Disclosure of Risks of Margin

TRADEXdirect 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 margin  Before trading stocks, futures or other investment products in a margin account, you should carefully review the margin agreement provided by the Clearing Firm, and you should consult TRADEX regarding any questions or concerns you may have about margin.

When you purchase securities, you may pay for the securities in full or you may borrow part of the purchase price from the Clearing Firm. If you choose to borrow funds from the Clearing Firm, you will open a margin account with the Clearing Firm. Likewise, if you trade futures, you will have a margin account. The securities and futures contracts purchased are the clearing Firm'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, the cCearing Firm can take action, such as sell securities or other assets in any of your accounts held with the Clearing Firm or issue a margin call, in order to maintain the required equity in the account.

• 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 the clearing Firm to avoid the forced sale of those securities or futures contracts or other assets in your account(s).
• The Clearing Firm 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 the Clearing Firm has higher "house" requirements, the Clearing Firm 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 to the Clearing Firm for any short fall in the account after such a sale.
• The Clearing Firm 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, the Clearing Firm 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. Because the securities or futures contracts are collateral for the margin loan, the Clearing Firm has the right to decide which positions to sell in order to protect its interests.
• The Clearing Firm can increase its "house" maintenance margin requirements at any time and is not required to provide you 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 the Clearing Firm to liquidate or sell securities or futures contracts in your account(s).
• If the Clearing Firm chooses to issue a margin call rather than immediately liquidating under margined positions, you are not entitled to an extension of time on a margin call.