Important Disclosure Information Regarding Online Trading

Although on-line trading continues to become a more popular and reliable way to trade, there are a number of market and technology related variables that you should be aware of when placing orders. Before investing, you must also understand that these variables create potential problems including, but not limited to, order outcomes.  High volumes of trading at market opening and at various points during the day may cause delays in execution and executions at prices significantly away from the market price quoted or displayed at the time the order was entered. Although many investors have come to expect quick executions at or near the quotes displayed on their computer screens, there are certain factors beyond our control. For example, Market Makers may execute orders manually or reduce their size guarantees during periods of volatility, possibly resulting in delays in order execution and losses. 

Understanding the differences between market and limit orders and the benefits and risks of each is important for investors to understand. Firms are required to execute a market order fully and promptly without regard to price. That execution may be at a price significantly different from the current price quoted for the security. Limit orders are executed only at a specified price or better and while the investor receives price protection, there is the possibility that the order may not be executed.

Customers who place market orders for initial public offerings (IPOs) – particularly those trading at a price significantly higher than their offering price or in ‘hot stocks’, those that have recently traded under ‘fast market’ conditions in which the price changes so quickly that quotes for the stock cannot keep pace with its trading price, should be aware that market orders may be executed at prices that are significantly less than or more than 100% greater than the indicated price. On the first day of trading in an IPO, the myTrade system does not allow BUY MARKET orders. Generally, sufficient funds must be in your account in order to effect transactions.  Paragraph 3 of the Customer Agreement discuss the possible effects of an account with inadequate funds . It is important to understand that the amount of funds available to purchase securities factors in the value of all open orders [If a customer enters an order, the value of that order (even if not yet executed) is immediately deducted from the amount of funds available to make further purchases]. Furthermore, if a customer owns securities and has a SELL ORDER that is OPEN to sell those securities, the myTrade system will generally not allow another sell order on the same security until the open sell order has been confirmed canceled.  Note that a "Cancel Acknowledged/Received" message does not indicate that an order is cancelled. The order is confirmed cancelled only when a "Cancelled by Broker" message is received.TDS is available to accept phone orders between 6:30 AM and 8:00 PM EST during normal market days. If a customer enters a phone order, the myTrack system may not subsequently allow the customer to cancel or alter the order, in which case the customer will have to call TDS to request to cancel or alter the order. Marketable orders, including marketable limit orders, are not cancellable unless the customer calls in. In which case, the myTrack registered rep may attempt to cancel the order. Marketable limit orders are defined as sell orders set at a limit price at or below the current offer and buy orders set at a limit price at or above the current bid.

Good-Til-Cancelled ("GTC") orders may NOT be placed over the phone.

Orders for which a "Received by myTrack" message is received and for which a "Received by broker" message does not subsequently appear within 60 seconds, may not have been received by our brokerage and should be cancelled by the client. 

myTrack allows its customers to establish a default maker maker to route orders. In cases where the customer selects a market maker as the default and and that market maker is unavailable at the time an order is placed, myTrack has the discretion to route the order elsewhere.

90 Second Lockout Rule for listed stocks sent to Trimark: When a customer's order is routed to Trimark, that customer will not be able to route another order (buy OR sell) for the SAME security to Trimark within 90 seconds. For example, if a customer places an order to buy 100 shares of LU that was routed to Trimark at 10:00:00 AM, he will not be able to route another LU order (buy OR sell) to Trimark until 10:01:30 AM. This does not prevent another Track Data Securities customer from entering another order for the same security to Trimark within 90 seconds. Please note that cancelling an order does not remove the 90 second lockout.

Clearly Erroneous Policy: As defined by the NASD, a "clearly erroneous" transaction is one "when there is an obvious error in any term, such as price, number of shares or other unit of trading, or identification of the security." If a customer seeks to dispute a transaction because he/she feels that one of the terms of a transaction is clearly erroneous, the customer must contact myTrack's trading desk within 15 minutes from the time of execution in order to submit a valid request. There is a $0.20 per share charge if the customer seeks to dispute a trade that was executed on Island (INET), regardless of the outcome of the dispute.

If a stock split (forward or reverse) or a symbol change has become effective, TDS will make its best efforts to promptly adjust the customers' accounts. An adjustment which has not been affected on myTrack may prevent the customer from affecting transactions in the security. In such case, the customer must inform TDS immediately. It is the customer's responsibility to be aware of their actual positions, selling or purchasing securities in excess of those owned, and the result of doing so, which may include, but not limited to, margin calls.

Customers should reconcile balances and positions daily against their Trade Confirmations and Daily Summaries and monthly against their Monthly Statement. TDS should be notified immediately if there is a discrepancy.

There may be periods of time when you may be unable to access your accounts due to high volume. You may have difficulty accessing your accounts due to high Internet traffic or even because of systems capacity limitations. If on-line trading has been disabled or is not available, you may have difficulty reaching account representatives on the telephone during periods of high volume. Please be aware that you may suffer losses during periods of volatility due to delays in effecting buy and sell orders.

It is the customer’s obligation to notify Track Data Securities Corporation (TDSC) in a timely manner of any discrepancy regarding their account. In the event of a trade dispute or any other issue relating to an order, TDSC expects our customers to notify our trading staff promptly (within ½ hour of the occurrence). Whether it be an improper fill or confirmation of order status, the earlier we receive your inquiry, the more timely we can resolve the issue.

Orders may not be placed, adjusted or cancelled on the myTrade Chat Room, via e-mail, nor by leaving a voice mail message. Orders may be placed only on your myTrade system or by verbally speaking to a myTrade Registered Representative.

