MFR Securities, Inc. Disclosures

Privacy Statement

We collect non-public information about you from the following sources: Information from your application or other forms; information about your transactions and information we may receive from custodian or prime broker. We do not disclose any non-public information about our customers or former customers to any one, except as required by law. We restrict access to your account information to those employees and our affiliates who need to know that information to provide products and services to you. We maintain physical, electronic, and procedural safeguards to guard your non-public information. When disposing of paper documents containing confidential customer information they are electronically shredded.

 

Business Continuity

MFR has developed a Business Continuity Plan for how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions are unpredictable, we must be flexible in responding to actual events as they occur. With that in mind, we are providing you with information on our business continuity plan. If after a significant business disruption you cannot contact us as you usually do at 212-416-5000, you should call our alternative numbers (646 220-4101 or 888-693-9233) or go to our website at www.mfrsec.com. If you cannot access us through either of those means, you should contact our clearing firm, Pershing, at 201-413-3635 or www.pershing.com for instructions on how you may enter transactions that under normal circumstances would be executed by MFR. We plan to recover quickly and resume business operations after a significant business disruption and respond by safeguarding our employees and property, making a financial and operational assessment, protecting the firm’s books and records, and allowing our customers to transact business. In short, our business continuity plan is designed to permit our firm to resume operations as quickly as possible, given the scope and severity of the significant business disruption. If you would like more information about our plan please contact your MFR representative.

 

Customer Identification Program and Anti-Money Laundering - Important Information About Procedures for Opening a New Retail Account

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions obtain, verify, and record information that identifies each person or institution who opens an account. What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents. Institutions wishing to open an account will be asked to provide several documents that enable the firm to confirm compliance with anti-money laundering customer identification requirements. For our New Institutional Accounts we may request the following: For a corporation, partnership, trust, Limited Liability Company or other legal entity we will need to know the principal place of business address, tax identification number, articles of formation, operating agreement, formation documents, partnership or trust agreement and any other information that will allow our firm to identify the organization. U.S. Department of the Treasury, Securities and Exchange Commission and FINRA Rules require this information to be provided

 

FINRA BrokerCheck

FINRA BrokerCheck, allows investors to learn about the professional background, business practices, and conduct of FINRA member firms or their brokers. The telephone number of the BrokerCheck is 800-289-9999, the website address is www.brokercheck.finra.org.

 

Tax and Legal Advice

No one associated with MFR is authorized to render tax or legal advice and customer may not and should not rely upon such advice, if given.

 

Complaints

Complaints regarding your account may be directed to MFR Securities, Inc. at 630 Third Ave., Suite 1203, New York, NY 10017. Attention Compliance Department. The telephone number is 212-416-5000.

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Inaccuracies and/or Discrepancies – Questions About Your Account Statement

Your account statement contains important information about your securities account, including recent transactions. All account statements sent to you shall be deemed complete and accurate if not objected to in writing within 10 days of receipt. Please report any inaccuracy or discrepancy in your account to MFR’s Operations Department. MFR encourages you to review the details in your statement.

 

Changes of Address

Please promptly notify your representative of any changes in your residential address or contact information. Failure to notify the firm may result in MFR’s inability to send you important notifications which could result in restrictions or other issues in your account.

 

Fails Charge

MFR has adopted the Fails Charge Trading Practice (the “Practice(s)”) published by the Securities Industry and Financial Markets Association (“SIFMA”) covering the following securities: U.S. Treasury Securities, debentures issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks and agency mortgage-backed securities (“MBS”) issued or guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae. These Practices can be accessed at www.sifma.org. By entering into any such transaction with MFR, you agree to abide by the Practices.

 

SEC Rule 607

In accordance with SEC Rule 607 of Regulation NMS, MFR is required to disclose upon account opening and on an annual basis thereafter (1) its policies regarding payment for order flow, including a statement as to whether any payment for order flow is received for routing customer orders and a detailed description of the nature of the compensation received, and (2) their polices for determining, in the absence of specific customer instructions, where to route customer orders that are the subject of payment for order flow, including a description of the extent to which orders can be executed at prices superior to the NBBO. MFR does not pay for order flow nor does it receive payment for order flow. However, MFR potentially may profit by trading as principal with its customers’ orders. Additionally, orders routed to public exchanges may be eligible for “rebates” under the relevant exchange rules. If MFR were to receive a rebate net of fees assessed by such an exchange, such could be considered “payment for order flow”. For any execution, customers of MFR are entitled to know the venue of execution, and whether MFR netted a rebated from such venue during the relevant time period.

 

Payment For Order Flow

The SEC’s payment for order flow rules, which became effective October 2, 1995, require disclosure of payment for order flow practices on confirmations, upon the opening of new accounts, and annually thereafter. The firm does not receive remuneration for directing orders in equity securities to particular broker-dealers or market centers for execution.

 

Limit Orders

The firm will handle any customer limit orders, whether received from its own customers, or from another broker-dealer with all due care so as not to “trade ahead” of limit orders. Therefore, the firm will not trade on buy orders at prices equal to or less than that of the limit order, or conversely the firm will not trade on sell orders at prices equal to or greater than that of the customer limit order, without first executing the customer limit order.

