FAQ

ACCOUNT RELATED

What is the minimum to open an account?

There is no minimum to open a cash account. If you want a margin account and would like margin privileges, then you must maintain a minimum balance of at
least $2,000. When trading, you must meet the buying power requirement to place the trade.

What type of accounts does Eddid USA offer?

We offer the following account types:

  • Individual account
  • IRA account
  • Joint account (Tenants in Common & With Rights of Survivorship)
  • Entity account (Corporate & Trusts)
  • International account

Is my account safe and protected?

Eddid Securities USA Inc. is a member of Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000
(including $250,000 for claims for cash). For more information, please visit SIPC.
Our clearing firm Apex Clearing Corporation has purchased an additional insurance policy to supplement SIPC protection. This additional insurance policy, widely
known as "excess SIPC", becomes available to customers in the event that SIPC limits are exhausted. This additional insurance provides protection for securities
and cash up to an aggregate limit of $150 million, subject to sub-limits for any one customer of $37.5 million for securities and $900,000 for cash. Similar to
SIPC protection, this additional insurance does not protect against a loss in the market value of securities.

Is there any tax for Foreign Investors?

As a general rule, foreign investors (i.e. non-U.S. citizens and residents) with no U.S. business are typically not obligated to file a U.S. tax return, including on
income generated from U.S. capital gains on U.S. securities trades. Instead, when investing with Eddid USA as their broker-dealer, our clearing firm will withhold
the required U.S. taxes on U.S. income and gross proceeds, as applicable, and pay the withheld tax and report to the IRS directly.
Foreign investors must continue to certify their non-U.S. citizen and resident status through submitting required documentation (e.g. the applicable W-8 form)
and may be able to receive reduced U.S. tax withholding by identifying the country where they claim to be a resident for income treaty purposes.
Eddid USA foreign investors who are non-U.S. residents and residents of a tax treaty country with a valid Form W-8 on file may be able to claim a reduced rate of
withholding under an income tax treaty. Other foreign investors generally pay a flat 30% withholding tax on certain interest and dividend income from U.S.
securities investments.
Please see IRS Publication 515 for more information on tax rates applicable to non-residents.

Is there any Estate Tax for Foreign Investors?

Foreign investors are generally subject to a low estate tax threshold of US$60,000 before being subject to U.S. estate tax at a rate up to maximum of 40% above
this threshold on U.S. situated assets, such as securities of U.S. companies. However, assets that are exempt for U.S. estate tax generally include securities that
generate portfolio interest (e.g. U.S. treasury and U.S. government agency securities and certain U.S. corporate bonds and U.S. commercial paper), and dividend
income from certain foreign corporations or offshore mutual funds are generally not subject to U.S. estate taxes. Executors for non-residents must file an estate
tax return or Form 706-NA. Please note that the U.S. estate tax rules for foreign investors may be modified by applicable estate and gift tax treaties.
Please see IRS Publication 515 for more information on tax rates applicable to non-residents.

How can I update my account information?

You can update your account information at any one of the following three locations:

Account Management

  • Log in to Account Management
  • Click on your account number at the upper right-hand corner
  • Click
  • Update your account information and press "submit" at the last page

Eddid Trader Mobile

  • Log in to Eddid Trader Mobile
  • Choose "Account" > Choose your account number
  • Choose
  • Update your account information and press "submit" at the last page

Eddid Trader Pro

  • Log in to Eddid Trader Pro
  • Click on your account number at the upper right-hand corner
  • Choose "Edit"
  • Point the cursor to the row of your account number and click
  • Update your account information and press "submit" at the last page

FUNDING AND TRANSFER

How can I fund my account?

You can fund your account in three different ways:

  • ACH transfer
  • Wire transfer
  • ACAT Transfer

How can I link my bank account to my Eddid USA account to establish an ACH relationship?

