty Limited 32
The option taker 11
Options information on the ASX web site 33
The option writer 13

Glossary of terms 37
Tracking positions and costs 14

How to track options positions 14

Option contract specifications 39
Costs 14

Margins 15 Further information 40

 Before you begin

The ASX options market has been operating Option sellers are referred to as ‘writers’ because
since 1976. Since the market started, volumes they underwrite (or willingly accept) the obligation
have increased significantly. There are now to deliver or accept the shares covered by an
over 60 different companies and the S&P ASX option. Similarly, buyers are referred to as the
200 share price index to choose from. A list ‘takers’ of an option as they take up the right to
of companies and indices over which Exchange buy or sell a parcel of shares.
Traded Options (options) are traded can be
found on the ASX website, www.asx.com.au/ Every option contract has both a taker (buyer)
options. and a writer (seller). Options can provide
protection for a share portfolio, additional
This booklet explains the concepts of options, income or trading profits. Both the purchase
how they work and what they can be used and sale of options, however, involve risk.
for. It should be noted that this booklet deals Transactions should only be entered into by
exclusively with Exchange Traded Options over investors who understand the nature and
listed shares and indices, and not company extent of their rights, obligations and risks.
issued options. Information on other ASX
products is available by calling 131 279 or
visiting www.asx.com.au. To assist in your
understanding there is a glossary of terms
on page 37.

2
What is an option?

An option is a contract between two parties There are two types of options available:
giving the taker (buyer) the right, but not call options and put options.
the obligation, to buy or sell a security
at a predetermined price on or before a Call options
predetermined date. To acquire this right the Call options give the taker the right, but not
taker pays a premium to the writer (seller) of the obligation, to buy the underlying shares
the contract. at a predetermined price, on or before a
predetermined date.
For illustrative purposes, the term shares (or
stock) is used throughout this booklet when
Call option example
referring to the underlying securities. When
considering options over an index, the same Santos Limited (STO) shares have a last sale
concepts generally apply. From time to time price of $14.00. An available 3 month option
options may be available over other types of would be an STO 3 month $14.00 call. A
securities. taker of this contract has the right, but not the
obligation, to buy 100 STO shares for $14.00
The standard number of shares covered by one per share at any time until the expiry*. For this
option contract on ASX is 100. However, this right, the taker pays a premium (or purchase
may change due to adjustment events such as price) to the writer of the option. In order to
a new issue or a reorganisation of capital in the take up this right to buy the STO shares at the
underlying share. specified price, the taker must exercise the
option on or before expiry.
All of the examples in this booklet assume
100 shares per contract and ignore brokerage On the other hand, the writer of this call option
and ASX fees. You will most definitely need to is obliged to deliver 100 STO shares at $14.00
consider these when evaluating an option per share if the taker exercises the option. For 3
transaction. For options over an index, the accepting this obligation the writer receives and
contract value is based on a dollar value per keeps the option premium whether the option
point. Details can be checked in the contract is exercised or not.
specifications.

TAKER WRITER
(BUYER) BROKER ASX BROKER
(SELLER)

It is important to note that the taker is not obligated

to exercise the option.

* The expiry day for stock options is usually the Thursday before the last Friday in the expiry month unless ASX Clear
determines another day. This may change for various reasons (eg. for public holidays), so please check with your broker.
For index options, refer to the contract specifications.
 Put options It is important to note
Put options give the taker the right but not
the obligation to sell the underlying shares that the taker is not
at a predetermined price on or before a
predetermined date. The taker of a put is obligated to exercise
only required to deliver the underlying shares
if they exercise the option. the option.
Put option example If the call or put option is exercised, the shares
An available option would be an STO 3 month are traded at the specified price. This price
$14.00 put. This gives the taker the right, is called the exercise or strike price. The last
but not the obligation, to sell 100 STO shares date when an option can be exercised is called
for $14.00 per share at any time until expiry. expiry day.
For this right, the taker pays a premium (or
purchase price) to the writer of the put option. There are two different exercise styles:
In order to take up this right to sell the STO American style, which means the option can
shares at a specified price the taker must be exercised at any time prior to the expiry; and
exercise the option on or before expiry. The European style, which means the option can
writer of the put option is obliged to buy the only be exercised on the expiry day. Most stock
STO shares for $14.00 per share if the option options traded on ASX are American style.
is exercised. As with call options, the writer
of a put option receives and keeps the option
premium whether the option is exercised or not.

RIGHTS AND OBLIGATIONS

4 CALL OPTION
Taker receives the right to buy shares at the exercise
TAKER price in return for paying the premium to the writer. WRITER *
(BUYER) (SELLER)
Writer receives and keeps premium but
now has the obligation to deliver shares
if the taker exercises.

PUT OPTION
Taker receives the right to sell shares at the exercise
price in return for paying the premium to the writer.
*TAKER WRITER
(BUYER) Writer receives and keeps premium but (SELLER)
now has the obligation to buy the underlying shares
if the taker exercises.

* The taker of a put and writer of a call option do not have to own the underlying shares.
Advantages of option trading

Risk management The table below compares the purchase

of 1 call option and 100 shares. The
Put options, when taken, allow you to hedge
higher percentage return from the option
against a possible fall in the value of shares you
demonstrates how leverage can work.
hold.

Option Stock
Time to decide
By taking a call option, the purchase price Bought on October 15 $38 $400
for the shares is locked in. This gives the call Sold on December 15 $67 $450
option holder until the expiry day to decide
Profit $29 $50
whether or not to exercise the option and buy
the shares. Likewise the taker of a put option Return on investment 76.3% 12.5%
has time to decide whether or not to sell (not annualised)
the shares.
Diversification
Speculation
Options can allow you to build a diversified
The ease of trading in and out of an option portfolio for a lower initial outlay than
position makes it possible to trade options purchasing shares directly.
with no intention of ever exercising them.
If you expect the market to rise, you may Income generation
decide to buy call options. If you expect a fall,
You can earn extra income over and above
you may decide to buy put options.
dividends by writing call options against your
Either way you can sell the option prior to shares, including shares bought using a margin
expiry to take a profit or limit a loss. lending facility. By writing an option you receive
the option premium up front. While you get to
5
Leverage keep the option premium, there is a possibility
that you could be exercised against and have to
Leverage provides the potential to make a
deliver your shares at the exercise price.
higher return from a smaller initial outlay than
investing directly. However, leverage usually It is important that you balance the advantages
involves more risks than a direct investment of trading options with the risks before making
in the underlying shares. Trading in options any decisions. Details of the risks of options
can allow you to benefit from a change in the trading are set out on page 27.
price of the share without having to pay the full
price of the share. The following example helps
illustrate how leverage can work for you.
 Option features

The ease of trading in and out of options 2. Contract size

on ASX‘s options market is assisted by the On ASX‘s options market an option contract
standardisation of the following option contract size is standardised at 100 underlying shares.
components: That means, 1 option contract represents 100
1. Underlying securities underlying shares. As mentioned earlier, this
2. Contract size may change if there is an adjustment such as a
new issue or a reorganisation of capital in the
3. Expiry day
underlying share. In the case of index options,
4. Exercise prices contract value is fixed at a certain number of
dollars per index point (for example, $10 per
There is a fifth component, the option
index point). The size of the contract is equal to
premium, which is not standardised but
the index level x the dollar value per index point
rather determined by market forces. ASX
(for example, for an index at 4,500 points, 1
operates the options market, while ASX Clear
contract would be 4,500 x $10 = $45,000).
Pty Limited (ASX Clear) operates the clearing
facility for ASX‘s options market. Among
3. Expiry day
ASX‘s responsibilities is the setting of the
standardised option components. Options have a limited life span and expire on
standard expiry days set by ASX Clear. The
expiry day is the day on which all unexercised
1 option contract options in a particular series expire and is the
last day of trading for that particular series.
usually represents 100
For options over shares this is usually the
underlying shares. Thursday before the last Friday in the month.
6
For index options, expiry is usually the third
The 5 components of an option Thursday of the contract month. However, ASX
contract Clear has the right to change this date should
the need arise.
1. Underlying securities/approved indices
Options traded on ASX‘s options market As options expire new expiry months are added
are only available for certain securities and further out.
approved indices. These securities are referred
All option classes (stock or index) have expiries
to as underlying securities or underlying
based on the financial quarters (March, June,
shares. They must be listed on ASX and are
September and December).
selected by ASX Clear according to specific
guidelines. The issuers of underlying securities For example, a June expiry means that the
do not participate in the selection of securities option expires on the expiry day in June. If
against which options may be listed. Thursday or Friday are not business days, the
expiry day is brought forward.
Calls and puts over the same underlying
security are termed classes of options. A full list of all options series available for
For example, all call and put options listed trading is available on the ASX website,
over Lend Lease Corporation (LLC) shares, www.asx.com.au/options in the csv file
regardless of exercise price and expiry “Options code list” in the “Trading Information”
day, form one class of option. A list of all section. This list is updated daily.
the classes of options trading on ASX‘s
options market can be found on the ASX
website www.asx.com.au/options (in the
“Trading Information” section on the ‘Volatility
parameters and ETO class rankings’ page).
You can find a useful expiry calendar on the payable for a standard size option contract,
ASX website: www.asx.com.au/options under multiply the quoted premium by the number
“Expiry calendar” in the “Trading Information” of shares per contract, usually 100.
section.
For example, a quoted premium of 16 cents
For detail on option listing guidelines please represents a total premium cost of $16.00
view the “Option listing guidelines.pdf” on the ($0.16 x 100) per contract. To calculate
ASX website: www.asx.com.au/options in the the full premium payable for an index option,
“Trading Information” section. you simply multiply the premium by the
index multiplier. For example, a premium of
4. Exercise (or strike) prices 30 points, with an index multiplier of $10,
The exercise price is the predetermined buying represents a total premium cost of $300
or selling price for the underlying shares if the per contract.
option is exercised.
No eligibility for dividends and voting
ASX Clear sets the exercise prices for all
The taker of the call option or the writer of
options listed on ASX‘s options market with a
a put option does not receive dividends on
range of exercise prices available for options on
the underlying shares until the shares are
the same expiry. New exercise prices are listed
transferred after exercise. Nor do they obtain
as the underlying share price moves.
any voting rights in relation to the shares until
For example, if the underlying share is trading that time.
at $3.50, it is likely that option contracts
with the following strike prices would be listed:
$3.00, $3.25, $3.50, $3.75 and $4.00. Option information is
A range of exercise prices allows you to more 7
effectively match your expectations of the price available on our website
movement in the underlying share to your
option position. Exercise prices may also be
www.asx.com.au or in
adjusted during the life of the option if there
is a new issue or a reorganisation of capital
The Australian Financial
in the underlying shares.
Review newspaper.
5. Premium
The premium is the price of the option which
is arrived at by the negotiation between the
taker and the writer of the option. It is the only
component of the five option components that
is not set by ASX Clear.

Option premiums are quoted on a cents per

share basis. To calculate the full premium
 Adjustments to option contracts

The specifications of option contracts listed Corporate events that do not strictly
on ASX‘s options market are standardised as affect shares in a pro-rata manner, that is
much as possible. proportionally, are generally excluded from an
option adjustment. For instance, an entitlement
However, ASX may make adjustments to issue of 50 shares for each shareholder,
options to preserve, as far as practicable, the (irrespective of the number of shares held by
value of positions in options held by takers and a shareholder) is not a strictly pro-rata issue.
writers. Adjustments are made as a result of But a bonus issue of 1 for 2 does result in an
corporate events that affect the price of the adjustment as it is a pro-rata issue of 50 new
underlying, such as a bonus issue, share split shares for each 100 old shares held.
or rights issue.
The various adjustment circumstances and also
Adjustments may be made to one or more of a detailed treatment of option adjustments,
the components of an option, including exercise titled Explanatory Guide for Option Adjustments
price, contract size, underlying securities, and can be found on the ASX website at
number of contracts. With some events, ASX www.asx.com.au/options (under “Corporate
has adopted adjustments which are understood Actions and Notices”).
by the market to be conventions that will be
applied when those circumstances arise. This document covers:
These are specific adjustments set out in the • what an adjustment is
ASX Operating Rules.
• why adjustments are made
The adjustment assumes that the corporate • how adjustments are determined
event giving rise to a need to make an • different types of adjustments
adjustment has an ex-date or a deemed ex-
8 date, and the event must affect the parcel
• examples of past adjustments.

of underlying securities. ASX considers that

the value of the option to both the taker and
the writer is best preserved over the ex-date
by maintaining the total exercise value. The
total exercise value is the product of three
parameters:
• the quantity of option contracts
• the number of the underlying securities
represented by the option contract
• the exercise price of option contracts in
the series.
Option pricing fundamentals

When considering an option it is important

to understand how the premium is calculated. Remember, call options convey to the taker
Option premiums change according to a range the right but not the obligation to buy the
of factors including the price of the underlying underlying shares. If the share price is
share and the time left to expiry. An option below the exercise price it is better to buy
premium can be separated into two parts – the shares on the sharemarket and let
intrinsic value and time value. Different factors the option lapse.
influence intrinsic and time value.

Put options
Intrinsic value
Put options work the opposite way to calls.
Intrinsic value is the difference between the
If the exercise price is greater than the market
exercise price of the option and the market price
price of the share the put option is in-the-
of the underlying shares at any given time. Here
money and has intrinsic value. Exercising the
are some examples for call and put options.
in-the-money put option allows the taker to sell
the shares for a higher price than the current
Call options market price.
For example, if CSL Limited (CSL) June $30.00
call options are trading at a premium of $1.50 For example, a CSL July $31.00 put option
and CSL shares are trading at $31.00 per share, allows the holder to sell CSL shares for
the option has $1.00 intrinsic value. This is $31.00 when the current market price for CSL
because the option taker has the right to buy the is $30.00. The option has a premium
shares for $30.00 which is $1.00 lower than the of $1.20 which is made up of $1.00 of
market price. Options that have intrinsic value are intrinsic value and 20 cents time value.
said to be ‘in-the-money’.
A put option is out-of-the-money when the share 9
price is above the exercise price, as a taker will
CSL option Intrinsic time
not exercise the put to sell the shares below
share premium value value the current share price.
price (Share price – (Option premium –
Exercise price) Intrinsic value)
CSL option Intrinsic time
$31.00 $1.50 = $1.00 + $0.50 share premium value value
CALL OPTION EXERCISE PRICE $30.00
price (Share price – (Option premium –
Exercise price) Intrinsic value)
In this example, the remaining 50 cents of the
premium is time value. $30.00 $1.20 = $1.00 + $0.20
PUT OPTION EXERCISE PRICE: $31.00
However, if the shares were trading at $29.00
there would be no intrinsic value because the Once again, remember put options convey
$30.00 call option contract would only enable the right but not the obligation to sell the
the taker to buy the shares for $30.00 per underlying shares. If the share price is
share which is $1.00 higher than the market above the exercise price it is better to sell
price. When the share price is less than the the shares on the share market and let the
exercise price of the call option, the option is option lapse.
said to be ‘out-of-the-money’.

When the share price equals the exercise price, the

call and the put options are said to be ‘at-the-money’.
 Time value Time value
Time value represents the amount you are The amount you are willing to pay for the
prepared to pay for the possibility that the possibility that you could make a profit from
market might move in your favour during the the option transaction. It is influenced by
life of the option. Time value will vary with in- the following factors:
the-money, at-the-money and out-of-the-money • time to expiry
options and is greatest for at-the-money options.
• volatility
As time draws closer to expiry and the • interest rates
opportunities for the option to become profitable • dividend payments
decline, the time value declines. This erosion
• market expectations.
of option value is called time decay. Time value
does not decay at a constant rate, but becomes
more rapid towards expiry.

Time
value

Time Expiry Day

The role of dividends in pricing

and early exercise
10 When a share goes “ex-dividend” its price usually Options investors need to make an assessment
falls by the amount of the dividend. As option of when and how much a dividend is likely to be
contracts do not carry any right to dividends and factor this into their assessment of the fair
paid on the underlying shares it follows that value of any particular option series. The ASX
option prices, both puts and calls need to take theoretical options price calculator can assist
account of any dividend likely to be paid during with this task.
the life of the option. Although companies
usually follow a pattern as to the timing and the Dividend payments can also influence the
amount, these can change. likelihood of an option being exercised early. ASX
also has a calculator to assist with assessing
this likelihood.

The key factors which affect the time value of an option are:

Time to expiry The longer the time to expiry, the greater the time value of the option.

Volatility In general, the more volatile the price of the underlying share or index, the higher the
premium will be. This is due to the wider range over which the stock can potentially move.

Interest rates A rise in interest rates will push call option premiums up and put option premiums down.

Dividend payments If a dividend is payable during the life of an option, the premium of a call option will be lower,
and the premium of a put option higher, than if no dividend was payable. Holders of option
contracts who do not own the underlying securities are not eligible for dividends payable on
those shares.

Market expectations Ultimately supply and demand determine the market value of all options. During times of
strong demand, premiums will be higher.
Parties to an option contract

The option taker On average 15% of options are exercised.

However this does not mean 85% expire or
An option taker is an investor or trader
worthless. Instead 60% of options are closed
anticipating a significant move in a particular
out whilst 25% expire worthless. These figures
share price. Taking an option offers the
represent the average over recent times and
opportunity to earn a leveraged profit with
may vary depending on current volatility and
a known and limited risk.
other features.
Taking a call option gives you the right to buy the
Assume AMP Limited (AMP) shares are trading
shares covered by the option at the exercise
at $4.24. Anticipating an increase in the share
price at any time until expiry. In general, call
price, you take a 3 month AMP $4.25 call for
option premiums rise as the underlying share
45 cents, or $45 total premium ($0.45 x 100
price rises. For this reason the taker of a call
shares per contract).
option expects the underlying share price will
rise. Close to the expiry day, AMP shares are trading
at $5.25 and the option premium is now $1.02
Taking a put option gives you the right, but
per share. You could exercise the option and
not the obligation, to sell the underlying shares.
buy 100 AMP shares at $4.25, which is $1.00
Put option premiums usually rise as the
below the current market price, realising a gain
underlying share price falls. For this reason
of 55 cents per share: $1.00 – $0.45 = $0.55
the taker of a put option expects the underlying
(excluding brokerage and exchange fees).
share price to fall.
Alternatively you can close out the call on
ASX‘s option market by completing an equal
In taking this right to buy or sell shares, and opposite transaction to your opening
the taker pays the premium. This premium transaction. In this example you would write an 11
represents the maximum possible loss on AMP August $4.25 call for $1.02 (the current
the option for the taker. premium) and realise a gain of 57 cents per
share (excluding brokerage and exchange fees).

It is important to remember that it is not The 2 cent profit difference between exercising
necessary for the taker of a put option to own and closing out the call is due to the option
the underlying shares at the time of taking the having some remaining time value (as explained
put. Certainly, if the taker chooses to exercise on page 10).
the put option they will be required to deliver
the underlying shares, at the exercise price, If AMP shares had declined over this period,
to a randomly selected writer of put options the call premium would have also declined.
in that series. However, the taker also has Depending on the timing and magnitude of
the choice of closing out the position on ASX‘s the share price decline, the option may have
options market prior to expiry. A full explanation retained some value prior to expiry, allowing you
of closing out can be found on page 17. to recoup a portion of the original premium by
liquidating the position. The first table on the
If the taker chooses to close out the option, following page summarises the two alternatives.
a loss will be incurred if the premium that
the investor receives on closing out is lower
than the premium paid by the investor for
the original taken contract. A profit will occur
if the reverse is true. Any time value in the
premium for the option will be lost if the option
is exercised.
 EXERCISE vs CLOSEOUT
CURRENT HOLDING: ONE $4.25 AMP CALL
AMP SHARES TRADING AT $5.25
exercise closeout

Exercise option / buy 100 AMP shares for $4.25* Closeout / sell ONE AMP $4.25 call for $1.02**

Sell 100 AMP shares

at market price of $5.25*

Total profit Less initial cost

$5.25 - $4.25 = $1.00 per share ($100) $1.02 - $0.45 = $0.57 cents profit per share ($57)

Less initial cost

$1.00 - $0.45 = $0.55 cents profit per share ($55)

* Fees and Commission are payable on each of these steps  ** Fees and Commission are paid on the sale of the option to close

Put buying example need to purchase these before exercising the

Say AMP Limited (AMP) shares are trading at put option. Alternatively, you could close out the
$5.48. Anticipating a fall in the share price, option by selling the 3 month AMP $5.25 put
you take a 3 month AMP $5.25 put option for at $1.30 (the current market premium) and
15 cents per share. realise a gain of $1.15 per share (excluding
brokerage and exchange fees). The 5 cent
Close to the expiry day, AMP shares are difference represents time value remaining in
trading at $4.00 and the option premium is the option premium. If AMP shares had risen in
now $1.30 per share. price over this period, the option premium would
have declined. As with the call option, the put
You could exercise the option and sell 100 AMP option may have retained some value and you
shares at $5.25 which is $1.25 above the may have been able to close out the option to
12 current market price, realising a gain of $1.10 recover some of the initial premium. The second
per share (excluding brokerage and exchange table summarises the two alternatives.
fees). If you don’t own the shares you would

EXERCISE vs CLOSEOUT
CURRENT HOLDING: ONE $5.25 AMP PUT
AMP SHARES TRADING AT $4.00
exercise closeout

Before exercising option, buy AMP shares at market price of $4.00* Close out / sell ONE AMP $5.25 put for $1.30**

Exercise put and sell 100 AMP shares for $5.25* Less initial cost
Total profit $1.30 - $0.15 = $1.15 cents profit per share ($115)
$5.25 - $4.00 = $1.25 per share ($1,25)

Less initial cost

$1.25 - $0.15 = $1.10
profit per share ($110)

* Fees and commission are payable on each of these steps ** Fees and commission are paid on the sale of the option to close
The option writer Put writing example
Option writers earn premium for selling options. The writer of a Computershare Limited (CPU)
Both put and call option writers are generally November $9.50 put option is obliged to
looking for prices to remain steady. buy 100 CPU shares at $9.50 as long as
the position remains open. If CPU shares
Call writing example fall to $8.50 and the taker of the put option
Suppose you own 100 Australia and New exercises the option, the writer is obliged to
Zealand Banking Group (ANZ) shares and write buy the shares at $9.50. On the other hand
one ANZ June $20.00 call option. If you are if the CPU shares rise to $10.00 it is unlikely
exercised against, you must sell 100 ANZ that the taker of the put option will exercise
shares for $20.00 per share. If you do not and accordingly, the put writer will earn the
already own ANZ shares you will be obliged to option premium.
buy 100 ANZ shares at the current market
As the example shows, the writer of a put
price. Writing uncovered call options therefore
option has risk if the share price falls. In
exposes the writer to substantial risk and
extreme cases the risk is that the price of the
should not be undertaken lightly.
shares falls to zero.

The decision to exercise the option rests entirely with the option taker. An option writer
may be exercised against at any time prior to expiry when trading an American style option.
However, this is most likely to occur when the option is in-the-money and close to expiry, or
when the underlying share is about to pay a dividend. Call option takers may exercise in order
to receive the dividend. ASX Clear will require payment of margins to ensure the obligations of
the option writer to the market are met unless the underlying stock is held as collateral.

13
 Tracking positions and costs

When deciding whether to trade options, there a number of factors to be aware of:
• the costs of trading options
• how to track the value of your options or option positions
• the requirement to pay margins when selling options.

How to track options via the internet and in the newspapers

Option codes and prices are available in the options section of the ASX website. To access this go
to www.asx.com.au/options. The ASX website also has pricing and other information about the
underlying securities or indices. Details of the previous day‘s trading are published in summary form
in The Australian Financial Review. Current option prices are also available from your broker.

Costs
Brokerage is payable at a flat rate or as a percentage based on the full premium. ASX Clear
charges a fee per contract, and also an exercise fee, if you exercise an option. For more
information contact your broker, or visit the ASX website, www.asx.com.au/options (under Costs
In the “Trading Information” section).

14
Margins

Margins are designed to protect the financial Each week ASX Clear publishes the margin
security of the market. If you write an option interval for all option classes. You can find this
contract, you have a potential obligation to the figure on the ASX website at www.asx.com.
market because the taker of the option may au/options (under Margins and Collateral in
exercise their position. A margin is an amount the “Trading Information” section). If you have
that is calculated by ASX Clear as necessary a number of option positions open, ADMS will
to ensure that you can meet that obligation on evaluate the risk associated with your entire
that trading day. options portfolio and calculate your total margin
obligation accordingly. It is possible that some
Note that ASX Clear‘s relationship is with option positions may offset others, leading to a
your broker, and not directly with you. Once reduction in your overall obligation.
an option trade is registered with ASX Clear,
the process of novation results in ASX Clear The ASX website has a tool available to help
becoming the counterparty to both the buying you to estimate your margin liability. It can be
and the selling broker. ASX Clear calls margins found at www.asx.com.au/options (under
from your broker, who then calls margins from “Calculators and tools”).
you.
How margins are met
References to margins and collateral in this
Your broker will require you to provide cash
document reflect the practices of ASX Clear
or collateral to cover your margin obligations.
in risk margining ASX Clearing Participants.
Note that minimum margin requirements
It is important to note that individual clients
are set by ASX Clear, but higher margin
may be risk managed differently by their ASX
requirements may be imposed by brokers.
Clearing Participant or broker with respect to
(for example) the type and quantity of margin There is a range of collateral that is acceptable
applied, the type of collateral accepted and to ASX Clear. This includes certain shares and
15
the interest paid on cash collateral. Individuals bank guarantees. ASX Clear applies a “haircut”
should contact their broker to establish their in relation to the value of some collateral to
practices. protect against a sudden fall in the value of
collateral held.
How margins are calculated
ASX Clear calculates margins using a system Details of eligible collateral are published on
known as the ASX Derivatives Margining the ASX website at www.asx.com.au/options
System (ADMS), which takes into account (under Margins and Collateral in the “Trading
the volatility of the underlying security when Information” section).
calculating margin obligations.
Payment of margins
The total margin for ETOs is made up of two Margins are recalculated on a daily basis to
components: ensure an adequate level of margin cover is
maintained. This means that you may have to
1. The premium margin is the market value
pay more if the market moves against you. If the
of the position at the close of business each
market moves in your favour, margins may fall.
day. It represents the amount that would
be required to close out your option position. Settlement requirements for trading options
are strict. You must pay margin calls by the
2. The risk margin covers the potential change
time stated in your Client Agreement. This is
in the price of the option contract assuming
usually within 24 hours of being advised of the
the maximum probable intra-day movement
margin call by your broker. If you do not pay in
(daily volatility) in the price of the underlying
time, your broker can take action to close out
security. The daily volatility figure, expressed
your positions without further reference to you.
as a percentage, is known as the margin
interval.
 Taxation

It is beyond the scope of this booklet to provide For a paper discussing the taxation treatment
a detailed treatment of the taxation issues of options, please refer to the ASX website, at
that are relevant to trading or investing in www.asx.com.au/options (under Tax in the
options. You should, however, take taxation into “Trading Information” section).
consideration when you are investing in options,
just as you would when investing in shares. This document covers aspects of options
trading such as:
Some of the issues that may be relevant • classification of the options trader as a
include: trader, speculator, hedger or investor

• Are you classified as a trader, as a • the treatment of realisation of profits or

speculator or as a hedger? losses from options trading
• the use of options in superannuation funds
• Is an option trade on revenue account or on
• franking credits – Holding Period Rule and
capital account?
Related Payments Rule.
• Are there timing issues, for example when
an option is opened in one tax year and
closed in the next tax year?

• Where an option strategy is in place around

the time a stock goes ex-dividend, are you in
danger of not satisfying the 45-day Holding
Period Rule and therefore being disqualified
from receiving the franking credits attached

16 to the dividend?

• Could the exercise of an option position

crystallise a taxation event for the underlying
shareholding?

This is by no means a comprehensive list of

the taxation issues of options trading. The
information contained in this booklet is provided
for educational purposes only and does not
constitute investment, taxation or financial
product advice. Taxation issues will vary from
investor to investor. It is therefore important
to discuss your taxation situation with your
financial adviser or accountant, to ensure
that any options trades you enter will not have
adverse taxation implications.
Tradeability

As explained previously, an option is a contract The writer of an option has two alternatives:
between two parties – the taker and the writer.
An option contract comes into existence when 1. Close out the option prior to the expiry.
a writer and a taker agree on the option price For example, if you write a put option as
and the contract is registered with ASX Clear. an opening transaction, you may liquidate
The establishment of a contract is referred to or close out your obligations by taking an
as an open position. identical put option contract with another
party; or
Once the taker has an open position they have
three alternatives: 2. Let the option go to the expiry day. The
option will either be exercised against or
1. The taker can close out their position by expire worthless.
writing an option in the same series as
originally taken and instructing their broker You would close out:
to ‘close out’ the position. • to take a profit
• to limit a loss
For example, if you take a call option as an
opening transaction, you may liquidate or • when there is a risk of unwanted early
close out your right to exercise by writing an exercise.*
identical call option to another party. With options, there is no transfer of rights or
obligations between parties.
2. The taker can exercise the option and trade
* Note that with index options, exercise can only occur
the underlying shares. In the case of index on the expiry day, so this risk does not exist for index
options it is impractical to take delivery of options.
the many shares contained in the index, so
index options are only exercisable at expiry 17
into a cash payment. Index options are
further explained on page 20.

3. The taker can hold the option to expiry and

allow it to lapse.

It is important to note that once the taker exercises

an option it is too late for the writer of that option
to close out their position.
 How can options work for you?

There are a number of different reasons why 2. Protecting the value of your
investors trade in options. Some of these are shares
outlined below.
This strategy can be useful if you are a
shareholder in a particular company and are
1. Earn income concerned about a short term fall in the value
Writing options against shares you already of the shares. Without using options you can
own or are purchasing can be one of the either watch the value of your shares fall, or
simplest and most rewarding strategies. Below you could sell them.
are two scenarios when this strategy may be
appropriate. In each of these scenarios, your Scenario 1: Writing call options to give you
risk is that you will have to sell your shares at downside protection
the exercise price but you still keep the option
Previous examples show how you can generate
premium. This is most likely to happen if the
extra income from your shares by writing
market rises strongly.
options. Writing call options can also generate
extra income to offset a decline in share price.
Scenario 1: Writing options against shares
you already own If WES is trading at $34.00, writing a one
Assume you own 100 Wesfarmers Limited month $32.00 call option for $2.50 means
(WES) shares. The current price is $34.00 the shares could fall by $2.50 before you
and you would be happy to sell your shares if begin to incur a loss. If the share price falls to
the price reached $36.50. You look $31.50 the loss on WES shares is offset by
in the newspaper and see a one month WES the $2.50 option premium. If WES falls further,
call option is worth around 70 cents. You call the $2.50 premium will not be enough to fully
your broker and instruct them to sell a one offset the fall in price.
month WES $36.50 call option which they do
18 for 72 cents ($72 less fees and commissions).
If WES closes above $32.00 at expiry, the
option will be exercised unless the option has
You now have the obligation to sell your WES
been closed out.
shares for $36.50 any time between now
and expiry. For undertaking this obligation you
Scenario 2: Take put options
received $72 (less brokerage and exchange
fees). Calls can also be written against stock Assume you own 100 WES shares and you
bought on margin. Find out more from your think the price will fall. Writing call options will
margin lender, broker or ASX. offset some of the loss, but you would like to be
able to lock in a sale price for your shares if the
Scenario 2: Writing options at the same market does fall. You could take 1 WES June
time as buying the shares $34.00 put option for 90 cents ($90 plus fees
and commissions). If the price falls, you have
Assume you are interested in purchasing 100
until the end of June to exercise your put option
WES shares but would like to reduce the cost
and sell your shares for $34.00. If you are
of doing so. You could establish a buy and write
wrong and the market rises you could let the
over WES shares. This means you would buy
option lapse or alternatively close out before
100 WES shares at around $34.00 and at
the expiry day.
the same time sell a one month WES $36.50
call for say 72 cents. The extra income of $72
(less brokerage and exchange fees) reduces
the cost of buying the shares. You now have
the obligation to sell your WES shares for
$36.50 at any time between now and expiry.