Customer support access may be limited at certain times due to market or technology related reasons. During these times, your best alternative is to email trading@myTrack.com. Please be aware that orders may not be placed via email.

GENERAL AFTER-HOURS TRADING DISCLOSURES 

After-hours investing involves unique risks that investors should fully understand before placing an order after hours. These risks include, but are not limited to, greater price volatility, less liquidity, and wider bid/ask spreads than during regular market hours. Prior to participating in this unique after-hours session, you should review and be aware of the various risks and requirements involved with after-hours trading. For your convenience, below is a list of issues that we believe should be carefully considered before engaging in after hours trading. 

After-Hours Trading Session: Currently, orders may placed until 8:00 PM EST. Any day orders you enter after 4:05 PM ESTwill be routed to the Island ECN (other markets will be added as they come on line). Any unexecuted day order will be cancelled at 8 PM. A day order entered let's say at 5 pm will not be in effect for the next day. It will be valid for the same day and then cancelled at 8 PM if not executed. If you want to enter an order after 4:05 for the next day, enter it as a GTC order. Be advised that GTC orders will remain open until executed.  Any order entered in the after-market that is not eligible to be routed to Island (or another ECN) will be held in our database until 9:05 AM EST the next market day.  At 9:05 AM EST, the order will then be routed to a marketplace.

Limit Orders: To minimize the potential effects of lower liquidity and greater volatility, only limit orders may be placed after hours and are subject to the normal limit order rules.   Again, an order entered as GTC will be routed to a marketplace at 9:05 AM EST the next business day.

Lower Liquidity: Liquidity generally refers to the number of buyers and sellers or quotations in any given security. In the after-hour marketplace there may be a lack of liquidity in certain securities that may affect how orders are executed. Orders placed after hours are routed to a specific trading system, and such orders will be executed only if such order is matched against another investor or market professional to buy or sell on the other side of the transaction for that particular price.

Higher Volatility: Volatility refers to the changes in price that securities undergo when trading. Because of reduced liquidity in the after-hours market which produces higher volatility, there may be greater price swings in securities traded in the after-hours session. 

Price of Execution: As mentioned, orders placed after hours are routed to a specific electronic trading system. That system may not have the best prices for a securities purchase or sale and cannot guarantee that its marketplace, at any given moment, represents the best price available for a particular security. Customers may actually pay less, equal, or more for securities traded on that system than what was executed on a similar order on another after-hours electronic trading system. Also, a limit order may be executed at a price away from the current market price.

For example, a customer enters an order at 11:00 PM EST to Buy 100 XYZ @ 62 and receives a message that the order will be routed at 9:05 AM the next market day. At 9:05 AM, the market for XYZ is at 59. The customer may be executed at 62 by a seller who sells its shares to the customer at 62. 

Risk of Timing Of Order Entry: Orders entered by other investors may beat your order to the electronic trading system's order book, and thus remove from the order book an order you were trying to match. This may prevent your order from being executed, in whole or in part, or from being executed at the price you wanted. In addition, orders entered earlier into the electronic trading system at the same price level of your order will have a higher priority than your order. This means that, if there is an execution at that price level, those earlier orders will be executed before your order, unless you improve the price of your order to move you up in priority.

Quotations Subject to Change: Orders posted on the electronic trading system may be changed before your order has a chance to be matched against the posted orders. This means that there is no guarantee that there will be orders at any given price.

Communications Delays: The potential risk of delay that can be caused by problems related to communications between customers and Track Data Securities and Track Data Securities and the after-hour marketplace may cause delays in, or prevent execution of your order.

Trading Halts: If securities have been halted during the regular trading session, such trading halts will continue to be in effect during the after-hours trading session. No trading halts will be initiated by the after-hour trading system itself during the after-hours trading session. 

Risks of Cancellation and/or Change Requests: Cancellation and/or change requests may not be accepted if the order you want to cancel/change is executed first: You may change or cancel your order any time before it is executed. If all or a portion of your order is executed before your change or cancellation is received (see above for the risk of communications delays), that portion of your order which was executed can not be changed or cancelled. This means that you will be responsible for settling the portion of your order that was executed. In addition, once an order is partially executed, the remaining portion can not be changed, but can only be cancelled and replaced by a new order. Changing an order may also cause a loss of time priority. Orders are ranked within the electronic trading system first by price (better priced orders come first), and second by time priority (earlier orders at the same price level come first). If you change your order, and that change is accepted (see above), your change is treated as a cancellation and replacement. This means that your change is treated as a new order, which may cause it to lose its time priority. 

Option Trading
Equity option orders may be placed until the equity market closes at 4:02 PM EST. Index option orders may be placed until the index option market closes at 4:15 PM EST. Customers cannot place equity option orders between 4:02 and 4:15 for next day queue. 

To write naked puts, accounts must have a minimum equity of $50,000. Additional criteria must be met before accounts are approved for naked put writing including:

20% of the current market value of the underlying security
+ the premium of the option received
+ initial (one-time) $10,000 for the first naked transaction
+ additional $5,000 per 25 contracts.

Please note that writing (shorting) of index options and shorting of naked calls are not permitted.

As a reminder, every customer approved for option trading has verified in the option agreement that he/she has read and understands the information and risks contained in the risk disclosure document and any supplement issued by the various exchanges and the Options Clearing Corporation.

Special note regarding non-network mutual funds: If you place a non-network mutual fund order, you will receive an execution at the close of the next business day. See List of Penson In-network Mutual Funds