Step 1: Enter your bank account information at Account Management, Eddid Trader Pro or Eddid Trader Mobile.
Step 2: Wait until two micro-deposits appear in your bank account. It can take up to 2-3 business days for the two micro-deposits to appear in your bank account.
Step 3: After you receive the two micro-deposits in your bank account, go back to Account Management, Eddid Trader Pro or Eddid Trader Mobile and enter the two micro-deposit amounts in the fields provided.

If the amounts are correct, the relationship is then available to use for ACH transfers.

When will my funds be available for trading after I deposit via ACH?

The funds are immediately available for trading once the funds have been deposited via ACH into your Eddid USA account. Those funds are not eligible to be
withdrawn from the account until they have been on deposit for 5 days.

How can I transfer my account from another Brokerage firm?

You can transfer your assets to Eddid USA from another brokerage firm or bank by ACATS. Please fill out the Account Transfer Form and obtain your most recent
statement from your previous brokerage firm. Attach both documents and email to help@eddidusa.com

How can I withdraw fund from my account?

You may withdraw funds from your account by requesting an ACH transfer, wire transfer, or to have a check mailed to you. Simply log on to our desktop platform
or mobile app to complete the setup and withdrawal. Please note that there is a fee of $25 for all outbound domestic wires and a fee of $45 for all outbound
international wires. For check withdrawal, the check will be mailed to your address on file (for U.S. domestic account only). There is a fee of $5 for this service.

TRADING

When are market trading hours?

  • Pre-market:08:00EST to 09:27EST
  • Pre-market and Regular:08:00EST to 16:00EST
  • Regular:09:30EST to 16:00EST
  • Regular and Post-market:09:30EST to 18:00EST
  • Post-market:16:00EST to 18:00EST
  • All sessions:08:00EST to 18:00EST

"Extended hours trading" means trading outside of "regular trading hours". "Regular trading hours" generally means the time between 9:30 a.m. and 4:00 p.m.
Eastern Standard Time. Eddid USA does not advocate or suggest that extended hours trading is suitable for all customers by simply offering the service of
extended hours trading. Customers shall familiarize themselves with these risks and make a well-informed decision as to whether extended hours trading is
appropriate for their investment objectives and risk tolerance. Please review Extended Trading Hours Risk Disclosure to learn more about the risks associated
with extended hours trading.

What are the margin requirements for stocks?

The following table provides a list of margin requirements for margin-approved securities:

For Margin-Approved Stocks:

Type of
Security
Initial
Requirement
Maintenance
Requirement
Day Trade
Requirement
Priced above $5 50% X M.V. 25% X M.V. 25% X M.V.
Priced b/w $3 & $4.99 50% X M.V. 50% X M.V. 25% X M.V.
Priced below $2.99 100% X M.V. 100% X M.V. 25% X M.V.
2x Leveraged ETFs 50% X M.V. 50% X M.V. 50% X M.V.
3x Leveraged ETFs 75% X M.V. 75% X M.V. 75% X M.V.

For Short Stocks:

Type of
Security
Initial
Requirement
Maintenance
Requirement
Day Trade
Requirement
Priced above $16.625 50% X M.V. 30% X M.V. 25% X M.V.
Priced b/w $5 & $16.625 $5 per share $5 per share 25% X M.V.
Priced b/w $2.51 & $4.99 100% X M.V. 100% X M.V. 25% X M.V.
Priced below $2.50 $2.50 per share $2.50 per share 25% X M.V.
2x Leveraged ETFs 60% X M.V. 60% X M.V. 50% X M.V.
3x Leveraged ETFs 90% X M.V. 90% X M.V. 75% X M.V.

Please note that the margin requirements will vary depending on the type of security. At any time, the initial and maintenance requirements on any security can
change without prior notice and can go into effect immediately. Furthermore, accounts whose account equity falls below the required maintenance requirement
can be liquidated without prior notice. To prevent forced liquidations, we advise clients to keep a buffer above the minimum equity requirement.