*Please note: you will have to pay margins for

the difference between the options settling and
subsequent stock settlement (options settle
T+1 vs stock T+3)
3. Capitalising on share price 4. Using options gives you time to
movements without having to decide
purchase shares Taking a call option can give you time to decide
You can profit from a movement, either up or if you want to buy the shares. You pay the
down, in the underlying shares without having premium which is only a fraction of the price
to trade the underlying shares themselves. of the underlying shares. The option then locks
Some examples are outlined below. in a buying price for the shares if you decide
to exercise. You then have until the expiry day
Scenario 1: Take calls when expecting the of the option to decide if you want to buy the
market to rise underlying shares.
Buying call options allows you to profit from an
Put options can work in a similar manner.
increase in the price of the underlying shares.
By taking a put option you can lock in a selling
Suppose you believe Computershare Limited
price for shares that you already own and then
(CPU) shares will rise in price over the next
wait until the expiry day of the option to see if it
few months. You don‘t want to pay the full
is worthwhile exercising the option and selling
$900 to buy 100 shares so you decide to
your shares. Or you can let the option lapse if
buy a 3 month $9.50 call for 40 cents ($40
the price does not fall as expected.
plus brokerage and exchange fees). If you are
correct and the price of CPU shares rises then In both cases the most you can lose is the
the value of your option will also rise. You can premium you have paid for the option in the
then sell an equivalent call option to close out first place.
any time prior to the expiry date and take your
profit. You will not have to buy the CPU shares 5. Index options let you trade all the
if you don‘t want to. stocks in an index with just one trade
If the market doesn‘t move as expected, you By using call and put options over an index, you 19
can either close out the option and recoup can trade a view on the general direction of
some of your initial investment, or you can the market, or hedge a portfolio with just one
simply let the option expire worthless. When trade. If you are bullish on the market but don‘t
you take a call option, the most you can lose know what stock to buy or which sector of the
is the premium you have paid in the first place. market will rise, you can buy a call option over
the whole index. This means you don‘t have to
Scenario 2: Take puts when expecting choose a particular stock to invest in, you can
the market to fall just take a view on the direction of the broad
Assume you believe CPU shares will fall in stockmarket. If the level of the index rises
value. You don‘t like the idea of short selling the the value of the call options will rise, just as
shares as you believe this is too risky so you for call options over individual shares. All the
decide to buy a 3 month CPU $9.00 put option concepts about call and put options explained
for 60 cents ($60 plus fees and commissions). in this booklet apply to index options, which are
If you are correct and the price of CPU falls, explained in detail on page 20.
the value of your put should rise. You can then
sell the put to close out any time up to and 6. Other strategies
including the expiry. If the market does not fall, Writing covered calls on stock bought on
then you can close out the option and recoup margin is an increasingly popular strategy.
some of your initial investment, or you can Options can allow you to construct strategies
simply let the option expire worthless. that enable you to take advantage of many
market situations. Some can be quite complex
When you take a put option you don‘t have to and involve varying levels of risk.
own the underlying shares and, as with call
options, the most you can lose is the premium
you have paid in the first place.
 Trading index options

How are index options different? Settlement method

Except where specific reference has been The index options settlement price is based
made to index options, up to this point the on the opening price on ASX Trade of each
options we have been discussing have been stock in the underlying index on the morning of
over shares in individual companies. Individual the expiry date. It is not based on the closing
stock options enable you to trade a view on a index level. As the stocks in the index open, the
particular company. ASX also offers options first trading price of each stock is recorded.
which are traded over a share price index (that Once all stocks in the index have opened, an
is, a group of listed securities). index calculation is made using these opening
prices. This process is called the Opening Price
As the name suggests, index options give you Index Calculation (OPIC). Shortly afterwards
exposure to a sharemarket index. They offer the OPIC is confirmed to ASX and ASX Clear, it
similar benefits and flexibility to that of options is announced to the market. The OPIC is then
traded over individual stocks, with the added posted onto the ASX website at
advantage of offering exposure to a broad www.asx.com.au/options
range of securities comprising an index rather
than being limited to one particular company. This method of calculating the index level for
You can use index options to trade a view on settling index options is used by several major
the market as a whole, or on the sector of the exchanges internationally. It is regarded as an
market that is covered by the particular index. effective way to manage potential volatility around
the expiry of index options and futures contracts.
There are some important differences between
index options and options over individual securities: The Australian market staggers the opening of
stocks, with stocks opening in five tranches,
• Index options are cash settled, rather than
20 deliverable. You will receive a cash payment
according to the initial letter of the stock name:
• A and B
on exercising an in-the-money index option.
• C to F
• Index options are European in exercise style. • G to M
This means there is no risk of early exercise
• N to R
for sellers.
• S to Z.
• The strike price and premium of an index
option are usually expressed in points. The staggered opening means it is not possible
for the entire market to be traded in one ‘hit’
A multiplier is then applied to give a dollar during the opening period. The unwinding of large
figure. For example, the multiplier may be $10 positions to match the index option expiry can
per point, meaning that to buy an index option be done in a more orderly fashion. Furthermore,
with a premium of 50 points, you would pay market opening is typically a time of higher
$500 (plus brokerage and exchange fees). liquidity, and therefore the time the market is
better able to absorb orders placed by traders
looking to unwind index arbitrage strategies.
Some key advantages of trading For example, you hold a $45,000 share portfolio
index options that tacks the index. Assume the index is at
4500 points and assume you buy a 3 month
1. Exposure to the broader market 4500 put option for 250 points (or $2,500
Investing in index options approximates trading plus fees and commissions). At expiry the index
a share portfolio that tracks a particular index. has fallen to 4000 points. You receive a cash
It provides exposure to the broader market payment equal to the difference between 4500
which the index represents, with no specific points (the insured value) and the level of the
company risk. index at expiry, in this case 4000 points.

2. Greater leverage In other words, you receive a cash payment of

$5,000 (500 points x $10 a point) for a net
Like options over a single company, index options profit on the option of $2,500. If your share
can provide leveraged profit opportunities. When portfolio has moved in line with the underlying
the market rises (or falls), percentage gains (or index, then the profits on the put options
losses) are far greater for the option than rises purchase will largely offset the fall in the value of
(or falls) in the underlying index. the portfolio.

3. Protection for a share portfolio

By purchasing index put options, you can lock
in the value of a share portfolio. You may fear a
market downturn, but have good reasons for not
wanting to sell stocks. By purchasing index put
options, you can make profits if the index falls.
Profits on put options should compensate you for
the loss of value in the stocks in the portfolio. 21

Date Index Option trade Premium value

Late today 4500 points Buy 3 month 4500 $2500 (PAY)

Put @ 250 points

Expiry 4000 points Exercise option, $5,000 (RECEIVE)

Receive 500 points x $10

Profit = $2,500
 Examples of how trading index options can work for you
Example 1: Using an index put option to protect a share portfolio
When you decide to buy shares in the sharemarket you are exposed to two types of risks:

1. Company risk – the risk that the specific company you have bought into will underperform.

2. Market risk – the risk that the whole market underperforms, including your shares.

There are a number of ways to protect your shares against market risk using index options. You can,
for example, buy the shares you believe in and buy an index put option to protect yourself against a fall
in the whole market. Depending on the amount of risk you wish to remain exposed to, you can choose
to hedge all or only part of your portfolio. Let‘s assume that it is June, and the broad market index is
at 4500 points. You have a share portfolio worth $135,000 which approximately tracks the index.
You believe that there may be a downturn in the market over the next three months. As an alternative
to selling shares, you decide to buy index put options to protect your portfolio. As the 3 month 4500
index put option has a contract value of $45,000 (4500 points x $10 per point), you are able to
protect your $135,000 portfolio by buying three contracts, for 250 points each. The total cost is
$7,500 (ignoring brokerage and exchange fees).

The 3 month 4500 put gives you the right, but not the obligation, to “sell“ the index at a level of
4500 at expiry.

At expiry, the index has fallen to 4000 points, and your options have the following value:

DATe Index Share Portfolio 4500 Put Premium Value

Today 4500 points $135,000 250 points 3 contracts x $2,500

= $7,500 (PAY)

22 Expiry 4000 points $115,000 500 points 3 contracts x $5,000

= $15,000 (RECEIVE)

Profit (Loss) ($20,000) ($12,500)

= ($20,000 - $7,500)

Your net position is a loss of $12,500. The loss of $20,000 in the value of your shares has
been largely offset by the profit of $7,500 on the option trade.

Alternatively, you could buy index put options with an exercise price greater than the value of the
share portfolio you want to protect. This will provide you with a larger profit on the option trade if
the index falls as expected. However, you will be paying a higher amount in premium, an amount
which will be lost if the expected market decline does not take place.

Example 2: Using an index call option to trade a bullish view of the market
You are expecting the broad sharemarket to rise over the next 3 months. Assume the index is
at 4500. As an alternative to buying a portfolio of shares directly, you decide to buy a 3 month
4500 index call option for 200 points, or $2,000 (plus brokerage and exchange fees). That
gives you the right, but not the obligation, to “buy” the index at a level of 4500 at expiry. Ignoring
brokerage and exchange fees, your break even point at expiry is 4500 + 200 = 4700 points.

The most you are risking in this trade is $2,000, the cost of the option. You have potentially
unlimited profits. At expiry, for every point the index is above your break-even point of 4700 points,
you will make a profit of $10. Two months later, it turns out that you were right in your prediction.
The value has increased as shown in the table on the next page.
Date Index 4500 call Premium value

Now 4500 points 200 points $2,000

2 Months later 4725 (+5%) 320 points $3,200

Profit / loss +$1,200 (+60%)

The profit/loss profile (or pay-off diagram) for As you can see, the option has increased by
this position at expiry looks like this. 60% compared to a relatively small (+5%)
Note our example trades out of the position increase in the index. This is the advantage
1 month prior to expiry. of the leverage which an index call option
provides. Since the option has not yet expired,
you could also have:

1. Sold the option and realised the profit.

2. Kept the option and hoped for more upside

(but remember that time decay is working
BREAK-EVEN POINT 4700 against you).

These are just two of many strategies that

4500 4600 4700 4800 4900
are possible using index options. The range
of expiry dates and exercise prices available
makes it possible to structure a strategy to
reflect any view you may have on the direction
of the broader market.

23
The chart above is called a pay-off diagram.
To learn more about these, check page 24.

Differences between equity options and index options

The table below summarises the main differences between exchange traded options over
individual securities and index options.

Exchange Traded Options Index Options

Exercise style Generally American European

Settlement Deliverable Cash settled

Last trading The Thursday before The third

and the last Friday Thursday of
expiry day in the expiry month the month
Underlying asset ASX approved securities ASX approved indices

Premium Expressed in dollars and cents Expressed in points

Exercise price Expressed in dollars and cents Expressed in points

Contract size 100 shares The exercise price of the option

multiplied by $ value
 Pay-off diagrams

A pay-off or break-even diagram shows Call option writer

the potential profit or loss on the strategy
Using the example of selling a ANZ $20.00 call
at different stock prices at expiry. Pay-off
for $1.00.
diagrams can be drawn for any option or
combination of options in the one class.

Visit the ASX website, www.asx.com.au/ ANZ

options (under “Calculators”) to download any
of the calculators and tools that will plot options
profiles.

Call option taker

Using the example of buying a 3 month
Woolworths Ltd (WOW) $27.00 call for 50
cents.

The break-even point for the call option taker

is the exercise price of the option plus the
premium paid. In this example it is $27.50
($27.00 exercise price + 50 cent premium).

WOW $27.00 CALL OPTION

$0.60
24
$0.40 The diagram shows that the call option writer
has potential profit limited to the premium
$0.20
BREAK-EVEN $27.50 received ($100). If the option writer does not
PROFIT/LOSS

own the underlying shares the potential loss

$0.0
is unlimited. In this case, as the share price
$26.00 $26.50 $27.00 $27.50 $28.00 rises the writer will have to pay more to buy
-$0.20
the shares at the market price if the option is
-$0.40
exercised.
-$0.50
The break-even point for the call option writer
-$0.60
SHARE PRICE is the exercise price of the option plus the
PROFIT/LOSS premium received. This is the same as for the
call option taker.

The diagram shows that while WOW is below

$27.50 the call option taker has an unrealised
For call options the
loss. The most the call option taker can lose break-even point is the
is the premium paid (50 cents). As the WOW
share price rises above $27.50 the call option exercise price plus the
taker begins to profit. The maximum profit is
unlimited as the higher the share price goes, premium.
the larger the taker‘s profit.
For put options the Put option writer
Using the example of selling a 1 month CPU
break-even point is the $9.50 put for 10 cents.

exercise price less the

CPU $9.50 PUT OPTION
premium. $0.20

$0.0
Put option taker $8.50 $9.00 $9.50 $10.00 $10.50
Using the example of buying a 3 month -$0.20
PROFIT/LOSS

BlueScope Steel Ltd (BSL) $2.50 put for 20

cents. -$0.40
BREAK-EVEN $9.40

-$0.60
BSL $2.50 PUT OPTION
-$0.80

$0.50
-$0.100
$0.40
SHARE PRICE
$0.30 PROFIT/LOSS

$0.20

$0.10
The diagram shows that the put option writer
25
$0.0
has profit potential limited to the premium
-$0.10 received ($10). Once the share price falls
-$0.20 below $9.50 the put writer‘s profits begin to
-$0.30 erode. This becomes a loss after the share
-$0.40 price falls below $9.40. The break-even price of
$9.40 is the exercise price less the premium
-$0.50
received, and the potential loss is limited only
by a fall in the share price to zero.

The diagram shows that the most the put

option taker can lose is the premium paid. The
further the share price falls below the break-
even point of $2.30, the larger the investor‘s These four pay-off diagrams are the basis
potential profit. The break-even point for the for more advanced option strategies. By
put option taker is the exercise price less combining these positions, more elaborate
the premium paid. The maximum profit is the and complex strategies can be created.
exercise price less the premium paid.
 Summary

Call Option Taker Call Option Writer

Characteristics Characteristics

Pays premium Receives premium

Right to exercise Obligation to sell shares

and buy the shares if exercised

Benefits from rising volatility Benefits from time decay

Profits from Profits from price falling

price rising or remaining neutral

Limited losses, Potentially unlimited losses,

potentially unlimited gain limited gain

Can SELL before Can buy back before expiry

expiry to close out or before assignment
to close out

Put Option Taker Put Option Writer

Characteristics Characteristics

Pays premium Receives premium

Right to exercise Obligation to buy shares

and sell shares if exercised

Benefits from rising volatility Benefits from time decay

Profits from Profits from price rising

26 price falling or remaining neutral

Limited losses, gain is only limited Losses only limited to the share price
to the share price falling to zero falling to zero limited gain
Can SELL before Can buy back before expiry
expiry to close out or before assignment
to close out

In this booklet we discuss, in general terms, the risks associated with particular option strategies.
It should be remembered that the risk associated with a particular strategy can change over time
and in light of market circumstances. Furthermore if you vary the strategy, for example by adding or
removing options from your initial position, this can have a dramatic impact on the risk profile of the
total position. It could increase your risk, or reduce it. You should give serious consideration to these
matters before varying your strategy, and also seek the advice of your broker.
Risks of options trading

Options are not suitable for all investors. Options writers face potentially
In light of the risks associated with trading unlimited losses
options, you should use them only if you are
Writing (selling) options may entail considerably
confident that you understand them and the
greater risk than taking options. The premium
risks. Before you invest, you should carefully
received by the writer (seller) is fixed and
assess your experience, investment objectives,
limited, however the writer may incur losses
financial resources and all other relevant
greater than that amount. The writer who does
considerations, and consult your broker.
not own the underlying shares or does not have
offsetting positions potentially faces unlimited
Market risks losses.
The market value of options is affected by
a range of factors (see the section ‘Option Additional margin calls
pricing fundamentals’). They may fall in price
You may sustain a total loss of margin funds
or become worthless on or before expiry.
deposited with your broker in relation to your
Changes in the price of the underlying may
positions. Your liability in relation to a written
result in changes to the price of an option, but
option contract is not limited to the amount of
the change can sometimes be in a different
the margin paid. If the market moves against
direction or of a different magnitude to the
your position or margins are increased, you
change in the price of the underlying.
may be called upon to pay substantial additional
funds on short notice to maintain your position,
Options are a wasting asset or upon settlement. If you fail to comply with a
Options have an expiry date and therefore a request from your broker for additional funds
limited life. An option‘s time value erodes over within the time prescribed, they may close out
its life and this accelerates as an option nears
expiry. It is important to assess whether the
your position and you will be liable for any loss 27
that might result.
options selected have sufficient time to expiry
for your view to be realised. Liquidity risk
Market Makers play an important role in the
Effect of ‘Leverage’ or ‘Gearing’ liquidity of the options market. However, their
The initial outlay of capital may be small relative obligations to provide quotes are not unqualified
to the total contract value with the result that and your ability to trade out of a strategy
options transactions are ‘leveraged’ or ‘geared’. may depend on your being able to obtain a
A relatively small market movement may have quote from a Market Maker. The scope of the
a proportionately larger impact on the value obligation of Market Makers is described on
of the contract. This may work against you as page 31.
well as for you. The use of leverage can lead to
large losses as well as large gains. Liquidity and pricing relationships
Market conditions (for example, lack of liquidity)
may increase the risk of loss by making it
difficult to effect transactions or close out
existing positions.

Normal pricing relationships may not exist in

certain circumstances, for example, in periods
of high buying or selling pressure, high market
volatility or lack of liquidity in the underlying
security.
 Orderly market powers
You and your broker
ASX and ASX Clear have broad powers under This information relates to the relationship
the ASX Operating Rules to take action in between you and your broker (or as they are
the interests of maintaining fair and orderly called, ASX Market Participant) when trading
markets or of providing services in a fair and and settling exchange traded options.
effective way. These powers include the ability
to suspend trading, impose position limits or
1. Your relationship with your
exercise limits and terminate open contracts.
In some circumstances, this may affect your
broker
positions. Similarly, regulatory authorities Brokers offer both trading and clearing
such as ASIC may give directions to ASX or services or they can specialise, with some
ASX Clear, for example to suspend dealings in parts of the trading and settlement process
products. contracted to other brokers.

Trading disputes
You should be aware that all options The different services a broker may offer in
transactions on ASX are subject to the rules, trading and settling options are as follows:
procedures, and practices of ASX and ASX
Clear, and the ASIC Market Integrity Rules. • Offer both trading and clearing services.
Under the ASX Operating Rules, certain trading
• Offer only trading services. If so, the
disputes between ASX Market Participants
broker will execute transactions but will
(for example errors involving traded prices
not provide clearing services.
that do not bear a relationship to fair market
or intrinsic value) may lead to ASX cancelling • Offer only clearing services. If so, the
or amending a trade. In these situations broker will settle transactions but will
the client‘s consent is not required for the not offer trading services.
cancellation of a trade.
• Offer purely advisory or execution
28 Trading Facilities services. If so, the broker will not offer
As with all trading facilities and systems, there clearing or trading services but will
is the possibility of temporary disruption to, or only provide advice to clients. They will
failure of the systems used in ASX‘s options use another broker to perform these
market, which may result in your order not functions.
being executed according to your instructions
or not being executed at all. Your ability to
recover certain losses may be subject to limits
on liability imposed by the system provider,
ASX, ASX Clear or your broker. 2. The paperwork: Client
Agreement forms
If you are trading through a broker (which
offers both trading and clearing services) you
will only have to sign one Client Agreement
form with that broker. If the broker does
not offer both trading and clearing services
then you may have to sign more than one
Agreement.

A trading broker (which is not also a clearing

broker) uses a clearing broker to clear its
option trades. You don‘t have to use the trading
broker‘s clearing broker.
The Client Agreement broker to provide a confirmation to you on
behalf of the trading broker. A confirmation

is a legal contract must contain information about the trade and

the client including (but not limited to):
setting out the terms • the client‘s details
• the option series traded
on which the broker(s) • the trade details

will act for you. • brokerage and fees

• which broker traded
• which broker cleared the trade (if the trading
broker is not also the clearer).
If you use an advice or execution only broker,
you must still sign a Client Agreement with a You should ensure the details contained in
trading broker and a clearing broker. each confirmation are correct and immediately
discuss any inaccuracies with your broker.
It is important that you read the Client
Agreement carefully before signing it, and At the end of each month if you have open
retain a copy of the agreement. positions you will receive a statement listing your
positions. Again, it is important that you carefully
ASX does not prescribe a set Client
check these documents and immediately raise
Agreement, however the ASIC Market Integrity
any inaccuracies with your broker.
Rules specify minimum terms which the Client
Agreement must contain. Brokers may have
Failing to pay your broker
other terms provided they are not inconsistent
If you fail to pay your broker, they may have the
with the minimum terms.
right to close out contracts opened for you.
The involvement of ASX Clear Pty Limited
Accordingly, it is important that you understand
(ASX Clear)
the settlement and margin requirements
It is important to understand that options
registered with the ASX Clear Pty Limited
set out in the Client Agreement(s) before
commencing trading.
29
(ASX Clear) are contracts between clearing
brokers and ASX Clear (on a principal to 3. Instructing a broker to trade
principal basis). ASX Clear does not have any
options
contractual relationship with you.
Your investment objectives
More about the role of ASX Clear is detailed
Trading brokers are required to understand
below.
their client‘s financial situation in order to assess
whether a particular investment (such as options)
Fees and commissions
is suitable for that particular client‘s situation.
ASX does not prescribe the rate of brokerage The trading broker‘s adviser will ask you certain
which brokers may charge. Clients should questions relating to your financial position and
discuss these rates and how they will be your investment objectives when dealing with
administered directly with their broker(s) prior you for the first time. The adviser will rely on the
to signing the Client Agreement(s). ASX and information you provide when advising you.
ASX Clear have standard fees (e.g. for trading
and exercise), which can be checked by calling Accredited Derivatives Advisers
ASX or your broker, or referring to www.asx.
You can place an order through any adviser,
com.au/options (under Costs in the “Trading
however under the ASIC Market Integrity Rules,
Information” section).
only those individuals who are Accredited
Derivatives Advisers can advise retail investors
Confirmations (previously called contract
about what orders to place.
notes) and monthly reports
The trading broker is under a legal obligation
to provide you with a confirmation. In practice,
the trading broker may arrange for the clearing
 What does “Opening” and “Closing” a Settlement of underlying securities on
transaction mean? exercise
When you first buy (or sell) options it is called Payment for, and the delivery of, underlying
an opening transaction. If you then sell (or buy) securities, on exercise of an open contract are
options to cancel existing bought (or sold) open undertaken by the clearing broker. The clearing
positions, it is called a closing transaction. broker has the legal obligation to provide
the confirmation for the settlement of the
For example, if you have just opened an underlying securities following an exercise. The
account with ABC Stockbroking Limited and securities transaction resulting from exercise of
instruct ABC Stockbroking to sell 10 one month an option takes place three business days after
Newcrest Mining Limited (NCM) calls with a exercise (T+3).
strike price of $40.00, this is called an opening
transaction. If, after one week, you decide you Cash or collateral to cover margins
do not wish to remain exposed to having to
The broker‘s dealings with ASX Clear are
sell 1,000 NCM underlying shares, you would
as principal. In other words, ASX Clear‘s
instruct ABC Stockbroking to buy the 10 NCM
relationship is with the buying and selling broker
one month $40.00 call options as a closing
of an option contract, and not with the end
transaction.
buyer and seller of the contract. The broker
It is important that you tell your broker whether is liable for meeting payment, settlement and
you are entering into an options transaction to margin obligations to ASX Clear.
open or to close.
Brokers require option investors to provide
Once the transaction has been registered, and money or property to enable the broker to
is entered to close, the initial open contract manage the risks associated with the client‘s
is cancelled and you have no further rights or dealings in options. Client money and property
obligations arising from these NCM call option must be dealt with in accordance with the
contracts (on either the buy or sell sides). Corporations Act, the ASIC Market Integrity
Rules, the ASX Clear Operating Rules and the
Client Agreement.
30 If receiving investment
The broker is generally obliged to hold money
or trading advice about on trust, but this does not include money paid
to reimburse the broker for payments it has
options, you should check made to ASX Clear in respect of dealings for
the client.
with your adviser to ensure
The broker may lodge CHESS securities held in
they are accredited. the client‘s name with ASX Clear as collateral
for margin obligations relating to options
trades for the client. Where this occurs, the
securities are held by ASX Clear as a “third
Exercising options party security”. ASX Clear is not entitled to use
If you wish to exercise rather than close out the security to cover the broker‘s obligations to
taken (bought) open contracts you will need ASX Clear relating to dealings for other clients
to notify your broker of exactly which option or the broker‘s own dealing. Margining is
contract(s) you want to exercise. The broker discussed in more detail on page 15.
will advise you of the latest time it will accept
an instruction to exercise contracts in order for 4. Role of Market Makers
them to be exercised that day (T). Market Makers play an important role in the
ASX options market. Market Makers compete
Where an exercise instruction is given, ASX
against one another while trading on their
Clear will randomly select a writer (seller) in
own accounts and at their own risk. Under
that series of options and on the following day
contractual arrangements with ASX, they are
will notify that writer that their written (sold)
incentivised to achieve benchmark quoting
position has been exercised (i.e. T+1).
requirements.
The quoting requirements aim to ensure Quote Request Quoting Benchmark
liquidity in the market, so that traders are more The Market Maker is required to provide orders
easily able to trade into and out of an options on request for all series with up to twelve
position. This also makes it easier to price and months expiration in the minimum quantity and
value options positions. at or within the maximum spread.

Liquidity is assisted when there are multiple

Minimum Contracts
Market Makers covering each stock. ETO
Market Makers are contracted into one or Each security (Class) over which exchange
more Classes (representing each underlying traded options are traded has been allocated
security) in which they must meet ASX’s volume to a category designated by ASX. ASX has
and spread requirements with maturities going four different Class categories. A security is
out one year. This involves quoting buy and sell placed in a category by reference to the liquidity
prices for a certain number of series, and/ of such security. Category 1 stocks are the
or responding to quote requests from other most highly liquid, Category 3 stocks are the
Market Participants for prices. least liquid and Category 4 is for Index options.
The category of the security determines the
Description of Quoting Requirements for minimum number of contracts for which the
Market Makers Market Maker must quote a price.

For each option Class in which a Market Full details of current ASX options market
Maker is responsible there are three quoting making requirements including benchmarks
benchmark requirements. Market Makers are for incentives are also published on the ASX
judged on their performance in making markets website.
in certain series on a Continuous Basis and
on making markets in response to Quote www.asx.com.au/documents/products/
Requests in certain series. These benchmarks asx_eto_market_making_scheme.pdf
are measured during the ASX options market
trading hours over a calendar month. Quoting Requirement Notes
Investors in ASX ETOs should be aware of the
1. M
 inimum of 50% of the required Continuous
following; 31
Quoting benchmark;
2. M
 inimum of 50% of the required Quote • Market Maker monitoring (as to the Market
Request Quoting benchmark; and Maker’s quoting performance against the
benchmark requirements) is calculated over
3. A
 combined minimum average of 70% on
the course of a calendar month not daily.
Continuous Quoting and Quote Request
Quoting • Market Maker monitoring (as to the Market
In practical terms this means that if a Market Maker’s performance against the benchmark
Maker meets the Quote Request benchmark requirements) times are: 10.20am –
61% and the Continuous Quoting benchmark 4.00pm for single stock options; and
83% of the time that the options market is 10.00am – 4.30pm for index options.
trading (calculated over a calendar month) that
• Market Makers are not required to quote
is a pass. But if a Market Maker meets the
option series with a maturity beyond 12
Quote Request benchmark 49% of the time
months, although they may respond to quote
and the Continuous Quote benchmark 99% of
requests in these series.
the time, this would be a fail.
• Regarding single stock option Classes
Continuous Quoting Benchmark (e.g. BHP & TLS), Market Makers are
The Market Maker is required to provide not required to quote into European style
continuous orders in eighteen series series. They are only required to quote into
encompassing three calls and three puts American style series.
in three of the next six expiration months.
Each order must be for at least the minimum
quantity, and at or within the designated
maximum spread requirements.
 • Market Makers are not required to provide Position and exercise limits
quotes in all series, or at all times, and ASX reserves the right to limit the number
as such there can be no guarantee that of options in a series or class which may be
all series will have prices displayed. The registered with ASX Clear and may also restrict
ability of Market Makers to provide quotes the exercise of open contracts in a class. Both
can be impacted at times by a variety of of these limits may be applied in relation to one
factors including, company announcements, or more accounts or accounts generally.
company corporate actions, Iiquidity in the
underlying and its options, price volatility in National Guarantee Fund
the underlying and its options and trading
In certain circumstances you may have a claim
system limitations. While these events may
against the National Guarantee Fund (NGF).
occur infrequently traders and investors
The NGF is administered by the Securities
should have a contingency plan to deal with
Exchanges Guarantee Corporation Limited
an absence of quotes.
and is governed by the Corporations Act and
Regulations. The NGF provides you with some
5. ASX Clear Pty Limited
protection in the specific circumstances set out
(ASX Clear) in the legislation:
ASX Clear is a wholly owned subsidiary of ASX.
It undertakes the registration and clearing of 1. if a stock option is exercised, the NGF
all options traded on ASX‘s options market. may provide compensation in certain
The points below are some of the key aspects circumstances if the resulting trades are not
of ASX Clear. completed and

2. if you have entrusted property to your broker

Novation
in the course of dealing in options, and the
Through a process called “novation” ASX Clear broker later becomes insolvent, you may
becomes the counter-party to both the buying claim on the NGF for any property which
and selling brokers of an option contract. That has not been returned to you or which has
is, ASX Clear becomes the buyer for each sold otherwise not been dealt with in accordance
32 option and the seller for each bought option. with the broker‘s obligations.
For example: ABC Stockbroking places an order
to sell 10 one month ANZ $15.00 call options Further information on these potential NGF
and XYZ Stockbroking agrees to buy them. protections can be found at www.segc.com.au
On registration of the trade with ASX Clear
the original buy and sell trade (called a market
contract) is “novated” and replaced by two
new contracts (called open contracts) whereby
ASX Clear becomes the counterparty buyer
against the selling broker and correspondingly,
becomes the counterparty seller against the
buying broker. This means that the buying and
the selling brokers only deal with ASX Clear in
the settlement of the open contract and neither
broker has to rely on the other to perform
under the original market contract.

Adjustments to options series

In certain circumstances where the capital
structure or value of the underlying securities
over which options exist is changed, ASX
may make adjustments to the contract
specifications of a class of options.

Adjustments are discussed on page 8 of this

booklet.
Options online courses

Comprehensive free online

options courses
ASX offers a very comprehensive
series of online courses on options.
Learn the basics of what an option is.
Understand the strategies that options
can be used for including - earning
income and protecting a portfolio. The
courses are interactive with diagrams,
activities and plenty of quizzes to
practice your understanding.

You can access these options online courses any

time. Visit www.asx.com.au/classes

Our online courses help you to understand the ins and outs of options 33
 Option calculators

The ASX website has a range of tools and

Underlying value
calculators that you can explore and use as
you become more confident with options trading. Delayed price of underlying share or
You can use the tools to draw options payoff index plus initial pricing assumptions.
diagrams, to calculate theoretical prices and
estimate margins.
Add more options
Multiple series can be displayed.

Show margin
Use this feature to show
OPTION THEORETICAL PRICE CALCULATOR RESULTS margin estimates.

Volatility assumptions
These assumptions can be changed
to reflect your market view.

Recalculate
Changing your assumptions will
affect the fair value calculation.

Portfolio
Multiple series over different
stocks or indices can be

34 displayed.

Theoretical total value

Option fair values shown for
different underlying prices.

MARGIN ESTIMATOR RESULTS

Volatility assumptions
These assumptions can be
changed to reflect your market
view.

Bought option

Sold option

Portfolio
Combined calculation for multiple option
series and underlying stocks/index.

Net margin estimate

Getting to the calculators
All ASX calculators can be found by visiting
www.asx.com.au/calculators

Step 1: Choose calculator

From the ASX calculators & tools page
select the theoretical option price
calculator

Step 2: Theoretical option

price calculator
Click the calculator link

Step 3: Theoretical option

price calculator
Choose the stock/index code then the option
series you want to price.
35

Step 4: Margin estimator option

Click the show margin button to switch to the
margin estimator.

Step 5: Margin estimator

Choose the stock/index code you want
followed by the option series

Detailed help section

Scroll to the bottom of the theoretical
option price calculator or margin estimator
screen for help
 Option prices

List of options and their prices

The ASX website has a complete list of the ETOs available over a particular stock. You can check
prices and essential trading information.

SEARCH SCREEN
Expiry month
You can choose a particular
expiry month.

Puts and calls

You can choose puts, calls or both.

Direct option search

Use this search box if you know
exactly which option series you
are searching for.

Company search
Use this search box if you do
not know the company code.
SEARCH RESULTS SCREEN
36

Expiry months
Expiry months are sorted with
the nearest month first.

At the money
Most trading usually happens in the
‘at the money’ series.

Contract specifications
Click on the link for the key features
of that option series.

Series listing
Series are listed in order of exercise
price.
Glossary of terms

Adjustment to options contract CHESS

adjustments are made when certain events Clearing House Electronic Sub-register System
occur that may affect the value of the underlying which provides the central register for the
securities. Examples of adjustments include clearing and settlement of CHESS approved
changing the number of shares per contract and/ financial products, the transfer of securities and
or the exercise price of options in the event of a the registration of transfers.
new issue or a reorganisation of capital by the
issuer of the underlying securities. Class of options
all option contracts covering the same underlying
American style security.
type of option contract which allows the holder
to exercise at any time up to and including the ASX Clearing Participant
expiry day means an entity that has been admitted as a
Participant under the ASX Clear Operating Rules.
Annualised return
the return or profit, expressed on an annual Closing purchase
basis, the writer of the option contract receives a transaction in which a party who has previously
for buying the shares and writing that particular written (sold) an option liquidates the position as
option. a writer by “taking” an option in the same series
as the option previously written.
Assignment
the random allocation of an exercise obligation to Closing out
a writer. This is carried out by ASX Clear. a transaction in which a party who had previously
taken (purchased) an option, liquidates the
At-the-money position as a taker by “writing” an option in the
when the price of the underlying security equals same series as the option previously taken or vice
the exercise price of the option. versa for a sold position.

ASX Clear Pty Limited (ASX Clear) Delta

37
a wholly owned subsidiary of ASX. the rate of change of option premium due to a
change in price of the underlying securities.
ASX Trade:
The trading platform for cash market equities, Derivative
exchange traded options, interest rate securities an instrument which derives its value from
and warrants. ASX Trade is a screen based the value of an underlying instrument (such
trading system - brokers have terminals in their as shares, share price indices, fixed interest
office from which they can view the market and securities, commodities, currencies, etc).
execute trades. Options are a type of derivative.

Buy and write Designated Trading Representative (DTR)

the simultaneous purchase of shares and sale of is a staff member of a Trading Participant
an equivalent number of call option contracts. (that is, a broker that has trading permission
in respect of one or more products) who is
Call option authorised by ASX to access trading systems.
an option contract that entitles the taker (buyer)
to buy a fixed number of the underlying securities European style
(usually 100) at a stated price on or before a type of option contract which allows the holder to
fixed expiry day. exercise only on the expiry day

Class Category Exercise price

Each security (Class) over which exchange traded the amount of money which must be paid by the
options are traded has been allocated to a taker (in the case of a call option) or the writer
category designated by ASX. ASX has four different (in the case of a put option) for the transfer of
Class categories. A security is placed in a category each of the underlying securities upon exercise of
by reference to the liquidity of such security. the option.
Category 1 stocks are the most highly liquid,
Category 3 stocks are the least liquid and Category
4 is for Index options.
 Expiry day Opening sale
the date on which all unexercised options in a a transaction in which a party becomes the
particular series expire. writer of an option.

