E*TRADE from Morgan Stanley Futures Agreement for Self-Directed Accounts
Risk Disclosure
TRADING FUTURES AND FUTURES OPTIONS CONTRACTS IS HIGHLY SPECULATIVE. CERTAIN FUTURES AND FUTURES OPTIONS CONTRACTS MAY TRADE OR SETTLE BELOW ZERO OR AT NEGATIVE PRICING, AND TRADING IN FUTURES AND FUTURES OPTIONS CONTRACTS IS APPROPRIATE ONLY FOR THOSE CLIENTS WHO UNDERSTAND AND ARE WILLING TO ASSUME THE ECONOMIC, LEGAL, AND OTHER RISKS INVOLVED AND ARE FINANCIALLY ABLE TO ASSUME LOSSES SIGNIFICANTLY EXCEEDING THE VALUE OF ANY MARGINS OR DEPOSITS. THE LOW MARGIN DEPOSITS ASSOCIATED WITH VOLATILE PRICE MOVEMENTS IN THE MARKET FOR FUTURES AND FUTURES OPTIONS CONTRACTS CAN RESULT IN RAPID AND SUBSTANTIAL LOSSES. CLIENT MAY SUSTAIN A TOTAL LOSS OF FUNDS THAT CLIENT DEPOSITS WITH E*TRADE FUTURES OR AN AFFILIATE TO ESTABLISH OR MAINTAIN A POSITION IN THE FUTURES AND FUTURES OPTIONS CONTRACTS, AND CLIENT MAY INCUR LOSSES BEYOND THESE AMOUNTS. MOREOVER, IF THE MARKET MOVES AGAINST CLIENT’S POSITION, CLIENT MAY BE CALLED UPON BY E*TRADE FUTURES (OR MSSB) TO DEPOSIT A SUBSTANTIAL AMOUNT OF ADDITIONAL MARGIN FUNDS ON SHORT NOTICE IN ORDER TO MAINTAIN CLIENT’S POSITION. IF CLIENT DOES NOT PROVIDE THE REQUIRED FUNDS WITHIN THE TIME REQUIRED BY E*TRADE FUTURES (OR MSSB), CLIENT’S POSITION MAY BE LIQUIDATED AT A LOSS, AND CLIENT WILL BE LIABLE FOR ANY RESULTING DEFICIT IN CLIENT’S ACCOUNT. NO ONE (INCLUDING ANY FUTURES COMMISSION MERCHANT, INTRODUCING BROKER, ASSOCIATED PERSON, AUTHORIZED AGENT, FUND MANAGER, OR COMMODITY POOL OPERATOR) CAN GUARANTEE PROFITS OR THE ABSENCE OF ANY LOSSES.
Disclosure Concerning the Different Regulatory Treatment of Your Securities and Futures Accounts
YOUR ACCOUNT UNDER THIS FUTURES AGREEMENT AND YOUR SELF-DIRECTED ACCOUNT UNDER THE SELF-DIRECTED ACCOUNT AGREEMENT ARE SUBJECT TO DIFFERENT REGULATORY TREATMENT. SPECIFICALLY, (I) YOUR ACCOUNT UNDER THIS FUTURES AGREEMENT IS HELD BY E*TRADE FUTURES, WHICH IS A FUTURES COMMISSION MERCHANT REGISTERED AS SUCH WITH THE CFTC, AND CONTRACTS, COLLATERAL AND OTHER PROPERTY CARRIED IN AND FOR THE ACCOUNT UNDER THIS FUTURES AGREEMENT ARE SUBJECT TO REGULATION AND AFFORDED PROTECTION UNDER THE COMMODITY EXCHANGE ACT AND THE REGULATIONS OF THE CFTC; AND (II) IN THE UNLIKELY EVENT OF E*TRADE FUTURES’ BANKRUPTCY OR INSOLVENCY, YOUR RIGHTS WITH RESPECT TO CONTRACTS, COLLATERAL AND OTHER PROPERTY HELD BY E*TRADE FUTURES FOR YOUR ACCOUNT WOULD BE DETERMINED PURSUANT TO THE COMMODITY BROKER LIQUIDATION PROVISIONS OF THE U.S. BANKRUTCY CODE AND PART 190 OF THE CFTC REGULATIONS. BY CONTRAST, (I) YOUR SELF-DIRECTED ACCOUNT UNDER THE SELF-DIRECTED ACCOUNT AGREEMENT IS HELD BY MSSB, WHICH IS A BROKER-DEALER REGISTERED AS SUCH WITH THE SEC, AND SECURITIES, COLLATERAL AND OTHER PROPERTY CARRIED IN THE SELF-DIRECTED ACCOUNT UNDER YOUR SELF-DIRECTED ACCOUNT AGREEMENT ARE SUBJECT TO AND AFFORDED PROTECTION UNDER SEC CUSTOMER PROTECTION RULES; AND (II) IN THE UNLIKELY EVENT OF MSSB’S BANKRUPTCY OR INSOLVENCY YOUR RIGHTS WITH RESPECT TO SECURITIES, COLLATERAL AND PROPERTY HELD BY MSSB FOR YOUR SELF-DIRECTED ACCOUNT WOULD BE DETERMINED UNDER THE SECURITIES INVESTOR PROTECTION ACT OF 1970.
1. Definitions – The terms set forth below shall have the following meanings in this Futures Agreement.
“Account” has the meaning set forth in the Preamble. The “Account” shall also be construed, to the extent consistent with the terms of this Futures Agreement, as a “Self-Directed Account,” as that term is defined under the Self-Directed Account Agreement.