What is Pattern Day Trading (PDT) and Why did I get an equity maintenance call (EM)?

The term “pattern day-trader” is a regulatory designation which means any account that executes four or more day trades within a rolling, five business-day
period. The PDT rule applies to margin accounts only. Once an account is flagged as a Pattern Day Trader, total account equity needs to be maintained at above
$25,000 in order to day trade. An Equity maintenance call (EM) will be issued when margin account value falls below $25,000 at the close of business the
previous day. As a result of the call, the account is set to liquidating-transactions only.

A margin account must close above $25,000 or higher to meet an EM call, or you can meet the call by depositing funds. Alternatively, you may request a reset to
remove the PDT status. Accounts may request a PDT reset every 90 calendar days.

What is Good-Faith Violation (GFV)?

A good faith violation (GFV) occurs when a cash account buys a stock or option with unsettled funds and liquidates the position before the settlement date of the sale that generated the proceeds.

Eddid Securities USA chooses NOT to allow unsettled fund purchase for cash accounts. Accounts which have been set up as a 'Cash' type do not have access to the proceeds from the sale of securities until such time the transaction has settled at the clearinghouse and proceeds have been issued to our clearing firm. Most securities transactions settle in two business days of their transaction date. Providing access to the funds prior to settlement would constitute a loan, a transaction which is precluded from taking place within this account type.

Account holders who wish to have access to unsettled funds prior to the settlement day may do so by electing an account type of 'Margin'. Under this account type unsettled funds may be used for trading purposes but may not be withdrawn until settlement. Account holders maintaining a 'Cash' account may request an upgrade to a 'Margin' type account by updating the existing account form or sending the request to help@eddidusa.com. Upgrade requests are subject to a compliance review to ensure that the account holder maintains the appropriate qualifications.

The minimum account value requirement for margin trading is $2000. Margin trading is only for experienced investors with high risk tolerance.


  • Leveraged investments create a greater potential risk of loss
  • Trading losses may be greater than the value of the initial investment
  • Additional costs from margin interest charges
  • Potential margin calls or liquidation of securities

For further information about margin trading, please see Eddid Margin Disclosure https://www.eddidusa.com/uploads/soft/20211209/MarginDisclosureStatement.pdf

OPTIONS TRADING

What are the strategies available at different Options Trading level?

The options strategies allowed for each options trading level:

Level 1 Covered calls, including:

  • Covered calls sold against stocks held long in your brokerage account
  • Buy-writes (simultaneously buying a stock and writing a covered call)
  • Covered call roll-ups/roll-downs

*A margin or cash account is required to place Level 1 trades.

Level 2- All Level 1 strategies, plus:

  • Married puts
  • Long calls
  • Long puts
  • Long straddles [not allowed for cash account]
  • Long strangles [not allowed for cash account]
  • Covered puts (short stock and short put position) [not allowed for cash account]

*A margin or cash account is required to place Level 2 trades.

Level 3- All Level 1 and 2 strategies, plus:

  • Equity debit spreads
  • Equity credit spreads
  • Equity calendar/diagonal spreads
  • Index debit spreads
  • Index credit spreads
  • Index calendar/diagonal spreads

*A margin account is required to place Level 3 trades.

Level 4 -All Level 1, 2, and 3 strategies, plus:

  • Naked equity puts

*A margin account is required to place Level 4 trades.

What are the minimum equity requirements for options strategies?

Options Strategies Minimum Equity Requirement
Covered Call writing No minimum
Cash-secured Puts No minimum
Long calls and Puts No minimum
Spreads and combinations $2,000
Uncovered Put writing $25,000

What are the margin requirements for options?