Fair value Out-of-the-money

the theoretical value generated using an options a call option if the market price of underlying
pricing model. securities is below the exercise price of the
option; a put option is out-of-the-money if the
Hedge market price of the underlying securities is above
a transaction which reduces or offsets the risk the exercise price of the options.
of a current holding. For example, a put option
may act as a hedge for a current holding in the Premium
underlying instrument. the amount payable by the taker to the writer for
entering the option. It is determined through the
Implied volatility trading process and represents current market
a measure of volatility implied by the current value.
market price of an option.
Put option
In-the-money an option contract that entitles the taker (buyer)
an option with intrinsic value. to sell a fixed number of underlying securities
(usually 100) at a stated price on or before a
Intrinsic value
fixed expiry day.
the difference between the market value of the
underlying securities and the exercise price of Random selection
the option. It represents the advantage the taker the method by which an exercise of an option is
has over the current market price if the option allocated to a writer in that series of options.
is exercised. Intrinsic value cannot be less than
zero. Series of options
all contracts of the same class and type having the
Long term option same expiry day.
38 an option with a term to expiry of two or three
Spot month option
years from the date the series was first listed.
an option with a term to expiry of around four
Margin weeks from the date the series was first listed.
an amount calculated by ASX Clear to cover the
obligations arising from option contracts. Taker
the buyer of an option contract.
Market maker
option traders with obligations to provide market Time value
liquidity by making bids and offers for nominated the amount investors are willing to pay for the
option series. possibility that they could make a profit from their
option position. It is influenced by time to expiry,
Multiplier dividends, interest rates, volatility and market
is used when considering index options. The strike expectations.
price and premium of an index option are usually
expressed as points. A multiplier is then applied to Underlying securities
give a figure in dollars and cents. For example, the the shares or other securities subject to
multiplier may be $10 per point, meaning that to purchase or sale upon exercise of the option.
buy an index option with a premium of 100 points,
Volatility
an investor would pay $1,000.
a measure of the expected amount of fluctuation
Open interest in the price of the particular securities.
the number of outstanding contracts in a
Writer
particular class or series existing in the option
the seller of an option contract.
market. Also called the “open position”.

Opening purchase
a transaction in which a party becomes the taker
of an option.
Option contract specifications

Name ASX Equity Options

Underlying security Any share approved by ASX under Guidelines for Listing Equity Options
Security code The first three characters will be the ASX code eg. BHP, the fourth
and fifth character and sixth character (if required) will designate the
expiry month and series
Contract size Usually 100 shares per contract. This may be adjusted for rights,
bonus issues and other capital adjustment events
Tick size $0.001 per share = $0.10 (contract size 100 shares) for premium
below 1 cent.
$0.005 per share = $0.50 (contract size 100 shares) for premium
of 1 cent or more.
Exercise style Usually American, ie. exercisable on or before the expiry date
Exercise price Varies for each stock
Type Call and put options
Contract months As detailed in the ASX expiry calendars
Expiry date Thursday before last Friday of the settlement month. This may
change due to public holidays
Trading hours Normal trading 10.00am to 4.20pm (Sydney time). Late trading
4.20pm to 5.00pm and overseas trading in accordance with the ASX
Operating Rules
Settlement Physical delivery of underlying security
39

Contract name Index options

Underlying index S&P/ASX200 (XJO)
Security code The first three characters will be the ASX code, eg. XJO, the fourth
and fifth character and sixth character (if required) will designate the
expiry month and series
Index multiplier $10. Each index point is equal to $10
Tick size Quoted as 1 index point
Exercise style European, ie. exerciseable only on expiry day
Exercise interval 25 Index points
Type Call and put options
Contract months First 2 serial months and March quarterly expiry cycle up to 6
quarters ahead
Last trading Expiry day
Expiry day 12.00pm on the third Thursday of the contract month
Trading hours 6.00am to 5.00pm and 5.30pm to 8.00pm (Sydney time)
Settlement Cash settled against the Opening Index Price Calculation (OPIC) as
calculated on expiry day

For current option contract specifications, please refer to the ASX website at
www.asx.com.au/options
 Further information

For ASX explanatory booklets on options, please

phone 131 279, or download the booklets from
the ASX website www.asx.com.au/options

Online Classes
Online options classes include interactive
exercises that will aid your learning and a
quiz at the end of each section to show
your progress.

Webinars
Online seminars and recordings of past
sessions to aid your learning.

Website
www.asx.com.au/options

Email
options@asx.com.au

Phone
131 279
40
Post
ASX
20 Bridge Street
Sydney NSW 2000
Exchange Centre, 20 Bridge Street, Sydney NSW 2000. Telephone: 131 279 www.asx.com.au
 Understanding
ASX Listed CFDs
Disclaimer

Information provided is for educational purposes and does not constitute financial product advice. You
should obtain independent advice from an Australian financial services licensee before making any financial
decisions. Although ASX Limited ABN 98 008 624 691 and its related bodies corporate (“ASX”) has
made every effort to ensure the accuracy of the information as at the date of publication, ASX does not
give any warranty or representation as to the accuracy, reliability or completeness of the information. To
the extent permitted by law, ASX and its employees, officers and contractors shall not be liable for any loss
or damage arising in any way (including by way of negligence) from or in connection with any information
provided or omitted or from any one acting or refraining to act in reliance on this information. ASX is under
no obligation to list the CFDs set out in this booklet or may not list a particular CFD at the commencement
of the ASX Listed CFD market. Please refer to the ASX website (www.asx.com.au/cfd) for the availability of
particular ASX Listed CFDs.

For this contract the market is operated by Sydney Futures Exchange Limited ACN 000 943 377

© Copyright 01/2009 ASX Limited ABN 98 008 624 691. All rights reserved 01/2009.

Exchange Centre, 20 Bridge Street Sydney NSW 2000. Telephone 131 279 www.asx.com.au
Contents

Before you begin 2

Advantages of trading CFDs 3

Benefits of ASX Listed CFDs™ 4

Key features of ASX Listed CFDs™ 6

Price formation 8

Margins 9

Cashflows 11

Trading ASX Listed CFDs™ 16

ASX Equity CFDs™ 17 1

ASX Index CFDs™ 20

ASX FX CFDs™ 23

ASX Commodity CFDs™ 28

Risks of trading ASX Listed CFDs™ 31

Taxation 33

You and your broker 34

Further information 36

Glossary of terms 37
 Before you begin

This booklet explains what ASX Listed CFDs What is a CFD?

are and how they can be used. It should be
A CFD (Contract for Difference) is an
noted that this booklet deals exclusively with
agreement between a buyer and a seller to
ASX Listed CFDs. Information on any other ASX
exchange the difference in value of a particular
products is available by calling 131 ASX (279)
instrument between when the contract is
or visiting www.asx.com.au
opened and when it is closed. The difference is
To assist you in your understanding of ASX determined by reference to an ‘underlying’ – a
Listed CFDs there is a Glossary of Terms on share, index, FX rate or commodity and the
page 37. To increase your knowledge before period over which the CFD is held.
trading ASX Listed CFDs, you may find it
CFDs are leveraged instruments. This means
valuable to explore the ASX Listed CFD online
that you are fully exposed to price movements
education courses and test your knowledge and
of the underlying instrument without having
skills on the ASX CFD Trading Simulator (both
to pay the full price of that instrument. CFDs
available on www.asx.com.au/cfd)
therefore offer the potential to make a higher
Trading of ASX Listed CFDs involves risk. return from a smaller initial outlay than
Transactions should only be entered into by investing directly in the underlying security.
traders and investors who understand the
Leverage, however, usually involves more risks
nature and extent of their rights, obligations
than a direct investment in the underlying. It is
and risks.
important to understand that this effect may
ASX Listed CFDs are traded on the SYCOM® work against as well as for traders – the use
trading platform and operate under the SFE of leverage can lead to large losses as well as
(Sydney Futures Exchange) Operating Rules. large gains.
2
ASX Listed CFDs include those listed over
a range of ASX listed stocks, key global
equity indices, foreign exchange currencies
and commodities. A list of the full suite of
ASX Listed CFDs is available on the ASX
website www.asx.com.au/cfd.
Advantages of trading CFDs

CFDs have been used by professional investors

for over twenty years and emerged first as an
ASX Listed CFDs
over-the-counter (OTC) product. CFD related
trading and hedging is one of the fastest
include the key
growing areas in the Australian and European
derivatives markets.
features of over-
This popularity has arisen from the following
the-counter CFDs
main features:
augmented with the
• Leverage: CFDs enable you to obtain full
exposure to a share, commodity, FX cross fundamental strengths
or index for a fraction of the price of buying
the underlying. CFDs require only a small of exchange-based
initial margin to secure a trade.
trading.
• The ability to go ‘short’: CFDs allow traders
to take advantage of falls in prices. This
means that traders can profit when prices
are going down, not just up. CFDs are thus
an excellent trading and hedging tool.

• Simplicity
–N
 on-expiry: Most CFDs do not have an
expiry. They are perpetual in nature. For
CFDs that do not expire, the only way to 3
close a position is to trade the opposite
side of the position.
– T
 he CFD mirrors the price of the
underlying: Unlike other forms of derivatives
(i.e. options and futures), cashflows such as
carry costs and dividends are not reflected
in the price of a CFD. Instead, cashflows
are paid whilst the position is open,
allowing CFD prices to track the underlying
instrument rather than trade at a discount
or premium, as can be the case in other
forms of derivatives.
 Benefits of ASX Listed CFDs

Retail traders and Transparency

Transparency is a key ingredient in a well
investors can be informed market. ASX reports on all ASX
Listed CFDs transacted, open positions, bid,
confident trading ASX offers and their volumes. In fact, all the market
information you are used to seeing from the
Listed CFDs because ASX. This means a fundamentally better
informed market.
of the unique attributes
ASX Listed CFDs are traded in the same way
of exchange traded as other ASX traded contracts:

markets. These include: • A

 ll prices are formed in a fully transparent
manner in ASX’s CFD central market order
book. Each trader’s order is combined in the
Market Independence ASX Listed CFD central market order book
ASX is required under the Corporations Act to with those from other market participants,
ensure that its markets are fair, orderly and including market makers, and becomes an
transparent. ASX ensures a sound operational integral part of the price discovery process.
and front-line regulatory environment for its
• A
 ll trades are executed on a strict price/
exchange-traded markets and clearing and
time priority. Price/time priority means the
settlement facilities, providing effective systems
first person to enter the best price is traded
and infrastructure together with services
against first. This results in everyone in the
designed to maintain and enhance the integrity,
4 efficiency and effectiveness of its trading,
central market order book being treated
fairly and consistently, no matter how big
clearing and settlement facilities. For the ASX
or small a trader you are.
Listed CFD trader, this means being able to
participate in the market with confidence. • Importantly, while prices are transparent,
the individual trader remains anonymous,
As the central market operator, ASX is
which minimises market impact costs
independent of the parties with whom you are
(especially those related to others identifying
receiving advice and dealing through enabling it
an individual’s trading patterns and trading
to act fairly and impartially. This separation of
ahead of him/her).
responsibility between broker and exchange also
provides customers with choice as to whom they • A
 nyone can place into the market a better
wish to execute their business through. bid or offer, as is the case in all exchange
based markets. No-one is forced to accept
Having a central market also means there
the price offered in the market. However,
is one standard contract specification for
once an order is executed, you are
all ASX Listed CFDs, not a different product
committed to settle the trade. All prices in
depending on who you execute through. It’s a
the market are firm in the volume indicated.
fundamentally better CFD market.
• T
 he ASX Listed CFD central market order
book will include orders from market
makers. Their activities help ensure the ASX
Listed CFD market has competitive prices
and deep liquidity.
Risk Management Trading in the ASX Listed CFD
ASX Listed CFDs trade in a centrally cleared Market
marketplace. The Clearing House (SFE Clearing When trading ASX Listed CFDs, your order is
Corporation – SFECC) provides central entered directly via a Participant into the ASX
counterparty clearing for the ASX Listed CFD Listed CFD central market order book. This
market. This involves SFECC managing risks to order book is available for the market to see.
ensure that the interests of its Participants and All orders are executed on a strict price/time
clients are protected and that the integrity of priority. This means that the first order with
the marketplace is maintained. the best bid or offer price is always executed
first. Trading in the ASX Listed CFD central
Through a process called novation, SFE
market order book also ensures “client orders”
Clearing becomes the principal to all trades and
are always given priority over a broker’s “house
liable to perform against all contracts to which
orders”.
it is a party and effectively ‘guarantees’
performance to other Clearing Participants. In contrast, customers executing CFDs through
Novation and thus the clearing guarantee an OTC provider, do not have their orders in
become effective on registration of the contract the ASX Listed CFD central market order book.
between a buyer and seller. These orders are transacted with the OTC
CFD counterparty (typically described as a CFD
This exposure is then managed and the
Provider). The customer’s order is not protected
clearing guarantee put in place in a number
by the ASX’s price/time priority or client order
of ways. Firstly this is achieved by the collection
precedence rules.
of the various margins as discussed later in
this booklet. The collection of these moneys
protects against extreme price movements and 5
prevents participants from accumulating large
unpaid losses that could potentially impact on
the financial position of other market users.
This is a key component that differentiates
exchange-traded markets from over-the-counter
(OTC) markets, where such a strict margining
regime is not in place.

The ASX Listed CFD market also has access to

the Clearing Guarantee Fund for use in the
event of default of one or more Clearing
Participants. The Clearing Guarantee Fund
represents a significant component of the
overall capital adequacy of SFECC.

.....the key features of existing CFDs augmented

with the fundamental strengths of exchange-based
trading.
 Key features of ASX Listed CFDs

Product Range For details on the methodology or data source

used to create the DSP for ASX Listed CFDs, go
ASX Listed CFDs include CFDs listed over:
to www.asx.com.au/cfd
• The top 50 stocks listed on ASX;
• Key global equity indices; Expiry
• A range of major foreign currencies and ASX Listed CFDs do not expire. They are
crosses; and perpetual in nature. The only way to close a
• Selected commodities. position is to trade the opposite side of your
position.
A full list of current ASX Listed CFDs is always
available on www.asx.com.au/cfd. There are limited circumstances in which ASX
may expire and delist contracts. This is only
Long and Short Positions likely to occur where the contract has open
With an ASX Listed CFD it is possible to go positions in the following situations:
both ‘long’ (to buy) and ‘short’ (to sell). • there is a lack of liquidity in the contract;
• the underlying has been delisted; or
If you take a long position, you are anticipating
a rise in the value of the underlying instrument • access to the data of the underlying
and would experience a loss if the value fell. instrument becomes permanently unavailable
(for example, where an index provider
If you take a short position, you are anticipating ceases to calculate an index or terminates
a fall in the value of the underlying instrument. the index provider agreement with ASX).
If the value actually rose, you would experience
a loss. If the above action were to be taken, ASX would
provide as much notice to the market as possible
6 In contrast to shares, where a trader usually to enable the closing out of open positions.
buys first and then sells later, with an ASX
Listed CFD it is possible to firstly go short (or Corporate Actions
sell) to exploit falling prices and buy back (or go Any position in an ASX Equity CFD is adjusted
long) later. to reflect the same economic effect as the
underlying security on which the ASX Listed
Daily Settlement CFD is based. This means that whenever there
At the end of each trading day, all positions in is a corporate action – such as a share split,
ASX Listed CFDs are ‘marked to market’ using capital repayment, special dividend, bonus
the Daily Settlement Price (DSP). issue, takeover etc – the same impact will be
reflected back into the ASX Listed CFD position.
The DSP for ASX Equity, Index and Commodity
CFDs is determined by ASX and is generally1 ASX Index CFDs track indexes, which are
equal to that of the closing price of the adjusted by the index provider to reflect all
underlying instrument – this being that quoted corporate actions.
by the underlying instrument owner (e.g. ASX,
the index price provider, etc) or an independent
data source such as Reuters (e.g. in the case
of ASX Gold and FX CFDs).

1 In exceptional circumstances where the underlying price is not immediately available, ASX may choose alternate
methods to establish the Daily Settlement Price.
Profit and Loss Situations After the trade occurs, the relationship
between the two original contracting parties
The table below sets out profit and loss
is broken with the SFECC becoming the
situations when trading ASX Listed CFDs.
counterparty for both buyer and seller. This
process, called novation, is a key tool for
managing counterparty risk and is a primary
Profitable Unprofitable
benefit of trading “on exchange”.
trades trades

Buy low – Sell high Buy high – Sell low Tracking Positions and Costs
Sell high – Buy low Sell low – Buy high When deciding whether to trade ASX Listed
CFDs, there a number of factors to be aware
of including:
Trading Hours • The costs of trading ASX Listed CFDs;
Trading hours vary for the different types
• How to track the value of your ASX Listed
of ASX Listed CFDs available. Up-to-date trading
CFD positions; and
hours for all ASX Listed CFDs are available on
• The requirement to pay margins and other
www.asx.com.au/cfd
cashflows relating to holding an ASX Listed
CFD position.
Exchange for Physical
Traders can convert their ASX Equity CFD Costs of trading – Brokerage
position into stock. This conversion is allowed
Brokerage is charged by your ASX Listed
through the Exchange for Physical (EFP) facility.
CFD broker and is typically either a flat rate
The EFP facility enables you to complete
per contract or trade or expressed as a
both sides of the conversion at a set price
percentage based on the full value of the trade. 7
eliminating the risk of a price movement before
you complete the transaction. To undertake an
How to track ASX Listed CFDs
EFP, you need to speak to your ASX Listed CFD
ASX Listed CFD codes and prices are available
adviser.
in the ASX Listed CFDs section of the ASX
Further details of the Exchange for Physical website, www.asx.com.au/cfd. You can set
(EFP) are available on www.asx.com.au/cfd up watch lists and portfolios to assist in the
monitoring of positions. Many brokers also
Parties to an ASX Listed CFD offer portfolio management systems that
enable you to manage your positions and
Transaction
trades on-line.
Traders of ASX Listed CFDs can either:
• Buy – undertake a long transaction; or The ASX website – www.asx.com.au – has
pricing and other information about the
• Sell – undertake a short transaction.
underlying securities and indices.
When you first buy (or sell) an ASX Listed CFD it
Current ASX Listed CFD prices are also
is called an opening transaction. If you then sell
available from all major information vendors
(or buy) an ASX Listed CFD to cancel existing
such as Reuters, Bloomberg or Iress.
bought (or sold) open positions, it is called a
closing transaction. The market automatically
recognises if a trade is an opening or closing
trade.

Trading on SYCOM® is anonymous. This means

the identity of the buyer or seller is unknown to
the market.
 Price formation

What keeps the ASX Listed CFD The ASX has appointed designated price
price in line with the underlying makers (DPMs) to provide prices in the
ASX Listed CFD market. DPMs and other
price?
sophisticated market participants can be
The price of an ASX Listed CFD is closely expected to utilise arbitrage to ensure that
related to the price of its underlying instrument. prices for the ASX Listed CFDs do not ‘get
It is also closely related to the price of other out of line’ with the underlying instrument or
exchange-traded derivative products, such index.
as futures and options, based on the same
underlying security. • Price competition: DPMs compete to trade
as this determines any incentive paid to
There are three factors that ensure this them by ASX. DPMs provide users of the
outcome: market with enhanced liquidity and tighter
bid and offer spreads.
• D
 aily Settlement Price: The Daily
Settlement Price for ASX Listed CFDs is • C
 ontract Design and Cashflows: ASX Listed
the same price as the closing price for the CFDs include cashflows (Contract Interest,
underlying instrument or index. For example, Dividend Cashflow, etc.) for all positions held.
the ASX closing share prices resulting from This has the economic effect of making the
the closing single price auction at 4.10pm ASX Listed CFD position identical to holding
(AEST) determine the Daily Settlement Prices a leveraged spot position in the underlying
used for ASX Equity CFDs. This ensures instrument.
both markets close at parity. Daily variation
margins for ASX Listed CFDs are therefore
based on the closing price of the underlying
8 instrument or index.

• Arbitrage: During the trading period, the

arbitrage between the ASX Listed CFD
and underlying instrument will ensure both
markets remain at or close to parity. This
arbitrage is based on the opportunity for
traders to profit whenever the two markets
are out of line. For example, assume the
price of BHP Billiton shares are trading at
$42.00 bid and $42.05 offered. If the ASX
BHP Billiton CFD is offered below the bid on
the ASX ($42.00), a trader will profit from
buying the ASX BHP Billiton CFD at the lower
price and selling the share at $42.00.
Margins

Margins are designed to protect the financial Variation Margins

security of the market by ensuring that you
In addition to the Initial Margins required to open
can meet your obligations. If you trade an ASX
contracts, any adverse price movements in the
Listed CFD, you have a potential obligation to
market must be covered by further payments,
the market because the position may move
known as variation margins. The Variation
against you.
Margin is based on the end of day marked
After your order is executed, the ASX Listed to market revaluation of an ASX Listed CFD
CFD trade is registered with SFECC. This position.
process, called novation, results in SFECC
For example, if you have a long position and
becoming the counterparty to both the buyer
the price falls then you are required to pay a
and the seller.
Variation Margin large enough to cover the
Each day, SFECC calculates the margin adverse movement in the value of the position.
necessary to ensure you can meet your trading
On the other hand, if you have a short
obligations on that day. (Note that SFECC’s
position and the price falls, you would receive
relationship is with your broker’s Clearing
a Variation Margin equal to the positive
Participant and not directly with you.)
movement in the value of the position.

Failure to meet (pay) a Variation Margin call can

lead to the position being compulsorily closed
The total margin for ASX Listed CFDs is
out. The position holder is obligated to pay
made up of two components:
for any shortfall in funds if Variation and Initial
• Initial Margins Margins are insufficient to cover the shortfall.
• Variation Margins
Further discussion and examples on Variation 9
Margins can be found on the ASX website at
www.asx.com.au/cfd (under Online Education)

Initial Margins
Initial Margins apply to both buyers and sellers
upon opening a contract. They protect SFECC
from risk resulting from a negative movement
in the value of a position as a result of a
change in market prices. The Initial Margin
is typically set at a level designed to cover
reasonably foreseeable losses on a position
between the close of business on one day and
the next. The amount of Initial Margin for each
contract varies according to the price volatility
of the underlying, but typically is about 5% to
10% of the value of the underlying instrument
described by the contract.

ASX publishes the Initial Margin rates for all

ASX Listed CFDs. You can find these rates on
the ASX website at www.asx.com.au/cfd.

Initial Margins are returned when the contract

is closed out.
 How margins are met
Your broker will require you to provide collateral
to cover your margin obligations. Note that
minimum margin requirements are set by
SFECC, but higher margin requirements may be
imposed by brokers and clearers.

Payment of margins
Margins are recalculated on a daily basis to
ensure an adequate level of margin cover
is maintained. However, in exceptional
circumstances, margins may be recalculated
intra-day. This means that you may have to pay
more if the market moves against you. If the
market moves in your favour, margins may fall.

Settlement requirements for trading ASX Listed

CFDs are strict. You must pay margin calls by
the time stated in your Client Agreement. This
is usually within 24 hours of being advised of
the margin call by your broker. If you do not pay
in time, your broker can take action to close
out your positions without further reference to
you.

A detailed explanation of the ASX Listed

CFD margining process can be found in
10 the online education courses on the ASX
website at www.asx.com.au/cfd.
Cashflows

Unlike other forms of derivatives (i.e. options

and futures) cashflows such as carry costs
and dividends are not reflected in the price of
an ASX Listed CFD. Instead cashflows are paid
whilst the position is open, allowing ASX Listed
CFD prices to track the underlying security
rather than trade at a discount or premium, as
can be the case with other types of derivatives.

ASX Listed CFDs have 5 distinctive

cashflows that impact on holders of an
open position:
• Contract Interest
• Open Interest Charge (OIC)
• Dividend Cashflow
• F
 ranking Credit Cashflow (ASX Equity
CFDs only)
• Yield Cashflow (ASX FX CFDs only)

Holders of Long Positions Holders of Short Positions

11
Contract Interest Pay Receive

Open Interest Charge Pay Pay

Dividend Cashflow Receive Pay

Franking Credit Cashflow Receive Pay

Yield Cashflow Receive Pay

 Contract Interest (CI) contract currency of the ASX Listed CFD. The
Contract Interest Rate is varied whenever the
Contract Interest is paid daily by holders of
relevant benchmark rate is varied.
long positions and received daily by holders of
short positions. Contract Interest payable on It is important to note that the contract interest
positions held on Friday night will also include reflects the cash rate in the currency applicable
Saturday and Sunday (e.g. 3 days interest). for a particular ASX Listed CFD. Contract
Interest calculation examples are included later
The Contract Interest Rate is fixed to a
in this brochure (See page 18).
benchmark rate (Contract Interest Rate) in the

ASX Listed CFD Contract denomination Benchmark Contract

and CONTRACT currency Interest Rate

ASX Equity CFD AUD Target overnight cash rate as published

ASX S&P/ASX 2003 CFD daily by Reserve Bank of Australia
ASX DAX®4 CFD EUR EURO overnight Index Average (EONIA)
ASX Dow Jones EURO STOXX 50®5 CFD as published daily by Reuters
ASX AUD/EUR CFD
ASX Gold CFD USD Federal Funds Rate as published daily by
ASX Oil CFD the Federal Reserve Bank of New York
ASX DJIA6 CFD
ASX NASDAQ7 CFD
ASX AUD/USD CFD
ASX EUR/USD CFD
ASX NZD/USD CFD
ASX FTSE8 CFD GBP Sterling Overnight Index Average (SONIA)
as published by the British Wholesale
Markets Brokers’ Association (WMBA)
ASX NZD/JPY CFD JPY Overnight Target Rate as published

12 ASX AUD/JPY CFD

ASX USD/JPY CFD
daily by the Bank of Japan

ASX AUD/NZD CFD NZD Official Overnight Cash Rate (ONCR)

as published daily by the Reserve Bank
of New Zealand

3 Standard & Poor’s ® and S&P ® are registered trademarks of The McGraw-Hill Companies, Inc. and have
been licensed for use by Sydney Futures Exchange Limited. The ASX S&P/ASX 200 CFD is not sponsored,
endorsed, sold or promoted by S&P and S&P makes no representation regarding the advisability of investing
in the ASX S&P/ASX 200 CFD.
4 DAX 30 is a registered trademark of Deutsche Borse AG
5 Dow Jones EURO STOXX 50® is a service mark of STOXX Limited or Dow Jones & Company, Inc., as the case
may be, and has been licensed for use for certain purposes by Sydney Futures Exchange Limited. ASX Dow Jones
EURO STOXX 50® CFD based on the Dow Jones EURO STOXX 50® is not sponsored, endorsed, sold or promoted
by STOXX or Dow Jones and neither STOXX nor Dow Jones makes any representation regarding the advisability of
investing in such product.
6 “Dow Jones”, DJIA and “Dow Jones Industrial Average IndexSM” are service marks of Dow Jones & Company, Inc.
and have been licenced for use. Dow Jones has no relationship to the Sydney Futures Exchange Limited other than
the licensing of the Dow Jones Industrial Average Index and its service marks for use in connection with the ASX
DJIA CFD. The ASX DJIA CFD is not sponsored, endorsed, sold or promoted by Dow Jones and Dow Jones makes
no representation regarding the advisability of investing in the ASX DJIA CFD.
7 Nasdaq®, Nasdaq-100®, and Nasdaq-100 Index® are trademarks of The Nasdaq Stock Market, Inc. (which with its
affiliates is referred to as the “Corporations”) and are licensed for use by Sydney Futures Exchange Limited. The ASX
Nasdaq CFD has not been passed on by the Corporations as to their legality or suitability. The Product(s) are not
issued, endorsed, sold, or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR
NO LIABILITY WITH RESPECT TO THE PRODUCT(S).
8 “FTSE®” is a trade mark of the London Stock Exchange Plc and the Financial Times Limited and is used by FTSE
International Limited (“FTSE”) under licence. All copyright and database rights in the index values and constituent
lists vest in FTSE. Neither FTSE nor its licensors in any way sponsors, endorses or is otherwise involved in the
issue and offering of this product. FTSE and its licensors disclaim any liability to any party for any inaccuracy in the
data on which the Index is based, for any mistakes, errors or omissions in the calculation and/or dissemination of
the Index or for the manner in which it is applied in connection with the issue and offering thereof or in connection
with the trading of the Index. This ASX FTSE CFD is not in any way sponsored, endorsed, sold or promoted by FTSE
International Limited (“FTSE”) and neither FTSE nor or any licensors of FTSE make any warranty or representation
whatsoever, express or implied, as to the results to be obtained from the use of the ASX FTSE CFD”. The FTSE 100
Index is the proprietary interest of FTSE and has been licensed for use by the SFE.”

Note: the additional ASX Index CFD licence agreement disclaimers are set out on pages 39–40.
Open Interest Charge (OIC) Dividend Cashflow
The Open Interest Charge (OIC) is the daily ASX Listed CFDs replicate the dividends or
cost charged by the ASX for holding an open earning rate paid by the underlying instrument.
position in an ASX Listed CFD.
ASX Equity CFDs
The OIC rate is set by the ASX and is paid daily
Long ASX Equity CFD positions receive the
by both long and short positions.
Dividend Cashflow and short positions pay the
The OIC can be changed by ASX in response to Dividend Cashflow. Positions are calculated at the
market circumstances. The rate can move up close of trading on the last day cum dividend. The
and down but is expected to be adjusted only Dividend Cashflow is payable and received the
infrequently. following day (the first day ex dividend).

Traders will be able to view current OIC rates ASX Index CFDs
and any upcoming changes to the OIC on the When a share in an index goes ex-dividend, the
ASX website at www.asx.com.au/cfd. ASX Index CFD recognises the dividend and
generates a Dividend Cashflow. This cashflow
OIC calculation examples are included later
mirrors what would have been paid or received
in this brochure (on page 18).
had someone held the physical share as part
of the overall index. As with ASX Equity CFDs,
longs receive and shorts pay the Dividend
Cashflow.

Note: The timing for payment/receipt of the

Dividend Cashflow is different to that of the
underlying shares. In shares, payment of
dividends occurs some weeks after the ex-date.
In ASX Listed CFDs the Dividend Cashflow is
paid or received on the ex-date.
13
 Franking Credit Cashflow The NSOP is determined by the Exchange
calculating the net open position of DPMs
The Franking Credit Cashflow (FCC) applies only
and expressing it as a percentage of the
to ASX Equity CFDs. With equities, dividends
market’s total short open position. If the net
may have a franking credit associated with
DPM position is long, holders of long positions
them of a value which, for ASX Equity CFDs, is
receive 100% of the FCC.
described as the FCC. The FCC represents the
If the DPM net position is short, the FCC is
monetary equivalent of the declared franking
discounted by the NSOP percentage.
credit. Similar to the Dividend Cashflow, holders
of short positions pay the FCC whilst holders of For example, if the net DPM short open
long positions receive the FCC. position is 30% then holders of long positions
receive the FCC (short) discounted by 30%.
Note: The FCC paid by holders of short
positions and the FCC received by holders of The net short open position of the DPMs at
long positions may differ depending on the the close of each trading day for each ASX
percentage of net short open positions (NSOP) Equity CFD is available on the ASX website at
held by Designated Price Makers (DPMs) at www.asx.com.au/cfd.
the close of trading on the last cum date.

14

Note: FCC is paid/received on the day following the ex-date.

Yield Cashflow Holders of long positions receive the Yield
Cashflow. Holders of short positions pay the
ASX FX CFDs replicate the relationship between
Yield Cashflow.
the two currencies that make up the contract.
As such, a characteristic of ASX FX CFDs is The Yield Cashflow is paid and received the
that there are two different currencies involved. next trading day, based on positions held at the
previous day’s close. The interest rate used to
Margins, Contract Interest and the OIC are
calculate the Yield Cashflow is based on the
denominated in the contract currency. The
applicable Benchmark Contract Interest Rate of
Yield Cashflow is denominated in the yield
the currency applicable for the Yield Cashflow.
currency.

For example, in the ASX AUD/USD CFD, the

contract currency is the USD. This means
margins, Contract Interest and OIC are all
denominated in USD. The Yield Cashflow is
denominated in AUD.

ASX Listed CFD

Yield Cashflow Benchmark Contract Interest
Currency Rate applicable for the Yield
Currency

AUD/USD AUD Target overnight cash rate as published

AUD/NZD daily by Reserve Bank of Australia
AUD/JPY
AUD/EUR

NZD/JPY NZD Official Overnight Cash Rate (ONCR) as

NZD/USD published daily by the Reserve Bank of New
Zealand

EUR/USD EUR EURO overnight Index Average (EONIA)

published daily by Reuters
15
USD/JPY USD Federal Funds Rate as published daily by the
Federal Reserve Bank of New York

Yield Cashflow calculation examples are included later in this brochure (See page 27).
 Trading ASX Listed CFDs

Where can I trade ASX Listed Product range

CFDs?
ASX EQUITY CFDs
ASX Listed CFDs are traded on the Sydney
Futures Exchange’s SYCOM® trading platform Listed over the top 50 stocks on the ASX
and operate under the SFE (Sydney Futures
Exchange) Operating Rules.
ASX Index CFDs
ASX S&P/ASX 200 CFD
ASX DJIA CFD
ASX NASDAQ CFD
ASX FTSE CFD
ASX DAX® CFD
ASX DJ Euro Stoxx 50® CFD

ASX FX CFDs
ASX AUD/USD CFD
ASX AUD/EUR CFD
ASX AUD/JPY CFD
ASX AUD/NZD CFD
ASX EUR/USD CFD
16 ASX USD/JPY CFD
ASX NZD/USD CFD
ASX NZD/JPY CFD

Access to products listed on SYCOM® is

facilitated by SFE Full Participants. Full ASX Commodity CFDs
Participants provide services to end-customers
and introducing brokers who themselves have ASX Gold CFD
end-customers. Full Participants can provide ASX Oil CFD
customers with either direct market access
(electronic) to SYCOM® or through a dedicated
SYCOM® Workstation. Additional ASX Listed CFDs will be listed in the
future. Please refer to www.asx.com.au/cfd
As with investing in shares, traders need
for the ASX Listed CFDs currently listed.
to first decide whether they wish to receive
trading advice or not.

ASX accredits advisers from firms offering ASX

Listed CFDs to end customers. This involves
the adviser undertaking training and passing an
examination created by ASX.

