Terms of Business
Last Updated: January 30, 2018 (Effective: March 1, 2018)
By doing business with KGS-Alpha Capital Markets, L.P. (“KGS”), You, the Customer, accept and agree to the terms and conditions set forth herein, available at www.kgsalpha.com/misc/termsofbusiness.php, and as may be amended from time to time by KGS upon 30 days written notice to You, effective prospectively, (the “Terms of Business” or the “Terms”). KGS will maintain a securities Account for You (“Your Account”) either directly or through Pershing LLC, the “Clearing Broker.”
1. Applicable Laws and Regulations. Activity between KGS and You, and these Terms is governed by the laws of the State of New York, as applied to contracts entered into and performed in New York. All transactions in Your Account will be subject to all applicable laws, and the rules and regulations of applicable federal, state and self-regulatory organizations, including but not limited to the United States Securities and Exchange Commission (“SEC”), the Board of Governors of the Federal Reserve System, the New York Stock Exchange, Inc. (“NYSE”), the Financial Industry Regulatory Authority, Inc. (“FINRA”), and the constitution, rules and customs of the exchanges, markets and clearing agencies where transactions are executed, cleared and settled for Your Account. You understand that Your Account is carried by KGS or Clearing Broker and that KGS or Clearing Broker may, in its sole discretion, accept, reject, or continue to carry Your Account.
2. Disclosure Statement. The Firm may (i) act in a principal capacity for transactions with You; (ii) transact in the same security with an affiliate; or (iii) become engaged in an underwriting for the issuer of the same security. The Firm is not undertaking to provide impartial investment advice or to give advice in a fiduciary capacity in connection with any transaction, unless otherwise noted.
3. Customer's Representations in Connection with Purchase and Sale Orders. You represent that, in giving or transmitting an order to sell any security, You own the security and agree to deliver it to KGS or Clearing Broker by the settlement date. If KGS effects a sale of any security at Your direction and is unable to make delivery to the purchaser because of Your failure to supply such security, then KGS is authorized to purchase or borrow any such security necessary to make delivery thereof. In that event, You will be responsible for any direct loss which KGS may sustain thereby and any premiums which it may be required to pay, and for any direct loss which KGS may sustain because of its inability to purchase or borrow the security sold. You also represent that, in giving or transmitting an order to purchase any security via KGS or otherwise, the security is a permitted investment under the laws governing what constitutes a legal investment, if any, to which You are or may be subject from time to time and to any applicable internal investment policy(ies), if any, and You agree to deliver payment for that security to KGS or Clearing Broker by the settlement date. If KGS effects a purchase of any security at Your direction and is unable to make payment to the seller because of Your failure to make such payment, You will indemnify KGS for any direct loss which KGS may sustain thereby.
4. Confirmation of Transactions & Duplicate Confirmations. KGS will send You (or, if applicable, will instruct Clearing Broker to send You) a confirmation of each transaction after the transaction has been effected. In addition, KGS may, at Your request, transmit (or instruct Clearing Broker to transmit) pertinent trade information in a form agreed upon on the day following execution of each DVP/RVP transaction. At Your request, a duplicate information copy of each confirmation will simultaneously be sent to Your agent bank. It is understood, however, that the sending of copies of confirmations to an agent bank constitutes an information service only, and does not relieve You of Your obligations under Paragraph 4 of these Terms.
5. Customer's Standing Instructions to Agent Bank(s). You will issue standing instructions to Your agent bank(s) to receive from or deliver against payment to KGS or Clearing Broker any security in accordance with the procedures set forth in these Terms. Specific instructions for each transaction must be in the possession of the agent bank(s) no later than one (1) business day after trade date. You also agree to instruct Your agent(s) that, except for transactions that are to be settled outside the United States, the facilities of a securities depository will be used for the confirmation, acknowledgement and book-entry settlement of depository-eligible transactions covered by applicable marketplace rules. “Depository-eligible transactions” means transactions in securities that are eligible for deposit and book-entry transfer at a securities depository at the time of settlement of the transaction.
6. Customer's Standing Instructions to Clearing Broker. You will issue standing instructions to KGS (which KGS will pass along to Clearing Broker, if applicable) to receive from or deliver to Your agent bank(s), against payment, any security in accordance with the provisions of this Agreement.
7. Partial Delivery of Securities. You or Your agent agrees to receive securities against payment in an amount equal to an execution confirmed to You, which may represent only part of a larger order executed.