Equity Options

Type Initial
Requirement
for cash account
Initial
Requirement
for margin account
Maintenance
Requirement
for margin account
Long Call or Put Premium Premium No Requirement
Short Call or Put* Not Allowed The greater of the following:
1. 25%** of the underlying current
market value minus the OTM
amount times the multiplier
2. Calls – 15% of the
underlying current market plus
the premium; Puts – 15% of the
exercisable value plus the premium
3. Calls – 250 per contract;
Puts – 250 per contract not
to exceed the max loss
Same as margin initial requirement;
if the first calculation is used
then the cost of the option must be
added to the requirement
Straddles or Strangles Not Allowed The short call or put
requirement (whichever is greater)
plus the cost to close the
option on the other side
Same as Margin Initial Requirement
*Does not include cash secured Puts
**Subject to higher requirement based on the underlying security

Spreads

Type Initial
Requirement
for cash account
Initial
Requirement
for margin account
Maintenance
Requirement
for margin account
Universal Spread* Not Allowed Max Defined Loss of the
Overall Position
plus/minus the premium received
Max Defined Loss of
the Overall Position
*We do not allow Calendar Spreads on VIX Style Index Options

Covered

Type Initial
Requirement
for cash account
Initial
Requirement
for margin account
Maintenance
Requirement
for margin account
Covered Put Not Allowed The Initial Requirement
of the Short Position
minus the Premium Received
The Requirement of
the Underlying Position
Covered
Call/Buy-Write
Cost of the Underlying
Position minus the
Premium Received
The Initial Requirement of
the Long Position Minus
the Premium Received
Out-of-the-Money
The requirement of
the underlying Position*
In-the-money
The requirement of the
underlying position valued
at the strike price of the
call plus the in-the-money
amount of the option
*If the underlying position has a higher maintenance requirement, the higher requirement would apply; concentration requirements do not apply

Hedged

Type Initial
Requirement
for cash account
Initial
Requirement
for margin account
Maintenance
Requirement
for margin account
Married Put Cost of Each Position The Initial Requirement of
the Long Position plus the
Cost of Each Option

The lower of:


10% of the Put exercise
price plus 100% of the
out-of-the-money
amount or

20% of the underlying
market value
Married Call Not Allowed The Initial Requirement of
the Short Position plus
the Cost of the Option

100% of the underlying
market value plus the lower of:


10% of the call exercise
price plus 100% of any
out-of-the-money amount or

For stock, the greater
of $2.50/share or

100% of the stock
market value or

For stock with market
value of $5 or more per
share, the greater
of $5/share or

30% of the stock
market value
Conversion Cost of the Underlying
and the Put minus the
Premium Received for the Call
The Initial Requirement of
the Long Position and the
Long Put minus the Premium
of the Short Call
The Requirement of
the Long Position plus
Premium of the Short Call
Reverse
Conversion
Not Allowed The Initial requirement of the
Short Position and the
Long Call minus the
Premium of the Short Put
The Requirement of the
Short Position plus the
Premium of the Short Put
Collar Cost of the Underlying
and the Put minus the
Premium Received for the Call
The Initial Requirement of
the Underlying Position
and the Long Option minus
the Premium of the Short Option
The Requirement of the
Underlying Position plus
Premium of the Short Option

Index Options

Type Initial
Requirement
for cash account
Initial
Requirement
for margin account
Maintenance
Requirement
for margin account
Long Call or Put Premium Premium No Requirement
Short Call or Put* Not Allowed

The greater of the following:

1. 25%** of the underlying
current market value minus the
OTM amount times the multiplier

2. Calls – 15% of the underlying
current market value plus the
premium; Puts – 15% of the
exercisable value plus the premium

3. Calls – 250 per contract;
Puts – 250 per contract not
to exceed the max loss

Same as Margin initial requirement

If the first calculation is used,
the cost of the option
must be added to the requirement
Short Straddles
or Strangles
Not Allowed The short call or put requirement,
whichever is greater, plus
the cost to close the
option on the other side
Margin initial requirement
plus the cost to close both options
*Does not include cash secured Puts
**Subject to higher requirement based on the underlying index

OPTIONS EXPIRATION, EXERCISE AND ASSIGNMENT

Expiration

Options Expiration policy

Expiring long and short option positions may be closed by Eddid as early as 2:00PM EST on the last trading day prior to expiration if you do not have the funds or buying power to buy or short the underlying stock or ETF. Short option may be closed out by us even if it is out-of-the-money as you may still get assigned. We may close your positions without prior notice.

