IMPORTANT NOTICES

DAY TRADING RISK DISCLOSURE and MARGIN TRADING DISCLOSURE STATEMENT

DAY TRADING RISK DISCLOSURE

The risk of loss in electronic or manual day trading can be substantial. You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. In considering whether to trade you should be aware of the following points:

1. The national securities markets are extremely efficient and competitive. Successful day trading typically requires skill and discipline as well as experience and knowledge of the capital markets. There is no guarantee that you will be successful in implementing your investment strategy. A substantial number of day traders will not be successful. Moreover, changes in market structure and competitive conditions may also affect your continued success. Only risk capital should be used for trading. Market structure and competitive changes in the markets may cause formerly successful traders to become less successful.
2. Day trading may involve a high volume of trading activity - the number of transactions in an account may exceed 100 per day. Each trade generates a commission and the total daily commissions on such a high volume of trading can be in excess of any earnings .
3. Persons who are new to day trading should strictly limit both the number of trades they do and the size of their trades to reduce the risk of large dollar losses during the learning process.
4. Day trading is designed to produce short-term profits. However, the activity also may result in losses that can exceed more than 100% of your initial capital. You are solely responsible for any losses in your account.
5. Placing contingent orders, such as "stop-loss" or "stop-limit" orders will not necessarily limit your losses to the intended amounts, since market conditions on the NASDAQ or any alternative trading system on which the order is placed may make it impossible to execute such orders. Similarly, using "market orders" can be very risky, since large gaps can occur in price movements of active stocks. You are urged in most instances to use "limit orders."
6. 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 a recent news event or unusual trading activity. The more volatile a stock is, the greater the likelihood that problems may be encountered in executing a transaction .
7. In addition to normal market risks, you may experience losses due to system failures. The firm relies upon sophisticated computer software and hardware to execute transactions, which are subject to failure due to a variety of factors. In addition, NASDAQ and the alternative trading systems have computer systems that may malfunction. Among other events, you may experience losses due to: system crashes during both peak and low volume periods; the loss of orders on both SOES and Select Net; and delayed, conflicting and inaccurate confirmations on orders or cancellations that you initiate.
8. The use of any margin or leverage in an account can work against you as well as for you. Leverage can lead to large losses as well as gains. You may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or maintain a position, and you may incur losses beyond your initial investment. If the market moves against your position, you may be called upon to deposit a substantial amount of additional margin funds, on short notice, in order to maintain your position. If you do not provide the required funds within the time required, your position may be liquidated at a loss, and you will be liable for any resulting deficit in your account.
9. You should consult your broker concerning the nature of the protections available to safeguard funds or property deposited in your account.

All of the points noted above apply to day trading of domestic equity securities. If you are contemplating trading futures or options contracts, you should be aware that these instruments pose additional risk.

The risk of day trading may be substantial. This brief statement cannot, of course, disclose all the risks and other aspects of electronic day trading. Only risk capital should be used for such trading.

MARGIN TRADING DISCLOSURE STATEMENT

We are furnishing this document to you to provide some basic facts about purchasing securities on margin, and to alert you to the risks involved with trading securities in a margin account. Before trading stocks in a margin account, you should carefully review the margin agreement provided us. Consult your broker 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 us. If you choose to borrow funds, you will open a margin account with us. The securities purchased are collateral for the loan to you. If the securities in your account decline in value, so does the value of the collateral supporting your loan, and, as a result, the firm can take action, such as issue a margin call and/or sell securities in your account, in order to maintain the required equity in the account.

It is important that you fully understand the risks involved in trading securities 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 that are purchased on margin may require you to provide additional funds to the firm that has made the loan to avoid the forced sale of those securities or other securities in your account.

The firm can force the sale of securities in your account. If the equity in your account falls below the maintenance margin requirements under the law, or the firm’s higher "house" requirements, the firm can sell the securities in your account to cover the margin deficiency. You also will be responsible for any shortfall in the account after such a sale.

The firm can sell your securities 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 in their accounts to meet the call unless the firm has contacted them first. This is not the case. Most firms will attempt to notify their customers of margin calls, but they are not required to do so. However, even if a firm has contacted a customer and provided a specific date by which the customer can meet a margin call, the firm can still take necessary steps to protect its financial interests, including immediately selling the securities without notice to the customer.

You are not entitled to choose which security in your margin account is liquidated or sold to meet a margin call. Because the securities are collateral for the margin loan, the firm has the right to decide which security to sell in order to protect its interests.

The firm 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 and may result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause the member to liquidate or sell securities in your account.

You are not entitled to an extension of time on a margin call. While an extension of time to meet margin requirements may be available to customers under certain conditions, a customer does not have a right to the extension.