For a full list of parties (SFE Full Participants and

introducing brokers) that are accredited and able
to provide access to ASX Listed CFDs, visit the ASX
website.
ASX Equity CFDs

ASX Equity CFDs give you access to trade

a CFD over Australia’s most actively traded
shares. The contract value of one (1) ASX
Equity CFD equals the price quoted in cents.
For example, if the ASX Telstra CFD is trading
at 450, then the value of one ASX Telstra CFD
is AUD4.50.

For as little as the equivalent of 5% Initial

Margin, you can gain 20 times leveraged
exposure to the most actively traded shares
listed on the ASX.

When trading ASX Equity CFDs, a number

of factors affect the profitability of your
position. These include:
• movements in the price of the ASX
Equity CFD
• cashflows
• margins, and
• brokerage.

17
The examples on the following pages track both
a long and short position over a number of
days, illustrating the effect price movements,
cashflows and margins have on an ASX Equity
CFD position. Please note brokerage charged
by and payable to your broker has not been
taken into account in the examples that follow.
 Long Example ASX XYZ CFDs are currently trading at 2599
bid – 2600 offer (eg: $25.99-26.00).

Harry is a ‘directional trader’ who generally Harry places an order to buy 3,846 ASX XYZ
holds positions for no longer than 4 days. CFDs at 2600 = $99,996 value.
He believes that resource prices will be
strong over the next few days and thinks After the first day Harry must pay an Initial
XYZ Resources will rally off the back of Margin, Contract Interest, Open Interest and is
them. Harry has $100,000 deposited with exposed to Variation Margins.
his broker and wants to expose 5% of his
On subsequent days Harry is only subjected to
cash to this position.
Contract Interest, Open Interest and Variation
Margins.
ASX XYZ CFDs have an Initial Margin of $1.30
Note: If XYZ went ex-dividend during this period
per contract or approximately 5%. With
then Harry would receive the Dividend and any
$5000, therefore, Harry can gain exposure to
Franking Credit Cashflows.
$100,000 ($5,000/5%), as the $5,000 he
would like to expose is sufficient to pay his Initial
Margin on the position.

ASX EQUITY CFD Trade Price $26.00 $27.00

Trade Buy 3,846 Sell 3,846

Day 1 Day 2 Day 3 Day 4

Daily Settlement Price $26.50 $26.80 $25.80 $27.00

Initial Margin
(1) # of contracts 3,846
(2) Trade Price $26.00
18 (3) Initial Value (1x2) $99,996
(4) Margin $1.30 or 5%
Initial Margin (1x4) or (3x4) -$4,999.80 +$4,999.80
1
Contract Interest
(1) # of contracts 3,846 3,846 3,846
(2) Daily Settlement Price $26.50 $26.80 $25.80
(3) Position Value (1x2) $101,919 $103,072.80 $99,226.80
(4) CI/ # of days 7.25%/365 days 7.25%/365 days 7.25%/365 days
Contract Interest (3x4) -$20.24 -$20.47 -$19.71
1
Open Interest (OIC)
(1) # of contracts 3,846 3,846 3,846
(2) Daily Settlement Price $26.50 $26.80 $25.80
(3) Position Value (1x2) $101,919 $103,072.80 $99,226.80
(4) OIC/ # of days 1.5%/365 days 1.5%/365 days 1.5%/36 days
Open Interest Charge (3x4) -$4.19 -$4.24 -$4.08

Variation Margin
(1) Closing $26.50 $26.80 $25.80
(2) Opening $26.00 $26.50 $26.80
(3) Difference (1-2) $0.50 $0.30 -$1.00
(4) # of contracts 3,846 3,846 3,846
Variation Margin(3x4) $1,923.00 $1,153.80 -$3,846.00

Cumulative Profit/Loss
Gross Profit $1,923.00 $3,076.80 -$769.20 2
$3,846.00
Contract Interest -$20.24 -$40.72 -$60.43 -$60.43
Open Interest -$4.19 -$8.43 -$12.51 -$12.51
Net Profit/Loss $1,898.57 $3,027.66 -$842.13 $3,773.07

1 Some brokers aggregate Contract Interest and Open Interest and give them a generic title such as funding cost.
2 $3,846 is the difference between the price when the ASX Listed CFDs were initially purchased ($26.00) and the price when the CFDs were
sold ($27.00) multiplied by the number of CFDs traded (3,846)
Short Example ASX ABC CFDs are currently trading at 5000
bid – 5001 offer.

Jessica is a ‘directional trader’ who Jessica places an order to sell 2,000 ASX
generally holds positions for no longer ABC CFDs at $50.00 = $100,000 value.
than 4 days. She believes that ABC Bank
After the first day Jessica must pay an Initial
is overpriced and will fall over the next few
Margin and the Open Interest Charge. She is
days. Jessica has $100,000 deposited with
exposed to Variation Margins, but receives
her broker and wants to expose 5% of her
Contract Interest. On subsequent days Jessica
cash to this position.
continues to pay the Open Interest Charge, any
negative Variation Margins and continues to
ASX ABC CFDs have an Initial Margin of $2.50 receive Contract Interest.
per contract or approximately 5%. With
$5000, therefore, Jessica can gain exposure Note: If ABC went ex-dividend during this
to $100,000 (5,000/5%), as the $5,000 is period then Jessica would pay Dividend and any
sufficient to pay her Initial Margin on the position. Franking Credit Cashflow.

ASX EQUITY CFD Trade Price $50.00 $48.00

Trade Sell 2,000 Buy 2,000

Day 1 Day 2 Day 3 Day 4

Daily Settlement Price $51.00 $49.50 $49.00 $48.00

Initial Margin
(1) # of contracts 2,000
(2) Trade Price 50.00
(3) Initial Value (1x2) $100,000
(4) Margin 2.50 or 5%
Initial Margin (1x4) or (3x4) -$5,000.00 +$5,000.00 19
1
Contract Interest
(1) # of contracts 2,000 2,000 2,000
(2) Daily Settlement Price $51.00 $49.50 $49.00
(3) Position Value (1x2) $102,000 $99,000.00 $98,000.00
(4) CI/ # of days 7.25%/365 days 7.25%/365 days 7.25%/365 days
Contract Interest (3x4) $20.26 $19.66 $19.47
1
Open Interest (OIC)
(1) # of contracts 2,000 2,000 2,000
(2) Daily Settlement Price $51.00 $49.50 $49.00
(3) Position Value (1x2) $102,000 $99,000.00 $98,000.00
(4) OIC/ # of days 1.5%/365 days 1.5%/365 days 1.5%/365 days
Open Interest Charge (3x4) -$4.19 -$4.07 -$4.03

Variation Margin
(1) Opening $50.00 $51.00 $49.50
(2) Closing $51.00 $49.50 $49.00
(3) Difference (1-2) -$1.00 $1.50 $0.50
(4) # of contracts 2,000 2,000 2,000
Variation Margin(3x4) -$2,000 $3,000.00 $1,000.00

Cumulative Profit/Loss
Gross Profit -$2,000.00 $1,000.00 $2,000.00 2
$4,000.00
Contract Interest $20.26 $39.92 $59.39 $59.39
Open Interest -$4.19 -$8.26 -$12.29 -$12.29
Net Profit/Loss -$1,983.93 $1,031.66 $2,047.10 $4,047.10

1 Some brokers aggregate Contract Interest and Open Interest and give them a generic title such as funding cost.
2 $4,000 is the difference between the price when the ASX Listed CFDs were initially sold ($50.00) and the price when the CFDs were bought
back ($48.00) multiplied by the number of CFDs traded (2,000)
 ASX Index CFDs

ASX Index CFDs give you access to trade In this example, ASX S&P/ASX 200 CFDs
some of the world’s leading equity indices. The have an Initial Margin of $420 per contract or
contract value of one (1) ASX Index CFD equals approximately 8%. With $10,000, therefore,
the price quoted in the currency of the index. Tom can gain exposure to $128,571
For example, if the ASX DJIA CFD is trading at (10,000/7.78%). ASX S&P/ASX 200 CFDs
12,600.00, then the value of one (1) ASX DJIA are currently trading at 5399.0 bid – 5400.0
CFD is USD12,600.00. offer.

For as little as the equivalent of 5% Initial Tom places an order to buy 23 ASX S&P/ASX
Margin, you can gain 20 times leveraged 200 CFDs at $5,400.00 = $124,200 value.
exposure to these leading equity indices.
After the first day Tom must pay an Initial
When trading ASX Index CFDs, a number of Margin, Contract Interest, Open Interest and is
factors affect the profitability of your position. exposed to Variation Margins. On subsequent
These include movements in the price of days Tom is only exposed to Contract Interest,
the ASX Index CFD, cashflows, margins and Open Interest and Variation Margins.
brokerage. The following examples track both a
long and short position over a number of days. On day 4, Tom places an order to sell all 23
They showcase the effect price movement, CFDs when the index has reached 5500.
cashflows and margins have on an ASX Index Because he has sold his holding during the
CFD position. Please note no brokerage has trading day he is not subject to Contract Interest,
been taken into account. Open Interest or Variation Margin on day 4.

Note: If a constituent share of the index went

Long Example ex-dividend during this period then Tom would
20 receive Dividend Cashflow according to the
Tom – a ‘directional trader’ who generally share’s weighting in the index.
holds positions for no longer than 4 days –
believes that the S&P/ASX 200 Index will
be strong over the next few days. Tom has
$100,000 deposited with his broker and
wants to expose 10% of his cash to this
position.
 ASX S&P/ASX 200 CFD
Trade Price 5400.0 5500.0

Trade Buy 23 Sell 23

Day 1 Day 2 Day 3 Day 4

Daily Settlement Price

(Closing Price) 5,450.0 5,920.0 5,750.0 5,500.0

Initial Margin
(1) # of contracts 23
(2) Trade Price 5400.0
(3) Initial Value (1x2) $124,200
(4) Margin $420 or 7.778%
(5) Initial Margin (1x4) or (3x4) -$9,660.00 +$9,660.00
1
Contract Interest
(1) # of contracts 23 23 23
(2) Daily Settlement Price 5,450.0 5,520.0 5,350.0
(3) Position Value (1x2) $125,350.00 $126,960.00 $123,050.00
(4) CI/# of days 7.25%/365 days 7.25%/365 days 7.25%/365 days
(5) Contract Interest (3x4) -$24.90 -$25.22 -$24.44
1
Open Interest (OIC)
(1) Number of contracts 23 23 23
(2) Daily Settlement Price 5,450.0 5,520.0 5,350.0
(3) Position Value (1x2) $125,350.00 $126,960.00 $123,050.00
(4) OIC/# of days 1.5%/365 days 1.5%/365 days 1.5%/365 days 21
(5) Open Interest Charge (3x4) -$5.15 -$5.22 -$5.06

Variation Margin
(1) Closing 5,450 5,520 5,350
(2) Opening 5,400 5,450 5,520
(3) Difference (1-2) $50.00 $70.00 -$170.00
(4) Number of contracts 23 23 23
Variation Margin (3x4) $1,150.00 $1,610.00 -$3,910.00

Cumulative Profit/Loss
Gross Profit $1,150.00 $2,760.00 -$1,150.00 2
$2,300.00
Contract Interest -$24.90 -$50.12 -$74.56 -$74.56
Open Interest -$5.15 -$10.37 -$15.43 -$15.43
Net Profit / Loss $1,119.95 $2,699.51 -$1,239.98 $2,210.02

1 Some brokers aggregate Contract Interest and Open Interest and give them a generic title such as funding cost.
2 $2,300 is the difference between the price when the ASX Listed CFDs were initially purchased (5400) and the price when the CFDs were
sold (5500) multiplied by the number of CFDs traded (23)
 Short Example ASX DJIA CFDs are currently trading at
12,600.0 bid – 12,601.0 offer.

In this example all of the cashflows and Sandra places an order to sell 18 ASX DJIA
margins are in USD. Sandra – a ‘directional CFDs at 12,600 = USD226,800 value.
trader’ who generally holds positions for
no longer than 4 days – believes that the After the first day Sandra must pay an Initial
Dow Jones Industrial Average (DJIA) is Margin, Open Interest, is exposed to Variation
overpriced and will fall over the next few Margins, but receives Contract Interest. On
days. Sandra has USD100,000 deposited subsequent days Sandra is only exposed to
with her broker and wants to expose 10% Open Interest, Variation Margins, and continues
of her cash to this position. to receive Contract Interest.

In this example, ASX DJIA CFDs have an Note: If a constituent share of the index went
Initial Margin of USD530 per contract ex-dividend during this period then Sandra
or approximately 4%. With USD10,000, would pay the Dividend Cashflow according to
therefore, Sandra can gain exposure to the share’s weighting.
USD237,736 (10,000/4.2%).

ASX DJIA CFD Trade Price 12,600.0 12,400.0

Trade Sell 15 Buy 15

Day 1 Day 2 Day 3 Day 4

Daily Settlement Price 12,500 12,550 12,700 12,400

Initial Margin (USD)

(1) # of contracts 18
(2) Trade Price 12,600
(3) Initial Value (1x2) $226,800
22 (4) Margin 4.2%
Initial Margin (1x4) or (3x4) -$9,540.00 +$9,540.00
1
Contract Interest (USD)
(1) # of contracts 18 18 18
(2) Daily Settlement Price 12,500.0 12,550.0 12,700.0
(3) Position Value (1x2) $225,000 $225,900.00 $228,600.00
(4) CI/ # of days2 2.25%/360 days 2.25%/360 days 2.25%/360 days
Contract Interest (3x4) $14.06 $14.12 $14.29
1
Open Interest (OIC)
(1) # of contracts 18 18 18
(2) Daily Settlement Price 12,500.0 12,550.0 12,700.0
(3) Position Value (1x2) $225,000 $$225,900.00 $228,600.00
(4) OIC/ # of days2 1.5%/360 days 1.5%/360 days 1.5%/360 days
Open Interest Charge (3x4) -$9.38 -$9.41 -$9.53

Variation Margin
(1) Opening 12,600.0 12,500.0 12,550.0
(2) Closing 12,500.0 12,550.0 12,700.0
(3) Difference (1-2) $100.00 -$50.00 -$150.00
(4) # of contracts 18 18 18
Variation Margin(3x4) $1,800 -$900.00 -$2,700.00

Cumulative Profit/Loss
Gross Profit $1,800 $900.00 -$1,800.00 3
$3,600.00
Contract Interest $14.06 $28.18 $42.47 $42.47
Open Interest -$9.38 -$18.79 -$28.31 -$28.31
Net Profit/Loss $1,804.69 $909.39 -$1,785.84 $3,614.16

1 Some brokers aggregate Contract Interest and Open Interest and give them a generic title such as funding cost.
2 Market convention in the USA is to calculate interest based on a 360 day year. Therefore Contract and Open Interest Rates are divided by
360 not 365.
3 $3,600 is the difference between the price when the ASX Listed CFDs were initially sold (12,600) and the price when the CFDs were bought
back (12,400) multiplied by the number of CFDs traded (18)
ASX FX CFDs

Just like all foreign exchange transactions, For example:

ASX FX CFDs are based on two currencies, • When BUYING an ASX AUD/USD CFD you
commonly called currency ‘pairs’. will always be selling the second currency
(USD) and buying the first currency (AUD).
The second currency quoted in the currency
pair is referred to as the contract currency and • When SELLING an ASX AUD/USD CFD you
is the currency used for margins. will always buying the second currency (USD)
and selling the first currency (AUD).
It is critical to understand which currency is
being bought and which is being sold when you Therefore, if you want to profit from the AUD
buy CFDs (i.e. “go long”) or sell CFDs (i.e. “go strengthening against the USD, you need to
short”). increase your exposure to the AUD and buy the
ASX AUD/USD CFD.
The simple rule to remember is that if you
go long you are selling the contract currency. The table below provides a guide and highlights
If you go short, you are buying the contract the direction each currency in the cross rate
currency. must move for a trader to profit from a long
and short position.

ASX FX CFD Contract Trade Desired Trade Desired

Currency and effect outcome and effect outcome
AUD/USD USD Sell = Long USD / USD Buy = Short USD / USD
Short AUD AUD Long AUD AUD
AUD/EUR EUR Sell = Long EUR / EUR Buy = Short EUR / EUR 23
Short AUD AUD Long AUD AUD
AUD/JPY JPY Sell = Long JPY / JPY Buy = Short JPY / JPY
Short AUD AUD Long AUD AUD
AUD/NZD NZD Sell = Long NZD / NZD Buy = Short NZD / NZD
Short AUD AUD Long AUD AUD
EUR/USD USD Sell = Long USD / USD Buy = Short USD / USD
Short EUR EUR Long EUR EUR
USD/JPY JPY Sell = Long JPY / JPY Buy = Short JPY / JPY
Short USD USD Long USD USD
NZD/USD USD Sell = Long USD / USD Buy = Short USD / USD
Short NZD NZD Long NZD NZD
NZD/JPY JPY Sell = Long JPY / JPY Buy = Short JPY / JPY
Short NZD NZD Long NZD NZD

Note: ASX FX CFDs have a value of 1 CFD = 100 x the rate quoted.

For example, if the AUD/USD exchange rate is .9300, one ASX AUD/USD CFD delivers a US
dollar exposure of USD 93.00 and an Australian dollar exposure of AUD 100.

As with other ASX Listed CFDs, when trading ASX FX CFDs a number of factors affect the
profitability of your position, including movements in the price of the ASX FX CFD, cashflows,
margins, and brokerage. The following examples track both a long and short position over a
number of days. They showcase the effect price movement, cashflows and margins have on an
ASX FX CFD position. Please note no brokerage has been taken into account.
 Long Example After the first trading day, Chris’ account is
debited by the broker to pay for the Initial Margin,
Contract Interest and Open Interest Charge (OIC).
Chris is a ‘directional’ trader who generally He is also exposed to Variation Margins. All of
holds positions for no longer than 4 days. these charges are denominated in USD.
He believes that the AUD will strengthen
against the USD in the coming days. Holding a long position in ASX AUD/USD CFDs
means Chris will receive the Yield Cashflow
in AUD. On subsequent days Chris continues
Chris buys 2,000 ASX AUD/USD CFDs @ to pay, in USD, Contract Interest, the Open
0.9300. Interest Charge and Variation Margins (if
called), and receives the Yield cashflow in AUD.
This gives him an exposure of long
AUD200,000 and short USD186,000. In On Day 4, Chris closes out his position by
this example, the Initial Margin rate for the selling 2,000 CFDs at 0.9330. At this point his
ASX AUD/USD CFD is USD2 per lot. Chris Initial Margin is returned. If the Yield Cashflow
is therefore required to deposit as the initial is converted into USD (at the rate of .9330),
margin USD4,000 with his broker to support Chris has made a total profit for the trade of
the trade. Being long the contract means that USD541.78 + USD111.19 = USD652.97 or
if the price rises (i.e. the AUD appreciates AUD699.86.
against the USD), Chris will need less AUD
to buy back the short USD position.

24
ASX AUD/USD CFD Trade Price 0.9300 0.9330

Trade Buy 2,000 Sell 2,000

Day 1 Day 2 Day 3 Day 4

Settlement Price (USD) 0.9310 0.9315 0.9320 0.9330

Initial Margin (USD)

(1) Number of contracts 2,000 2,000
(2) Margin/per contract $2.00/contract $2.00/contract
(3) Initial Margin (1x2) -$4,000.00 +$4,000.00

Variation Margin (USD)

(1) Day’s Opening 0.9300 0.9310 0.9315
(2) Closing 0.9310 0.9315 0.9320
(3) Difference (2-1) 0.0010 0.0005 0.0005
(4) Multiplier 100 100 100
(5) Number of contracts 2,000 2,000 2,000
(6) Variation Margin(3x4x5) 200 100 100

Contract Interest (USD)1

(1) Number of contracts 2,000 2,000 2,000
(2) Multiplier 100 100 100
(3) Daily Settlement Price 0.9310 0.9315 0.9320
(4) Position Value(1x2x3) 186,200 186,300 186,400
(5) CI/ Number of days 2.25%/360 days 2.25%/360 days 2.25%/360 days
(6) Contract Interest (4x5) -$11.64 -$11.64 -$11.65

Open Interest (OIC) in USD

(1) Number of contracts 2,000 2,000 2,000
(2) Multiplier 100 100 100
(3) Daily Settlement price 0.9310 0.9315 0.9320
(4) Position Value (1x2x3) 186,200 186,300 186,400
(5) OIC/ Number of days
Open Interest Charge (4x5)
1.5%/360 days
-$7.76
1.5%/360 days
-$7.76
1.5%/360 days
-$7.77
25
Cumulative Profit/Loss (USD)
excl. Yield
(1) Gross Profit $200 $300 400 $600
2

(2) Contract Interest -$11.64 -$23.28 -$34.93 -$34.93

(3) Open Interest -$7.76 -$15.52 -23.29 -$23.29
$180.60 $261.20 $341.78 $541.78

Yield (AUD)
(1) Number of contracts 2,000 2,000 2,000
(2) Multiplier 100 100 100
(3) Yield/ Number of days 7.25%/365 days 7.25%/365 days 7.25%/365 days
(4) Yield cashflow (1x2x3) $39.73 $39.73 $39.73
Net Yield AUD $39.73 $79.45 $119.18 $119.18

1 The Benchmark Rate used for Contract Interest is the Federal Funds Rate as published daily by the Federal Reserve Bank of New York
2 $600 is the difference between the price when the ASX Listed CFDs were initially purchased (0.9300) and the price when the CFDs were
sold (0.9330) multiplied by the number of CFDs traded (2,000), multiplied by 100
 Short Example After the first day Kylie must pay to the broker
an Initial Margin and is exposed to Variation
Margins. These margins are denominated in
Kylie is a ‘Directional’ trader who generally JPY. Being short, Kylie pays the open interest
holds positions for no longer than 4 days. charge less the contract interest in JPY
She believes that the USD will fall against whilst paying Yield denominated in USD. On
the JPY in the coming days. subsequent days Kylie continues to receive
Contract Interest and pay the Open Interest
Charge and Variation Margins, if called, in JPY
Kylie Sells 2,000 ASX USD/JPY CFDs @
and pay the Yield Cashflow in USD.
102.00 JPY.

The trade gives her an exposure of short

USD200,000 and long JPY20,400,000.
In this example, Initial Margin rates for the ASX
USD/JPY CFD are JPY280 per contract. Kylie
is therefore required to deposit JPY560,000
with her broker as the Initial Margin in order to
trade. Being short the contract means that if
the price falls (i.e. the JPY appreciates against
the USD), Kylie will need less JPY to buy back
the short USD position.

26
 ASX USD/JPY CFD Trade Price 102.00 JPY 92.00

Trade Sell 2,000 Buy 2,000

Day 1 Day 2 Day 3 Day 4

Settlement Price (JPY) 97.00 102.00 87.00 92.00

Initial Margin (JPY)

(1) Number of contracts 2,000 2000
(2) Margin/per contract 280 / contract 280 / contract
(3) Initial Margin (1x2) -600,000 +600,000

Variation Margin (JPY)

(1) Day’s Opening 102.00 97.00 102.00
(2) Closing 97.00 102.00 87.00
(3) Difference (1-2) 5.00 -5.00 5.00
(4) Multiplier 100 100 100
(5) Number of contracts 2,000 2,000 2,000
(6) Variation Margin (3x4x5) 1,000,000 -1,000,000 3,000,000

Contract Interest (JPY)1

(1) Number of contracts 2,000 2,000 2,000
(2) Multiplier 100 100 100
(3) Daily Settlement Price 97.00 102.00 87.00
(4) Position Value (1x2x3) 22,000,000 23,000,000 20,000,000
(5) CI/ Number of days2 0.5%/360 days 0.5%/360 days 0.5%/360 days
(6) Contract Interest (4x5) 269 283 242

Open Interest (OIC) in JPY

(1) Number of contracts 2,000 2,000 2,000
(2) Multiplier 100 100 100
(3) Daily Settlement price 97.00 102.00 87.00
(4) Position Value (1x2x3) 22,000,000 23,000,000 20,000,000
(5) OIC/ Number of days
Open Interest Charge (4x5)
1.5%/360 days
-808
1.5%/360 days
-850
1.5%/360 days
-725
27
Cumulative Profit/Loss (JPY)
excl. Yield
(1) Gross Profit 1,000,000 0 3,000,000 3
2,000,000
(2) Contract Interest 269 553 794 794
(3) Open Interest -808 -1,658 -2,383 -2,383
999,461 -1,106 2,998,411 1,998,411

Yield (USD)
(1) Number of contracts 2,000 2,000 2,000
(2) Multiplier 100 100 100
(3)Yield/ Number of days 2.25%/360 days 2.25%/360 days 2.25%/360 days
(4) Yield cashflow (1x2x3) -$12.50 -$12.50 -$12.50
Net Yield USD -$12.50 -$25.00 -$37.50

1 The Benchmark Rate used for Contract Interest is the Overnight Target Rate as published daily by the Bank of Japan
2 Market convention in Japan and the US is to calculate interest based on a 360 day year. In Australia the convention is to use a 365 day year.
3 2,000,000 is the difference between the price when the ASX Listed CFDs were initially sold (102.00) and the price when the CFDs were
bought back (92.00) multiplied by the number of CFDs traded (2,000) multiplied by 100

ASX FX CFDs pay/receive yield in the opposing currency. Therefore a conversion needs to be
made to determine the overall profit/loss including yield.

In this example USD$37.50 of yield multiplied by the current cross rate (92) equals JPY3,450.
As short positions pay yield you deduct this figure from the original P&L figure to give an overall
profit of JPY1,994,961.
 ASX Commodity CFDs

ASX Commodity CFDs give you access to trade Long Example

some of the world’s key commodities. The
contract value of one (1) ASX Commodity CFD
equals the price quoted in the currency of the Larry is a ‘Directional’ trader who generally
commodity. For example, if the ASX Gold CFD is holds positions for no longer than 4 days.
trading at 925.00, then the value of one (1) ASX He believes that Gold will rally in the coming
Gold CFD is USD925.00 – or the equivalent of 1 days.
troy ounce of gold.

For as little as the equivalent of 2% Initial Margin, Larry buys 50 ASX Gold CFDs at 925.00.
you can gain 50 times leveraged exposure to
The position gives him an exposure of
these key commodities.
USD46,250. In this example, the Initial Margin
When trading ASX Commodity CFDs a number for an ASX Gold CFDs is USD29 per contract.
of factors affect the profitability of your position, Larry is required to deposit USD1,450 with his
including price movements in the ASX Commodity broker to support the position.
CFD, cashflows, margins, and brokerage. The
After the first day Larry must pay to the broker
following examples track both a long and short
an Initial Margin, Contract Interest and the
position over a number of days. They illustrate
Open Interest Charge. He is also exposed to
the effect that price movements, cashflows
Variation Margins. All of these charges are
and margins have on a position. Please note no
based in USD.
brokerage has been taken into account.
On subsequent days Larry continues to pay
Contract Interest, the Open Interest Charge

28 and, if called, Variation Margins in USD.

 ASX GOLD CFD Trade Price $925.00 $945.00

Trade Buy 50 Sell 50

Day 1 Day 2 Day 3 Day 4

Settlement Price (USD) $940.00 $925.00 $930.00 $945.00

Initial Margin (USD)

(1) # of contracts 50 50 x
(2) Margin/per contract $29/per contract $29/per contract =
Initial Margin (1x2) -$1,450.00 +$1,450.00

Variation Margin (USD)

(1) Closing $940.00 $925.00 $930.00
(2) Opening $925.00 $940.00 $925.00
(3) Difference (1-2) $15.00 -$15.00 $5.00
(4) # of contracts 50 50 50
(5) Variation margin (3x4) $750.00 -$750.00 $250.00
1
Contract Interest (USD)4
(1) # of contracts 50 50 50
(2) Daily Settlement Price $940.00 $925.00 $930.00
(3) Position Value (1x2) $47,000 $46,250.00 $46,500.00
(4) CI / # of days2 2.25%/360 days 2.25%/360 days 2.25%/360 days
Contract Interest (3x4) -$2.94 -$2.89 -$2.91
1
Open Interest (OIC) in USD
(1) # of contracts 50 50 50
(2) Daily Settlement Price $940.00 $925.00 $930.00 29
(3) Position Value (1x2) $47,000 $46,250.00 $46,500.00
(4) OIC / # of days2 1.5%/360 days 1.5%/360 days 1.5%/360 days
Open Interest (3x4) -$1.96 -$1.93 -$1.94

Cumulative Profit/Loss (USD)

Gross P & L $750.00 $0.00 $250.00 3
$1,000.00
Contract Interest -$2.94 -$5.83 -$8.73 -$8.73
Open Interest -$1.96 -$3.89 -$5.82 -$5.82
Net Profit/Loss $745.10 -$9.71 $235.44 $985.44

1 Some brokers aggregate Contract Interest and Open Interest and give them a generic title such as funding cost.
2 Market convention in the USA is to calculate interest based on a 360 day year. Therefore Contract and Open Interest Rates are divided by
360 not 365.
3 $1,000 is the difference between the price when the ASX Listed CFDs were initially purchased ($925) and the price when the CFDs were
sold ($945) multiplied by the number of CFDs traded (50)
4 The Benchmark Rate used for Contract Interest is the Federal Funds Rate as published daily by the Federal Reserve Bank of New York
 Short Example Barbara is required to deposit USD1,450 with
her broker to support the position.

Barbara is a ‘Directional’ trader who After the first day Barbara must pay to the
generally holds positions for no longer than broker an Initial Margin and the Open Interest
4 days. She believes that Gold will fall in the Charge. Having a short position, she receives
coming days. Contract Interest and is exposed to Variation
Margins. All of these cashflows are based in
USD.
Barbara Sells 50 ASX Gold CFDs at 925.00.
On subsequent days Barbara continues to
The position gives her an exposure of receive Contract Interest, pay the Open Interest
USD46,250. Charge and if called Variation Margins, in USD.
In this example, Initial Margin rates for ASX This example tracks Barbara’s cashflow
Gold CFDs are USD29.00 per lot. obligations and ultimate profit/loss.

ASX GOLD CFD Trade Price $925.00 $905.00

Trade Sell 50 Buy 50

Day 1 Day 2 Day 3 Day 4

Settlement Price (USD) $940.00 $925.00 $915.00 $905.00

Initial Margin (USD)

(1) # of contracts 50 50
(2) Margin/per contract $29 per contract $29 per contract
Initial Margin (1x2) -$1,450.00 +$1,450.00

Variation Margin (USD)

30 (1) Opening
(2) Closing
$925.00
$940.00
$940.00
$925.00
$925.00
$915.00
(3) Difference (1-2) -$15.00 $15.00 $10.00
(4) # of contracts 50 50 50
(5) Variation margin (3x4) -$750.00 $750.00 $500.00
1
Contract Interest (USD)4
(1) # of contracts 50 50 50
(2) Daily Settlement Price $940.00 $925.00 $915.00
(3) Position Value (1x2) $47,000 $46,250.00 $45,750.00
(4) CI / # of days2 2.25%/360 days 2.25%/360 days 2.25%/360 days
Contract Interest (3x4) $2.94 $2.89 $2.86
1
Open Interest (OIC) in USD
(1) # of contracts 50 50 50
(2) Daily Settlement Price $940.00 $925.00 $915.00
(3) Position Value (1x2) $47,000 $46,250.00 $45,750.00
(4) OIC / # of days2 1.5%/360 days 1.5%/360 days 1.5%/360 days
Open Interest (3x4) -$1.96 -$1.93 -$1.91

Cumulative Profit/Loss (USD)

Gross P & L -$750.00 $0.00 $500.00 3
$1,000.00
Contract Interest $2.94 $5.83 $8.69 $8.69
Open Interest -$1.96 -$3.89 -$5.79 -$5.79
Net Profit/Loss -$749.02 $1.94 $502.90 $1,002.90

1 Some brokers aggregate Contract Interest and Open Interest and give them a generic title such as funding cost.
2 Market convention in the USA is to calculate interest based on a 360 day year. Therefore Contract and Open Interest Rates are divided by
360 not 365.
3 $1,000 is the difference between the price when the ASX Listed CFDs were initially sold ($925) and the price when the CFDs were bought
back ($905) multiplied by the number of CFDs traded (50)
4 The Benchmark Rate used for Contract Interest is the Federal Funds Rate as published daily by the Federal Reserve Bank of New York
Risks of Trading ASX Listed CFDs

ASX Listed CFDs are not suitable for all traders Additional margin calls and
and investors. In light of the risks associated, unlimited loss:
you should only trade them if you are confident
It is important to note that the liability for a
that you understand ASX Listed CFDs and
holder of either a long or short ASX Listed CFD
the risks. Before trading ASX Listed CFDs
position is not limited to the margin paid.
you should carefully assess your experience,
investment objectives, financial resources and all If the market moves against a position or
other relevant considerations and consult your margin levels are increased, then the holder
adviser. Among the main risks of trading ASX of that position may be called upon to pay
Listed CFDs are the following: additional funds on short notice to maintain the
position (see section on Variation Margins on
Implications of leverage: page 9).
Leverage (or gearing) is the use of given
If a holder of a position fails to comply with a
resources in such a way that the potential
request from their broker for additional funds
positive or negative outcome is magnified.
within the time prescribed, the broker may close
ASX Listed CFDs are leveraged. They offer out the position. In addition, the holder will still
the potential to make a higher return from a be liable for any further losses that may have
smaller initial outlay than for a non-leveraged resulted from the position being closed out.
transaction such as direct share investing.
Note: The potential for loss is not limited to the
The example illustrates the effect of leverage amount of money paid as Initial and Variation
on a long ASX Equity CFD position. The table Margins. Adverse market moves can result
compares the possible purchase of 10,000 in losses being a multiple of the Initial Margin
long ASX Equity CFDs and 10,000 shares. The
higher percentage return from the ASX Equity
originally provided to support the position.
31
For a holder of a short position, a continuing
CFDs demonstrates how leverage can work.
adverse market price movement (e.g. market
The initial outlay of capital is small relative price rise), can result in theoretically unlimited
to the total position value. Consequently, losses being accumulated.
a relatively small market movement has a
proportionately larger impact on the amount of
funds supporting the position.