All expiring options that are at least $0.01 in-the-money (ITM) will be eligible for automatic exercises at expiration. However, we may or may not exercise your option automatically. We may need to contact you for further instructions. If we are unable to reach you, we may not be able to proceed with the exercise. In some instances, there may not be enough equity in the account to make full settlement on the terms of the option.

What do I need to do on the expiration day if my expiring options are in-the-money?

For long option positions, automatic exercise will occur for all options in-the-money by $0.01 or more. For short option positions, you have no control over assignment. The only way to avoid assignment is to close the position before the expiration of that contract.

It is very important if you have positions that are in-the-money that you keep a close eye on these positions and understand what your choices are for these options on Expiration Day.

You can:

  • proactively close the option position. In order to avoid a possible margin call for an exercised or assigned position that would exceed your buying power after expiration, you should take market action by 2:00PM EST to close out that position on the expiration day.
  • decide to keep the position open if you have adequate buying power available to take possession of the resultant long or short underlying position.
  • submit a Do Not Exercise (DNE) instruction on any of your in-the-money option.

What if I don’t have enough buying power to cover the resultant stock position of an
expiring in-the-money option?

On the expiration day, we closely monitor all expiring option positions. Usually we will allow our clients to take action in their own accounts by 2:00PM EST on the expiration day. If you do not manage the expiration risk in your account prior to 2:00PM EST, We reserve the right to buy, sell, or otherwise close positions to manage the risk in your account.

We may:

  • close out the position on your behalf
  • enter a Do Not Exercise instruction.
  • initiate closing stock trades in the after-hours market to cover any resultant position.

Can I trade same-day-expiring options?

Opening positions in same-day-expiring options will not be accepted. Any unexecuted good-till-cancel opening position same-day-expiring options orders will be cancelled by our Trade Desk at market open on the expiration day.

Exercise and Assignment

How do I exercise my long option contract?

If your long option contract expires in-the-money by at least $0.01 (based on the closing price of underlying stock or ETF at expiration), Eddid USA will automatically exercise it for you on the expiration day. If you would like to exercise your long option before the expiration day, you can:
send an email to help@eddidusa.com with the following details before 3:15PM EST
OR
submit a ticket via Eddid Trader Mobile App or Eddid Trader Pro - Help Center with the following details before 3:15PM EST


  • Your full name
  • Your Eddid USA account number
  • Number of contracts you would like to exercise
  • The underlying symbol, expiration, and strike price

Customers that exercise a long option contract will pay the full aggregate exercise price provided for by the option contract. The cut-off time for submitting exercise requests is 3:15pm for the days prior to the expiration day. Any requests submitted afterwards are processed on a best-effort basis. The exercise request is processed overnight, and your position and balances will be updated on the next business day.

How do I request an exercise-by-exception?

If you have a long option contract that expires out-of-the-money (OTM) and want to exercise it, you may submit an Exercise By Exception request by 4:15PM EST on the expiration day. You can:
send an email to help@eddidusa.com with the following details
OR
submit a ticket via Eddid Trader Mobile App or Eddid Trader Pro - Help Center with the following details


  • Your full name
  • Your Eddid USA account number
  • Number of contracts you would like to exercise-by-exception
  • The underlying symbol, expiration, and strike price

Customers that exercise a long option contract will pay the full aggregate exercise price provided for by the option contract. The cut-off time for submitting exercise-by-exception requests is 4:15pm on the expiration day. Any requests submitted afterwards are processed on a best-effort basis. The exercise request is processed overnight, and your position and balances will be updated on the next business day.