8. Delivery of Securities. KGS may trade with You CMO/REMIC’s or pooled securities (Megas, Giants and Platinums) collateralized and issued by GNMA or a U.S. Government Sponsored Enterprise (“GSE”) (collectively, “Agency Securities”) prior to the structure being finalized. Such trades are for Agency Securities. A security description of “STRU-KGS,” “PRLM-KG” or “TEMP-KGS” and/or a CUSIP identifier with a “BCC” prefix may be used as a placeholder for agency or non-agency securities until the final name and CUSIP for the Security is available. If the STRU, PRLM or TEMP security has been collateralized by agency securities, KGS will deliver the Agency Security with the final name and CUSIP at settlement.
9. Finality and Transmittal of Reports, Statements and Notices. Confirmations of orders and statements of Your Account will be conclusive if You do not object in writing within five (5) and ten (10) business days, respectively, after transmittal to You. Notices or other communications, including confirmations and account statements, delivered, mailed or otherwise transmitted by KGS to You at the address, email, or telephone number specified by You in writing to KGSAccounts@KGSAlpha.com upon opening of Your Account are deemed to have been delivered to You. You understand that KGS may send any communication pertaining to Your Account (a) via email to an address provided by You and/or (b) to such other electronic address or email that you have used to transact business relating to Your Account with KGS. You may modify or update Your delivery information by providing written notice to KGS of a different address, email and/or telephone phone number at KGSAccounts@KGSAlpha.com.
10. Resolution of Discrepancies. You agree to instruct Your agent bank(s) to receive or deliver the securities described on the confirmation, unless a discrepancy in the payment exceeds two percent (2%) of the money required for that delivery. KGS and You agree to resolve any such discrepancy directly, within a reasonable time after settlement.
11. Deposits on Transactions. If at any time either KGS or Clearing Broker considers it necessary for its protection, KGS or Clearing Broker may, in its sole discretion, require You to deposit cash or collateral in Your Account to assure due performance by You of Your open contractual commitments.
12. Covered Agency Transactions. Covered Agency Transactions are transactions in certain securities with forward contractual settlement dates that can be greater than one to three business days from the trade date, depending on the security and are defined in FINRA Rule 4210 (“Rule 4210”). Securities coming within the meaning of a Covered Agency Transactions include such thing as (i) certain mortgage-backed securities issued in conformity with a program of a governmental agency or government-sponsored enterprise; (ii) certain asset-backed securities issued in conformity with a program of the Small Business Administration; and (iii) certain collateralized mortgage obligations issued in conformity with a program of a governmental agency or government-sponsored enterprise.
By entering into a Covered Agency Transaction that settles after June 25, 2018, You agree that, if you do not have in place a Master Securities Forward Transaction Agreement with KGS that has been amended to conform to FINRA Rule 4210, the terms of the Covered Agency Transaction Margin Addendum will apply to any such Transaction.
13. Buy-Ins, Cancellations, and Liquidations of Orders/Transactions. KGS is authorized in the event that You become insolvent or are the subject of a proceeding commenced under the U.S. Bankruptcy Code or state bankruptcy law, or whenever KGS, in its sole discretion, deems it necessary for its protection, with at least one (1) day prior written notice to You, to cancel or liquidate all outstanding orders/transactions and to offset any indebtedness in Your Account against any other account You may have at KGS (either individually or jointly with others). You acknowledge that in the event any good delivery to the designated bank is refused, KGS may be compelled to cancel or liquidate the transactions pursuant to provisions of Regulation T of the Board of Governors of the Federal Reserve System. You understand and agree that You will be liable to KGS, and You agree to promptly pay KGS for any direct loss and costs resulting from such buy-ins, cancellations, or liquidations of orders/transactions.
14. Restrictions on Trading. You understand that KGS may, in its sole discretion, prohibit or restrict the trading of securities or substitution of securities in any of Your Accounts.
15. Customer Complaints. Any complaints relating to Your account may be directed to the Firm’s Compliance Department at 521 Fifth Avenue, 3rd Floor, New York, NY 10175. Please report any inaccuracy or discrepancy in Your account to the Firm’s Operations Department at the same address. Either department may also be reached by telephone at (646) 588-2100.
16. 144A Eligibility Disclosure. For any securities traded in reliance on SEC Rule 144A under the Securities Act of 1933, You agree that You are a Qualified Institutional Buyer and have access to the issuer level information contemplated by the rule. If requested by the Firm, You agree to provide the Firm with a certification that you are a Qualified Institutional Buyer.
17. Interest in Your Account. You represent that no one except persons designated by You in writing has an interest in Your Account unless such interest is revealed in the title of such account, and in any such case such person has the interest indicated in such title.