“Applicable Law” means all applicable laws, rules, regulations, including without limitation US federal, state, and local laws, rules and regulations, as well as the interpretive guidance issued by governmental regulators, agencies and self-regulatory organizations with jurisdiction of such laws, rules and regulations; the applicable laws of any foreign governmental authority; the constitution, by-laws, rules, regulations, procedures, customs, and uses of any exchange, designated contract market, foreign board of trade, clearinghouse, or derivatives clearing organization (including interpretive guidance issued by any such entity) where any transaction for the Account is executed or cleared; and the applicable rules (and interpretive guidance) of or issued by any self-regulatory organization of which E*TRADE Futures is a member or which has jurisdiction over a transaction in Contracts hereunder.
“Authorized Agent” has the meaning set forth in the Self-Directed Account Agreement.
“Automated System” has the meaning set forth in Section 11 of this Futures Agreement.
“Business Day” means Monday through Friday, excluding futures exchange holidays and closings. Although E*TRADE Futures may conduct business on bank holidays, bank holidays are not considered Business Days for purposes relating to banking services, which shall be further defined as certain Electronic Funds Transfer, ATM, debit card, and related banking services accessible through your Account or Self-Directed Account and provided by a bank or other depository institution. Unless specifically noted as Business Days, the term “days” refers to calendar days.
“CFTC” means the Commodity Futures Trading Commission and “CFTC Regulation” means a rule or regulation promulgated by the CFTC under the Commodity Exchange Act, including any amendment thereto promulgated subsequent to the date hereof.
“Client,” “you,” and “your” have the meaning set forth in the Preamble for “Client.”
“CEA” means the Commodity Exchange Act, as amended.
“Collateral” means all right, title, and interest in and to (a) each deposit, custody, securities, commodity, or other account maintained by you with E*TRADE Futures, MSSB, or any affiliate thereof, including without limitation your Account and your Self-Directed Account; (b) any cash, securities, commodity contracts, financial assets, or other property at any time carried in or credited to any such Account; (c) all of your right, title, and interest in, to, or under any contract with, or obligation of, E*TRADE Futures, MSSB, or any affiliate thereof; (d) any of your property in which E*TRADE Futures, MSSB, or any affiliate thereof is granted a security interest (however held); and (e) all profits, dividends, interest, distributions, or other proceeds of any of the foregoing, in each case whether now existing or owned by you or hereafter arising or acquired.
“Contract” and “Contracts” have the meaning set forth in the Preamble.
“E*TRADE Futures” has the meaning set forth in the Preamble.
“Electronic Funds Transfer” has the meaning set forth in the Self-Directed Account Agreement.
“Event of Default” means any Event of Default under Section 16 of this Futures Agreement as well as any Event of Default as defined under the Self-Directed Account Agreement.
“Force Majeure Event” has the meaning set forth in the Self-Directed Account Agreement.
“Futures Account Application” means the application that you submit to open your Account with E*TRADE Futures, including all information provided by you to E*TRADE Futures in connection with the opening or maintenance of your Account. It also includes the information provided by you to MSSB in connection with the opening or maintenance of your Self-Directed Account, as well as any amendments or subsequent applications submitted by you to E*TRADE Futures or to MSSB, or any affiliate of either E*TRADE Futures or MSSB, for additional Service(s) or account features and as part of which you consent to the terms and conditions of this Futures Agreement (into which the Futures Account Application is incorporated by reference) and which includes an acknowledgment and agreement to the applicable disclosures presented during the account opening process and that appear on etrade.com, which may require separate endorsement(s).
“Futures Agreement” has the meaning set forth in the Preamble.
“Good Deliverable Form” has the meaning set forth in the Self-Directed Account Agreement.
“Intercompany Control Agreement” has the meaning set forth in Section 15 of this Futures Agreement.
“Losses” has the meaning set forth in the Self-Directed Account Agreement.
“Margin” means (i) money, securities, or property required as performance bond to cover potential future exposures arising from changes in the market value of a Contract (initial or maintenance margin); (ii) a cash payment required to cover the current exposure arising from changes in the market value of a Contract since the trade was executed or the last previous time the Contract was marked to market (variation margin); and (iii) the amount due in connection with the purchase or sale of a Contract that is a futures option contract.
“MSSB” means Morgan Stanley Smith Barney LLC, also referred to in the Self-Directed Account Agreement as “we,” “us,” “our,” “Morgan Stanley,” “Morgan Stanley Wealth Management,” and “E*TRADE from Morgan Stanley.”
“Obligation” or “Obligations” has the meaning set forth in the Self-Directed Account Agreement.
“SEC” means the U.S. Securities and Exchange Commission.
“Self-Directed Account Agreement” has the meaning set forth in the Preamble.
“Services” means the securities brokerage, futures brokerage, financial, custody, and other services and the online trading platforms and mobile applications that E*TRADE Futures or MSSB may offer from time to time.
“UCC” has the meaning set forth in Section 15 of this Futures Agreement.
2. Authorization – Client authorizes E*TRADE Futures to purchase and sell Contracts for Client’s Account in accordance with Client’s instructions. Client agrees that E*TRADE Futures shall be entitled to rely on any instruction, notice or communication that it reasonably believes to have originated from Client or Client’s Authorized Agent and Client shall be bound thereby. Client hereby waives any defense that any such instructions were not in writing as may be required under Applicable Law. All orders accepted by E*TRADE Futures for handling are, at all times, subject to prevailing market conditions. In addition, in the case of market orders, certain order routers and exchanges may process or match orders through conversion to marketable limit orders for order protection, order matching, and other purposes. Accordingly, E*TRADE Futures does not guarantee that any particular order will be filled or filled at a particular price, within a particular timeframe, or at all. Furthermore, any service provided by E*TRADE Futures hereunder may be provided directly by E*TRADE Futures or through the services of a third party, including by means of an omnibus clearing arrangement with another futures commission merchant or using a third party that is a member of any exchange of which E*TRADE Futures is not a member to the extent permitted by Applicable Law. E*TRADE Futures is authorized to make such arrangements in its discretion with such third parties without further authorization from Client.