Assignment of short option contract

When you are assigned, you have the obligation to fulfill the terms of the contract. When you sell to open an option contract (short option), you can typically get assigned at any time prior to expiration, even if the short option is out-of-the-money. The only way to avoid assignment is to close the position before the expiration of the contract.

Eddid USA allocates the assignment of exercise notices among short positions according to an automated procedure. This procedure randomly selects from among all short option positions (including positions established on the date of assignment) those contracts that are subject to exercise.

All American-style short option positions are liable for assignment at any time. The assignment process may result in multiple partial assignment and/or multiple transactions to fulfill a single assignment, and a separate charge will apply to each partial assignment or transaction needed to complete an assignment.

Things to note about options exercise and assignment

Eddid reserves the right to prohibit the exercise of stock options and/or close short options if the exercise/assignment would place the account in margin deficit. Accounts with insufficient funds to exercise may post substantial risk should an adverse price change in the underlying occur upon delivery.
To protect against these scenarios as expiration nears, Eddid reserves the right to either:


  • liquidate options positions prior to expiration.
  • allow the options to lapse, and/or
  • allow options to be exercised and liquidate positions necessary to resolve a post-expiration margin deficit.

While Eddid reserves the right to take the above actions, Eddid is under no obligation to manage such risks. Account holders are solely responsible for managing the exercise/assignment risks associated with the positions in their accounts.

Note that Eddid generally initiates expiration related liquidations 2 hours prior to the close, but reserves the right to begin this process sooner or later should conditions warrant. If Eddid determines the exposure is excessive, we may liquidate positions in the account to resolve the projected margin deficiency. In addition, the account may be restricted from opening new positions to prevent an increase in exposure.

All exercises & assignments are processed overnight. For assignment, there is no definitive way to know if you will be assigned or how many contracts will be assigned for the short option position in your account until the next morning after the counterparty’s exercise request is processed. For spread, the long leg of your spread will not be automatically exercised if you were assigned early. The long option contract may only get exercised automatically when it expires in the money.

There is a $15 charge for exercises and assignments.

What is Dividend Risk?

If your account has any short call options (covered call or call spread position), there is a risk that you’ll get assigned on your short call options the night before the ex-dividend date.

When this happens to the covered call position, the shares you have as collateral will be called away and you will not be entitled to the dividend payment.

When this happens to the call spread position, your account will have a short stock position on the ex-dividend date, and you will actually be responsible for paying that dividend on the payable date.

You can avoid this by closing your option position before the market closes at 4:00PM EST on the day before the ex-dividend date.

On the trading day before the ex-dividend date, we will check if your account has enough buying power to cover the dividend that you may probably have to pay to the other party when the short leg of your spread position may potentially get assigned. If your account does not have enough buying power to cover the dividend payment, we reserve the right to close out your spread position before the market closes at 4:00PM EST on the day before the ex-dividend date in order to help reduce the risk in your account.

FULLY-PAID SECURITIES LENDING PROGRAM

What is Fully-Paid Securities Lending Program?

Eddid Securities USA’s Fully-Paid Securities Lending Program provides you with the opportunity to earn extra income on fully-paid or excess-margin shares of stock held in your account. While your shares are on loan, you will be paid an income that is accrued daily and credited to your account on a monthly basis.

What are “Fully-paid securities” and “Excess-margin securities”?

“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 at our clearing firm, Apex Clearing.

Are there any trading restrictions when my stocks are on loan?

There are no trading restrictions on stocks that are being lent out. You can sell your stocks at any time, just as you would if they weren’t on loan. However, selling your shares while they're being borrowed terminates the loan, and you’ll no longer earn interest off that share.

Are IRA accounts eligible?

Yes. IRA accounts may participate in the program and assets held in IRA accounts will be able to keep earnings tax deferred until a distribution is made to the owner of the account.

