Introduction

This document contains important disclosures (“Disclosures”) related to the use of the IMC single dealer platform (the “IMC Trading System”). Please read these Disclosures in their entirety and contact IMC personnel if you have any questions.

IMC Chicago, LLC d/b/a IMC Financial Markets (“IMC”) operates the IMC Trading System, to which IMC approved FINRA Member broker dealers (each a “User”) may connect. IMC, including a number of wholly owned affiliates located around the world, is one of the largest market makers in exchange traded instruments on more than 100 worldwide trading venues. IMC provides liquidity in over 200,000 securities and is a significant liquidity provider in the U.S. on NYSE, NASDAQ, BATS, CBOE, CME Group, and ICE exchanges, among others.  IMC and its affiliates have over 25 years of experience in market making and employ over 450 professionals in offices located in Amsterdam, Chicago, New York, Hong Kong, and Sydney.   

Overview

IMC has designed the IMC Trading System as a venue on which it provides its beneficial market making services to the equities marketplace. As a prerequisite to accessing the IMC Trading System, User must execute an access agreement (“Agreement”).  These Disclosures, as amended from time to time, are incorporated into User’s respective Agreement and made part thereof by reference. Capitalized terms that are used but not defined in these Disclosures, shall have the meaning ascribed to them in User’s Agreement.

Order Types

The IMC Trading System only accepts Immediate-or-Cancel (“IOC”) orders in exchange listed securities on an unsolicited basis during regular market hours (i.e. 9:30:00 ET – 16:00:00 ET). IMC is the executing broker for all trades that occur on the IMC Trading System.

Market Data

The IMC Trading System executes trades based on the national best bid or offer (“NBBO”). IMC determines the NBBO based on quotation data primarily received directly from various protected market centers, but also from quotations distributed by the Securities Information Processor (“SIP”). IMC reserves the right, at any time and in its sole discretion, to determine the NBBO based on any combination of quotation data received from the SIP and/or directly from protected market centers. 

Best Execution Obligations: Rule 5310         

IMC does not in any way guarantee that User's Orders submitted to the IMC Trading System will receive the best price offered by any other available trading venues or other source for execution. Nothing in these Disclosures, the Agreement, or otherwise should be construed to mean that IMC is a guarantor of any of User’s regulatory obligations associated with the Orders or the relevant fiduciary and non-fiduciary obligations that a User may owe to its customers (including, but not limited to, User’s obligations to provide best execution for their customers’ orders), that IMC has agreed, either expressly or implicitly, to take on those obligations, that IMC has agreed to indemnify User with respect to any alleged or actual breach of such obligations, or that IMC is a fiduciary of User or its customers.

No Guarantee Regarding Price Improvement; Execution Quality Metrics

IMC does not in any way guarantee that particular execution quality results, such as execution percentage, the speed of order handling and/or the availability of price improvement as compared to the national best bid or offer (NBBO), will be achieved by the use of the IMC Trading System. Further, User acknowledges that IMC customizes execution quality on a User by User basis (“User Settings”) based on a unique set of factors, including without limitation, (i) certain execution factors that are most desirable to its users respectively, and (ii) IMC’s preference to avoid execution of User Orders that are predicted to be undesirable for IMC, especially those indicative of aggressive or opportunistic trading strategies.

Use of User Information        

User Settings are determined in large part on information gathered from historical analyses performed by IMC personnel on each User’s order flow and may be adjusted from time to time, including intraday.  User acknowledges that information with respect to User’s executions, excluding unexecuted order quantity or rejected or canceled orders, and User Settings will be made available to personnel on the IMC market making desk during the trading day (“Execution Data”).  Execution Data will only be made available to the IMC market making desk after IMC sends notice of an executed trade to the applicable Trade Reporting Facility (TRF).  

Execution Data will be used primarily for the purposes of analyzing trade quality and to protect IMC against aggressive or opportunistic trading, which may lead to intraday adjustments in certain User Settings. Other than trading personnel responsible for the performance of the IMC Trading System on a day-to-day basis, the IMC market making desk and other IMC trading personnel will not have access to User’s cancelled, rejected, and/or unexecuted order quantity information until after the close of the applicable trading day. 

The IMC Trading System and IMC market making desk share many common support functions. User further acknowledges that all User Data and other information obtained by the IMC Trading System, including executed, cancelled, rejected, and partial fill information, is available on a real-time basis to a number of IMC developers, technical, and trade support personnel (“Support Personnel”), and certain trading personnel responsible for the day-to-day performance of the IMC Trading System for the purposes of determining User Settings, monitoring the IMC Trading System’s health, and providing user support. Certain senior business supervisors, risk managers and personnel involved in compliance, legal and operations functions also have access to User Data. The Support Personnel do not execute or generate proprietary trading orders for IMC but directly support the traders on the IMC market making desk, are physically located near these traders, or report to managers who are also responsible for the traders. The traders on the IMC market making desk, while accessing User Data (other than Execution Data), will not simultaneously work on any other trading strategies for IMC. All personnel with access to User Data will be subject to IMC information barrier policies that are designed to prevent the misuse of material non-public information in accordance with Applicable Law.