It is important to remember that leverage can

work both for and against you by magnifying
gains and losses.

Opening contract value Share ASX Listed CFD

Quantity purchased 10,000 10,000
Price $20.00 $20.00
Position value $200,000 $200,000
Capital outlay (Assume initial margin for CFD = 5%) $200,000 $10,000

Market/closing contract value Share ASX Listed CFD

Quantity held 10,000 10,000
Market/closing price $18.00 $18.00
Position value $180,000 $180,000
Gross profit/loss -$20,000 -$20,000
Gross return on initial capital outlay -10.00% -200.00%
 Foreign exchange risk Liquidity risk
Not all ASX Listed CFDs are denominated in Market conditions (for example, lack of liquidity)
Australian Dollars. may increase the risk of loss by making it
difficult to effect transactions or close out
It is important to keep in mind that when existing positions.
trading ASX FX, Commodity or overseas Index
CFDs all profits/losses are denominated in Normal pricing relationships may not exist in
the currency of the particular product. For certain circumstances. For example, normal
example, the ASX DJIA CFD is denominated pricing relationships may not exist in periods
in USD. of high buying or selling pressure, high market
volatility or lack of liquidity in the market for a
The following list indicates the currency particular ASX Listed CFD.
denomination of each ASX Index and
Commodity CFDs. Gapping, whereby a market price falls or rises
without the opportunity to trade, can result in
significant losses even when a stop loss has
ASX Listed CFDs Currency been put on. This is because it may not be
denomination possible to transact at the nominated price if
the market has gapped.
ASX S&P/ASX 200 CFD AUD
ASX Listed CFD traders may reduce liquidity
ASX DJIA CFD USD
risk by combining ASX Listed CFD positions with
ASX NASDAQ CFD USD ASX Exchange Traded Options. The result is
ASX FTSE CFD GBP similar to a guaranteed stop loss. More details
are available on the ASX Website at
ASX DAX® CFD EUR
www.asx.com.au/cfd.
ASX Dow Jones EURO STOXX 50® CFD EUR
Furthermore, there are limited circumstances
ASX Gold CFD USD
in which ASX may expire and delist the
ASX Oil CFD USD
32 contract. Please see page 6 for more detail.

The currency denomination of each ASX FX

Market disruptions / emergencies
CFD is listed on page 12. & issue resolution
ASX Listed CFD transactions are subject to the
rules, procedures, and practices of SFE and
SFECC. Under the SFE Operating Rules, certain
trading disputes between market participants
(for example errors involving traded prices
that do not bear a relationship to fair market
or intrinsic value) may lead to SFE cancelling
or amending a trade. In these situations your
consent is not required for the cancellation of
a trade.

In some circumstances underlying instruments

or securities may be halted, suspended from
trading or have their quotations withdrawn
from the exchange. These factors will directly
affect an ASX Listed CFDs value.
Taxation

It is beyond the scope of this booklet to provide

a detailed treatment of the taxation issues
that are relevant to trading in ASX Listed
CFDs. You should, however, take taxation into
consideration when you are investing in ASX
Listed CFDs, just as you would when investing
in shares.

Based on the law and administrative practice

as of July 2007, we note that it may benefit
potential investors to review Australian Taxation
Office (“ATO”) ruling TR 2005/15 (available at
http://law.ato.gov.au/pdf/tr2005-015.pdf)
paying particular attention as to how the ruling
applies to your facts and circumstances. Some
additional issues that may be relevant include:

• Your tax residency status;

• Taxation of Financial Arrangements (“TOFA”)

implications of trading in foreign currency
denominated CFDs; and

• Goods and Service Tax (“GST”) paid in

connection with CFD related services/
transactions. 33
 You and your broker

This information relates to the relationship Failing to pay your broker

between you and your broker (or, as they are
One of the significant terms required in every
officially called, Full Participants or introducing
Client Agreement with a broker is their right
brokers) when trading and settling ASX Listed
to close out contracts opened for you, without
CFDs.
further notice to you, if you fail to pay as
agreed in the Client Agreement. Accordingly,
Your relationship with your broker it is important that you understand the
As mentioned previously in this brochure, settlement and margin requirements set out
brokers can offer both trading and clearing in the Client Agreement(s) before commencing
services for ASX Listed CFDs or they can trading.
specialise, with some parts of the trading and
clearing process contracted to other brokers. Fees and commissions
The different services a broker may offer are ASX does not prescribe the rate of fees and
as follows commissions which brokers may charge
clients. Clients should discuss these rates
• Offer both trading and clearing services as a and how they will be administered directly
SFE Full Participant; with their broker(s) prior to signing the Client
Agreement(s). ASX has standard fees (e.g.
• Offer only trading services as a SFE Full for Contract and Open Interest), which can be
Participant. If so, the broker will execute checked on the ASX website.
transactions themselves but will clear
through another party; or

• Offer only trading services as an introducing

34 broker. If so, they will execute transactions
through a SFE Full Participant and clear
through a SFE Clearing Participant.

Client agreement forms

The Client Agreement is a legal contract setting
out the terms on which broker(s) will act for
you. It is important that you read the Client
Agreement carefully before signing it and retain
a copy of the agreement.

ASX does not prescribe a set Client Agreement

but requires minimum terms which the Client
Agreement must contain. Brokers may have
other terms provided they are not inconsistent
with the minimum terms.
SFE Clearing Corporation Instructing a broker to trade ASX
Clearing houses provide financial integrity by Listed CFDs
allowing participants to deal freely without Brokers are required to understand their
credit-risk constraints. The margining regime client’s financial situation in order to assess
adopted by exchange clearing houses are well whether a particular investment (such as ASX
established and strictly enforced. This prevents Listed CFDs) is suitable for that particular
participants from accumulating large unpaid client‘s situation. The broker‘s adviser will ask
losses that could threaten the financial position you certain questions relating to your financial
of other market users. position and your investment objectives when
dealing with you for the first time. The adviser
The SFE Clearing Corporation Pty Ltd (SFECC)
will rely on the information you provide when
has responsibility for the registration, clearing
advising you.
and processing of all trades executed on the
SFE Markets including ASX Listed CFDs.
Accredited ASX Listed CFD
The important functions to note here, in advisers
relation to ASX Listed CFDs are as follow: If receiving investment or trading advice about
ASX Listed CFDs, you should ensure that the
• Confirm and register all trades: Whenever
individual from whom you are receiving such
a deal is concluded, a record is passed
advice is accredited to advise on ASX Listed
to SFECC where it is processed and the
CFDs.
following morning a statement is issued to
the SFE Clearing Participant describing the You can place an order through any adviser
trades registered in their name. able to offer ASX Listed CFDs. A full list of

• Novation: After the contract is registered

accredited advisers is available on the ASX 35
website.
by SFECC (in the names of the SFE Clearing
Participants) the nexus between the two
original contracting parties is broken. SFECC
then becomes the buyer to the seller, and
the seller to the buyer. Thus, the identity
of the other party to the contract is no
longer of importance. Parties to an original
contract are not obliged to return to each
other to complete or unwind the contract.

• S
 et and collect margins: SFECC can
guarantee the payment of any profits made
on contracts because of the system of initial
and variation margins (daily settlements)
it imposes, as well as its own substantial
financial backing.

• Monitor Clearing Participants’ positions:

In protecting its guarantee, SFECC monitors
the size of each Participant’s position relative
to the overall market.
 Further information

Contract specifications Trading Simulator

Contract specifications for all ASX Listed CFDs Also on www.asx.com.au/cfd, ASX provides
are available on www.asx.com.au/cfd a trading simulator which allows traders and
investors to explore the fundamentals of trading
Education ASX Listed CFDs without putting any of their
For explanatory booklets on ASX Listed CFDs own funds at risk. For those new to trading
phone 131 279, or download the booklets CFDs, exploring the trading simulator after they
from the ASX website www.asx.com.au/cfd have attended an ASX Listed CFD class (either
online or face-to-face) may be a useful way of
Explanatory booklets on other derivatives ensuring they have a solid understanding of the
including options, futures and warrants are fundamentals and the risks in trading
also available. ASX Listed CFDs.

Face to face classes Contact Details

On a regular basis, ASX runs ‘Getting Started Website
in ASX Listed CFDs – The essentials of trading’
www.asx.com.au/cfd
classes. These are practical classes where
audience participation is encouraged and an
Email
interactive format is used.
ASXCFDs@asx.com.au
No prior knowledge of ASX Listed CFDs is
necessary. However, it is assumed that those Phone
attending have a working knowledge of the 131 279

36 sharemarket and an awareness of the risks

associated with trading CFDs. Post
ASX Listed CFDs
Details of upcoming class schedules are
20 Bridge Street,
available from the ASX website
Sydney NSW 2000
www.asx.com.au/cfd

Online education
You may prefer to complete classes in your
own time and a place that suits you. ASX has
three classes on ASX Listed CFDs available
online on www.asx.com.au/cfd. Each course
includes interactive exercises that will aid your
learning and a quiz at the end of each course
to show your progress.
Glossary of terms

Contract for Difference (CFD) Exchange for Physical (EFP)

An agreement between buyer and seller to An off-market trading mechanism that enables
exchange the difference in value of a particular a derivatives position to be swapped for an
instrument between when the contract is offsetting physical position.
opened and when it is closed. The difference is
determined by reference to an ‘underlying’ – a Franking Credit Cashflow (FCC)
stock, Index, FX rate or commodity. The monetary equivalent of the franking credit
declared on a particular underlying stock.
Contract Interest
FCC applies only to ASX Equity CFDs
An amount calculated daily on all open positions
Holders of long positions receive the FCC.
held at the close of trade; paid and received
daily by long and short position holders Holders of short positions pay the FCC.

Initial Margin
Daily Settlement Price (DSP)
Every trader in the ASX Listed CFD market is
Price used by SFECC in marking open positions required to put up an Initial Margin (deposit) for
to market for calculating Variation Margins for each contract they trade. This applies to both
open ASX Listed CFD positions. buyers and sellers.
This Initial Margin is returned when the
Designated Price Maker (DPM)
contract is closed out. Initial Margins protect
An Exchange approved market maker whose the Clearing House and Participant against
role is to provide liquidity in the ASX Listed CFD non-payment of losses by any customer. The
market. amount is normally set at a level designed
DPMs receive incentives from the Exchange to cover reasonably foreseeable losses on a
based on their success in trading ASX Listed position between the close of business on one 37
CFDs. day and the next. The amount of Initial Margin
for each contract varies according to the price
Dividend Cashflow volatility of the commodity, but is usually about
Payments replicating the dividends applying to 5% to 10% of the value of the goods described
the stocks underlying ASX Listed CFDs. They by the contract.
apply to:
Intra-day Margin
• A
 SX Equity CFDs based on stocks that
declare dividends, During periods of extreme market volatility,
additional margin calls known as an intraday
• A
 SX Index CFDs where a component stock
margin calls may be made. Although very rare,
pays out a dividend.
such a call can be affected at any point during
Long ASX Equity CFD positions receive the the trading day and is payable by the time
Dividend cashflow. specified by the SFECC.
Short ASX Equity CFD positions pay the
Dividend cashflow. Long
The amount of the Dividend Cashflow is To buy.
determined based on ASX Listed CFD positions
held.
For ASX Index CFDs a weighting is applied and
the Dividend Cashflow is denominated in the
base currency of the ASX Listed CFD.

Exchange-traded CFD
Where CFDs are traded on a formal regulated
market involving transparent and competitive
prices.
 Mark to market SFE Clearing Corporation (SFECC)
A system whereby the value of an open position The clearing house undertaking all clearing and
is revalued against the current market for processing of ASX Listed CFDs
the purpose of calculating variation margins.
A settlement price is used by the clearing Short
house for marking ASX Listed CFD positions to To sell.
market. SFECC uses settlement prices at the
close of the previous trading day. Stop loss order
An order placed at the same time as an order
Market maker model
to open a position which becomes activated
Where the OTC CFD provider acts as principal, when the market price reaches a designated
providing a two-way spread based on the level. Stop loss orders are used to close out
market price, and clients trade directly with the losing positions to prevent further loss.
OTC CFD provider.

Novation SYCOM®

Where the original parties to a contract created SFE trading system used for the trading of
on market are separated by the interposition futures contracts and ASX Listed CFDs.
of a third party, typically a clearing house.
Variation Margin
The interposition on a clearing party provides
certainty of contract completion by the contract Refers to the payment of profits or losses
guarantee provided by the clearing house. following revaluation of an ASX Listed CFD
contract. Clearing houses enforce a regime of
Open Interest Charge (OIC) daily variation margin calls. For this purpose,
Interest amount paid by both long and short open positions are revalued (or marked to
positions. The OIC rate is determined by the market) against settlement prices at the close
ASX and may vary according to product. In of the previous trading day.
the case of ASX Equity CFDs, and only in the
case of ASX Equity CFDs, the OIC will also vary Yield Cashflow
38 depending on whether a long or short position A payment applicable only to ASX FX CFDs.
is held. Paid by holders of short positions and received
by holders of long positions.
OTC Direct market access (DMA)
Paid or received the next trading day based on
Where the OTC CFD order is replicated by the
open positions held at the close of trading the
provider placing a corresponding stock order in
previous day
the underlying market.
Yield Rate
Over the counter (OTC)
Applicable only to ASX FX CFDs. The Yield rate
Non-exchange traded
is used for calculating Yield cashflow. It is fixed
to a benchmark rate in the currency opposite
Settlement prices
to the base currency of the ASX FX CFD. The
Price used by SFECC in marking open positions Yield rate varies according to movements in the
to market for calculating variation margins for relevant benchmark rate.
open CFD positions. For ASX Equity CFDs and
ASX Index CFDs, SFECC uses the closing prices
/levels of the underlying stock or index on the
previous trading day.
Index provider disclaimers

Standard & Poor’s ® and S&P ® are registered trademarks of The McGraw-Hill Companies, Inc. and have been
licensed for use by Sydney Futures Exchange Limited. THE ASX S&P/ASX 200 CFD IS NOT SPONSORED, ENDORSED,
SOLD OR PROMOTED BY STANDARD & POOR’S AND ITS AFFILIATES (“S&P”). S&P MAKES NO REPRESENTATION,
CONDITION, WARRANTY, EXPRESS OR IMPLIED, TO HOLDERS OF LONG OR SHORT POSITIONS IN THE CFD (“THE
CFD INVESTORS”) OR ANY MEMBER OF THE PUBLIC REGARDING THE ADVISABILITY OF INVESTING IN SECURITIES
GENERALLY OR IN THE CFD PARTICULARLY OR THE ABILITY OF THE ASX S&P/ASX 200 CFD TO TRACK GENERAL
STOCK MARKET PERFORMANCE. S&P’S ONLY RELATIONSHIP TO SYDNEY FUTURES EXCHANGE LIMITED IS THE
LICENSING OF CERTAIN TRADEMARKS AND TRADE NAMES AND OF THE S&P INDICES WHICH ARE DETERMINED,
COMPOSED AND CALCULATED BY S&P WITHOUT REGARD TO SYDNEY FUTURES EXCHANGE LIMITED OR CFD
INVESTORS. S&P HAS NO OBLIGATION TO TAKE THE NEEDS OF SYDNEY FUTURES EXCHANGE LIMITED OR THE
CFD INVESTORS INTO CONSIDERATION IN DETERMINING, COMPOSING OR CALCULATING THE S&P INDICES. S&P
IS NOT RESPONSIBLE FOR AND HAS NOT PARTICIPATED IN THE DETERMINATION OF THE PRICES OF THE CFD
OR THE LISTING AND TRADING OF THE CFD. S&P HAS NO OBLIGATION OR LIABILITY IN CONNECTION WITH THE
ADMINISTRATION, MARKETING, OR TRADING OF THE CFD.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P INDICES OR ANY DATA
INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS
THEREIN. S&P MAKES NO WARRANTY OR CONDITION, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY
CFD INVESTORS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDICES OR ANY DATA INCLUDED
THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES OR CONDITIONS, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OR CONDITIONS OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P INDICES OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN
NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS) RESULTING FROM THE USE OF THE S&P/ASX INDEX OR ANY DATA INCLUDED THEREIN,
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

DAX 30 is a registered trademark of Deutsche Börse AG. This financial instrument is neither sponsored nor promoted,
distributed or in any other manner supported by Deutsche Börse AG (the “Licensor”). Neither the publication of the
Index by the Licensor nor the granting of a license regarding the Index as well as the Index Trademark for the utilization
in connection with the financial instrument or other securities or financial products, which derived from the Index,
represents a recommendation by the Licensor for a capital investment or contains in any manner a warranty or opinion
by the Licensor with respect to the attractiveness on an investment in this product.

Dow Jones EURO STOXX 50® is a service mark of STOXX Limited or Dow Jones & Company, Inc., as the case may be, and has been
39
licensed for use for certain purposes by Sydney Futures Exchange Limited. ASX Dow Jones EURO STOXX 50® CFD based on the Dow Jones
EURO STOXX 50® is not sponsored, endorsed, sold or promoted by STOXX or Dow Jones and neither STOXX nor Dow Jones makes any
representation regarding the advisability of investing in such product.

STOXX does not:

• Sponsor, endorse, sell or promote the ASX Dow Jones EURO STOXX 50® CFD;
• Recommend that any person invest in the ASX Dow Jones EURO STOXX 50® CFD or any other securities;
• Have any responsibility or liability for or make any decisions about the timing, amount or pricing of the ASX Dow Jones EURO STOXX 50® CFD;
• Have any responsibility or liability for the administration, management or marketing of the ASX Dow Jones EURO STOXX 50 CFD®;
• Consider the needs of the ASX Dow Jones EURO STOXX 50® CFD or the owners of the ASX Dow Jones EURO STOXX 50® CFD in
determining, composing or calculating the Dow Jones EURO STOXX 50® or have any obligation to do so.

STOXX and/or Dow Jones & Company, Inc. (collectively herein the “Licensors”) will not have any liability in connection with the ASX Dow Jones
EURO STOXX 50® CFD. Specifically,

• The Licensors do not make any warranty, express or implied, and the Licensors disclaim any warranty about:
– The results to be obtained by the ASX Dow Jones EURO STOXX 50® CFD, the owner of the ASX Dow Jones EURO STOXX 50® CFD or
any other person in connection with the use of the Dow Jones EURO STOXX 50® and the data included in the Dow Jones EURO STOXX
50®;
– The accuracy or completeness of the Dow Jones EURO STOXX 50® and its data;
– The merchantability and the fitness for a particular purpose or use of the Dow Jones EURO STOXX 50® and its data;
• The Licensors will have no liability for any errors, omissions or interruptions in the Dow Jones EURO STOXX 50® or its data;
• Under no circumstances will the Licensors be liable for any lost profits or indirect, punitive, special or consequential damages or losses, even
if the Licensors know that they might occur.
Exchange Centre, 20 Bridge Street, Sydney NSW 2000. Telephone: 131 279 www.asx.com.au
 Interactive Brokers LLC

Australian
BEST EXECUTION POLICY
Retail Clients

Page 1 of 6
 Version Control

Document Date Author Key changes

version
1.0 Sept 2011 J Kelly Policy to comply with ASIC Market Integrity Rules

Page 2 of 6
1. Introduction

1.1 Interactive Brokers LLC (IB LLC) recognises that it has a duty to take all reasonable steps to
obtain the best outcome for the handling and execution of retail client orders. This means that IB LLC
has in place a policy and procedures that are designed to obtain the best outcome for retail clients
when executing orders on their behalf, subject to, and taking into account, any specific instructions
from the client, the nature of the particular orders and the nature of the markets concerned.

1.2 The Australian Securities & Investments Commission (ASIC) has published the ASIC Market
Integrity Rules (Competition in Exchange Markets) 2011 (MI Rules). Chapter 3 of the MI Rules,
which comes into effect on 31 October 2011, sets out the requirements for Best Execution including
requirements for documented policies and procedures (Part 3.2) and client disclosure (Part 3.3).

1.3 This document sets out IB LLC‟ s Best Execution Policy (the Policy) in accordance with Part 3.2
of the MI Rules

2. IB LLC.

2.1 IB LLC is a US online broker; specializing in routing orders and executing and processing trades
in securities, futures and foreign exchange instruments for its clients (“IB LLC clients”)

2.2 Timber Hill Australia Pty Limited (“THA”) is a Market Participant of the Australian Securities
Exchange and acts as executing broker for IB LLC .All IB LLC client orders for ASX financial
products are routed through THA‟ s connection to the ASX Integrated Trading System („ITS”) using
an electronic communications process (“ecp”) dedicated to the routing of only IB client orders

2.3 IB LLC has applied to be a trading participant of Chi-X Australia (CXA) for its Australian
securities market.IB LLC holds Australian Financial Services Licence number

2.4 IB LLC has applied to join the ASX PureMatch Order Book as an ASX Market Participant and the
ASX PureMatch Order Book is anticipated to be launched on 28 November 2011.

3. Scope
IB LLC owes a duty of best execution when it handles and executes orders on clients‟
behalf. For the purposes of this Policy IB LLC is in receipt of an order and acting on a client‟
s behalf when an execution instruction is given which gives rise to contractual or agency
obligations owed by IB LLC to a client. IB LLC believes this to be the case where it
exercises its discretion in relation to the execution of a client order.

4. Interpretation

4.1 Terms defined or described in the MI Rules have the same meaning in this Policy as they have in
the MI Rules. To the extent that there is any inconsistency between the terms of this Policy and
Chapter 3 of the MI Rules the MI rules prevail.

4.2 The term “venue” refers to any or all of the order books and systems referred to in paragraph 6.1
below.

Page 3 of 6
5. Specific Instructions

5.1 Where a retail client provides IB LLC with a specific instruction in relation to -
 an order,
 a particular aspect of an order ,
IB LLC will take reasonable steps to execute the orders in accordance with such instructions.

5.2 In following client instructions IB LLC will be deemed to have taken all reasonable steps to
provide the best outcome.

5.4 Therefore, if a client requires its order to be executed in a particular manner, the client should
clearly state the desired method of execution when the order is placed and such instruction must be
clear and ambiguous.

6. Execution Venues

6.1 In meeting its obligations to take all reasonable steps to consistently obtain the best outcome, IB
LLC may use one or more of the following order books and systems when executing the order on the
client‟ s behalf.

 The ASX TradeMatch Order Book,

 CXA Order Book.
 The ASX PureMatch Order Book

6.2 IB LLC will periodically assess each of the execution venues and order books it access when
executing Australian stocks to determine if alternative sources of execution provide a material
opportunity to achieve best execution.

Page 4 of 6
7. Execution factors

7.1 In the absence of specific instructions from the client, IB LLC may consider the following factors
to determine the manner in which a client order will be executed.

 Total consideration
 Price
 Speed
 Likelihood of execution or settlement
 Size of order
 Nature of order
 Costs
 Any other factor relevant to the execution of the order.

7.2 IB LLC will take all reasonable steps to obtain the best outcome when executing orders on behalf
of a client and will ordinarily place a higher importance on total consideration . However, IB LLC
will, in certain circumstances, determine that other execution factors are relevant; and in such cases it
will take into account the characteristics of:
 The client,
 The client order,
 The security subject to the order, and
 The execution venue.

8. No Fiduciary Responsibility

IB LLC‟ s commitment to provide “best execution” does not mean that it owes any of its clients any
fiduciary responsibilities over and above any specific regulatory obligations placed upon it or as may
be otherwise contracted between IB LLC and any individual client. Each client remains responsible
for its own investment decisions and IB LLC will not be responsible for any market or trading loss that
a client might suffer as a result of those decisions.

9. Monitoring & Review

9.1 IB LLC will monitor the effectiveness of its order execution arrangements and Best Execution
Policy in order to identify and, where appropriate, incorporate any amendments to procedures.

9.2 IB LLC will assess on a regular basis, whether the execution venues included in this Policy
provide the best outcome for its clients or whether it needs to make changes to its execution
arrangements. IB LLC will review its order execution arrangements and this Policy at least annually
or whenever a material change occurs that affects its ability to continue to obtain the best outcome for
the execution of client orders on a consistent basis using the venues included in this Policy. IB LLC
will notify clients of any material changes to its order execution arrangements or Best Execution
Policy as described above by posting the information on its website or by email.

Page 5 of 6
Page 6 of 6
 Euronext.LIFFE Disclosure

1. Rules of LIFFE and our capacity: All contracts in the terms of an Exchange Contract made on LIFFE (hereinafter,”LIFFE” or “Exchange”)
shall be subject to the Rules of LIFFE as from time to time in force. As a member of LIFFE, an affiliate of Interactive Brokers LLC (“IB”), which
shall act as executing broker, contracts only as a principal in respect of contracts in the terms of an Exchange Contract. In the event of a
conflict between the Rules of LIFFE and the terms of this Agreement, the Rules of LIFFE as from time to time in force, shall prevail.

2. LIFFE Risk Disclosure for Financial Futures: Pursuant to General Notice Number 1376, issued 18 March 1999 with an effective date of 12
April 1999, LIFFE requires that we provide you with certain information in connection with your trading of equity futures and options through
LIFFE CONNECT, as follows:

Client Issues

1. Exclusion of Liability: As set forth in section 8 below, unless otherwise expressly provided for, the Exchange shall not be liable to
any member or client for loss or damage caused as a result of such curtailment of trading opportunities.

2. Client Orders: Prior to the commencement of trading, clients must undertake to understand the characteristics of order types
TM
recognised in LIFFE CONNECT and be aware that the Exchange has a number of powers which, if exercised, may impact upon
the ability of a member to submit an order on behalf of a client or which may lead to the cancellation of an order after submission to
TM
the LIFFE CONNECT trading Host prior to execution. In particular, in addition to the powers already available to the Exchange
(including those in relation to investor protection and maintaining an orderly and proper market), clients should be aware that, in
TM
respect of LIFFE CONNECT

1. the Exchange has the power to suspend a member’s access, or access via a particular Individual Trading Mnemonic
(“ITM”) or ITMs, following a single warning, and to terminate a member’s access under certain conditions;

2. the Exchange will cancel all outstanding orders on the default of a member;

3. orders outside the price limits will be rejected automatically by the Trading Host;

4. all orders (with the exception of GTC orders) will be cancelled automatically at Market close or when the ITM under which
the order was submitted is logged out without being transferred to an alternative ITM

5. all orders (including GTC orders) will be cancelled at close of business on the Last Trading Day of the expiry month to
which they relate; and

6. all orders with the exception of GTC orders will be cancelled automatically if the Trading Host fails.

3. Error Correction Facility: In our and your interests, the Exchange may from time to time sanction the making of contracts by us outside the
pit in order to satisfy your order, where there has been an error in the execution of your order in the pit. Where a better price (an
improvement) can be obtained, we will seek to secure and offer that improvement to you. However, you should note that where, in response
to your order, we have bought or sold in accordance with the instruction in your order to buy or, as the case may be, to sell but have traded the
wrong delivery/expiry month or wrong exercise price of the relevant contract, then we may in accordance with the Exchange’s Rules offset any
loss arising from that trade against any improvement achieved for you in the course of correctly satisfying your order, thus offering you only
the net improvement, if any.

4. Matching contracts: In respect of every contract made between us subject to the Rules of LIFFE, we shall have made an equivalent contract
on the floor of the market for execution by open outcry or in the market conducted on the Automated Pit Trading system, or shall have
accepted the allocation of any such contract.

5. Allocation: In respect of every contract made between us for allocation to another member specified by you:

(a) in the event that such other member accepts the allocation, we shall (without prejudice to any claim we may have for commission or
other payment) upon such acceptance cease to be a party to the contract and shall have no obligation to you for its performance;
(b) in the event that such other member declines to accept the allocation, we shall be entitled at our option either to confirm the contract
with you or to liquidate it by such sale, purchase, disposal or other transaction or cancellation as we may in our discretion determine,
whether on the market or by private contract or any other feasible method; and any balance resulting from such liquidation shall be
promptly settled between us.

6. Allocation on Delivery or Exercise: Where the London Clearinghouse (“LCH”) does not specify a particular contract when making a delivery
or exercise, IB shall use a random lottery when selecting particular contracts. This method is detailed in the Disclosure Regarding IB’s
Procedures for Allocating Equity Option Exercise Notices available on the IB website. However, Customer acknowledges that: (A) commodity
options cannot be exercised and must be closed out by offset; and (B) for futures contracts that settle not in cash but by physical delivery of
the commodity (including currencies not on IB's Deliverable Currency List), Customer cannot make or receive delivery. If Customer has not
offset a commodity option or physical delivery futures position prior to the deadline on the IB website, IB is authorized to roll or liquidate the
position or liquidate any position or commodity resulting from the option or futures contract, and Customer is liable for all losses/costs. As
such, IB does not use an allocation method on physical delivery futures.
7. Margin: Customer shall monitor Customer’s account so that at all times the account shall contain a sufficient Account Balance to meet the
margin requirements set by IB, margin requirements which IB may modify for any Customer for open and new positions at any time in IB’s sole
discretion. The required margin may exceed the margin required by any exchange or clearing house. IB may reject any Customer Order while
determining the correct margin status of Customer’s account. Customer shall maintain, without notice or demand, a sufficient Account Balance
at all times so as to continuously meet the margin requirements established by IB. IB has no obligation to notify Customer of any failure to
meet margin requirements in Customer’s account prior to exercising its rights and remedies under this Agreement. Customer understands that
IB will not issue margin calls, and that IB will not credit Customer’s account to meet intraday margin deficiencies.

8. The Market - Exclusion of Liability (rule 1.4): The Exchange is obliged under the Financial Services Markets Act 2000 to ensure that
business conducted by means of its facilities is conducted in an orderly manner and so as to afford proper protection to investors. To this end,
the Exchange will at all times endeavour to maintain a fair and orderly market as is consistent with the Exchange’s legal obligations and the
object of the market.

The Exchange wishes to draw to the attention of members and clients that, inter alia, business on the market may from time to time be
suspended or restricted or the market may from time to time be closed for a temporary period or for such longer period as may be determined
in accordance with the LIFFE’s Rules including, without limitation, as a result of a decision taken under Rule 4.15 or 4.16 on the occurrence of
one or more events which require such action to be taken in the interests of, inter alia, maintaining a fair and orderly market. Any such action
may result the inability of one or more members and through such members one or more clients to enter into contracts in accordance with the
Rules on the terms of Exchange Contracts either by means of contracts entered into on the market floor or through an ATS.

Furthermore, a member and through the member one or more clients may from time to time be prevented from or hindered in entering into
contracts in the terms of Exchange Contracts, or errors in orders or in contracts in the terms of Exchange Contracts may arise, as a result of a
failure or malfunction of communications, or equipment, or market facilities, or the ATS central processing systems, or one or more ATS
workstations supplied to the member by the Exchange or otherwise used by the member or software supplied to the member by the Exchange
or any other person.

The Exchange further wishes to draw the following exclusion of liability to the attention of members and clients. Unless otherwise expressly
provided in the Rules or in any other agreement to which the Exchange is party, the Exchange shall not be liable to any member or client for
loss (including any indirect or consequential loss including, without limitation, loss of profit), damage, injury or delay, whether direct or indirect,
arising from any of the circumstances or occurrences referred to in Rule 1.4.2. or from any act or omission of the Exchange, its officers,
employees, agents or representatives under LIFFE’s Rules or pursuant to the Exchange’s obligations under statute or from any breach of
contract by or any negligence howsoever arising of the Exchange, its officers, employees, agents or representatives.

9. Arbitration. Any dispute arising from or relating to this agreement, in so far as it relates to contracts made between us subject to the Rules of
LIFFE, and any dispute arising from or relating to any such contract as aforesaid and made hereunder shall, unless resolved between us, be
referred to arbitration under the arbitration rules of LIFFE, or to such other organisation as LIFFE may direct before either of us resort to the
jurisdiction of the courts (other than to obtain an injunction or an order for security for a claim).

10. Governing Law. This agreement and all contracts made under this agreement shall be subject to and construed in accordance with English
law.

11. Jurisdiction: Subject to the arbitration clause above, disputes arising from this agreement or from contracts made under this agreement shall
(for our benefit) be subject to the exclusive jurisdiction of the English courts to which both parties hereby irrevocably submit, provided that this
shall not prevent us bringing an action in the courts of any other jurisdiction.

12. Changes to Agreement: Notwithstanding any previous agreement between us to the contrary, we now agree that a variation of the terms
agreed between us from time to time does not require the written agreement of both of us. This notification shall take effect 12 days after
despatch by us, provided that you do not object within 10 days of receipt.
 REGULATORY INFORMATION AND ADDITIONAL PROVISIONS FOR USERS FROM HONG KONG & USERS TRADING ON HONG KONG
EXCHANGES

Your agreement is with Interactive Brokers' United States office ("IB"). IB wants to make sure that you are aware that:

• As of March 6, 2000, The Stock Exchange of Hong Kong Limited (“SEHK”), Hong Kong Futures Exchange Limited (“HKFE”) and Hong Kong
Securities Clearing Company Limited (“HKSCC”) merged under a single holding company, Hong Kong Exchanges and Clearing Limited
(“HKEx”). The SEHK Options Clearing House Limited (“SEOCH”) and the HKFE Clearing Corporation Limited are also wholly-owned
subsidiaries of HKEx.
• IB is not a member of the HKFE.
• IB is not a member of the SEHK.
• Factual information, including market quotations and other data, is provided as a discretionary courtesy; and IB does not warrant in any
fashion, and is not responsible for, the accuracy or timeliness of such information. Reliance on such information is at the Customer's own risk.
(See paragraph 25 of the IB Customer Agreement).
• Electronic or computer-based facilities and systems such as those used by IB are vulnerable to disruption or failure. Your ability to make
claims or recover losses may be subject to limits on liability imposed by the IB Customer Agreement. (See paragraph 28 of the IB Customer
Agreement).
• Because information is being sent to you, and from you, through internet facilities, there will be a time delay with respect to price
quotations and data transmission and your orders may not necessarily be executed at the price indicated to you through the
internet.

The following "Additional Provisions" are applicable to Users from Hong Kong and Users trading on Hong Kong Exchanges and are in addition to the
Provisions of the IB Customer Agreement. To the extent that there is any conflict between the terms of the IB Customer Agreement and the terms of the
Additional Provisions, the Additional Provisions shall prevail.