3. Applicable Rules and Regulations – The Account and each transaction therein shall be subject to Applicable Law. E*TRADE Futures’ failure to comply with Applicable Law in any way shall not constitute a breach of this Futures Agreement or relieve Client of its Obligations. In no event will E*TRADE Futures be obligated to effect any transaction or act on any instruction that it believes would violate Applicable Law. E*TRADE Futures shall not be liable to Client as a result of any action or inaction by E*TRADE Futures, its officers, directors, employees or agents to comply with Applicable Law.
4. Payments to E*TRADE Futures – Client agrees to pay to E*TRADE Futures immediately on request (a) commissions, fees, and service charges as are in effect from time to time together with all applicable regulatory and self-regulatory organization and exchange fees and charges; (b) the amount of any debit balance, Margin obligation or any other liability that may result from transactions executed for the Account; (c) interest on such debit balance or liability at the prevailing rate charged by E*TRADE Futures at the time such debit balance or liability arises and service charges on any such debit balance or liability, together with any reasonable costs and attorneys’ fees incurred in collecting any such debit balance or liability; and (d) the amount necessary to hold E*TRADE Futures harmless against all taxes, including interest, penalties and additions thereto (“Taxes”), and all contractual and other liabilities in respect of Taxes, arising in connection with the Account or Client’s transactions hereunder including, for the avoidance of doubt, (i) any liability E*TRADE Futures may have to a clearing house in respect of Taxes or to a taxing authority in respect of a payment to or from a clearing house and (ii) Taxes imposed on a payment made pursuant to this Section 4(d). E*TRADE Futures reserves the right to negotiate different fees and charges than those included in any fee schedule published by E*TRADE Futures, if applicable, or elsewhere, including variable-rate commissions and interest charges and also reserves the right to charge commissions at other rates to other Clients.
5. Client’s Duty to Maintain Adequate Margin – Client shall at all times and without prior notice or demand from E*TRADE Futures maintain adequate Margin balances in the Account so as to continually meet the original and maintenance Margin requirements established by E*TRADE Futures for Client. E*TRADE Futures may change such requirements from time to time at E*TRADE Futures’ discretion. Such Margin requirements may exceed the Margin requirements set by any exchange or other regulatory authority and may vary from E*TRADE Futures’ requirements for other Clients. Client agrees, when so requested, promptly to transfer Margin funds to E*TRADE Futures in accordance with E*TRADE Futures’ Margin requirements and to furnish E*TRADE Futures with any additional information as may be requested by E*TRADE Futures in relation to the transfer of funds. Client agrees to promptly meet all Margin calls or cure any Margin deficiency in any manner as E*TRADE Futures designates, at its sole discretion, including by wire transfer initiated on the same Business Day on which such Margin call is made. Any deposits or funds remitted to E*TRADE Futures are deemed made or received only when cleared funds are actually received by E*TRADE Futures. E*TRADE Futures’ failure to demand satisfaction of a Margin call promptly on any occasion shall not be deemed to be a waiver of its right to do so in the future. Client acknowledges and agrees that E*TRADE Futures may receive and retain as its own any interest, increment, profit, gain or benefit, directly or indirectly, accruing from permitted investments (made in accordance with and subject to CFTC Regulations) of any of the funds E*TRADE Futures receives from Client.
6. Delivery
a) As a general matter, E*TRADE Futures does not permit physical delivery of commodities (including digital assets) and expressly prohibits physical delivery on any Contract held to maturity. E*TRADE Futures reserves the right, without notice to Client, not to make or take delivery on any Contract that settles through physical delivery. Client acknowledges and agrees that E*TRADE Futures shall have no obligation to make or take delivery on Client’s behalf and Client shall be required to liquidate or arrange for the transfer of any such Contract sufficiently before the first notice day or the last trading day (as applicable) for the relevant Contract to ensure that E*TRADE Futures incurs no delivery obligation with respect to such Contract, but in any event, no later than five (5) Business Days prior to such first notice day or last trading day (as applicable). In the event that Client fails by such deadline to liquidate or transfer a physically settled Contract, Client hereby instructs and authorizes E*TRADE Futures to liquidate such Contract by offset for the sole and entire risk and loss of Client’s Account. Client further understands and agrees that Client may be prohibited from holding contracts to maturity or settlement and trading to the nearest expiration date for a futures or futures options contract (also referred to as front, near, or spot month trading), the result of which may result in forced liquidation of Client’s position by E*TRADE Futures. Although E*TRADE Futures has the ability in its discretion to take delivery, E*TRADE Futures shall at no time assume the obligation or otherwise be obligated to do so. You agree not to hold E*TRADE Futures liable for any Losses arising out of or relating to your failure to act or to give instructions to E*TRADE Futures to act on your behalf in respect of physical delivery on a Contract held for the Account.
