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Rules for Three-Level Fully Disclosed Broker Accounts

Fully Disclosed Broker accounts with Advisor, Proprietary Trading Group Separate Trading Limit (STL) and Multiple Hedge Fund accounts (three-level accounts) are subject to the following rules.

Function Advisor Account Proprietary Trading Group STL Account Multiple Hedge Fund Account
Trading

The Fully Disclosed Broker can trade for advisor client accounts.

The Fully Disclosed Broker cannot allocate trades for advisor client accounts.

The advisor can trade for and allocate trades to Advisor client accounts.

The Fully Disclosed Broker can apply trading restrictions to the Advisor Master account but not to the Advisor clients accounts.

The products that the Fully Disclosed Broker is approved to trade determine the products that the advisor can trade. In other words, the advisor cannot trade products that the broker has not been approved to trade.

The advisor cannot link to money managers in a three-level broker account structure.

The Fully Disclosed Broker can trade for the STL Master account but not for any of the STL sub accounts.

The Fully Disclosed Broker can apply trading restrictions to the STL Master account but not to the STL sub accounts.

The products that the Fully Disclosed Broker is approved to trade determine the products that the STL Master can trade. In other words, the STL Master cannot trade products that the broker has not been approved to trade.

The Fully Disclosed Broker can trade for Fund accounts.

The Fully Disclosed Broker cannot allocate trades to Fund accounts.

The Fund Investment Manager can trade for multiple Funds in an Allocation Account and assign trades before the end of the day to specific cleared Fund Accounts.

The Fund Investment Manager can pre-trade allocate for fund accounts.

The Fully Disclosed Broker can apply trading restrictions to the Fund Investment Manager account but not to Fund or SMA accounts.

The products that the Fully Disclosed Broker is approved to trade determine the products that the Investment Manager can trade. In other words, the Investment Manager cannot trade products that the broker has not been approved to trade.

Margin Each advisor client account is individually margined. The Broker Master account and client accounts are margined separately. Each Fund account is individually margined.
Markups and Fees

The broker can enter a markup schedule for the advisor just as they can for their fully disclosed broker clients.

The advisor can enter fee and markup schedules for their clients.

The advisor client will be charged both markup schedules. If there are two markups for Non-US Advisor clients, the markups will be combined into one markup. If there is a markup and an advisor client fee configured as a Percent of Net Liquidation Value, the fees will appear separately.

Broker markups will be placed in the Broker Master account and swept to the broker's trading account at the end of the day.

Advisor client fees will be placed in the Advisor Master account.

The broker will enter a markup schedule for the STL Master account just as they can for organization client accounts. Markups for STL sub accounts are never placed in the STL Master account.

Broker fees will be placed in the Broker Master account and swept to the broker's trading account at the end of each day.

The broker can enter a markup schedule for the Fund Investment Manager just as they can for their fully disclosed broker clients.
Funding

Brokers can perform funding functions on behalf of an advisor but not the advisor's clients.

Advisor clients may complete a deposit notification in Account Management if they have a username and password. If they don't, the advisor can also complete a deposit notification for his clients.

Brokers cannot perform any funding functions on behalf of an STL account.

All existing standalone STL funding functions will be available to the STL under the broker.

Deposits and withdrawals must be made from the STL Master account and transferred to/from the sub accounts.

Brokers can perform funding functions on behalf of a Multiple Hedge Fund Investment Manager (the Master account) but not the individual Fund accounts.

The Fund Investment Manager can deposit funds for individual fund accounts, and individual funds can deposit funds into their own accounts.

Reporting

An advisor in a Fully Disclosed Broker account has access to all of the reports that are available to any Advisor Master.

The broker can view a consolidated statement for each Advisor group.

All tax reporting for the Advisor and his clients will be performed by us.

The STL account under a broker has access to the same reports available as a standalone STL account.

The broker can see STL accounts on an individual and/or consolidated basis.

All tax reporting for the STL account will be performed by us.

The Fund Investment Manager has access to all of the reports that are available to any Multiple Fund Investment Manager.
White Branding White branding is supported for an advisor under a Fully Disclosed Broker account. White branding is supported for an STL account under a Fully Disclosed Broker account. White branding is supported for a Multiple Hedge Fund account under a Fully Disclosed Broker account.
Manage Clients > Accounts > View Menu Fully Disclosed Brokers can view Summary and client account details for the Advisor Master account and its client accounts. Fully Disclosed Brokers can view Summary and client account details for the STL Master account and its sub accounts. Fully Disclosed Brokers can view Summary and client account details for the Fund Investment Manager account and its fund accounts.