 

FINRA Rule 5320

Order Handling Practices. Under rule 5320, if a firm is in possession of a customer order that is eligible for protection, the firm may not receive executions for its own account at prices that would satisfy the customer order without providing the executions to the customer order. Rule 5320 permits firms to accept orders from institutional accounts and to trade along or exclusive of such orders without providing them protection as long as the firms has provided disclosure of their order handling practices. MFR takes this opportunity to explain which institutional customer orders will receive protection under Rule 5320. Orders received from institutional customers that are below 10,000 shares, under $100,000 in notional value and entered on a held basis will be protected by MFR. Therefore, the trade desk at MFR with knowledge of such an order will be required to provide the order with protection. Additionally, an institutional customer may opt into order protection on orders over 10,000 shares, under $100,000 in notional value, provided that these orders are entered on a “held” basis. MFR will consider such requests on a case by case basis and will inform the customer whether it is willing to accept such a protected order. Because “not held” orders (including best-efforts, VWAP orders, “anticipate” orders, percentage of volume orders, stopped orders, “work” orders and “over-the-day” orders) require that the firm exercise discretion as to the time and price of execution, MFR does not believe that it is feasible for these orders to be eligible for share-for share protection. Additionally, orders executed subject to guarantee (including guaranteed close, market-on-close, limit-on-close orders, guaranteed open orders, market–on-open and guaranteed VWAP orders) are ineligible for share-to-share protection. Lastly, complex orders (basket or program orders, risk arbitrage pairs orders, spread orders, convertible swaps orders and multi-leg orders) from customers will not be eligible for protection because of the difficulties in assessing which firm executions are applicable to a particular complex customer order. Risk orders (including Total Touch Risk orders, Beat-the VWAP orders and Hedging Outperformance Orders) with price improvement will not be eligible for Rule 5320 protection. Rather such customer orders will be priced according to the price improvement formula agreed upon between MFR and the customer. If any customer should have any questions please contact your sales trader.

 

Market Orders

The firm will make all reasonable efforts to obtain the best possible price available at the time the order is received. In the event that a customer market order is placed at the same time as a firm order, the customer order will be completed first.

 

Confirmations

In the case of a transaction in a reported security, or an equity security quoted on a national exchange and that is subject to last sale reporting, the name of the party from or to whom the securities were purchased or sold to you, the time the transaction took place, the difference between the price to the customer and the dealer's purchase price, and the source and amount of any other remuneration received or to be received by the firm in connection with the transaction will be furnished upon request.

 

Payment for Securities

In the event that you wish to pay for securities purchased through MFR. please make checks payable to Pershing LLC, our clearing firm for securities transactions. Also please note your account number and MFR Securities, Inc. in the memo section of the check. We cannot accept checks made payable to MFR.

 

Rule 144A Securities

In order to transact 144A securities, you attest to be a Qualified Intuitional Buyer and will obtain access to the issuer’s Rule 144A(d)(4) either directly from the issuer or from the issuer’s designated informational website and that you will comply with all conditions for obtaining access to the issuer’s or borrower’s information including if applicable any non-disclosure agreement and any agreement that such information is being obtained solely for the purpose of considering a purchase of the securities. If you are unable to agree to any of the foregoing you will not purchase the securi-ties from MFR.

 

Indications of Interest

If you provide MFR with an order to “work” the firm may handle the order by issuing an Indication of Interest (“IOI”) to another market participant or trading venue. An IOI is an expression of trading interest that contains one or more but not all of the following elements: security name, size, side, capacity and price. The use of an IOI is intended to solicit contra-side interest in an attempt to minimize market impact. IOUs may be disseminated over electronic trading systems, through direct connections to client order management systems. An IOI disseminate on your behalf cannot ex-ceed the size of the order you have submitted unless you indicate that the size of your interest may grow.

 

FINRA Rule 2261: Disclosure of Financial Condition to Other Members

The Statement of Financial Condition is available to the firm’s customers. If you would like to request a copy please do so in writing and contact MFR Securities, Inc., 630 Third Ave., Suite 1203, New York, NY 10017, Compliance De-partment and a copy will be provided to you. The telephone number is 212-416-5000.

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FINRA Rule 2266: SIPC

You may obtain more information about the Securities Investor Protection Corporation (“SIPC”) coverage on your brokerage account by contacting the firm or requesting a SIPC brochure. SIPC’s website is www.sipc.org and the telephone number is 202-371-8300.

 

Money Market Funds in Brokerage Accounts

Federal Deposit insurance corporation (FDIC) Insured Bank Deposits are not protected by Securities Investor Protection Corporation (SIPC). You may view current money market fund rates by visiting www.pershing.com and selecting the link at the bot-tom of the page titled “money fund and FDIC insured bank product rates.” Please note that we may not offer all of the money market funds listed on the Pershing website.

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Audit

The firm is subject to regular reviews by external audit and regulatory authorities.

 

FINRA Rule 2265:  Extended Trading Hours Trading Risk Disclosure

MFR offers its customers the opportunity to trade securities when the major U.S. securities markets are not open. The hours for trading outside of customary market hours are 8 AM - 9:30 AM and 4 PM - 8 PM EST. There are risks to trading securities when the major trading markets are closed. To make sure you are aware of these risks, the FINRA has developed the following model disclosure or risks of extended hours trading.

 

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.

 

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 dur-ing regular market hours.

 

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 the next morning. As result, you may receive an inferior price in extended hours trad-ing than you would during regular market hours.

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Risk of Unlinked Markets

Depending on the extended hours trading system or the time of day, the prices displayed on a particular extended hours trading 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.

 

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.

 

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.

 

Risk of Lack of Calculation or Dissemination of Underlying Index Value or Intraday Indicative Value (IIV)

If trading in 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 IIV is not calculated or widely disseminated during pre-market and post-market sessions, an investor who is unable to calculate implied values for certain derivative securities products in those sessions be placed at a disadvantage to other market professionals.