How do I enroll in the program?

You may enroll online via the new account application form or by updating the existing account form if you already have an account.

How do I opt out/unenroll from the Fully-Paid Securities Lending Program?

Please submit your request by updating the existing account form or by sending the request to help@eddidusa.com.

Will I pay any fees to participate in the program?

No, there are no fees associated with the program.

Will I receive dividend payments on loaned shares?

While you do not receive dividend payments directly on the stocks that are on loan, you will receive payment in Lieu equal to the value of dividends paid on loaned shares. These payments will be taxed at your marginal tax rate rather than the prevailing dividend tax rate.

Will I receive collateral for stocks on loan?

Yes. Although the loaned securities are not eligible for SIPC protection, a cash collateral equal to the dollar amount of the stocks borrowed will be deposited on your behalf into a reserve account held by our clearing firm, Apex Clearing. The collateral is adjusted daily on a mark-to-market basis. It is calculated by multiplying the previous closing price of the security by 102% (rounding it up to the nearest dollar), then multiply by the number of shares of stock on loan.

Can I see loaned stocks in my account?

Yes. Any stocks on loan will be visible on the Positions tab of Eddid Trader mobile app with the loaned quantity in the Quantity field of that particular stock.

Can I select which stocks to lend?

No. Once you are enrolled in the Fully-Paid Securities Lending Program, Apex Clearing will borrow shares of in-demand stocks from your portfolio as needed. There is no guarantee that your fully paid shares will be loaned out and loans may be terminated at any time by Apex Clearing.

How are lending rates determined?

Each security has its own lending rate based on demand. The securities that typically generate the greatest demand from borrowers in the securities lending market and generate the highest loan fees, are “hard to borrow” securities. It is likely that these shares will be used for short sales, where the borrower sells shares in hopes that the shares will decline in value. Investors who do not want their securities used to facilitate short sales should not participate in the Fully-Paid Securities Lending Program.

Will I retain voting rights on loaned stocks?

No. You will not have the voting rights on loaned stocks.

How are earnings from loan interest taxed?

In general, earnings from loan interest are taxed as ordinary income rates, just like wages. The loan income will be accrued daily and credited within fifteen (15) business days following the last business day of the calendar month.

Potential tax implications with respect to loaned securities:

During the term of any securities loan, you are entitled to receive the amount of all dividends and distributions made on or in respect of your loaned securities. However, you will receive manufactured payments (e.g. receive cash substitute payments) in lieu of receiving dividends or distributions directly from the issuer. Certain unique distributions may not be capable of being exactly replicated as a manufactured payment by our clearing firm.

  • If you are a U.S. taxpayer, cash payments in lieu of dividends will not be afforded the same treatment as qualified dividends for tax purposes and are likely to be taxed at a higher tax rate instead of the preferential qualified dividend rate.
  • If you are not a U.S. taxpayer, our clearing firm may be required to withhold tax on payments in lieu of dividends and loan fees to you, unless an exception applies.
  • You should consult a tax advisor regarding the tax implications of entering into a securities loan with our clearing firm, including but not limited to: treatment of cash-in-lieu payments under U.S. state tax laws and the Internal Revenue Code, as well as any foreign tax regulations, as applicable; under what circumstances a securities loan could be treated as a taxable disposition of the Loaned Securities; and treatment of interest received on cash collateral.

Potential tax implications with respect to loaned securities:

  • There is no guarantee that your fully-paid shares will be loaned out.
  • You can sell your loaned shares at any time. However, selling of stocks on loan will terminate the loan.
  • You will receive cash payments in lieu of dividends.
  • You will lose the voting rights on loaned stocks.
  • Loans may be terminated at any time by our clearing firm.
  • Loaned securities are not eligible for SIPC coverage.
  • Loan incomes are taxed at ordinary 1099 income rates (for US persons). For non-US persons with a valid W-8BEN form, the income will be subject to withholding.