Proprietary Trading by IMC and FINRA Rule 5320

All Orders that IMC executes are executed in a principal capacity. As a market maker, the IMC market making desks will most likely engage in trading for IMC's proprietary accounts in the same securities available for trading to User on the IMC Trading System. Since the IMC Trading System only accepts IOC orders, User orders will either receive an execution or be canceled or rejected; User orders will not be held pending in the IMC Trading System.  Therefore, User orders will not be subject to the order protection requirements of FINRA Rule 5320.  The IMC market making desk executions may be at terms better or worse than the prices received by User on the IMC Trading System provided that IMC shall have procedures reasonably designed to prevent the misuse of material non-public information in accordance with Applicable Law.

No Advice or Reliance

USER WILL MAKE ITS OWN INDEPENDENT DECISION TO ACCESS OR USE THE IMC TRADING SYSTEM OR TO ROUTE ANY ORDERS TO THE IMC TRADING SYSTEM AND USER ACKNOWLEDGES AND AGREES NOT TO USE IMC OR THE IMC TRADING SYSTEM AS THE PRIMARY BASIS FOR ANY OF USER'S OR USER’S CUSTOMER’S INVESTMENT DECISIONS CONCERNING USER’S ACCOUNTS, ITS CUSTOMER’S ACCOUNTS OR THEIR MANAGED OR FIDUCIARY ACCOUNTS.  USER AND ITS CUSTOMERS ARE SOLELY RESPONSIBLE FOR ANY INVESTMENT OR TRADING DECISIONS THEY MAKE WITH RESPECT TO ORDERS ROUTED TO THE IMC TRADING SYSTEM AND IMC IS NOT RESPONSIBLE FOR DETERMINING WHETHER ANY ORDER USER MAY ENTER INTO ON BEHALF OF ITSELF OR USER’S CUSTOMERS IS SUITABLE, APPROPRIATE OR ADVISABLE.  IMC IS NOT AND WILL NOT BE, BY VIRTUE OF PROVIDING ACCESS TO THE IMC TRADING SYSTEM, AN ADVISOR OR FIDUCIARY FOR USER, ANY OF USER’S CUSTOMERS OR USER’S OR ANY USER’S CUSTOMER’S MANAGED OR FIDUCIARY ACCOUNTS.     

Information Requests

User shall comply with any reasonable requests by IMC for information, documents and agreements related to User's use of the IMC Trading System. User understands that IMC may report such information to such regulatory authorities as IMC deems necessary, notwithstanding any prior notification requirements that may otherwise be included in User’s Agreement.

FINRA’s Know Your Customer Rule and Anti-Money Laundering

User shall be solely responsible for compliance with FINRA’s Know Your Customer rule (FINRA Rule 2090) regarding any of User's customers, at all times. User acknowledges that IMC has no relationship with User's underlying customers, if any. User has and will maintain Anti-Money Laundering policies and procedures in compliance with applicable law including the USA Patriot Act and shall be responsible for verifying User's customers' identities or, if User or User's customers are giving up trades to a clearing firm, User has assured itself that such clearing firm has done the appropriate customer identification and verification pursuant to the USA Patriot Act.

Manipulative and Disruptive Trading Practices       

User is solely responsible for compliance with all Applicable Law with respect to manipulative, fraudulent, and disruptive trading and the maintenance of fair and orderly markets. User will not submit Orders to the IMC Trading System in a manner that would constitute spoofing or layering, or that is otherwise intended to disrupt, manipulate, destabilize, introduce latency, or exacerbate price volatility, in the market for any security.

Trade Reporting        

User shall be solely responsible for its compliance with Applicable Law with respect to trade reporting, including the rules of FINRA, applicable to User or its customers or clients. 

Securities Investor Protection Corporation

User can obtain information about SIPC, including the SIPC brochure, by visiting www.sipc.org or calling (202) 371-8300.

Business Continuity Plan

FINRA Rule 4370 requires that member firms create and maintain a written business continuity plan identifying procedures relating to an emergency or significant business disruption.  Such procedures must address the member's existing relationships with other broker-dealers and counter-parties.  IMC has developed a Business Continuity Plan (“BCP”) designed to provide reasonable assurance of business continuity in the event there are disruptions of normal operations at the firm’s critical facilities.

IMC is providing summary information regarding how the BCP addresses the possibility of a future significant business disruption and how IMC plans to respond to events of varying scope. Specifically, the IMC BCP includes the use of a back-up office facility, global offices, remote access, and leveraging resources and infrastructure as well as using critical data and applications which are replicated between geographically dispersed data centers.  Additionally, the IMC BCP has been implemented at a departmental level, enabling the firm to develop applicable recovery procedures for each critical process.

Various aspects of the BCP are tested no less frequently than annually. Further, the BCP is reviewed annually and updated as necessary.

While no contingency plan can eliminate all risk of interruption in business, we continually assess and update our plans to mitigate all reasonable risk. The above summary provides an overview of the IMC BCP. If you have additional questions, please contact your IMC representative.