18. Authority; Reliance Upon Customer's Instructions. By doing business with KGS, You represent that (a) You are duly organized and validly existing under the laws of the jurisdiction in which You were formed or incorporated; (b) You have full power and authority to enter into and perform Your obligations hereunder; and (c) You have the power under Your organizing documents, to enter into transactions, both purchases and sales, as contemplated by these Terms. You represent and agree that all orders and instructions issued by You pursuant to these Terms, including instructions transmitted electronically to KGS, have been duly authorized by You. You agree that KGS may rely upon such instructions as having been duly authorized by You, without any duty or obligation to investigate into the accuracy or correctness of the instructions, or the authenticity or extent of the authority thereby exercised, and that KGS will incur no liability in acting upon such instructions given to it concerning Your Account or transactions.
19. Discretionary Authority Representation. If You are trading on behalf of a sub-account. You represent that (a) You have written authorization to engage in actions on behalf of such sub-account, including, but not limited to, the discretionary authority to evaluate and enter into transactions with KGS to purchase, sell, lend, or borrow securities or other financial instruments; (b) You received authorization from a person properly authorized to provide such authorization; and (c) You are familiar with the financial and investment objectives of such sub-account, and are responsible for entering into transactions that are consistent with the financial and market objections of each such sub-account. You further agree that KGS may rely upon such representation, without any duty or obligation to investigate into the accuracy or correctness of the representation, and that KGS will incur no liability in acting upon such representation concerning Your discretionary authority. You agree to notify KGS in the event that any representation provided herein becomes inaccurate.
20. For International Customers: If You are not a U.S. citizen or resident for U.S. tax purposes, or an entity organized or taxable in the U.S., and do not engage in trade or business in the U.S.: You agree to certify, as applicable, that You are not a U.S. citizen or resident for U.S. tax purposes (a holder of a U.S. green card or an individual satisfying the “substantial presence” test) or an entity organized or taxable in the U.S., and do not engage in trade or business in the U.S. You further agree to certify that IRS Form W-8BEN, W-8EXP, or W-8IMY, as applicable, has been duly completed, executed by You and the information contained therein is complete and accurate; You agree to notify KGS within 30 days in the event that any information provided therein becomes inaccurate and to update or replace such form and/or information in accordance with its terms or subsequent amendments.
21. Non-U.S. Taxes. It is Your responsibility to determine the amounts of any withholding taxes owed to any non-U.S. authority, if any, and to pay such taxes to the applicable authorities. Any and all payments by or on account of any of Your obligations, including commissions and fees paid to KGS are to be made free and clear of and without deduction for any Taxes; provided that if You are required to deduct any Taxes from such payments then (i) the sum payable will be increased as necessary so that after making all required deductions, KGS receives an amount equal to the sum it would have received had no such deductions been made, and (ii) You will make such deductions and pay the full amount deducted to the relevant governmental authority in accordance with applicable law.
You will indemnify KGS and/or its affiliates within 10 days after written demand therefor, for the full amount of any Taxes paid by KGS and/or its affiliates on or with respect to any payment by or on account of any of Your obligations under this Paragraph 15 and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or
legally imposed or asserted by the relevant governmental authority. KGS and/or its affiliates may collect such indemnified amounts in accordance with the indemnification rights afforded herein.
If KGS is entitled to an exemption from or reduction of withholding tax under the law of the non-U.S. jurisdiction in which You reside, or any treaty to which such jurisdiction is a party, with respect to payments to KGS and/or its affiliates, KGS will use commercially reasonable efforts to deliver to You, at the time or times prescribed by applicable law, such properly completed and executed documentation as is reasonably requested by You (but in no event more than required by applicable law) as will permit such payments to be made without withholding or at a reduced rate.
As used herein, “Taxes” means all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any non-U.S. governmental authority; and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made by You or on Your behalf or from the execution, delivery or enforcement of, or otherwise with respect to Your Account, but excludes, with respect to KGS or any other recipient of any payment to be made by or on account of any of Your obligations related to Your Account, income or franchise taxes imposed on (or measured by) KGS’s or recipients’ net income by the United States of America.
22. Foreign Currency Exchange. You are responsible for determining all applicable foreign currency exchange and transfer laws and rules and to comply therewith. You will indemnify KGS, its affiliates, and Clearing Broker for any and all direct losses, if the net amount of any payment received by KGS, its affiliates, or Clearing Broker, including without limitation amounts received pursuant to an arbitration award, court judgment, or pursuant to any indemnification under these Terms, after such amount has been converted into U.S. Dollars, is less than the amount otherwise then due and owing by You or if the recipient is unable to immediately convert and transfer any such amount as aforesaid, then You agree as a separate obligation to KGS, its affiliates, and/or Clearing Broker to indemnify KGS, its affiliates, and/or Clearing Broker against the direct loss incurred by reason of such shortfall or delay, to the extent but only to the extent such shortfall or delay is due to (i) the application of any exchange controls or similar laws and regulations or (ii) the fact that such amount was received in a currency other than U.S. Dollars; and if the amount of U.S. Dollars thus received by KGS, its affiliates, and/or Clearing Broker, after such conversion, exceeds the amount otherwise then due and owing, KGS will remit any further excess to You.