b) Although E*TRADE Futures does not permit physical delivery of commodities (including digital assets) and expressly prohibits physical delivery on any Contract held to maturity, the following provisions shall apply to physically settled Contracts with respect to which E*TRADE Futures may in its sole discretion be prepared to make or take delivery of a commodity underlying a Contract held for the Account. Client acknowledges that the making or accepting of delivery pursuant to a Contract may involve a much higher degree of risk than liquidating a position by offset. E*TRADE Futures has no control over and makes no warranty with respect to grade, quality, tolerances or equivalent terms of any commodity delivered in fulfillment of any Contract hereunder.
c) Client understands that liquidating instructions on open Contracts maturing in a current month must be given to E*TRADE Futures at least five Business Days prior to the first notice day in the case of long positions and, in the case of short positions, at least five business days prior to the last trading day.
d) In the case of E*TRADE Futures’ inability to deliver any security, commodity or other property to the purchaser by reason of failure of Client to supply E*TRADE Futures therewith, then and in such event, Client authorizes E*TRADE Futures to borrow or buy any security, commodity or other property necessary to make delivery thereof at Client’s expense. Client agrees to be responsible for any Losses which E*TRADE Futures may incur in connection with any action taken by E*TRADE Futures in connection with an obligation to make or take delivery on a Contract held by E*TRADE Futures for Client’s Account.
7. Futures Options
a) E*TRADE Futures shall not have any obligation to exercise any long futures option Contract unless Client has furnished E*TRADE Futures with timely exercise instructions and sufficient initial Margin with respect to each underlying futures contract. Client understands that some exchanges and clearing houses have established cut off times for the tender of futures option exercise instructions and that a futures option will become worthless if instructions are not delivered before such expiration time. Client understands that Client is responsible at all times to notify E*TRADE Futures of Client’s intent to exercise a futures option no later than 3:15 p.m. Central Time on the business day prior to the last day of trading for that futures option; that E*TRADE Futures’ date and time for the tendering of exercise instructions may be different than those set by any exchange, board of trade, market, or clearinghouse; and that failure to provide E*TRADE Futures with any instruction may constitute an abandonment of the futures option, and the Client’s futures option may become worthless in the event that they do not deliver instructions prior to E*TRADE Futures’ established expiration times. Client also understands that certain exchanges and clearing houses automatically exercise some “in-the-money” futures options unless instructed otherwise. Client acknowledges full responsibility for taking action either to exercise or to prevent the automatic exercise of a futures option Contract, as the case may be, and E*TRADE Futures is not required to take any action with respect to a futures option Contract, including without limitation, any action to exercise a futures option prior to its expiration date or to prevent its automatic exercise, except upon Client’s express instructions.
b) Client understands that all short futures option positions are subject to assignment at any time, including positions established on the same day that exercises are assigned, and that assignment notices are allocated among E*TRADE Futures’ Clients’ short futures options positions which are subject to assignment. Client understands that E*TRADE Futures may not be able to notify Client that a position was exercised prior to the opening of the next trading session, although E*TRADE Futures will undertake reasonable efforts to do so. Exercise and assignment notices are allocated randomly among all short futures options positions subject to exercise. If the Client fails to timely provide E*TRADE Futures with any required instruction, E*TRADE Futures is authorized, at its sole discretion, to exercise or liquidate all or any portion of the futures option for the Account and at the Client’s risk. Client agrees to be responsible for any Losses which E*TRADE Futures may incur in connection with any action taken by E*TRADE Futures in connection with an obligation to exercise a futures option Contract held by E*TRADE Futures for Client’s Account.
8. Position Limits
a) Client agrees that E*TRADE Futures, in its discretion, may from time to time establish trading limits for Client’s Account and may limit the number of open Contracts (net or gross) which Client may execute, clear, or carry with or acquire through the Account. Client agrees (i) not to make any trade which would have the effect of exceeding such limits, (ii) that E*TRADE Futures may, at any time in its sole discretion, require Client to reduce open Contracts, and (iii) that E*TRADE Futures may, at any time in its sole discretion, refuse to accept orders to establish new positions. E*TRADE Futures may impose and enforce such limits, require Client to reduce open Contracts, and refuse to accept orders to establish new positions in its sole discretion and without regard to whether any such action is required under Applicable Law.
b) Client shall comply with all position limits established under Applicable Law. In addition, Client agrees to notify E*TRADE Futures promptly if Client is required to file position reports with the CFTC, any regulatory or self-regulatory organization, including any exchange, and agrees to provide E*TRADE Futures with copies of any such report. E*TRADE Futures expressly disclaims any liability for Client’s Losses related to Client’s exceeding any trading limit applicable to the Account. Client acknowledges and agrees that E*TRADE Futures has no obligation to monitor Client’s trading for compliance with trading limits other than as required by Applicable Law.
9. Limits on E*TRADE Futures’ Duties; Liability – Client agrees:
a) that E*TRADE Futures is not acting as a fiduciary, commodity trading advisor, investment adviser or commodity pool operator with respect to Client or any Contract or Account and E*TRADE Futures shall have no responsibility for compliance with any Applicable Law governing the conduct of any such fiduciary or advisor or for Client’s compliance with any Applicable Law governing or affecting Client’s trading hereunder;
b) that if Client has authorized an Authorized Agent to place orders or effect transactions in Contracts on behalf of Client in any Account, such Authorized Agent has been selected by Client based on Client’s own evaluation and assessment of such party; and
c) to waive any and all claims, rights or causes of action which Client has or may have against E*TRADE Futures or its directors, officers, employees, agents and affiliates for or in connection with (i) indirect, consequential, punitive, or special damages or (ii) any Loss of any kind caused, directly or indirectly, by any Force Majeure Event.