The following definitions are applicable to the Additional Provisions:

• "Agreement" refers to the IB Customer Agreement and these Additional Provisions;

• “Commission” means the Securities and Futures Commission;
• "HKFE" means Hong Kong Futures Exchange Limited;
• "the HKFE Clearing House" means HKFE Clearing Corporation Limited;
• "SEHK" means The Stock Exchange of Hong Kong Limited;
• "SEOCH" means The SEHK Options Clearing House Limited;
• “CCASS” means the Central Clearing and Settlement System operated by Hong Kong Securities Clearing Company Limited;
• “HKSCC” means Hong Kong Securities Clearing Company Limited;
• "IB" means Interactive Brokers LLC, an overseas company registered with the Securities and Futures Commission as a Dealer and also
registered in the United States as a broker-dealer with the U.S. Securities and Exchange Commission and a Futures Commission Merchant
with the U.S. Commodity Futures Trading Commission;
• "Procedures" means the practices, procedures and administrative requirements prescribed from time to time by the HKEx, HKFE, SEHK,
HKFE Clearing House, CCASS/HKSCC or SEOCH, as applicable;
• "the Ordinance" means the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong as amended from time to time;
• "THSHK" means Timber Hill Securities Hong Kong Limited, an entity registered with the Securities and Futures Commission and a member of
the SEHK, HKFE, HKFE Clearing House, SEOCH and HKSCC; THSHK is an affiliate of IB.
• "Rules" means the Rules and Regulations of the HKEx, HKFE, SEHK, HKFE Clearing House, CCASS/HKSCC or SEOCH, as applicable, and
any amendments, supplements, variations or modifications thereto.

1. These Additional Provisions are subject to and governed by the provisions of the Ordinance and Hong Kong Law.

2. The rules and regulations of the HKEx, HKFE or SEHK as applicable, and the HKFE Clearing House, CCASS/HKSCC or SEOCH, as applicable, shall
be binding on the Customer and IB. Those rules and regulations contain provisions which require IB, in certain circumstances, to disclose the name and
beneficial identity or such other information concerning Customer as the exchange or Commission may request. Customer agrees to provide such
information to IB in compliance with the Ordinance, exchange Rules, Regulations and Procedures or as the exchange or Commission may require.
Customer acknowledges that if such information is not provided, the Chief Executive of the exchange may require the closing out of Customer’s
positions or the imposition of a margin surcharge on Customer's positions.

3. IB, its affiliates, including THSHK, and their respective directors and/or employees may trade on their own account and, subject to the provisions of
the Ordinance, IB and its affiliates may take the opposite position to the Customer's order in relation to any futures/options contract, whether on IB's or
its affiliate's own account or for the account of other customers of IB, provided that such trade is executed competitively on or through the facilities of
HKFE in accordance with its rules or the facilities of any other commodity, futures or options exchange in accordance with the rules and regulations of
the exchanges and clearinghouses governing the relevant markets.

4. Unless otherwise confirmed in writing by IB and agreed to by the Customer and IB, IB is acting solely as broker to any transactions made with IB by
the Customer.
5. In all transactions referred to in the Agreement, IB or its affiliates are authorized to engage in proprietary trading and may contract as principal.

6. The Customer submits to the non-exclusive jurisdiction of the Courts of Hong Kong in respect of all disputes, differences and claims relating to or
arising out of the Agreement.

7. The Customer is bound by rule 631 of the HKFE which permits the HKFE or Chief Executive of the HKFE to take steps to limit positions or require the
closing out of contracts of the Customer who in the opinion of the HKFE or the Chief Executive are accumulating positions which are or may be
detrimental to any particular Market or Markets, or which are or may be capable of adversely affecting the fair and orderly operation of any Market or
Markets as the case may be. In addition, IB may be required to report information regarding large open positions held by its Customers in accordance
with relevant regulations. More information on these requirements can be found in HKFE rules 628 – 633 and the Securities and Futures (Contracts
Limits and Reportable Positions) Rules and related guidance notes issued by the Commission.

8. All monies or other properties received by IB from the Customer or from any other person, including the HKFE Clearing House for the account of the
Customer in respect of the futures/options contracts transacted on behalf of the Customer, shall be held by IB as trustee, segregated from IB's own
assets and paid into a segregated bank account. All monies or other property so held by IB shall not form part of the assets of IB for insolvency or
winding up purposes but shall be promptly returned to Customer upon the appointment of a provisional liquidator, liquidator or similar officer over all or
any part of IB's business or assets.

9. The Customer hereby authorizes IB to apply any monies, approved debt securities or approved securities which the Customer may pay to IB in order
to: (i) meet obligations to the HKFE Clearing House (provided that no withdrawal from the Customer's accounts with IB may be made which would have
the effect that the relevant margin requirements or trading liabilities conducted on behalf of any Customer are thereby financed by any other Customer);
(ii) pay commission, brokerage, levies and other proper charges for contracts transacted by IB on behalf of the Customer; and/or (iii) make payments in
accordance with the Customer's directions (provided that no money may be paid into another account of the Customer unless that account is also a
segregated bank account). The Customer acknowledges that IB may apply such monies, approved debt securities or approved securities in or towards
meeting IB's obligations to any party insofar as such obligations arise in connection with or incidental to all futures/options contracts transacted on the
Customer's behalf. The Customer agrees that IB may retain interest on the Customer's money.

10. In respect of any account of IB, its affiliates, including THSHK, or any other broker acting on their behalf, maintained with the HKFE Clearing House,
whether or not such account is maintained wholly or partly in respect of the futures/options contracts transacted on behalf of the Customer and whether
or not monies or approved securities paid or deposited by the Customer has been paid to the HKFE Clearing House, as between such entities and the
HKFE Clearing House, such entities deal as principal and accordingly no such account is impressed with any trust or other equitable interest in favor of
the Customer and the monies and/or approved securities paid to or deposited with the HKFE Clearing House are thereby freed from the trust referred to
in paragraph 8, above.

11. In the event that the Customer directs IB to enter into any contract on an exchange or other market on which such transactions are effected in a
foreign currency: (i) any profit or loss arising as a result of a fluctuation in the exchange rate affecting such currency will be entirely for the account and
risk of the Customer; (ii) all initial and subsequent deposits for margin purposes shall be made in such currency in such amounts as IB may, at its sole
discretion, require; and (iii) when such a contract is liquidated IB shall debit or credit the account of the Customer in the currency in which such account
is denominated at a rate of exchange (where the relevant contract is denominated in a currency other than that of the account) determined by IB at its
sole discretion on the basis of the then prevailing money market rates of exchange.

12. The Customer acknowledges that the HKFE Clearing House may do all things necessary to transfer any open positions held by IB on the
Customer's behalf and money and securities standing to the credit of the Customer's account with IB to another member of the HKFE if necessary.

13. LEVIES & COMMISSIONS

• Every contract executed on the floor of the HKFE shall be subject to the charge of an applicable Investor Compensation Fund levy and a levy
pursuant to the Ordinance, the cost of both of which shall be borne by the Customer.
• In respect of contracts executed in markets other than those organized by the HKFE, any charges levied on such contracts by the relevant
markets shall be borne by the Customer.
• The Customer will pay commission and other charges at rates to be determined by IB and at charges pursuant to Hong Kong law or the rules
of the HKFE or other exchanges governing the relevant markets.

14. RULES & LAWS

• All transactions shall be subject to the constitution, rules, regulations, customs, usages, rulings and interpretations, from time to time extant or
in force of the HKEx, HKFE or SEHK or other markets as applicable (and of their respective clearing house, if any), where the transactions
are executed by IB or IB agents. All transactions under this agreement shall also be subject to any law, rule, or regulation then applicable
thereto, including but not by way of limitation, the provisions of the Ordinance, as amended from time to time, and the rules and regulations
thereunder.
• All transactions entered between IB and the Customer relating to any money, foreign currency, currency option, currency future, or currency
forward contract or foreign exchange contract shall be governed by and subject to all the rules, regulations, orders and laws of the country of
the currency or money concerned and those of Hong Kong and/or the by-laws, rules and regulations of the exchange concerned in which the
transaction is done.
• All transactions related to futures/options contracts executed in markets other than those organized by the HKFE will be subject to the rules
and regulations of those markets and not those of the HKFE, with the result that the Customer may have a markedly different level and type of
protection in relation to those transactions as compared to the level and type of protection afforded by the rules of the HKFE.
 • No provisions of this Agreement will operate to remove, exclude, or restrict any of your rights or any obligations of IB under Hong Kong law.

15. EXPLANATION OF MARGIN PROCEDURES AND UNILATERAL CLOSING OUT OF CLIENTS' POSITIONS

Margin Procedures

We set out below an explanation of margin procedures and the circumstances under which Customer positions may be unilaterally closed.

• Paragraph 11 of the IB Customer Agreement sets out detailed provisions regarding Margin Requirements.
• IB follows all margin rules laid down by all exchanges on which products are traded on margin.
• Any changes in margin requirements (whether imposed by the exchange or by IB) will be communicated to customers.
• Customers must remember that, in the event of a default, IB may close out the customers' open positions without prior notice to or consent
from the customers as provided for by the terms of the Agreement. IB has reserved in the Agreement the right to close out any open
positions(s) without notice: (i) when the margins on deposit with IB are exhausted, inadequate in the opinion of IB to protect it against possible
price fluctuations or any adverse conditions; or (ii) any other appropriate circumstances. Please Note: IB is required to notify the HKFE (and
may be required to report to the HKFE and the Commission particulars of all open positions) if Customer fails to meet two or more successive
margin calls or demands for variation adjustments if the total amount in default exceeds HK $150,000.
• No conduct or omission on behalf of IB, nor any agreement purportedly entered into on IB's behalf (save an agreement in accordance with the
terms of the Agreement), shall constitute any form of waiver or variation or relaxation of IB's rights to close out customers' positions
unilaterally.
• Any steps taken by IB to close out customers' positions unilaterally will be entirely without prejudice to IB's other rights under the Agreement
and otherwise, in particular the right to payments from customers of all amounts outstanding.

16. STATEMENT OF PARTICULARS OF APPROVED CONTRACTS

IB and THSHK are licensed to trade in the products approved by the HKEx, HKFE or SEHK, as applicable, from time to time. Contract specifications for
the products in question are available on request.

17. If Customer suffers pecuniary loss by reason of IB’s default, the liability of the Investor Compensation Fund will be restricted to valid claims as
provided for in the Ordinance and the relevant subsidiary legislation and will be subject to the monetary limits specified in the Securities and Futures
(Investor Compensation – Compensation Limits) Rules and accordingly there can be no assurance that any pecuniary loss sustained by reason of such
a default will necessarily be recouped from the Investor Compensation Fund in full, in part or at all.

18. We disclose the following to you: Company Name: Interactive Brokers LLC. Licensed for Dealing in Securities, Dealing in Futures Contracts and
Leveraged Foreign Exchange Trading. Central Entity Number (CE Number): AEX264. Staff responsible for your account: The IB Customer Service
Desk. Name of IB Responsible Officer / Registered Representative: David E. Friedland CE No.: ACP478.

19. RISK DISCLOSURE STATEMENT FOR EQUITY SECURITIES

• Customer acknowledges that the price of securities can and does fluctuate, and that any individual security may experience downward
movements, and under some circumstances even become valueless. Customer appreciates therefore that there is an inherent risk that losses
may be incurred rather than profit made, as a result of buying and selling securities. This is a risk that the Customer is prepared to accept.
• Customer also acknowledges that there are risks in leaving securities in the custody of the Broker or in authorizing the Broker to deposit
securities as collateral for loans or advances made to the Broker or authorizing the Broker to borrow or loan securities.
 HONG KONG RISK DISCLOSURE STATEMENTS

A. RISK OF SECURITIES TRADING

• The prices of securities fluctuate, sometimes dramatically. The price of a security may move up or down, and may become valueless. It is as
likely that losses will be incurred rather than profit made as a result of buying and selling securities.

B. RISK OF TRADING FUTURES AND OPTIONS

• The risk of loss in trading futures contracts or options is substantial. In some circumstances, you may sustain losses in excess of your initial
margin funds. Placing contingent orders, such as "stop-loss" or "stop-limit" orders, will not necessarily avoid loss. Market conditions may make
it impossible to execute such orders. You may be called upon at short notice to deposit additional margin funds. If the required funds are not
provided within the prescribed time, your position may be liquidated. You will remain liable for any resulting deficit in your account. You should
therefore study and understand futures contracts and options before you trade and carefully consider whether such trading is suitable in the
light of your own financial position and investment objectives. If you trade options you should inform yourself of exercise and expiration
procedures and your rights and obligations upon exercise or expiry.

C. RISK OF TRADING IN LEVERAGED FOREIGN EXCHANGE CONTRACTS

• The risk of loss in leveraged foreign exchange trading can be substantial. You may sustain losses in excess of your initial margin funds.
Placing contingent orders, such as "stop-loss" or "stop-limit" orders, will not necessarily limit losses to the intended amounts. Market
conditions may make it impossible to execute such orders. You may be called upon at short notice to deposit additional margin funds. If the
required funds are not provided within the prescribed time, your position may be liquidated. You will remain liable for any resulting deficit in
your account. You should therefore carefully consider whether such trading is suitable in light of your own financial position and investment
objectives.

D. RISK OF TRADING IN GROWTH ENTERPRISE MARKET STOCKS

• Growth Enterprise Market (GEM) stocks involve a high investment risk. In particular, companies may list on GEM with neither a track record of
profitability nor any obligation to forecast future profitability. GEM stocks may be very volatile and illiquid.
• You should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM
mean that it is a market more suited to professional and other sophisticated investors.
• Current information on GEM stocks may only be found on the internet website operated by The Stock Exchange of Hong Kong Limited. GEM
Companies are usually not required to issue paid announcements in gazetted newspapers.
• You should seek independent professional advice if you are uncertain of or have not understood any aspect of this risk disclosure statement or
the nature and risks involved in trading of GEM stocks.

E. RISK OF CLIENT ASSETS RECEIVED OR HELD OUTSIDE HONG KONG

• Client assets received or held by the licensed or registered person outside Hong Kong are subject to the applicable laws and regulations of the
relevant overseas jurisdiction which may be different from the Securities and Futures Ordinance (Cap.571) and the rules made thereunder.
Consequently, such client assets may not enjoy the same protection as that conferred on client assets received or held in Hong Kong.

F. RISK OF PROVIDING AN AUTHORITY TO REPLEDGE YOUR SECURITIES COLLATERAL ETC.

• There is risk if you provide the licensed or registered person with an authority that allows it to apply your securities or securities collateral
pursuant to a securities borrowing and lending agreement, repledge your securities collateral for financial accommodation or deposit your
securities collateral as collateral for the discharge and satisfaction of its settlement obligations and liabilities.
• If your securities or securities collateral are received or held by the licensed or registered person in Hong Kong, the above arrangement is
allowed only if you consent in writing. Moreover, unless you are a professional investor, your authority must specify the period for which it is
current and be limited to not more than 12 months. If you are a professional investor, these restrictions do not apply.
• Additionally, your authority may be deemed to be renewed (i.e. without your written consent) if the licensed or registered person issues you a
reminder at least 14 days prior to the expiry of the authority, and you do not object to such deemed renewal before the expiry date of your then
existing authority.
• You are not required by any law to sign these authorities. But an authority may be required by licensed or registered persons, for example, to
facilitate margin lending to you or to allow your securities or securities collateral to be lent to or deposited as collateral with third parties. The
licensed or registered person should explain to you the purposes for which one of these authorities is to be used.
• If you sign one of these authorities and your securities or securities collateral are lent to or deposited with third parties, those third parties will
have a lien or charge on your securities or securities collateral. Although the licensed or registered person is responsible to you for securities
or securities collateral lent or deposited under your authority, a default by it could result in the loss of your securities or securities collateral.
• A cash account not involving securities borrowing and lending is available from most licensed or registered persons. If you do not require
margin facilities or do not wish your securities or securities collateral to be lent or pledged, do not sign the above authorities and ask to open
this type of cash account.
G. RISK OF MARGIN TRADING

• The risk of loss in financing a transaction by deposit of collateral is significant. You may sustain losses in excess of your cash and any other
assets deposited as collateral with the licensed or registered person. Market conditions may make it impossible to execute contingent orders,
such as "stop-loss" or "stop-limit" orders. You may be called upon at short notice to make additional margin deposits or interest payments. If
the required margin deposits or interest payments are not made within the prescribed time, your collateral may be liquidated without your
consent. Moreover, you will remain liable for any resulting deficit in your account and interest charged on your account. You should therefore
carefully consider whether such a financing arrangement is suitable in light of your own financial position and investment objectives.

H. ADDITIONAL RISK DISCLOSURE FOR FUTURES AND OPTIONS TRADING

• This brief statement does not disclose all of the risks and other significant aspects of trading in futures and options. In light of the risks, you
should undertake such transactions only if you understand the nature of the contracts (and contractual relationships) into which you are
entering and the extent of your exposure to risk. Trading in futures and options is not suitable for many members of the public. You should
carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources and other relevant
circumstances.

Futures

1. Effect of 'Leverage' or 'Gearing'

Transactions in futures carry a high degree of risk. The amount of initial margin is small relative to the value of the futures contract so that
transactions are 'leveraged' or 'geared'. A relatively small market movement will have a proportionately larger impact on the funds you have
deposited or will have to deposit: this may work against you as well as for you. You may sustain a total loss of initial margin funds and any
additional funds deposited with the firm with which you deal to maintain your position. If the market moves against your position or margin
levels are increased, you may be called upon to pay substantial additional funds on short notice to maintain your position. If you fail to comply
with a request for additional funds within the time prescribed, your position may be liquidated at a loss and you will be liable for any resulting
deficit.

2. Risk-reducing orders or strategies

The placing of certain orders (e.g. “stop-loss” orders, or “stop-limit” orders), which are intended to limit losses to certain amounts, may not be
effective because market conditions may make it impossible to execute such orders. Strategies using combinations of positions, such as
'spread' and 'straddle' positions may be as risky as taking simple 'long' or 'short' positions.

Options

3. Variable degrees of risk

Transactions in options carry a high degree of risk. Purchasers and sellers of options should familiarize themselves with the type of option (i.e.
put or call) which they contemplate trading and the associated risks. You should calculate the extent to which the value of the options must
increase for your position to become profitable, taking into account the premium and all transaction costs.

The purchaser of options may offset or exercise the options or allow the options to expire. The exercise of an option results either in a cash
settlement or in the purchaser acquiring or delivering the underlying interest. If the option is on a futures contract, the purchaser will acquire a
futures position with associated liabilities for margin (see the section on Futures above). If the purchased options expire worthless, you will
suffer a total loss of your investment which will consist of the option premium plus transaction costs. If you are contemplating purchasing deep-
out-of-the-money options, you should be aware that the chance of such options becoming profitable ordinarily is remote.

Selling ('writing' or 'granting') options generally entails considerably greater risk than purchasing options. Although the premium received by
the seller is fixed, the seller may sustain a loss well in excess of that amount. The seller will be liable for additional margin to maintain the
position if the market moves unfavorably against him. The seller will also be exposed to the risk of the purchaser exercising the option and the
seller will be obligated to either settle the options in cash or to acquire or deliver the underlying interest. If the option is on a futures contract,
the seller will acquire a position in a futures contract with associated liabilities for margin (see the section on Futures above). If the option is
'covered' by the seller holding a corresponding position in the underlying interest or a futures contract or another option, the risk may be
reduced. If the option is not covered, the risk of loss can be unlimited.

Certain exchanges in some jurisdictions permit deferred payment of the option premium, exposing the purchaser to liability for margin
payments not exceeding the amount of the premium. The purchaser is still subject to the risk of losing the premium and transaction costs.
When the option is exercised or expires, the purchaser is responsible for any unpaid premium outstanding at that time.
Additional Risks Common to Futures and Options

4. Terms and conditions of contracts

You should ask the firm with which you deal about the terms and conditions of the specific futures or options which you are trading and
associated obligations (e.g. the circumstances under which you may become obliged to make or take delivery of the underlying interest of a
futures contract and, in respect of options, expiration dates and restrictions on the time for exercise). Under certain circumstances the
specifications of outstanding contracts (including the exercise price of an option) may be modified by the exchange or clearing house to reflect
changes in the underlying interest.

5. Suspension or restriction of trading and pricing relationships

Market conditions (e.g. illiquidity) and/or the operation of the rules of certain markets (e.g. the suspension of trading in any contract or contract
month because of price limits or 'circuit breakers') may increase the risk of loss by making it difficult or impossible to effect transactions or
liquidate/offset positions. If you have sold options, this may increase the risk of loss.

Further, normal pricing relationships between the underlying interest and the futures, and the underlying interest and the option may not exist.
This can occur when, for example, the futures contract underlying the option is subject to price limits while the option is not. The absence of an
underlying reference price may make it difficult to judge 'fair' value.

6. Deposited cash and property

You should familiarize yourself with the protections given to money or other property you deposit for domestic and foreign transactions,
particularly in the event of a firm insolvency or bankruptcy. The extent to which you may recover your money or property may be governed by
specific legislation or local rules. In some jurisdictions, property which had been specifically identifiable as your own will be pro-rated in the
same manner as cash for purposes of distribution in the event of a shortfall.

7. Commission and other charges

Before you begin to trade, you should obtain a clear explanation of all commission, fees and other charges for which you will be liable. These
charges will affect your net profit (if any) or increase your loss.

8. Transactions in other jurisdictions

Transactions on markets in other jurisdictions, including markets formally linked to a domestic market, may expose you to additional risk. Such
markets may be subject to regulation which may offer different or diminished investor protection. Before you trade, you should enquire about
any rules relevant to your particular transactions. Your local regulatory authority will be unable to compel the enforcement of the rules of
regulatory authorities or markets in other jurisdictions where your transactions have been effected. You should ask the firm with which you
deal for details about the types of redress available in both your home jurisdiction and other relevant jurisdictions before you start to trade.

9. Currency risks

The profit or loss in transactions in foreign currency-denominated contracts (whether they are traded in your own or another jurisdiction) will be
affected by fluctuations in currency rates where there is a need to convert from the currency denomination of the contract to another currency.

10. Trading facilities

Electronic trading facilities are supported by computer-based component systems for the order-routing, execution, matching, registration or
clearing of trades. As with all facilities and systems, they are vulnerable to temporary disruption or failure. Your ability to recover certain losses
may be subject to limits on liability imposed by the system provider, the market, the clearing house and/or participant firms. Such limits may
vary: you should ask the firm with which you deal for details in this respect.

11. Electronic trading

Trading on an electronic trading system may differ not only from trading in an open-outcry market but also from trading on other electronic
trading systems. If you undertake transactions on an electronic trading system, you will be exposed to risks associated with the system
including the failure of hardware and software. The result of any system failure may be that your order is either not executed according to your
instructions or is not executed at all.

12. Off-exchange transactions

In some jurisdictions, and only then in restricted circumstances, firms are permitted to effect off-exchange transactions. The firm with which
you deal may be acting as your counterparty to the transaction. It may be difficult or impossible to liquidate an existing position, to assess the
value, to determine a fair price or to assess the exposure to risk. For these reasons, these transactions may involve increased risks. Off-
 exchange transactions may be less regulated or subject to a separate regulatory regime. Before you undertake such transactions, you should
familiarize yourself with applicable rules and attendant risks.

I. DISCLOSURE REGARDING HONG KONG OPTIONS

• Hong Kong options are treated as normal premium options in that IB will not post changes in variation margin (profits or losses) for such
options. The profit or loss will be determined at the time a position is closed and will be the difference between the opening and closing
transaction prices. You should note that the end profit or loss calculation result remains identical. It is important to note that positions
resulting from strategies with combined futures and options legs may require additional collateral to maintain. This is because commodity
accounts must maintain a positive cash balance and adverse market movements may cause the futures portion of the strategy to generate
negative cash which will not be offset by options price changes.
 Client Standing Authority

To: Interactive Brokers LLC

Suite 1512, Two Pacific Place
88 Queensway
Admiralty, Hong Kong

Authority under Securities and Futures (Client Securities) Rules

This letter of authority is in respect of my/our securities or securities collateral as set out below.

Unless otherwise defined, all the terms used in this authorisation letter shall have the same meanings as in the Securities and Futures Ordinance and
the Securities and Futures (Client Securities) Rules as amended from time to time.

This letter authorises you to:

i. apply any of my/our securities or securities collateral pursuant to a securities borrowing and lending agreement;

ii. deposit any of my/our securities collateral with an authorized financial institution as collateral for financial accommodation provided
to you;

iii. deposit any of my/our securities collateral with Hong Kong Securities Clearing Company Limited (“HKSCC”) as collateral for the
discharge and satisfaction of your settlement obligations and liabilities. I/We understand that HKSCC will have a first fixed charge
over my/our securities to the extent of your obligations and liabilities;

iv. deposit any of my/our securities collateral with any other recognised clearing house, or another intermediary licensed or registered
for dealing in securities, as collateral for the discharge and satisfaction of your settlement obligations and liabilities; and

v. apply or deposit any of my/our securities collateral in accordance with paragraphs (i), (ii), (iii) and/or (iv) above if you provide
financial accommodation to me/us in the course of dealing in securities and also provide financial accommodation to me/us in the
course of any other regulated activity for which you are licensed or registered.

You may do any of these things without giving me/us notice. I/We acknowledge that this authority shall not affect your right to dispose or initiate a
disposal by your associated entity of my/our securities or securities collateral in settlement of any liability owed by or on behalf of me/us to you, the
associated entity or a third person.

This authority is given to Interactive Brokers LLC in consideration of its agreeing to continue to maintain securities cash and/or margin account(s) for
me/us and in consideration of its agreeing to continue to maintain futures account(s) for me/us.

I/We understand that a third party may have rights to my/our securities, which you must satisfy before my/our securities can be returned to me/us.

This authority is valid for a period of 12 months from the date of this letter.

This authority may be revoked by giving you written notice addressed to the Customer Service Department at your address specified above. Such notice
shall take effect upon the expiry of two weeks from the date of your actual receipt of such notice.

I/We understand that this authority shall be deemed to be renewed on a continuing basis without my/our written consent if you issue me/us a written
reminder at least 14 days prior to the expiry date of this authority, and I/we do not object to such deemed renewal before such expiry date.

This letter has been explained to me/us and I/we understand the contents of this letter.
 Client Money Standing Authority

To: Interactive Brokers LLC

Suite 1512, Two Pacific Place
88 Queensway
Admiralty, Hong Kong

Authority under Securities and Futures (Client Money) Rules

This letter of authority covers money held or received by Interactive Brokers LLC in Hong Kong (including any interest derived from the holding of the
money which does not belong to you) in one or more segregated account(s) on my/our behalf ("Monies").

Unless otherwise defined, all the terms used in this authorisation letter shall have the same meanings as in the Securities and Futures Ordinance and
the Securities and Futures (Client Money) Rules as amended from time to time.

This letter authorises you to:

1. combine or consolidate any or all segregated accounts, of any nature whatsoever and either individually or jointly with others, maintained by you
or IBG LLC (“IB Group”) and/or any of its subsidiaries from time to time and you may transfer any sum of Monies to and between such
segregated account(s) to satisfy my/our obligations or liabilities to any member of the IB Group, whether such obligations and liabilities are
actual, contingent, primary or collateral, secured or unsecured, or joint or several; and

2. transfer any sum of Monies interchangeably between any of the segregated accounts maintained at any time by any member of the IB Group.

You may do any of these things without giving me/us notice.

This authority is given to Interactive Brokers LLC in consideration of its agreeing to continue to maintain securities cash and/or margin account(s) for
me/us and in consideration of its agreeing to continue to maintain futures account(s) for me/us.

This authority is given without prejudice to other authorities or rights which IB Group may have in relation to dealing in Monies in the segregated
accounts.

This authority is valid for a period of 12 months from the date of this letter.

This authority may be revoked by giving you written notice addressed to the Customer Service Department at your address specified above. Such notice
shall take effect upon the expiry of two weeks from the date of your actual receipt of such notice.

I/We understand that this authority shall be deemed to be renewed on a continuing basis without my/our written consent if you issue me/us a written
reminder at least 14 days prior to the expiry date of this authority, and I/we do not object to such deemed renewal before such expiry date.

This letter has been explained to me/us and I/we understand the contents of this letter.
 Notice Regarding NFA's BASIC System

Interactive Brokers LLC ("IBL") is required to inform its customers of the National Futures
Association ("NFA") Background Affiliation Status Information Center ("BASIC"). The BASIC
system compiles various information on registrants and anyone can access this system on the
Internet.

The information in the BASIC system includes Commodity Futures Trading Commission
("CFTC") registration information and membership information from the NFA. Also included are
regulatory and non-regulatory actions contributed by the NFA, the CFTC and the U.S. futures
exchanges regarding futures-related activity.

The NFA BASIC system may be accessed at www.nfa.futures.org/basicnet/. To locate

information on a registrant, simply enter the registrant's NFA ID number when prompted. For
questions regarding this system, you may contact the NFA information center at 1-800-621-
3570 between the hours of 8:00 a.m. to 5:00 p.m. CST.
 FINRA Investor Protection Information Resources

Financial Industry Regulatory Authority ("FINRA") Conduct Rule 2267 requires that Interactive Brokers provide
customers with certain information regarding its Public Disclosure Program. This information is included below:

1. The FINRA Public Disclosure (BrokerCheck) Program Hotline Number, Address and Facsimile number are:

Telephone: (800) 289-9999

FINRA BrokerCheck
P.O. Box 9495
Gaithersburg, MD 20898-9495

Fax: (240) 386-4750

2. The FINRA Website address is:

http://www.finra.org

Customers who wish to obtain a brochure that describes FINRA BrokerCheck should contact the FINRA at the
address or phone number listed above.
 Notice Regarding USA PATRIOT Act Section 311

Pursuant to U.S. regulations issued under Section 311 of the USA PATRIOT Act, Interactive Brokers prohibits customers from establishing,
maintaining, administering or managing an account for, or on behalf of the following financial institutions:

Aktsionerny Bank Russian Federation

Banco Continental, S.A.
Banco Delta Asia
Bank Rossiya
Bank Severny Morskoy Put
Commercial Bank of Syria
Credex
Delta Asia Credit Limited
Delta Asia Insurance
FBME Bank Ltd.
Hawali Exchange Co.
Inresbank ooo
Investcapitalbank
Joint Stock Company Genbank
Joint Stock Company Sevastopolsky Morskoy Bank
JSB Sobinbank
Kassem Rmeiti & Co for Exchange
Mir Business Bank Zao
Open Joint Stock Company Commercial Bank Verkhnevolzhsky
Open Joint Stock Company Krasnodar Regional Investment Bank
PAO Mosoblbank
a.k.a. AKB Mosoblbank OAO
a.k.a. Aktsionerny Kommercheski Bank
a.k.a. Moskovski Oblastnoi Bank
a.k.a. Otkrytoe Aktsionernoe Obshchestvo
a.k.a. Public Joint Stock Company Moscow Regional Bank
PJSC Trustbank
Russian Financial Alliance Bank
Russian National Commercial Bank
SMP Bank
Syrian Lebanese Commercial Bank

The regulations also require us to notify you that your account with Interactive Brokers may not be used to provide services to any of the
financial institutions or jurisdictions listed above with access to Interactive Brokers. If we become aware that any of the entities or
jurisdictions listed above are directly or indirectly using the account you hold at Interactive Brokers, we will be required to take appropriate
steps to prevent such access, including, where necessary, terminating your account. We may from time to time apprise you of additional
entities that are added to this list as new restrictions are issued.
 Interactive Brokers LLC Customer Agreement
Individual Retirement Account Article III

1. Customer Agreement: This Agreement ("Agreement") governs the relationship between

Article I Customer and Interactive Brokers LLC ("IB"). If this Agreement varies from the IB website, this
Agreement controls. This Agreement cannot be amended or waived except in writing by an IB
Customer is establishing a traditional individual retirement account under section 408(a) of the officer. Customer Service employees cannot amend or waive any part of this Agreement.
Internal Revenue Code to provide for his or her retirement and for the support of his or her Customer acknowledges that IB may modify this Agreement by sending notice of the revised
beneficiaries after death. Agreement by e-mail or upon Customer log-in. Customer's use of IB after such notice constitutes
acceptance of the revised Agreement.
Article II
2. No Investment, Tax or Trading Advice: IB representatives are not authorized to provide
Customer agrees that such individual retirement account shall be administered by Delaware investment, tax or trading advice or to solicit orders. Nothing on IB's website is a
Charter Guarantee & Trust Company doing business as Principal Trust Company (“Principal recommendation or solicitation to buy or sell securities, futures or other investments.
Trust Company” or “Trustee”) who will act as Trustee with regard to this account.
3. Responsibility for Customer Orders/Trades: Customer acknowledges that IB does not
Customer agrees that he or she has received, read and understands the documents included in the know whether someone entering orders with Customer's user name/password is Customer.
“Traditional, Rollover, Roth, or SEP Individual Retirement Account” Application Booklet (“the Unless IB is notified and agrees, Customer will not allow anyone to access Customer's
IRA Application Booklet”) produced by Principal Trust Company that is distributed during the account. Customer is responsible for the confidentiality and use of Customer's user
Interactive Brokers LLC (“IB”) application process and is also available on IB’s website. name/password and agrees to report any theft/loss of such user name/password, or any
Included in the IRA Application Booklet are Principal Trust Company’s Privacy Notice, Internal unauthorized access to Customer's account, immediately by telephone or electronically
Revenue Service Opinion Letter and the Disclosure Statement for Self-Directed Individual through the IB website. Customer remains responsible for all transactions entered using
Retirement Accounts. Customer acknowledges having received and read these documents. Customer's user name/password.