23. Anti-Money Laundering. To help the U.S. government fight the funding of terrorism and money laundering activities, U.S. federal law requires all U.S. financial institutions to obtain, verify, and record information that identifies each person or entity that opens an account. In the event that KGS is unable to verify Your identity, KGS reserves the right to take additional steps up to and including closing Your Account. More information regarding this policy is available at kgsalpha.com/about/notices.php.
24. Non-U.S. Resident Representations. If You are not a U.S. citizen or resident for U.S. tax purposes, or an entity organized or taxable in the U.S., and do not engage in trade or business in the U.S.:
You certify that Your understanding of the English language is of a sufficient level to be able to understand these Terms; that You have reviewed these Terms; and that You understand all the provisions included.
You understand that KGS is not licensed or authorized to provide financial services in the jurisdiction of Your residence and that by opening Your Account, You will not have any of the applicable protections conferred by legislation and regulations of Your resident jurisdiction with respect to this Account or Your relationship with KGS, including, without limitation its privacy and secrecy laws, and will not be afforded the benefits, if any, of any dispute resolution or compensation schemes that may be provided by such legislation and regulation. You hereby waive any of Your rights under any privacy and secrecy laws or other similar regulations that prohibit or restrict KGS or its affiliates from disclosing its information or information related to the Account to any governmental body, agency, official or authority that KGS reasonably believes has jurisdiction over You or Your Account or which disclosure is otherwise required by applicable law.
You represent that You have the legal capacity, and are authorized to open Your Account, including without limitation any required authorizations from applicable governmental authorities. You will indemnify KGS, its affiliates, and Clearing Broker for any direct losses, fees and costs, including reasonable attorneys’ fees related to any breach of the representation in this paragraph.
Non-U.K. Financial Services Registered Firms Representations. If You are not a U.K. Financial Services Registered Firm:
You confirm that Your initial interest to open the Account was not the result of any solicitation efforts You received from a representative of KGS while You and such representative were both present in the jurisdiction where You reside.
25. Termination. The relationship between You and KGS may be terminated at will upon written notice by either KGS or You to the other and termination will become effective upon receipt of that notice. Any termination will not, however, affect liabilities or obligations of the parties incurred, or arising from transactions initiated under these Terms prior to the effectiveness of such termination.
26. Recording Conversations. For mutual protection, KGS may record any of Your conversations with KGS without further notice to You.
A. No one associated with the Firm is authorized to render tax or legal advice, and You should not rely upon representations made relating to tax or legal matters, if given.
B. You will comply with all applicable federal, state, and local laws, regulations, and ordinances related to the subject matter of these Terms and the transactions involved and contemplated herein.
C. Any notice or pleading required or permitted to be given in connection with these Terms (other than any confirmation or account statement and including any notice of the initiation of a dispute between us) or arising out of the Firm’s relationship with You will be deemed to be delivered if it is personally delivered or sent by certified or registered mail or overnight courier, postage prepaid with return receipt requested, and addressed to KGS, at the address listed below (or at such other address as KGS may specify in writing) or to You at the address specified on Your New Account Form (or at such other address as You may specify in writing to KGS).
KGS-Alpha Capital Markets, L.P.
Attn: Legal Department
521 Fifth Avenue, 3rd Floor
New York, NY 10175
D. Any controversy or disagreement that may arise under these Terms or any agreement between You and KGS, or concerning the interpretation, breach, or performance thereof, or any transaction between You and KGS, will be resolved in accordance with the laws of the State of New York and in the State of New York.
E. If You wish to seek modification to any of the Terms set forth herein, You will provide notice thereof by contacting the General Counsel of KGS as provided above.
F. If any of these Terms are determined to be invalid, illegal or unenforceable under any law or regulation, it will not affect the validity of the remaining provisions of these Terms, which remain in full force and effect.
G. Please be advised that KGS deals in good faith with You, anyone who is associated with You, and anyone who holds him or herself out on phone, electronic, or other communications as having the authority to act on Your behalf. It is Your responsibility to develop an appropriate supervisory system of controls so that persons holding themselves out as having the authority to act on Your behalf are in fact authorized to do so.
H. By doing business with KGS, You agree to and accept these Terms. These Terms supersede any prior or other outstanding terms or agreements between KGS and You, and may not be modified by any conflicting or alternate terms provided by You, absent the signed consent of KGS thereto.