10. Consent to Take the Other Side of Orders – Without its prior notice, Client agrees that when E*TRADE Futures executes sell or buy orders on Client’s behalf, E*TRADE Futures, its directors, officers, employees, agents, affiliates and any floor broker may take the other side of Client’s order for the account of such person subject to such order being executed in accordance with and subject to the limitations and conditions, if any, contained in Applicable Law. This consent shall remain in effect until Client delivers written notice to E*TRADE Futures revoking such consent.
11. Automated Systems – The Client consents to E*TRADE Futures’ use of automated systems or service bureaus in conjunction with: the receipt and handling of orders; the reporting of order acknowledgments, cancellations, and executions; the clearing and settlement of transactions for the Account; tax and cost basis reporting; the delivery of information with respect to Collateral; and similar recordkeeping and reporting services and account reconciliation and risk management (collectively, “Automated Systems”). Client understands that the use of Automated Systems entails risks, including but not limited to interruption of service, systems or communications failures, delays in service, cyberattacks, and errors in the design or functionality of such Automated Systems that could cause substantial damage, expense, or liability to the Client. The Client understands and agrees that E*TRADE Futures does not guarantee uninterrupted access to futures brokerage or other Services that E*TRADE Futures may offer from time to time. Client further acknowledges that pending orders submitted to any exchange may be cancelled upon loss of connection to such exchange and that orders submitted to an exchange may be outside of that exchange’s established price parameters and such order may therefore fail to be submitted. E*TRADE Futures reserves the right to suspend access to any Services it provides without prior notice during scheduled or unscheduled system repairs or upgrades and to modify any Service it provides at any time without prior notice. Client authorizes E*TRADE Futures to place orders for Contracts in accordance with its instructions through one or more Automated Systems maintained or operated by E*TRADE Futures, or by or under the auspices of, any exchange.
E*TRADE FUTURES MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE SELECTION, DESIGN, SECURITY, FUNCTIONALITY, OPERATION, TITLE, OR NONINFRINGEMENT OF ANY AUTOMATED SYSTEM. E*TRADE FUTURES MAKES NO EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY WITH RESPECT THERETO. WITHOUT LIMITING THE FOREGOING, E*TRADE FUTURES EXPRESSLY DISCLAIMS ANY REPRESENTATION THAT ANY AUTOMATED SYSTEM WILL OPERATE UNINTERUPTED OR BE ERROR-FREE. E*TRADE FUTURES SHALL NOT BE LIABLE OR OBLIGATED TO CLIENT FOR ANY LOSSES INCURRED OR SUSTAINED BY CLIENT AND ARISING IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, FROM ANY FAULT, DELAY, OMISSION, INACCURACY OR TERMINATION OF ANY AUTOMATED SYSTEM OR FROM E*TRADE FUTURES’ INABILITY TO ENTER, CANCEL OR MODIFY AN ORDER ON BEHALF OF CLIENT ON OR THROUGH AN AUTOMATED SYSTEM. CLIENT AGREES TO HOLD E*TRADE FUTURES HARMLESS FROM AND TO INDEMNIFY E*TRADE FUTURES FOR LOSSES THAT MAY ARISE FROM ANY SUCH EVENT.
12. Indemnification of E*TRADE Futures – Client agrees to indemnify, defend and hold harmless E*TRADE Futures and its directors, officers, employees and agents from and against any Losses (including reasonable attorneys’ fees) as the result, directly or indirectly, of:
a) any transaction in Contracts effected for the Account in accordance with any communication, notice, instruction, or order received from you or your Authorized Agent or an individual whom E*TRADE Futures believes to be authorized to act on your behalf;
b) any erroneous, mismatched, or incomplete identifying information on any Electronic Funds Transfer instruction;
c) Your failure to perform your Obligations hereunder, including without limitation your failure to satisfy any Obligations due to E*TRADE Futures;
d) a breach of any representation, warranty, or covenant made by you under this Futures Agreement or any subsequent false or misleading statement or representation made by you or your Authorized Agents;
e) any act or omission by you with respect to any Account, including any failure to timely deliver any security, commodity or other property in connection with any Obligation under a Contract held by E*TRADE Futures for the Account;
f) any action taken by E*TRADE Futures or its affiliates to enforce our rights under this Futures Agreement;
g) any Event of Default;
h) any violation or infringement, or alleged violation or infringement by you or your Authorized Agents of any Applicable Law; and
i) any violation or infringement of any copyright or other intellectual property right.
13. Notices; Transmittal – E*TRADE Futures shall transmit all communications to Client at Client’s address, email address, telefax or telephone number set forth in the accompanying Futures Account Application or to such other address as Client and E*TRADE Futures may hereafter agree in writing. Client shall transmit all communications to E*TRADE Futures (except routine inquiries concerning the Account) to the attention of the Legal Department, 10 S. Riverside Plaza, Fifth Floor, Chicago, IL 60606, Client. All payments and deliveries to E*TRADE Futures shall be made as instructed by E*TRADE Futures from time to time and shall be deemed received only when actually received by E*TRADE Futures.
14. Confirmation Conclusive – Confirmation of trades and any other notices sent to Client shall be conclusive and binding on Client unless Client or Client’s Authorized Agent notifies E*TRADE Futures to the contrary (a) in the case of an oral report, orally at the time received by Client or its Authorized Agent or (b) in the case of a written report or notice, in writing prior to opening of trading on the business day following receipt of the report. In addition, if Client has not received a written confirmation that a Contract has been executed within three business days after Client has placed an order with E*TRADE Futures to effect such transaction, and has been informed or believes that such order has been or should have been executed, then Client immediately shall notify E*TRADE Futures. Thereafter, absent such notice, Client conclusively shall be deemed estopped to object and to have waived any such objection to the failure to execute, or cause to be executed such transaction. Anything in this Section 14 notwithstanding, the Client and E*TRADE Futures shall not be bound by any transaction or price reported in error.