Customer agrees to be bound by the following points included in the IRA Application Booklet: 4. Order Routing: Unless otherwise directed, IB will select the market/dealer to which to route
Customer's orders. For products traded at multiple markets, IB may provide “Smart Routing”,
I appoint Principal Trust Company to serve as Trustee. By making this appointment, I agree to which seeks the best market for each order through a computerized algorithm. Customer should
and acknowledge the following: choose Smart Routing if available. If Customer directs orders to a particular market, Customer
assumes responsibility for knowing and trading in accordance with the rules and policies of that
 I have read and understand the Trust Agreement and Disclosure Statement included in the market (e.g., trading hours, order types, etc.). IB cannot guarantee execution of every order at the
IRA Application Booklet and agree to abide by the terms of the plan documents listed best posted price: IB may not have access to every market/dealer; other orders may trade ahead;
above. market centers may not honor posted prices or may re-route orders for manual handling; or
market rules, decisions or system failures may prevent/delay execution of Customer's orders or
 I have read and understand the information provided in the Instructions included in the cause orders not to receive the best price.
IRA Application Booklet regarding float.
5. Order Cancellation/Modification: Customer acknowledges that it may not be possible to
 I understand Principal Trust Company is not an investment advisor and does not cancel/modify an order and that Customer is responsible for executions notwithstanding a
supervise or control my investment representative. Principal Trust Company does not cancel/modify request.
endorse any particular investment. I agree to use independent judgment in making my
investment decisions. 6. Order Execution: IB shall execute Customer orders as agent, unless otherwise confirmed. IB
can execute Customer orders as principal. IB may use another broker, or an affiliate, to execute
 I agree to resolve disputes with Principal Trust Company through binding arbitration. See orders, and they have benefit of all IB's rights hereunder. IB may decline any Customer order, or
Article 5.8G of the Trust Agreement included in the IRA Application Booklet. terminate Customer's use of IB’s services at any time in IB's discretion. All transactions are
subject to rules and policies of relevant markets and clearinghouses, and applicable laws and
 I certify that the social security number provided on the IB IRA Application is true and
regulations. IB IS NOT LIABLE FOR ANY ACTION OR DECISION OF ANY
correct.
EXCHANGE, MARKET, DEALER, CLEARINGHOUSE OR REGULATOR.
7. Confirmations: instructions. Such powers include, without limit, authority to buy, sell (including short),
exchange, convert, tender, redeem and withdraw assets (including delivery of securities to/from
A. Customer agrees to monitor each order until IB confirms execution or cancellation. the account) to trade securities on margin or otherwise (including purchase/sale of options), and
Customer acknowledges that confirmations of executions or cancellations may be delayed trade futures and/or options on futures, for the Trust. Should only one Trustee execute this
or may be erroneous (e.g. due to computer system issues) or may be cancelled/adjusted by Agreement, Trustee represents that Trustee has the authority to execute this Agreement, without
an exchange. Customer is bound by the actual order execution, if consistent with consent by the other Trustees. Trustee(s) certifies(y) that all transactions for this account will
Customer's order. If IB confirms execution or cancellation in error and Customer delays comply with the Trust documents and applicable law. Trustee(s), jointly and severally, shall
reporting such error, IB reserves the right to remove the trade from the account or require indemnify IB and hold IB harmless from any claim, loss, expense or liability for effecting any
Customer to accept the trade, in IB's discretion. transactions, and acting upon any instructions given by the Trustee(s).

B. Customer agrees to notify IB immediately by telephone or electronically through the IB D. Regulated Persons and Entities: Unless Customer notifies IB otherwise, Customer represents
website if: i) Customer fails to receive an accurate confirmation of an execution or that Customer is not a broker-dealer; futures commission merchant; or affiliate, associated
cancellation; ii) Customer receives a confirmation that is different than Customer's order; person or employee thereof. Customer agrees to notify IB immediately by telephone or
iii) Customer receives a confirmation for an order that Customer did not place; or iv) electronically through the IB website if Customer becomes employed or associated with a
Customer receives an account statement, confirmation, or other information reflecting broker-dealer or futures commission merchant.
inaccurate orders, trades, balances, positions, margin status, or transaction history.
Customer acknowledges that IB may adjust Customer's account to correct any error. 10. Joint Accounts: Each joint account holder agrees that each joint holder has authority,
Customer agrees to promptly return to IB any assets erroneously distributed to Customer. without notice to the other, to: (i) buy/sell securities, futures or other products (including on
margin); (ii) receive account confirmations and correspondence; (iii) receive and dispose of
8. Proprietary Trading - Display of Customer Orders: Subject to all laws and regulations, money, securities or other assets; (iv) enter, terminate, or agree to modify this Agreement; (v)
Customer authorizes IB to execute proprietary trades of itself and its affiliates, though IB waive any part of this Agreement; and (vi) deal with IB as if each joint holder was the sole
may simultaneously hold unexecuted Customer orders for the same products at the same holder. Notice to any joint holder constitutes notice to all joint holders. Each joint account holder
price. is jointly and severally liable to IB for all account matters. IB may follow instructions of any
joint holder and make delivery to any joint account holder individually of any account property.
9. Customer Qualification: Customer warrants that their application is true and complete; will
promptly notify IB of any information changes; and authorizes IB to make any inquiry to verify Upon death of any joint holder, the surviving holder shall give IB notice by telephone or
information. electronically through the IB website and IB may, before or after notice, initiate proceedings,
require documents, retain assets and/or restrict transactions as it deems advisable to protect itself
A. Natural Persons: Customer warrants that Customer is over 18; is under no legal incapacity; against any liability or loss. The estate of any deceased joint account holder shall be liable and
and has sufficient knowledge and experience to understand the nature and risks of the products to each survivor will be liable, jointly and severally, to IB for any debt or loss in the account or
be traded. upon liquidation of the account. Unless Customers indicate otherwise, IB may presume that
account holders are joint tenants with rights of survivorship. Upon death of any joint holder, the
B. Organizations: Customer and its authorized representatives warrant that Customer: (i) is account shall be vested in the surviving holders, without in any manner releasing the deceased
authorized under its governing document(s) and in the jurisdictions in which it is organized joint holder's estate from liability.
and/or regulated to enter this Agreement and trade (including on margin if applicable); (ii) is
under no legal incapacity; and (iii) that persons identified to enter orders have proper authority 11. Margin:
and have sufficient knowledge and experience to understand the nature and risks of the products
to be traded. A. Risk of Margin Trading: Margin trading is highly risky and may result in a loss of funds
greater than Customer has deposited in the account. Customer has read the “Disclosure of
C. Trusts: “Customer" refers to the Trust and/or Trustees. Trustee(s) represent(s) that there are Risks of Margin Trading” provided separately by IB.
no Trustees other than listed in the application and certifies(y) that IB may follow instructions
from any Trustee and deliver funds, securities, or any other assets to any Trustee or on any B. Requirement to Maintain Sufficient Margin Continuously: Margin transactions are subject to
Trustee's instructions, including delivering assets to a Trustee personally. IB, in its discretion, initial and maintenance margin requirements of exchanges, clearinghouses and regulators and
may require written consent of any or all Trustee(s) prior to following instructions of any also to any additional margin requirement of IB, which may be greater ("Margin Requirements").
Trustee. Trustee(s) has (have) the power under the Trust documents and applicable law to enter IB MAY MODIFY MARGIN REQUIREMENTS FOR ANY OR ALL CUSTOMERS FOR
this Agreement, open the type of account applied for, and enter transactions and issue ANY OPEN OR NEW POSITIONS AT ANY TIME, IN IB'S SOLE DISCRETION.
Customer shall monitor their account so that at all times the account contains sufficient equity to iv. Customer acknowledges that IB also has the right to liquidate all or part of Customer's
meet Margin Requirements. IB may reject any order if the account has insufficient equity to meet positions without prior notice: (i) if any dispute arises concerning any Customer trade, (ii) upon
Margin Requirements, and may delay processing any order while determining margin status. any “Default” as described in 17 below, or (iii) whenever IB deems liquidation necessary or
Customer shall maintain, without notice or demand, sufficient equity at all times to continuously advisable for IB's protection.
meet Margin Requirements. Formulas for calculating Margin Requirements on the IB website
are indicative only and may not reflect actual Margin Requirements. Customers must at all times 12. Universal Accounts: An IB Universal Account is two underlying accounts, an SEC-
satisfy whatever Margin Requirement is calculated by IB. regulated securities account and a CFTC-regulated commodity account. Customer authorizes
transfers between the securities and commodity accounts to cover Margin Requirements and
C. IB Will Not Issue Margin Calls: IB does not have to notify Customer of any failure to other obligations, and acknowledges IB may liquidate positions to cover obligations in the other
meet Margin Requirements prior to IB exercising its rights under this Agreement. account. Customer authorizes IB to provide combined confirmations/statements for both
Customer acknowledges that IB generally will not issue margin calls; generally will not accounts. Customer acknowledges that only assets in the securities account are covered by
credit Customer's account to meet intraday or overnight margin deficiencies; and is SIPC protection and excess coverage and not assets in the commodity account.
authorized to liquidate account positions in order to satisfy Margin Requirements without
prior notice. 13. Short Sales: Customer acknowledges that short sales must be done in a margin account,
subject to Margin Requirements; that prior to selling short, IB must believe it can borrow stock
D. Liquidation of Positions and Offsetting Transactions: for delivery; and that if IB cannot borrow stock (or re-borrow after a recall notice) IB may buy-in
stock on Customer’s behalf, without notice to Customer, to cover short positions and Customer is
i. IF AT ANY TIME CUSTOMER'S ACCOUNT HAS INSUFFICIENT EQUITY TO liable for any losses/costs.
MEET MARGIN REQUIREMENTS OR IS IN DEFICIT, IB HAS THE RIGHT, IN ITS
SOLE DISCRETION, BUT NOT THE OBLIGATION, TO LIQUIDATE ALL OR ANY 14. Event of Default: A "Default" occurs automatically, without notice upon: (i) Customer
PART OF CUSTOMER'S POSITIONS IN CUSTOMER'S ACCOUNT, AT ANY TIME breach/repudiation of any agreement with IB; (ii) Customer failure to provide assurance
AND IN ANY MANNER AND THROUGH ANY MARKET OR DEALER, WITHOUT satisfactory to IB of performance of an obligation, after request from IB in IB’s sole discretion;
PRIOR NOTICE OR MARGIN CALL TO CUSTOMER. CUSTOMER SHALL BE (iii) proceedings by/against Customer under any bankruptcy, insolvency, or similar law; (iv)
LIABLE AND WILL PROMPTLY PAY IB FOR ANY DEFICIENCIES IN assignment for the benefit of Customer’s creditors; (v) appointment of a receiver, trustee,
CUSTOMER'S ACCOUNT THAT ARISE FROM SUCH LIQUIDATION OR REMAIN liquidator or similar officer for Customer or Customer property; (vi) Customer representations
AFTER SUCH LIQUIDATION. IB HAS NO LIABILITY FOR ANY LOSS SUSTAINED being untrue or misleading when made or later becoming untrue; (vii) legal incompetence of
BY CUSTOMER IN CONNECTION WITH SUCH LIQUIDATIONS (OR IF THE IB Customer; (viii) proceeding to suspend Customer business or license by any regulator or
SYSTEM DELAYS EFFECTING, OR DOES NOT EFFECT, SUCH LIQUIDATIONS) organization; (ix) IB having reason to believe that any of the foregoing is likely to occur
EVEN IF CUSTOMER RE-ESTABLISHES ITS POSITION AT A WORSE PRICE. imminently.

ii. IB may allow Customer to pre-request the order of liquidation in event of a margin deficiency, Customer unconditionally agrees that, upon a Default, IB may terminate any or all IB's
but such requests are not binding on IB and IB retains sole discretion to determine the assets to obligations to Customer and IB shall have the right in its discretion, but not the obligation,
be liquidated and the order/manner of liquidation. IB may liquidate through any market or dealer, without prior notice, to liquidate all or any part of Customer's positions in any IB account,
and IB or its affiliates may take the other side of the transactions consistent with laws and individual or joint, at any time and any manner and through any market or dealer. Customer shall
regulations. If IB liquidates any/all positions in Customer's account, such liquidation shall reimburse and hold IB harmless for all actions, omissions, costs, fees (including, but not limited
establish Customer's gain/loss and remaining indebtedness to IB, if any. Customer shall to, attorney's fees), or liabilities associated with any Customer Default or any transaction
reimburse and hold IB harmless for all actions, omissions, costs, fees (including, but not limited undertaken by IB upon Default.
to, attorney's fees), or liabilities associated with any such transaction undertaken by IB. If IB
executes an order for which Customer did not have sufficient equity, IB has the right, without 15. Suspicious Activity: If IB in its sole discretion believes that a Customer account has been
notice, to liquidate the trade and Customer shall be responsible for any resulting loss and shall involved in any fraud or crime or violation of laws or regulations, or has been accessed
not be entitled to any resulting profit. unlawfully, or is otherwise involved in any suspicious activity (whether victim or perpetrator or
otherwise), IB may suspend or freeze the account or any privileges of the account, may freeze or
iii. If IB does not, for any reason, liquidate under-margined positions, and issues a margin call, liquidate funds or assets, or may utilize any of the remedies in this Agreement for a “Default”.
Customer must satisfy such call immediately by depositing funds. Customer acknowledges that
even if a call is issued, IB still may liquidate positions at any time. 16. Multi-Currency Function in IB Accounts: Customers may be able to trade products
denominated in different currencies using a base currency chosen by Customer. Upon purchase
of a product denominated in a different currency from the base currency, a margin loan is created contracts that settle not in cash but by physical delivery of the commodity (including currencies
to fund the purchase, secured by the assets in Customer’s accounts. If Customer maintains not on IB’s Deliverable Currency List), Customer cannot make or receive delivery. If Customer
positions denominated in foreign currencies, IB will calculate Margin Requirements by applying has not offset a commodity option or physical delivery futures position prior to the deadline on
exchange rates specified by IB. IB WILL APPLY "HAIRCUTS" (A PERCENTAGE the IB website, IB is authorized to roll or liquidate the position or liquidate any position or
DISCOUNT ON THE FOREIGN CURRENCY EQUITY AMOUNT) TO REFLECT THE commodity resulting from the option or futures contract, and Customer is liable for all
POSSIBILITY OF FLUCTUATING EXCHANGE RATES BETWEEN THE BASE losses/costs.
CURRENCY AND THE FOREIGN CURRENCY. CUSTOMER MUST CLOSELY
MONITOR MARGIN REQUIREMENTS AT ALL TIMES, PARTICULARLY FOR 19. Commissions and Fees, Interest Charges, Funds: Commissions and fees are as specified
POSITIONS DENOMINATED IN FOREIGN CURRENCIES, BECAUSE on the IB website unless otherwise agreed in writing by an officer of IB. Customer acknowledges
FLUCTUATION IN THE CURRENCY ANDTHE VALUE OF THE UNDERLYING that IB deducts commissions/fees from Customer accounts, which will reduce account equity.
POSITION CAN CAUSE A MARGIN DEFICIT. Positions will be liquidated if commissions or other charges cause a margin deficiency. Changes
to commissions/fees are effective immediately upon either of: posting on the IB website or email
17. Foreign Currency Exchange (“Forex”) Transactions: or other written notice to Customer. IB shall pay credit interest to and charge debit interest from
Customer at interest rates and terms on the IB website. Customer funds will not be disbursed
A. HIGH RISKS OF FOREX TRADING: FOREX TRADING IS GENERALLY until after transactions are settled. Terms and conditions for deposit and withdrawal of funds
UNREGULATED, IS HIGHLY RISKY DUE TO THE LEVERAGE (MARGIN) (including holding periods) are as specified on the IB website.
INVOLVED, AND MAY RESULT IN LOSS OF FUNDS GREATER THAN CUSTOMER
DEPOSITED IN THE ACCOUNT. Customer acknowledges the “Risk Disclosure 20. Account Deficits: If a cash account incurs a deficit, margin interest rates will apply until the
Statement for Forex Trading and Multi-Currency Accounts” provided separately by IB. balance is repaid, and IB has the right, but not the obligation, to treat the account as a margin
account. Customer agrees to pay reasonable costs of collection for any unpaid Customer
B. For Forex transactions, IB generally will act as agent or riskless principal and charge a fee. IB deficit, including attorneys' and collection agent fees.
may effect Forex transactions through an affiliate or third party, which may profit or lose from
such transactions. Customer agrees that IB may transfer to or from Customer's regulated futures 21. Risks of Foreign Markets; After Hours Trading: Customer acknowledges that trading
or securities account(s) from or to any of Customer's non-regulated Forex account any funds or securities, options, futures, currencies, or any product on a foreign market is speculative
assets that may be required to avoid margin calls, reduce debit balances or for any other lawful and involves high risk. There also are special risks of trading outside ordinary market
reason. hours, including risk of lower liquidity, higher volatility, changing prices, un-linked
markets, news announcements affecting prices, and wider spreads. Customer represents
C. Netting: (i) Netting by Novation. Each Forex transaction between Customer and IB will that Customer is knowledgeable and able to assume these risks.
immediately be netted with all then existing Forex transactions between Customer and IB for the
same currencies to constitute one transaction. (ii) Payment Netting. If on any delivery date more 22. Knowledge of Securities, Warrants and Options; Corporate Actions: Customer
than one delivery of a currency is due, each party shall aggregate the amounts deliverable and acknowledges Customer’s responsibility for knowing the terms of any securities, options,
only the difference shall be delivered. (iii) Close-Out Netting. If Customer: (a) incurs a margin warrants or other products in Customer’s account, including upcoming corporate actions (e.g.,
deficit in any IB account, (b) defaults on any obligation to IB, (c) becomes subject to bankruptcy, tender offers, reorganizations, stock splits, etc.). IB has no obligation to notify Customer of
insolvency or other similar proceedings, or (d) fails to pay debts when due, IB has the right but deadlines or required actions or dates of meetings, nor is IB obligated to take any action without
not the obligation to close-out Customer's Forex transactions, liquidate all or some of Customer's specific written instructions sent by Customer to IB electronically through the IB website.
collateral and apply the proceeds to any debt to IB. (iv) Upon Close-Out Netting or any
“Default”, all outstanding Forex transactions will be deemed terminated as of the time 23. Quotes, Market Information, Research and Internet Links: Quotes, news, research and
immediately preceding the triggering event, petition or proceeding. (v) IB’s rights herein are in information accessible through IB (including through links to outside websites) ("Information")
addition to any other rights IB has (whether by agreement, by law or otherwise). may be prepared by independent Providers. The Information is the property of IB, the Providers
or their licensors and is protected by law. Customer agrees not to reproduce, distribute, sell or
D. Nothing herein constitutes a commitment of IB to offer Forex transactions generally or to commercially exploit the Information in any manner without written consent of IB or the
enter into any specific Forex transaction. IB reserves the unlimited right to refuse any Forex Providers. IB reserves the right to terminate access to the Information. None of the Information
order or to decline to quote a two-way market in any currency. constitutes a recommendation by IB or a solicitation to buy or sell. Neither IB nor the Providers
guarantee accuracy, timeliness, or completeness of the Information, and Customer should consult
18. Commodity Options and Futures Not Settled in Cash: Customer acknowledges that: (A) an advisor before making investment decisions. RELIANCE ON QUOTES, DATA OR
commodity options cannot be exercised and must be closed out by offset; and (B) for futures OTHER INFORMATION IS AT CUSTOMER'S OWN RISK. IN NO EVENT WILL IB
OR THE PROVIDERS BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL 27. IB and Its Affiliates: A copy of IB's audited financial statements shall be posted on the IB
OR INDIRECT DAMAGES ARISING FROM USE OF THE INFORMATION. THERE website and, upon request, mailed to Customer. Customers shall rely only on the financial
IS NO WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, REGARDING THE condition of IB, and not on its affiliates, which are not liable for IB's acts and omissions.
INFORMATION, INCLUDING WARRANTY OF MERCHANTIBILITY, WARRANTY
OF FITNESS FOR A PARTICULAR USE, OR WARRANTY OF NON- 28. DISCLOSURE STATEMENT: THIS STATEMENT IS FURNISHED TO YOU
INFRINGEMENT. BECAUSE RULE 190.10(c) OF THE COMMODITY FUTURES TRADING
COMMISSION REQUIRES IT FOR REASONS OF FAIR NOTICE UNRELATED TO
24. License to Use IB Software: IB grants Customer a non-exclusive, non-transferable license IB'S CURRENT FINANCIAL CONDITION: (A) YOU SHOULD KNOW THAT IN THE
to use IB Software solely as provided herein. Title to IB Software and updates shall remain the UNLIKELY EVENT OF THIS COMPANY'S BANKRUPTCY, PROPERTY,
sole property of IB, including all patents, copyrights and trademarks. Customer shall not sell, INCLUDING PROPERTY SPECIFICALLY TRACEABLE TO YOU, WILL BE
exchange, or transfer the IB Software to others. Customer shall not copy, modify, translate, RETURNED, TRANSFERRED OR DISTRIBUTED TO YOU, OR ON YOUR BEHALF,
decompile, reverse engineer, disassemble or reduce to a human readable form, or adapt, the IB ONLY TO THE EXTENT OF YOUR PRO RATA SHARE OF ALL PROPERTY
Software or use it to create a derivative work, unless authorized in writing by an officer of IB. IB AVAILABLE FOR DISTRIBUTION TO CUSTOMERS; (B) NOTICE CONCERNING
is entitled to immediate injunctive relief for threatened breaches of these undertakings. THE TERMS FOR THE RETURN OF SPECIFICALLY IDENTIFIABLE PROPERTY
WILL BE MADE BY PUBLICATION IN A NEWSPAPER OF GENERAL
25. LIMITATION OF LIABILITY AND LIQUIDATED DAMAGES PROVISION: CIRCULATION. (C) THE COMMISSION'S REGULATIONS CONCERNING
CUSTOMER ACCEPTS THE IB SYSTEM "AS IS", AND WITHOUT WARRANTIES, BANKRUPTCIES OF COMMODITY BROKERS CAN BE FOUND AT 17 CODE OF
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED FEDERAL REGULATIONS PART 190.
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE,
PURPOSE OR APPLICATION; TIMELINESS; FREEDOM FROM INTERRUPTION;
OR ANY IMPLIED WARRANTIES ARISING FROM TRADE USAGE, COURSE OF 29. Consent To Accept Electronic Records And Communications
DEALING OR COURSE OF PERFORMANCE. UNDER NO CIRCUMSTANCES
SHALL IB BE LIABLE FOR ANY PUNITIVE, INDIRECT, INCIDENTAL, SPECIAL IB provides electronic trade confirmations, account statements, tax information and other
OR CONSEQUENTIAL LOSS OR DAMAGES, INCLUDING LOSS OF BUSINESS, Customer records and communications (collectively, "Records and Communications") in
PROFITS OR GOODWILL. IB SHALL NOT BE LIABLE TO CUSTOMER BY electronic form. Electronic Records and Communications may be sent to Customer's Trader
REASON OF DELAYS OR INTERRUPTIONS OF SERVICE OR TRANSMISSIONS, Workstation or to Customer's e-mail address, or for security purposes may be posted on the IB
OR FAILURES OF PERFORMANCE OF THE IB SYSTEM, REGARDLESS OF website, with a notification sent to customer to login and retrieve the Communication. By
CAUSE, INCLUDING, BUT NOT LIMITED TO, THOSE CAUSED BY HARDWARE entering into this Agreement, Customer consents to the receipt of electronic Records and
OR SOFTWARE MALFUNCTION; GOVERNMENTAL, EXCHANGE OR OTHER Communications. Such consent will apply on an ongoing basis and for every tax year unless
REGULATORY ACTION; ACTS OF GOD; WAR, TERRORISM, OR IB'S withdrawn by Customer. Customer may withdraw such consent at any time by providing
INTENTIONAL ACTS. CUSTOMER RECOGNIZES THAT THERE MAY BE DELAYS electronic notice to IB through the IB website. If Customer withdraws such consent, IB will
OR INTERRUPTIONS IN THE USE OF THE IB SYSTEM, INCLUDING, FOR provide required tax documents in paper form upon request by telephone or via the IB website.
EXAMPLE, THOSE CAUSED INTENTIONALLY BY IB FOR PURPOSES OF However, IB reserves the right to require Customer to close Customer's account.
SERVICING THE IB SYSTEM. IN NO EVENT SHALL IB'S LIABILITY,
REGARDLESS OF THE FORM OF ACTION AND DAMAGES SUFFERED BY In order to trade using the IB Trader Workstation ("TWS"), and to receive Records and
CUSTOMER, EXCEED THE HIGHEST TOTAL MONTHLY COMMISSIONS PAID BY Communications through the TWS, there are certain system hardware and software
CUSTOMER TO IB OVER THE 6 MONTHS PRIOR TO ANY INCIDENT. requirements, which are described on the IB Website at www.interactivebrokers.com. Since
these requirements may change, Customer must periodically refer to the IB website for current
26. Customer Must Maintain Alternative Trading Arrangements: Computer-based systems system requirements. To receive electronic mail from IB, Customer is responsible for
such as those used by IB are inherently vulnerable to disruption, delay or failure. CUSTOMER maintaining a valid Internet e-mail address and software allowing customer to read, send and
MUST MAINTAIN ALTERNATIVE TRADING ARRANGEMENTS IN ADDITION TO receive e-mail. Customer must notify IB immediately of a change in Customer's e-mail address
CUSTOMER'S IB ACCOUNT FOR EXECUTION OF CUSTOMER'S ORDERS IN THE by using those procedures to change a Customer e-mail address that may be available on the IB
EVENT THAT THE IB SYSTEM IS UNAVAILABLE. By signing this Agreement, website.
Customer represents that Customer maintains alternative trading arrangements.
30. Miscellaneous:
A. This Agreement is governed by the laws of the State of New York, without giving effect to  THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY
conflict of laws provisions. Courts of New York have exclusive jurisdiction over disputes OF ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE
relating to this Agreement, except when arbitration is provided. IN ALL JUDICIAL SECURITIES INDUSTRY.
ACTIONS, ARBITRATIONS, OR DISPUTE RESOLUTION METHODS, THE PARTIES  THE RULES OF SOME ARBITRATION FORUMS MAY IMPOSE TIME
WAIVE ANY RIGHT TO PUNITIVE DAMAGES. LIMITS FOR BRINGING A CLAIM IN ARBITRATION.
 IN SOME CASES, A CLAIM THAT IS INELIGIBLE FOR ARBITRATION MAY
B. Customer agrees to the provision of this Agreement in English and represents that Customer BE BROUGHT IN COURT.
understands its terms and conditions. This Agreement contains the entire agreement between the  THE RULES OF THE ARBITRATION FORUM IN WHICH THE CLAIM IS
parties, who have made no other representations or warranties. If any provision of this FILED, AND ANY AMENDMENTS THERETO, SHALL BE INCORPORATED
Agreement is unenforceable, it shall not invalidate other provisions. Failure of IB to enforce any INTO THIS AGREEMENT.
term or condition of this Agreement is not a waiver of the term/condition.

C. Customer consents to recording of all telephone conversations. Customer acknowledges the B. Customer agrees that any controversy, dispute, claim, or grievance between IB, any IB
IBG Privacy Statement and consents to collection/use of Customer information as described affiliate or any of their shareholders, officers, directors employees, associates, or agents, on
therein. the one hand, and Customer or, if applicable, Customer's shareholders, officers, directors
employees, associates, or agents on the other hand, arising out of, or relating to, this
D. Customer may not assign or transfer any rights or obligations hereunder without the prior Agreement, or any account(s) established hereunder in which securities may be traded; any
written consent of IB. Upon notice to Customer IB may assign this Agreement to another broker- transactions therein; any transactions between IB and Customer; any provision of the
dealer or futures commission merchant. This Agreement shall inure to the benefit of IB's Customer Agreement or any other agreement between IB and Customer; or any breach of
successors and assigns. IB may terminate this Agreement or its services to Customer at any time. such transactions or agreements, shall be resolved by arbitration, in accordance with the
Customer may close its account upon notice to IB electronically through the IB website, but only rules then prevailing of any one of the following: (a) The Financial Industry Regulatory
after all positions are closed and all other requirements specified on the IB website regarding Authority; or (b) any other exchange of which IB is a member, as the true claimant-in-
account closure are satisfied. interest may elect. If Customer is the claimant-in-interest and has not selected an
arbitration forum within ten days of providing notice of Customer’s intent to arbitrate, IB
31. Mandatory Arbitration: shall select the forum. The award of the arbitrators, or a majority of them, shall be final,
and judgment upon the award rendered may be entered in any court, state or federal,
A. This agreement contains a pre-dispute arbitration clause. By signing an arbitration having jurisdiction.
agreement the parties agree as follows:
C. No person shall bring a putative or certified class action to arbitration, nor seek to
 ALL PARTIES TO THIS AGREEMENT ARE GIVING UP THE RIGHT TO SUE enforce any pre-dispute arbitration agreement against any person who has initiated in
EACH OTHER IN COURT, INCLUDING THE RIGHT TO A TRIAL BY JURY, court a putative class action; or who is a member of a putative class who has not opted out
EXCEPT AS PROVIDED BY THE RULES OF THE ARBITRATION FORUM IN of the class with respect to any claims encompassed by the putative class action until:
WHICH A CLAIM IS FILED.
 ARBITRATION AWARDS ARE GENERALLY FINAL AND BINDING; A o the class certification is denied; or
PARTY’S ABILITY TO HAVE A COURT REVERSE OR MODIFY AN o the class is decertified; or
ARBITRATION AWARD IS VERY LIMITED. o the customer is excluded from the class by the court. Such forbearance to
 THE ABILITY OF THE PARTIES TO OBTAIN DOCUMENTS, WITNESS enforce an agreement to arbitrate shall not constitute a waiver of any rights
STATEMENTS AND OTHER DISCOVERY IS GENERALLY MORE LIMITED under this Agreement except to the extent stated herein.
IN ARBITRATION THAN IN COURT PROCEEDINGS.
 THE ARBITRATORS DO NOT HAVE TO EXPLAIN THE REASON(S) FOR CERTIFICATION FOR U.S. TAXPAYERS ONLY:
THEIR AWARD.
 UNLESS, IN AN ELIGIBLE CASE, A JOINT REQUEST FOR AN EXPLAINED Under penalties of perjury, I certify that:
DECISION HAS BEEN SUBMITTED BY ALL PARTIES TO THE PANEL AT 1) The number provided is my correct taxpayer identification number and
LEAST 20 DAYS PRIOR TO THE FIRST SCHEDULED HEARING DATE. 2) I am not subject to backup withholding because: a) I am exempt from
backup withholding, or b) I have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup withholding as a result of a
 failure to report all interest or dividends or the IRS has notified me that I
am no longer subject to backup withholding.
3) I am a U.S. person (including a U.S. resident alien).

THIS AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE IN

PARAGRAPH 31. BY SIGNING THIS AGREEMENT I ACKNOWLEDGE THAT THIS
AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE AND THAT I
HAVE RECEIVED, READ AND UNDERSTOOD THE TERMS THEREOF.
 Interactive Brokers LLC Customer Agreement 1. Customer Agreement: This Agreement ("Agreement") governs the relationship between
Roth Individual Retirement Account Customer and Interactive Brokers LLC ("IB"). If this Agreement varies from the IB website, this
Agreement controls. This Agreement cannot be amended or waived except in writing by an IB
Article I officer. Customer Service employees cannot amend or waive any part of this Agreement.
Customer acknowledges that IB may modify this Agreement by sending notice of the revised
Customer is establishing a Roth individual retirement account under section 408A of the Internal Agreement by e-mail or upon Customer log-in. Customer's use of IB after such notice constitutes
Revenue Code to provide for his or her retirement and for the support of his or her beneficiaries acceptance of the revised Agreement.
after death.
2. No Investment, Tax or Trading Advice: IB representatives are not authorized to provide
Article II investment, tax or trading advice or to solicit orders. Nothing on IB's website is a
recommendation or solicitation to buy or sell securities, futures or other investments.
Customer agrees that such individual retirement account shall be administered by Delaware
Charter Guarantee & Trust Company doing business as Principal Trust Company (“Principal 3. Responsibility for Customer Orders/Trades: Customer acknowledges that IB does not
Trust Company” or “Trustee”) who will act as Trustee with regard to this account. know whether someone entering orders with Customer's user name/password is Customer.
Unless IB is notified and agrees, Customer will not allow anyone to access Customer's account.
Customer agrees that he or she has received, read and understands the documents included in the Customer is responsible for the confidentiality and use of Customer's user name/password and
“Traditional, Rollover, Roth, or SEP Individual Retirement Account” Application Booklet (“the agrees to report any theft/loss of such user name/password, or any unauthorized access to
IRA Application Booklet”) produced by Principal Trust Company that is distributed during the Customer's account, immediately by telephone or electronically through the IB website.
Interactive Brokers LLC (“IB”) application process and is also available on IB’s website. Customer remains responsible for all transactions entered using Customer's user name/password.
Included in the IRA Application Booklet are Principal Trust Company’s Privacy Notice, Internal
Revenue Service Opinion Letter and the Disclosure Statement for Self-Directed Individual 4. Order Routing: Unless otherwise directed, IB will select the market/dealer to which to route
Retirement Accounts. Customer acknowledges having received and read these documents. Customer's orders. For products traded at multiple markets, IB may provide “Smart Routing”,
which seeks the best market for each order through a computerized algorithm. Customer should
Customer agrees to be bound by the following points included in the IRA Application Booklet: choose Smart Routing if available. If Customer directs orders to a particular market, Customer
assumes responsibility for knowing and trading in accordance with the rules and policies of that
I appoint Principal Trust Company to serve as Trustee. By making this appointment, I agree to market (e.g., trading hours, order types, etc.). IB cannot guarantee execution of every order at the
and acknowledge the following: best posted price: IB may not have access to every market/dealer; other orders may trade ahead;
market centers may not honor posted prices or may re-route orders for manual handling; or
 I have read and understand the Trust Agreement and Disclosure Statement included in the market rules, decisions or system failures may prevent/delay execution of Customer's orders or
IRA Application Booklet and agree to abide by the terms of the plan documents listed cause orders not to receive the best price.
above.
5. Order Cancellation/Modification: Customer acknowledges that it may not be possible to
 I have read and understand the information provided in the Instructions included in the cancel/modify an order and that Customer is responsible for executions notwithstanding a
IRA Application Booklet regarding float. cancel/modify request.

 I understand Principal Trust Company is not an investment advisor and does not 6. Order Execution: IB shall execute Customer orders as agent, unless otherwise confirmed. IB
supervise or control my investment representative. Principal Trust Company does not can execute Customer orders as principal. IB may use another broker, or an affiliate, to execute
endorse any particular investment. I agree to use independent judgment in making my orders, and they have benefit of all IB's rights hereunder. IB may decline any Customer order, or
investment decisions. terminate Customer's use of IB’s services at any time in IB's discretion. All transactions are
subject to rules and policies of relevant markets and clearinghouses, and applicable laws and
 I agree to resolve disputes with Principal Trust Company through binding arbitration. See regulations. IB IS NOT LIABLE FOR ANY ACTION OR DECISION OF ANY
Article 5.8G of the Trust Agreement included in the IRA Application Booklet. EXCHANGE, MARKET, DEALER, CLEARINGHOUSE OR REGULATOR.
 I certify that the social security number provided on the IB IRA Application is true and
7. Confirmations:
correct.

Article III
A. Customer agrees to monitor each order until IB confirms execution or cancellation. the account) to trade securities on margin or otherwise (including purchase/sale of options), and
Customer acknowledges that confirmations of executions or cancellations may be delayed trade futures and/or options on futures, for the Trust. Should only one Trustee execute this
or may be erroneous (e.g. due to computer system issues) or may be cancelled/adjusted by Agreement, Trustee represents that Trustee has the authority to execute this Agreement, without
an exchange. Customer is bound by the actual order execution, if consistent with consent by the other Trustees. Trustee(s) certifies(y) that all transactions for this account will
Customer's order. If IB confirms execution or cancellation in error and Customer delays comply with the Trust documents and applicable law. Trustee(s), jointly and severally, shall
reporting such error, IB reserves the right to remove the trade from the account or require indemnify IB and hold IB harmless from any claim, loss, expense or liability for effecting any
Customer to accept the trade, in IB's discretion. transactions, and acting upon any instructions given by the Trustee(s).

B. Customer agrees to notify IB immediately by telephone or electronically through the IB D. Regulated Persons and Entities: Unless Customer notifies IB otherwise, Customer represents
website if: i) Customer fails to receive an accurate confirmation of an execution or that Customer is not a broker-dealer; futures commission merchant; or affiliate, associated
cancellation; ii) Customer receives a confirmation that is different than Customer's order; person or employee thereof. Customer agrees to notify IB immediately by telephone or
iii) Customer receives a confirmation for an order that Customer did not place; or iv) electronically through the IB website if Customer becomes employed or associated with a
Customer receives an account statement, confirmation, or other information reflecting broker-dealer or futures commission merchant.
inaccurate orders, trades, balances, positions, margin status, or transaction history.
Customer acknowledges that IB may adjust Customer's account to correct any error. 10. Joint Accounts: Each joint account holder agrees that each joint holder has authority,
Customer agrees to promptly return to IB any assets erroneously distributed to Customer. without notice to the other, to: (i) buy/sell securities, futures or other products (including on
margin); (ii) receive account confirmations and correspondence; (iii) receive and dispose of
8. Proprietary Trading - Display of Customer Orders: Subject to all laws and regulations, money, securities or other assets; (iv) enter, terminate, or agree to modify this Agreement; (v)
Customer authorizes IB to execute proprietary trades of itself and its affiliates, though IB waive any part of this Agreement; and (vi) deal with IB as if each joint holder was the sole
may simultaneously hold unexecuted Customer orders for the same products at the same holder. Notice to any joint holder constitutes notice to all joint holders. Each joint account holder
price. is jointly and severally liable to IB for all account matters. IB may follow instructions of any
joint holder and make delivery to any joint account holder individually of any account property.
9. Customer Qualification: Customer warrants that their application is true and complete; will
promptly notify IB of any information changes; and authorizes IB to make any inquiry to verify Upon death of any joint holder, the surviving holder shall give IB notice by telephone or
information. electronically through the IB website and IB may, before or after notice, initiate proceedings,
require documents, retain assets and/or restrict transactions as it deems advisable to protect itself
A. Natural Persons: Customer warrants that Customer is over 18; is under no legal incapacity; against any liability or loss. The estate of any deceased joint account holder shall be liable and
and has sufficient knowledge and experience to understand the nature and risks of the products to each survivor will be liable, jointly and severally, to IB for any debt or loss in the account or
be traded. upon liquidation of the account. Unless Customers indicate otherwise, IB may presume that
account holders are joint tenants with rights of survivorship. Upon death of any joint holder, the
B. Organizations: Customer and its authorized representatives warrant that Customer: (i) is account shall be vested in the surviving holders, without in any manner releasing the deceased
authorized under its governing document(s) and in the jurisdictions in which it is organized joint holder's estate from liability.
and/or regulated to enter this Agreement and trade (including on margin if applicable); (ii) is
under no legal incapacity; and (iii) that persons identified to enter orders have proper authority 11. Margin:
and have sufficient knowledge and experience to understand the nature and risks of the products
to be traded. A. Risk of Margin Trading: Margin trading is highly risky and may result in a loss of funds
greater than Customer has deposited in the account. Customer has read the “Disclosure of
C. Trusts: “Customer" refers to the Trust and/or Trustees. Trustee(s) represent(s) that there are Risks of Margin Trading” provided separately by IB.
no Trustees other than listed in the application and certifies(y) that IB may follow instructions
from any Trustee and deliver funds, securities, or any other assets to any Trustee or on any B. Requirement to Maintain Sufficient Margin Continuously: Margin transactions are subject
Trustee's instructions, including delivering assets to a Trustee personally. IB, in its discretion, to initial and maintenance margin requirements of exchanges, clearinghouses and regulators and
may require written consent of any or all Trustee(s) prior to following instructions of any also to any additional margin requirement of IB, which may be greater ("Margin Requirements").
Trustee. Trustee(s) has (have) the power under the Trust documents and applicable law to enter IB MAY MODIFY MARGIN REQUIREMENTS FOR ANY OR ALL CUSTOMERS FOR
this Agreement, open the type of account applied for, and enter transactions and issue ANY OPEN OR NEW POSITIONS AT ANY TIME, IN IB'S SOLE DISCRETION.
instructions. Such powers include, without limit, authority to buy, sell (including short), Customer shall monitor their account so that at all times the account contains sufficient equity to
exchange, convert, tender, redeem and withdraw assets (including delivery of securities to/from meet Margin Requirements. IB may reject any order if the account has insufficient equity to meet
Margin Requirements, and may delay processing any order while determining margin status. any “Default” as described in 17 below, or (iii) whenever IB deems liquidation necessary or
Customer shall maintain, without notice or demand, sufficient equity at all times to continuously advisable for IB's protection.
meet Margin Requirements. Formulas for calculating Margin Requirements on the IB website
are indicative only and may not reflect actual Margin Requirements. Customers must at all times 12. Universal Accounts: An IB Universal Account is two underlying accounts, an SEC-
satisfy whatever Margin Requirement is calculated by IB. regulated securities account and a CFTC-regulated commodity account. Customer authorizes
transfers between the securities and commodity accounts to cover Margin Requirements and
C. IB Will Not Issue Margin Calls: IB does not have to notify Customer of any failure to other obligations, and acknowledges IB may liquidate positions to cover obligations in the other
meet Margin Requirements prior to IB exercising its rights under this Agreement. account. Customer authorizes IB to provide combined confirmations/statements for both
Customer acknowledges that IB generally will not issue margin calls; generally will not accounts. Customer acknowledges that only assets in the securities account are covered by
credit Customer's account to meet intraday or overnight margin deficiencies; and is SIPC protection and excess coverage and not assets in the commodity account.
authorized to liquidate account positions in order to satisfy Margin Requirements without
prior notice. 13. Short Sales: Customer acknowledges that short sales must be done in a margin account,
subject to Margin Requirements; that prior to selling short, IB must believe it can borrow stock
D. Liquidation of Positions and Offsetting Transactions: for delivery; and that if IB cannot borrow stock (or re-borrow after a recall notice) IB may buy-in
stock on Customer’s behalf, without notice to Customer, to cover short positions and Customer is
i. IF AT ANY TIME CUSTOMER'S ACCOUNT HAS INSUFFICIENT EQUITY TO liable for any losses/costs.
MEET MARGIN REQUIREMENTS OR IS IN DEFICIT, IB HAS THE RIGHT, IN ITS
SOLE DISCRETION, BUT NOT THE OBLIGATION, TO LIQUIDATE ALL OR ANY 14. Event of Default: A "Default" occurs automatically, without notice upon: (i) Customer
PART OF CUSTOMER'S POSITIONS IN CUSTOMER'S ACCOUNT, AT ANY TIME breach/repudiation of any agreement with IB; (ii) Customer failure to provide assurance
AND IN ANY MANNER AND THROUGH ANY MARKET OR DEALER, WITHOUT satisfactory to IB of performance of an obligation, after request from IB in IB’s sole discretion;
PRIOR NOTICE OR MARGIN CALL TO CUSTOMER. CUSTOMER SHALL BE (iii) proceedings by/against Customer under any bankruptcy, insolvency, or similar law; (iv)
LIABLE AND WILL PROMPTLY PAY IB FOR ANY DEFICIENCIES IN assignment for the benefit of Customer’s creditors; (v) appointment of a receiver, trustee,
CUSTOMER'S ACCOUNT THAT ARISE FROM SUCH LIQUIDATION OR REMAIN liquidator or similar officer for Customer or Customer property; (vi) Customer representations
AFTER SUCH LIQUIDATION. IB HAS NO LIABILITY FOR ANY LOSS SUSTAINED being untrue or misleading when made or later becoming untrue; (vii) legal incompetence of
BY CUSTOMER IN CONNECTION WITH SUCH LIQUIDATIONS (OR IF THE IB Customer; (viii) proceeding to suspend Customer business or license by any regulator or
SYSTEM DELAYS EFFECTING, OR DOES NOT EFFECT, SUCH LIQUIDATIONS) organization; (ix) IB having reason to believe that any of the foregoing is likely to occur
EVEN IF CUSTOMER RE-ESTABLISHES ITS POSITION AT A WORSE PRICE. imminently.

ii. IB may allow Customer to pre-request the order of liquidation in event of a margin deficiency, Customer unconditionally agrees that, upon a Default, IB may terminate any or all IB's
but such requests are not binding on IB and IB retains sole discretion to determine the assets to obligations to Customer and IB shall have the right in its discretion, but not the obligation,
be liquidated and the order/manner of liquidation. IB may liquidate through any market or dealer, without prior notice, to liquidate all or any part of Customer's positions in any IB account,
and IB or its affiliates may take the other side of the transactions consistent with laws and individual or joint, at any time and any manner and through any market or dealer. Customer shall
regulations. If IB liquidates any/all positions in Customer's account, such liquidation shall reimburse and hold IB harmless for all actions, omissions, costs, fees (including, but not limited
establish Customer's gain/loss and remaining indebtedness to IB, if any. Customer shall to, attorney's fees), or liabilities associated with any Customer Default or any transaction
reimburse and hold IB harmless for all actions, omissions, costs, fees (including, but not limited undertaken by IB upon Default.
to, attorney's fees), or liabilities associated with any such transaction undertaken by IB. If IB
executes an order for which Customer did not have sufficient equity, IB has the right, without 15. Suspicious Activity: If IB in its sole discretion believes that a Customer account has been
notice, to liquidate the trade and Customer shall be responsible for any resulting loss and shall involved in any fraud or crime or violation of laws or regulations, or has been accessed
not be entitled to any resulting profit. unlawfully, or is otherwise involved in any suspicious activity (whether victim or perpetrator or
otherwise), IB may suspend or freeze the account or any privileges of the account, may freeze or
iii. If IB does not, for any reason, liquidate under-margined positions, and issues a margin call, liquidate funds or assets, or may utilize any of the remedies in this Agreement for a “Default”.
Customer must satisfy such call immediately by depositing funds. Customer acknowledges that
even if a call is issued, IB still may liquidate positions at any time. 16. Multi-Currency Function in IB Accounts: Customers may be able to trade products
denominated in different currencies using a base currency chosen by Customer. Upon purchase
iv. Customer acknowledges that IB also has the right to liquidate all or part of Customer's of a product denominated in a different currency from the base currency, a margin loan is created
positions without prior notice: (i) if any dispute arises concerning any Customer trade, (ii) upon to fund the purchase, secured by the assets in Customer’s accounts. If Customer maintains
positions denominated in foreign currencies, IB will calculate Margin Requirements by applying has not offset a commodity option or physical delivery futures position prior to the deadline on
exchange rates specified by IB. IB WILL APPLY "HAIRCUTS" (A PERCENTAGE the IB website, IB is authorized to roll or liquidate the position or liquidate any position or
DISCOUNT ON THE FOREIGN CURRENCY EQUITY AMOUNT) TO REFLECT THE commodity resulting from the option or futures contract, and Customer is liable for all
POSSIBILITY OF FLUCTUATING EXCHANGE RATES BETWEEN THE BASE losses/costs.
CURRENCY AND THE FOREIGN CURRENCY. CUSTOMER MUST CLOSELY
MONITOR MARGIN REQUIREMENTS AT ALL TIMES, PARTICULARLY FOR 19. Commissions and Fees, Interest Charges, Funds: Commissions and fees are as specified
POSITIONS DENOMINATED IN FOREIGN CURRENCIES, BECAUSE on the IB website unless otherwise agreed in writing by an officer of IB. Customer acknowledges
FLUCTUATION IN THE CURRENCY AND THE VALUE OF THE UNDERLYING that IB deducts commissions/fees from Customer accounts, which will reduce account equity.
POSITION CAN CAUSE A MARGIN DEFICIT. Positions will be liquidated if commissions or other charges cause a margin deficiency. Changes
to commissions/fees are effective immediately upon either of: posting on the IB website or email
17. Foreign Currency Exchange (“Forex”) Transactions: or other written notice to Customer. IB shall pay credit interest to and charge debit interest from
Customer at interest rates and terms on the IB website. Customer funds will not be disbursed
A. HIGH RISKS OF FOREX TRADING: FOREX TRADING IS GENERALLY until after transactions are settled. Terms and conditions for deposit and withdrawal of funds
UNREGULATED, IS HIGHLY RISKY DUE TO THE LEVERAGE (MARGIN) (including holding periods) are as specified on the IB website.
INVOLVED, AND MAY RESULT IN LOSS OF FUNDS GREATER THAN CUSTOMER
DEPOSITED IN THE ACCOUNT. Customer acknowledges the “Risk Disclosure 20. Account Deficits: If a cash account incurs a deficit, margin interest rates will apply until the
Statement for Forex Trading and Multi-Currency Accounts” provided separately by IB. balance is repaid, and IB has the right, but not the obligation, to treat the account as a margin
account. Customer agrees to pay reasonable costs of collection for any unpaid Customer
B. For Forex transactions, IB generally will act as agent or riskless principal and charge a fee. IB deficit, including attorneys' and collection agent fees.
may effect Forex transactions through an affiliate or third party, which may profit or lose from
such transactions. Customer agrees that IB may transfer to or from Customer's regulated futures 21. Risks of Foreign Markets; After Hours Trading: Customer acknowledges that trading
or securities account(s) from or to any of Customer's non-regulated Forex account any funds or securities, options, futures, currencies, or any product on a foreign market is speculative
assets that may be required to avoid margin calls, reduce debit balances or for any other lawful and involves high risk. There also are special risks of trading outside ordinary market
reason. hours, including risk of lower liquidity, higher volatility, changing prices, un-linked
markets, news announcements affecting prices, and wider spreads. Customer represents
C. Netting: (i) Netting by Novation. Each Forex transaction between Customer and IB will that Customer is knowledgeable and able to assume these risks.
immediately be netted with all then existing Forex transactions between Customer and IB for the
same currencies to constitute one transaction. (ii) Payment Netting. If on any delivery date more 22. Knowledge of Securities, Warrants and Options; Corporate Actions: Customer
than one delivery of a currency is due, each party shall aggregate the amounts deliverable and acknowledges Customer’s responsibility for knowing the terms of any securities, options,
only the difference shall be delivered. (iii) Close-Out Netting. If Customer: (a) incurs a margin warrants or other products in Customer’s account, including upcoming corporate actions (e.g.,
deficit in any IB account, (b) defaults on any obligation to IB, (c) becomes subject to bankruptcy, tender offers, reorganizations, stock splits, etc.). IB has no obligation to notify Customer of
insolvency or other similar proceedings, or (d) fails to pay debts when due, IB has the right but deadlines or required actions or dates of meetings, nor is IB obligated to take any action without
not the obligation to close-out Customer's Forex transactions, liquidate all or some of Customer's specific written instructions sent by Customer to IB electronically through the IB website.
collateral and apply the proceeds to any debt to IB. (iv) Upon Close-Out Netting or any
“Default”, all outstanding Forex transactions will be deemed terminated as of the time 23. Quotes, Market Information, Research and Internet Links: Quotes, news, research and
immediately preceding the triggering event, petition or proceeding. (v) IB’s rights herein are in information accessible through IB (including through links to outside websites) ("Information")
addition to any other rights IB has (whether by agreement, by law or otherwise). may be prepared by independent Providers. The Information is the property of IB, the Providers
or their licensors and is protected by law. Customer agrees not to reproduce, distribute, sell or
D. Nothing herein constitutes a commitment of IB to offer Forex transactions generally or to commercially exploit the Information in any manner without written consent of IB or the
enter into any specific Forex transaction. IB reserves the unlimited right to refuse any Forex Providers. IB reserves the right to terminate access to the Information. None of the Information
order or to decline to quote a two-way market in any currency. constitutes a recommendation by IB or a solicitation to buy or sell. Neither IB nor the Providers
guarantee accuracy, timeliness, or completeness of the Information, and Customer should consult
18. Commodity Options and Futures Not Settled in Cash: Customer acknowledges that: (A) an advisor before making investment decisions. RELIANCE ON QUOTES, DATA OR
commodity options cannot be exercised and must be closed out by offset; and (B) for futures OTHER INFORMATION IS AT CUSTOMER'S OWN RISK. IN NO EVENT WILL IB
contracts that settle not in cash but by physical delivery of the commodity (including currencies OR THE PROVIDERS BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL
not on IB’s Deliverable Currency List), Customer cannot make or receive delivery. If Customer OR INDIRECT DAMAGES ARISING FROM USE OF THE INFORMATION. THERE
IS NO WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, REGARDING THE 28. DISCLOSURE STATEMENT: THIS STATEMENT IS FURNISHED TO YOU
INFORMATION, INCLUDING WARRANTY OF MERCHANTIBILITY, WARRANTY BECAUSE RULE 190.10(c) OF THE COMMODITY FUTURES TRADING
OF FITNESS FOR A PARTICULAR USE, OR WARRANTY OF NON- COMMISSION REQUIRES IT FOR REASONS OF FAIR NOTICE UNRELATED TO
INFRINGEMENT. IB'S CURRENT FINANCIAL CONDITION: (A) YOU SHOULD KNOW THAT IN THE
UNLIKELY EVENT OF THIS COMPANY'S BANKRUPTCY, PROPERTY,
24. License to Use IB Software: IB grants Customer a non-exclusive, non-transferable license INCLUDING PROPERTY SPECIFICALLY TRACEABLE TO YOU, WILL BE
to use IB Software solely as provided herein. Title to IB Software and updates shall remain the RETURNED, TRANSFERRED OR DISTRIBUTED TO YOU, OR ON YOUR BEHALF,
sole property of IB, including all patents, copyrights and trademarks. Customer shall not sell, ONLY TO THE EXTENT OF YOUR PRO RATA SHARE OF ALL PROPERTY
exchange, or transfer the IB Software to others. Customer shall not copy, modify, translate, AVAILABLE FOR DISTRIBUTION TO CUSTOMERS; (B) NOTICE CONCERNING
decompile, reverse engineer, disassemble or reduce to a human readable form, or adapt, the IB THE TERMS FOR THE RETURN OF SPECIFICALLY IDENTIFIABLE PROPERTY
Software or use it to create a derivative work, unless authorized in writing by an officer of IB. IB WILL BE MADE BY PUBLICATION IN A NEWSPAPER OF GENERAL
is entitled to immediate injunctive relief for threatened breaches of these undertakings. CIRCULATION. (C) THE COMMISSION'S REGULATIONS CONCERNING
BANKRUPTCIES OF COMMODITY BROKERS CAN BE FOUND AT 17 CODE OF
25. LIMITATION OF LIABILITY AND LIQUIDATED DAMAGES PROVISION: FEDERAL REGULATIONS PART 190.
CUSTOMER ACCEPTS THE IB SYSTEM "AS IS", AND WITHOUT WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED 29. Consent To Accept Electronic Records And Communications
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE,
PURPOSE OR APPLICATION; TIMELINESS; FREEDOM FROM INTERRUPTION; IB provides electronic trade confirmations, account statements, tax information and other
OR ANY IMPLIED WARRANTIES ARISING FROM TRADE USAGE, COURSE OF Customer records and communications (collectively, "Records and Communications") in
DEALING OR COURSE OF PERFORMANCE. UNDER NO CIRCUMSTANCES electronic form. Electronic Records and Communications may be sent to Customer's Trader
SHALL IB BE LIABLE FOR ANY PUNITIVE, INDIRECT, INCIDENTAL, SPECIAL Workstation or to Customer's e-mail address, or for security purposes may be posted on the IB
OR CONSEQUENTIAL LOSS OR DAMAGES, INCLUDING LOSS OF BUSINESS, website, with a notification sent to customer to login and retrieve the Communication. By
PROFITS OR GOODWILL. IB SHALL NOT BE LIABLE TO CUSTOMER BY entering into this Agreement, Customer consents to the receipt of electronic Records and
REASON OF DELAYS OR INTERRUPTIONS OF SERVICE OR TRANSMISSIONS, Communications. Such consent will apply on an ongoing basis and for every tax year unless
OR FAILURES OF PERFORMANCE OF THE IB SYSTEM, REGARDLESS OF withdrawn by Customer. Customer may withdraw such consent at any time by providing
CAUSE, INCLUDING, BUT NOT LIMITED TO, THOSE CAUSED BY HARDWARE electronic notice to IB through the IB website. If Customer withdraws such consent, IB will
OR SOFTWARE MALFUNCTION; GOVERNMENTAL, EXCHANGE OR OTHER provide required tax documents in paper form upon request by telephone or via the IB website.
REGULATORY ACTION; ACTS OF GOD; WAR, TERRORISM, OR IB'S However, IB reserves the right to require Customer to close Customer's account.
INTENTIONAL ACTS. CUSTOMER RECOGNIZES THAT THERE MAY BE DELAYS
OR INTERRUPTIONS IN THE USE OF THE IB SYSTEM, INCLUDING, FOR In order to trade using the IB Trader Workstation ("TWS"), and to receive Records and
EXAMPLE, THOSE CAUSED INTENTIONALLY BY IB FOR PURPOSES OF Communications through the TWS, there are certain system hardware and software
SERVICING THE IB SYSTEM. IN NO EVENT SHALL IB'S LIABILITY, requirements, which are described on the IB Website at www.interactivebrokers.com. Since
REGARDLESS OF THE FORM OF ACTION AND DAMAGES SUFFERED BY these requirements may change, Customer must periodically refer to the IB website for current
CUSTOMER, EXCEED THE HIGHEST TOTAL MONTHLY COMMISSIONS PAID BY system requirements. To receive electronic mail from IB, Customer is responsible for
CUSTOMER TO IB OVER THE 6 MONTHS PRIOR TO ANY INCIDENT. maintaining a valid Internet e-mail address and software allowing customer to read, send and
receive e-mail. Customer must notify IB immediately of a change in Customer's e-mail address
26. Customer Must Maintain Alternative Trading Arrangements: Computer-based systems by using those procedures to change a Customer e-mail address that may be available on the IB
such as those used by IB are inherently vulnerable to disruption, delay or failure. CUSTOMER website.
MUST MAINTAIN ALTERNATIVE TRADING ARRANGEMENTS IN ADDITION TO
CUSTOMER'S IB ACCOUNT FOR EXECUTION OF CUSTOMER'S ORDERS IN THE 30. Miscellaneous:
EVENT THAT THE IB SYSTEM IS UNAVAILABLE. By signing this Agreement,
Customer represents that Customer maintains alternative trading arrangements. A. This Agreement is governed by the laws of the State of New York, without giving effect to
conflict of laws provisions. Courts of New York have exclusive jurisdiction over disputes
27. IB and Its Affiliates: A copy of IB's audited financial statements shall be posted on the IB relating to this Agreement, except when arbitration is provided. IN ALL JUDICIAL
website and, upon request, mailed to Customer. Customers shall rely only on the financial ACTIONS, ARBITRATIONS, OR DISPUTE RESOLUTION METHODS, THE PARTIES
condition of IB, and not on its affiliates, which are not liable for IB's acts and omissions. WAIVE ANY RIGHT TO PUNITIVE DAMAGES.
B. Customer agrees to the provision of this Agreement in English and represents that Customer  THE RULES OF THE ARBITRATION FORUM IN WHICH THE CLAIM IS
understands its terms and conditions. This Agreement contains the entire agreement between the FILED, AND ANY AMENDMENTS THERETO, SHALL BE INCORPORATED
parties, who have made no other representations or warranties. If any provision of this INTO THIS AGREEMENT.
Agreement is unenforceable, it shall not invalidate other provisions. Failure of IB to enforce any
term or condition of this Agreement is not a waiver of the term/condition. B. Customer agrees that any controversy, dispute, claim, or grievance between IB, any IB
affiliate or any of their shareholders, officers, directors employees, associates, or agents, on
C. Customer consents to recording of all telephone conversations. Customer acknowledges the the one hand, and Customer or, if applicable, Customer's shareholders, officers, directors
IBG Privacy Statement and consents to collection/use of Customer information as described employees, associates, or agents on the other hand, arising out of, or relating to, this
therein. Agreement, or any account(s) established hereunder in which securities may be traded; any
transactions therein; any transactions between IB and Customer; any provision of the
D. Customer may not assign or transfer any rights or obligations hereunder without the prior Customer Agreement or any other agreement between IB and Customer; or any breach of
written consent of IB. Upon notice to Customer IB may assign this Agreement to another broker- such transactions or agreements, shall be resolved by arbitration, in accordance with the
dealer or futures commission merchant. This Agreement shall inure to the benefit of IB's rules then prevailing of any one of the following: (a) The Financial Industry Regulatory
successors and assigns. IB may terminate this Agreement or its services to Customer at any time. Authority; or (b) any other exchange of which IB is a member, as the true claimant-in-
Customer may close its account upon notice to IB electronically through the IB website, but only interest may elect. If Customer is the claimant-in-interest and has not selected an
after all positions are closed and all other requirements specified on the IB website regarding arbitration forum within ten days of providing notice of Customer’s intent to arbitrate, IB
account closure are satisfied. shall select the forum. The award of the arbitrators, or a majority of them, shall be final,
and judgment upon the award rendered may be entered in any court, state or federal,
31. Mandatory Arbitration: having jurisdiction.

A. This agreement contains a pre-dispute arbitration clause. By signing an arbitration C. No person shall bring a putative or certified class action to arbitration, nor seek to
agreement the parties agree as follows: enforce any pre-dispute arbitration agreement against any person who has initiated in
court a putative class action; or who is a member of a putative class who has not opted out
 ALL PARTIES TO THIS AGREEMENT ARE GIVING UP THE RIGHT TO SUE of the class with respect to any claims encompassed by the putative class action until:
EACH OTHER IN COURT, INCLUDING THE RIGHT TO A TRIAL BY JURY,
EXCEPT AS PROVIDED BY THE RULES OF THE ARBITRATION FORUM IN o the class certification is denied; or
WHICH A CLAIM IS FILED. o the class is decertified; or
 ARBITRATION AWARDS ARE GENERALLY FINAL AND BINDING; A o the customer is excluded from the class by the court. Such forbearance to
PARTY’S ABILITY TO HAVE A COURT REVERSE OR MODIFY AN enforce an agreement to arbitrate shall not constitute a waiver of any rights
ARBITRATION AWARD IS VERY LIMITED. under this Agreement except to the extent stated herein.
 THE ABILITY OF THE PARTIES TO OBTAIN DOCUMENTS, WITNESS
STATEMENTS AND OTHER DISCOVERY IS GENERALLY MORE LIMITED CERTIFICATION FOR U.S. TAXPAYERS ONLY:
IN ARBITRATION THAN IN COURT PROCEEDINGS.
 THE ARBITRATORS DO NOT HAVE TO EXPLAIN THE REASON(S) FOR Under penalties of perjury, I certify that:
THEIR AWARD. 1) The number provided is my correct taxpayer identification number and
 UNLESS, IN AN ELIGIBLE CASE, A JOINT REQUEST FOR AN EXPLAINED 2) I am not subject to backup withholding because: a) I am exempt from
DECISION HAS BEEN SUBMITTED BY ALL PARTIES TO THE PANEL AT backup withholding, or b) I have not been notified by the Internal Revenue
LEAST 20 DAYS PRIOR TO THE FIRST SCHEDULED HEARING DATE. Service (IRS) that I am subject to backup withholding as a result of a failure
 THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY to report all interest or dividends or the IRS has notified me that I am no
OF ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE longer subject to backup withholding.
SECURITIES INDUSTRY. 3) I am a U.S. person (including a U.S. resident alien).
 THE RULES OF SOME ARBITRATION FORUMS MAY IMPOSE TIME
LIMITS FOR BRINGING A CLAIM IN ARBITRATION.
 IN SOME CASES, A CLAIM THAT IS INELIGIBLE FOR ARBITRATION MAY THIS AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE IN
BE BROUGHT IN COURT. PARAGRAPH 31. BY SIGNING THIS AGREEMENT I ACKNOWLEDGE THAT THIS
AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE AND THAT I
HAVE RECEIVED, READ AND UNDERSTOOD THE TERMS THEREOF.
 TRUSTEE CERTIFICATION

Title of Trust:

In consideration of Interactive Brokers LLC (“IB”) opening a brokerage account (“Account”) for the
trust named above (“Trust”), each undersigned trustee (“Trustee”) hereby represents, warrants and
certifies that:

1. The Trust exists under applicable laws.

2. The Trust was established on

3. The information provided in the Trust’s IB account application is complete and accurate.
Each Trustee has reviewed and agrees to the terms and conditions of the IB Customer
Agreement.

4. The Trustee(s) has(have) the power under the instrument or agreement that governs the
Trust (the “Trust Agreement “) and under applicable law to enter into all transactions
authorized under the IB Customer Agreement.

5. Is the Trust authorized to engage in margin transactions in the Account?

☐Yes

☐No

6. All transactions effected and instructions given on this Account will be in full compliance
with the Trust Agreement. The Trustees will continuously monitor the transactions in the
Account to ensure that such transactions are authorized under the Trust Agreement.

7. The following is a complete list of all trustees associated with the Trust, their addresses and
their respective authorized powers under the Trust Agreement:

Individual Trustee
Full Legal Name of Trustee:

Residential Address (no PO Box):

Mailing Address (if different):

Is this Trustee an authorized signatory for the Trust? ☐Yes ☐No

Is this Trustee an authorized trader for the Trust? ☐Yes ☐No

Individual Co-Trustee
Full Legal Name of Trustee:

Residential Address (no PO Box):

Mailing Address (if different):

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Trustee Certification – Version July 1, 2015
 Is this Trustee an authorized signatory for the Trust? ☐Yes ☐No

Is this Trustee an authorized trader for the Trust? ☐Yes ☐No

Entity Trustee
Full Legal Name of Trustee:

Business Address (no PO Box):

Mailing Address (if different):

Is this Trustee an authorized signatory for the Trust? ☐Yes ☐No

Is this Trustee an authorized trader for the Trust? ☐Yes ☐No

8. The settlor(s)/grantor(s) of the Trust is(are):

Full Legal Name of Settlor/Grantor:

Full Legal Name of Settlor/Grantor:

9. Is the Trust is revocable? ☐Yes ☐No

If yes, please list all individuals or entities with the power to revoke the Trust.

Full Legal Name:

Full Legal Name:

10. The Trustee(s) agrees(agree) that any notice sent to one Trustee will constitute notice to all
Trustees. IB, in its sole discretion may require the written consent of any or all Trustees
prior to acting upon the instructions of any Trustee. Neither the Trustee(s) nor the Trust
impose any obligation upon IB for determining the purpose or validity of any instructions
received from any Trustee.

11. The Trustee(s) acknowledge(acknowledges) that (a) IB will be relying solely on the
certifications herein for all matters relating to such certifications and operation of the
Account, (b) IB will not review or interpret the Trust Agreement, and (c) IB will not monitor
transactions to determine if they are in compliance with the Trust Agreement.

12. The Trust has not been revoked, modified or amended in any manner, which would cause
the representations contained in this Certification to be incorrect. Each Trustee agrees to
notify IB immediately in writing of any change that would cause this Certification to become
incorrect or incomplete. Each Trustee acknowledges and agrees that IB is permitted to
verify any information that is provided to IB in the account application.

13. All assets (whether cash, securities or commodities) in the Account are to be held by or on
behalf of the Trust.

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Trustee Certification – Version July 1, 2015
 14. The Trustees may grant a Power of Attorney to a third party concerning the Account, and the
undersigned certify that they have the authority under the terms of the Trust Agreement and
applicable law to make such grant.

15. The undersigned Trustees jointly and severally agree to indemnify IB, its affiliates, officers,
directors, employees and agents from, and to hold such persons harmless from any losses,
expenses, penalties, claims or liabilities (including reasonable attorneys’ fees) that may arise
out of IB acting in reliance on the representations contained in this Certification. This
indemnification shall survive the termination of the trust and/or the Account.

CERTIFIED TO INTERACTIVE BROKERS LLC BY TRUSTEES. The undersigned certify under

penalty of perjury that the foregoing is true and correct. The representations and obligations stated
in this Certification will survive the termination of the Account and shall be governed by the laws of
the State of Connecticut, U.S.A.

TRUSTEE
By:
Name:
Date:

TRUSTEE
By:
Name:
Date:

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Trustee Certification – Version July 1, 2015