15. Security Interest and Transfer of Funds
a) Client hereby assigns, pledges and transfers to E*TRADE Futures and grants to E*TRADE Futures, and to any of its affiliates that may from time to time hold Contracts or Collateral for or on behalf of Client in connection with the execution or clearing of any transaction in such Contracts or settlement or custody of such Collateral, a continuing security interest in, right of set off to, and continuing first priority lien on all of Client’s right, title and interest (in each case whether now owned or hereafter arising or acquired) in (i) the Account and all assets (including security entitlements, commodity contracts, financial assets, proceeds and investment property (each as defined in the New York Uniform Commercial Code (“UCC”), as amended) credited thereto, including assets held by any clearing organization in respect of Contracts, as well as other property of Client (including any securities accounts, commodity accounts, security entitlements, commodity contracts, financial assets and investment property (each as defined in the UCC)) held in respect of Contracts by or for E*TRADE Futures, any clearing organization or any agent acting for E*TRADE Futures in connection with any transaction in Contracts, whether held jointly or individually; (ii) Client’s Contracts and all rights to payment thereunder; (iii) all money and/or cash of any currency deposited in or credited to the Account; and (iv) all products and proceeds of the foregoing. The foregoing grant of security secures, to the extent permissible by Applicable Law, all Obligations of Client now or hereafter owing to E*TRADE Futures or to any affiliate of E*TRADE Futures, including, without limitation, all Losses incurred by E*TRADE Futures in connection with the enforcement of this Futures Agreement and the security interest created hereunder. The foregoing security interest in the Collateral is hereby assigned, pledged and transferred as well to any affiliate of E*TRADE Futures that may from time to time hold Contracts or Collateral for or on behalf of Client in connection with the execution or clearing of any transaction in such Contracts or settlement or custody of such Collateral. Upon the occurrence of an Event of Default, E*TRADE Futures shall have and may exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it pursuant to Applicable Law, at law or in equity, all the rights and remedies of a secured party upon default under such applicable laws, rules and regulations, including but not limited to, the UCC, whether or not the UCC applies to the affected Collateral, to the fullest extent permitted under such Applicable Law. Client agrees to execute any documents reasonably required by E*TRADE Futures for the perfection or negotiation of such general lien or security interest. The Client shall pay the fees for any filing, registration, recording, or perfection of any security interest contemplated by this Futures Agreement and pay, or cause to be paid, from the Account any and all taxes imposed on the Collateral by any authority. Client acknowledges that E*TRADE Futures and certain of its affiliates have entered into an Intercompany Control Agreement under which Collateral could be made available to satisfy Client’s obligations to one or more such affiliates upon a default or termination event in respect Client’s account relationship with such affiliate.
b) All Collateral upon delivery to E*TRADE Futures shall be free and clear of all prior liens, claims, and encumbrances (other than liens solely in favor of E*TRADE Futures), and the Client will not cause or allow any of the Collateral, whether now owned or hereafter acquired, to be or become subject to any liens, security interests, mortgages, or encumbrances of any nature other than security interests solely in E*TRADE Futures’ favor. Furthermore, Collateral consisting of securities and other property shall be in Good Deliverable Form (or E*TRADE Futures shall have the power to place such securities in Good Deliverable Form), in accordance with the requirements of the primary market or markets for such securities.
c) From time to time, E*TRADE Futures may, in its sole discretion and without prior notice to Client, and at all times subject to Applicable Law, apply and transfer any funds or Collateral interchangeably between any of Client’s Accounts at E*TRADE Futures (including accounts maintained by E*TRADE with an affiliate or third party on Client’s behalf), as may be necessary in order to satisfy applicable Margin requirements or to satisfy or reduce any deficit or debit balance in any such Account. Within a reasonable time after such transfer, E*TRADE Futures will confirm such transfer in writing to Client. Client agrees to provide such funds or Collateral in such amount and in such form as E*TRADE Futures may require from time to time, in its sole discretion.
d) Client’s Account and Collateral carried by E*TRADE Futures shall be segregated as required by Applicable Law, including without limitation the CEA and the CFTC Regulations. Subject to such requirements, Client hereby acknowledges that E*TRADE Futures may from time to time and without notice to Client, make permitted investments of Collateral in accordance with and at all times subject to the requirements of CFTC Regulations. Client further agrees and acknowledges that, to the extent Client deposits securities, warehouse receipts or other negotiable instruments with E*TRADE Futures, E*TRADE Futures shall not at any time be required to deliver to Client identical property in return, but may fulfill its obligations to Client by delivery of property of like or equivalent kind or amount.
e) For purposes of Articles 8 and 9 of the UCC and any similar legislation in any other applicable jurisdiction, (i) E*TRADE Futures is a securities intermediary or commodity intermediary, as applicable, with respect to the Accounts and the Contracts, and the jurisdiction of E*TRADE Futures or any of its affiliates as securities intermediary or commodity intermediary with respect to the Account and the Contracts is New York, (ii) the Account is a “securities account,” a “futures account,” and a “commodity account,” and (iii) any property of any nature whatsoever credited or receivable to the Account is a “financial asset” and “investment property.”
f) E*TRADE Futures’ security interest in the Collateral shall (i) remain in full force and effect until the payment and performance in full of the Client’s Obligations; (ii) be binding on the Client, its successors, and permitted assigns, and (iii) inure to the benefit of, and be enforceable by, E*TRADE Futures and its respective successors, transferees, and assigns (including any affiliate that is party to the Intercompany Control Agreement).
g) In addition to and without limiting E*TRADE Futures’ rights under this Agreement or under the Self-Directed Agreement, upon the occurrence of an Event of Default arising under Section 16(d) or 16(g) hereof, any and all obligations owed to E*TRADE Futures shall (to the extent not already due and payable) become immediately due and payable. E*TRADE Futures may (1) liquidate, terminate, or accelerate the Client’s open position in whole or in part, and/or (2) set-off (including by set-off, offset, netting, combination of accounts, deduction, counterclaim, retention, or withholding across or within each or all of the positions) E*TRADE Futures obligation to the Client against the Client’s obligations to E*TRADE Futures, or apply or set-off margin posted in favor of the Client against E*TRADE Futures obligations to the Client.
h) E*TRADE Futures endeavors to comply with Applicable Law with respect to each particular Account that it custodies for Client and, in consequence, will not exercise any of its rights under this Futures Agreement or any other agreement with Client if such exercise is prohibited by Applicable Law. In particular, separate and distinct rules apply to tax qualified accounts (i.e., Traditional, Roth, Rollover, Inherited, SEP, SAR-SEP, or SIMPLE IRAs, any VIP, RPM, or other accounts that hold qualified plan assets, or any Coverdell Education Savings Accounts (collectively, “Retirement and Education Savings Accounts”)), and thus, notwithstanding any other provisions of this Futures Agreement, and of any other agreement entered into by and between Client and E*TRADE Futures or any affiliate of E*TRADE Futures, E*TRADE Futures will not look to Retirement and Education Savings Accounts to satisfy any Obligation that exists in connection with any other account that E*TRADE Futures maintains for Client, and nor will E*TRADE Futures look to such other accounts to satisfy any Obligation that exists in connection with any Retirement and Education Savings Accounts. Furthermore, E*TRADE Futures will not take into account any Retirement and Education Savings Accounts in determining available Margin credit or in connection with exercising its Margin requirement rights under any account of a different type (i.e., accounts which are not “tax qualified”), or vice versa, as set forth in this Futures Agreement or otherwise. To the extent such provisions or the application thereof would constitute a prohibited transaction or conflict with the requirements of the Employee Retirement Income Security Act, the Internal Revenue Code and any other Applicable Law that governs Retirement and Education Savings Accounts, specifically including any guidance on “cross-collateralization,” such provisions shall be hereby deemed null and void.
i) Subject to Applicable Law governing E*TRADE Futures’ obligation to segregate Collateral, Client grants to E*TRADE Futures the right to pledge, repledge, hypothecate, rehypothecate, sell or purchase, invest or loan, either separately or with the property of other Clients, any Collateral credited to Client’s E*TRADE Futures Account or held by E*TRADE Futures, to any exchange or clearinghouse through which the Client’s trades are executed or cleared. To the extent permitted under Applicable Law, E*TRADE Futures may, without prior notice to Client, use, credit, apply, or transfer any Collateral interchangeably between any Account in which the Client has an interest to any other Account in which the Client has an interest, regardless of whether there are other clients on either account, and may transfer Collateral between any sub-accounts of the Account.
j) Client authorizes E*TRADE Futures to transfer excess funds between the Account and the Self-Directed Account and any other accounts held by Client at E*TRADE Futures and any accounts held by Client with any affiliate of E*TRADE Futures for any reason that does not conflict with Applicable Law. In addition, subject to Applicable Law, E*TRADE Futures may transfer Collateral from the Account to any securities account carried by MSSB in which Client has an interest, to the extent necessary to satisfy any requirement applicable to such securities account as determined by MSSB under the Self-Directed Account Agreement, and MSSB may instruct on Client’s behalf a transfer Collateral from Client’s Self-Directed Account to the Account, to the extent necessary to satisfy any Margin call by E*TRADE Futures. At any time at MSSB’s sole discretion and to the extent permitted by Applicable Law, MSSB may transfer any cash, securities, commodity contracts, financial assets, or other property from any Account in which the Client has an interest to any other Account in which the Client has an interest, regardless of whether there are other Clients on either Account and MSSB may transfer property between any sub-accounts of the Account. In addition, MSSB may, to the extent permitted under Applicable Law, transfer property from the Account to any commodity, futures, or other account carried by E*TRADE Futures in which the Client has an interest, to the extent necessary to satisfy any margin call by MSSB, and E*TRADE Futures may transfer Property from the account to any securities or other account carried by MSSB in which the Client has an interest, to the extent necessary to satisfy any margin call by E*TRADE Futures. Client acknowledges that any of the foregoing transfers may be initiated and processed automatically by E*TRADE Futures or MSSB, as applicable, but that any return transfer may not necessarily be so processed, and may require the Client to instruct the transfer of such property between the Accounts.
16. Right to Liquidate Client Positions – In addition to all other rights of E*TRADE Futures set forth in this Futures Agreement, E*TRADE Futures shall have the right, without notice to Client, to liquidate Client positions, including positions held on Client’s behalf with an affiliate of E*TRADE Futures (or with a third-party service provider selected by E*TRADE or an affiliate for such purpose), and to close out Client’s Account, in the following circumstances (each, an “Event of Default”):
a) Any governmental or regulatory agency or self-regulatory organization or exchange having jurisdiction over E*TRADE Futures or the Account requires such liquidation or close-out;
b) Client is suspended from membership of, or participation in, any exchange, clearing house or self-regulatory organization, of suspended from dealings in Contracts by any governmental or regulatory agency or self-regulatory organization, or by act of any judicial authority;
c) There is, in the judgment of E*TRADE Futures, insufficient Margin in the Account, or E*TRADE Futures has determined that any Collateral deposited is inadequate to secure the Account;
d) Client fails to make a payment in accordance with the requirements of Section 4 hereof, or to deposit sufficient Margin funds in respect of any Contract or portfolio of Contracts, or to satisfy any demand for Margin within such time frames as determined by E*TRADE Futures in its sole discretion;
e) Client or any affiliate of Client repudiates, violates, breaches, or fails to perform on a timely basis (as determined by E*TRADE Futures in its sole discretion) any term or condition on its part to be performed under this Futures Agreement or any other agreement with E*TRADE Futures or with any affiliate of E*TRADE Futures (including, for the avoidance of doubt, the Self-Directed Account Agreement), or any representation, warranty or covenant made by Client hereunder (or under the Self-Directed Account Agreement) is or becomes untrue or inaccurate in any respect;
f) Client breaches any position limit applicable to the Account;
g) A bankruptcy proceeding is commenced or any other proceeding under any insolvency or other law for the protection of creditors or for the appointment of a receiver, liquidator, trustee, conservator, custodian or similar officer is filed by or against Client or any affiliate of Client, or Client or any affiliate of Client makes or proposes to make any arrangement or composition for the benefit of its creditors, or Client (or any such affiliate) or any or all of Client’s property is subject to any agreement, order, judgment, or decree providing for Client’s (or any such affiliate’s) dissolution, winding-up, liquidation, merger, consolidation, or reorganization;
h) E*TRADE Futures is informed of Client’s death or judicial declaration of incompetence;
i) An attachment or similar order is levied against the Account or any other account maintained by Client or any affiliate of Client with E*TRADE Futures or any affiliate of E*TRADE Futures (including MSSB); or
j) Any other circumstances or developments that E*TRADE Futures, in its sole and absolute discretion, considers necessary for its protection.
Upon the occurrence of an Event of Default, E*TRADE Futures shall have the right, in addition to any other remedy available to E*TRADE Futures at law or in equity, to (i) satisfy any Obligations due E*TRADE Futures out of the Collateral in E*TRADE Futures’ custody or control, (ii) liquidate, terminate or accelerate any or all open Contracts held in or for the Account by any means of lawful disposition (including without limitation through any exchange of futures for related positions, block trade or similar transaction permitted under Applicable Law), (iii) hedge any or all open Contracts, (iv) cancel any or all of Client’s outstanding orders, (v) treat any or all of Client’s obligations due E*TRADE Futures as immediately due and payable, (vi) sell any or all of Client’s property in E*TRADE Futures’ or its affiliates’ custody or control in such manner as E*TRADE Futures determines to be commercially reasonable,(vii) terminate any or all of E*TRADE Futures’ obligations for future performance to Client, or (viii) take such other or further actions as E*TRADE Futures, in its commercially reasonable discretion, deems necessary or appropriate for its protection, all without demand for Margin and without notice or advertisement and to the full extent permitted under Applicable Law, provided that, E*TRADE Futures may make reasonable efforts under the circumstances to notify Client prior to taking any such action if E*TRADE Futures’ position would not be jeopardized thereby. Client agrees that a prior demand, call, or notice shall not be considered a waiver of E*TRADE Futures’ right to act without demand or notice as herein provided, that Client shall at all times be liable for the payment of any debit balance owing in each Account upon demand whether occurring upon a liquidation or close-out as provided under this Section 16 or otherwise under this Futures Agreement, and that in all cases Client shall be liable for any deficiency remaining in each Account in the event of liquidation or close-out thereof in whole or in part, together with interest thereon and all costs relating to liquidation and collection (including reasonable attorneys’ fees). In the event E*TRADE Futures exercises any remedies available to it under this Futures Agreement, Client shall reimburse, compensate, indemnify, defend and hold harmless E*TRADE Futures for any and all Losses that E*TRADE Futures may incur, including reasonable attorneys’ fees incurred in connection with the exercise of its remedies and the recovery of such Losses.
Upon the occurrence of an Event of Default, or upon termination of this Futures Agreement in accordance with Section 23 hereof, E*TRADE Futures shall have the right, at any time and from time to time, to set off (including by set off, offset, netting, combination of accounts, deduction, counterclaim, retention, and withholding across or within each or all of Client’s accounts with E*TRADE Futures or any affiliate of E*TRADE Futures) amounts that Client owes to E*TRADE Futures (or any affiliate of E*TRADE Futures) against any amounts that E*TRADE Futures (or any affiliate of E*TRADE Futures) owes to Client, or apply or set off Margin or Collateral posted in favor of Client against E*TRADE Futures’ obligations to Client, in each case, under this Futures Agreement or any other agreement between Client and E*TRADE Futures or any affiliate of E*TRADE Futures, and, in all cases, Client will remain liable for any deficiency. Client authorizes E*TRADE Futures and its affiliates, on behalf of and in the name of Client, to do all such acts and to execute all such documents as may be required to give effect to E*TRADE Futures’ setoff rights hereunder.
17. Global Buying Power – By accepting the terms of this Futures Agreement, Client authorizes automated transfers between Client's Self-Directed Account held with MSSB or another affiliate of E*TRADE Futures, to E*TRADE Futures for the purposes of transacting in Contracts on E*TRADE Futures. Client acknowledges and agrees that while funds from an MSSB Self-Directed Account may be used to support transactions on E*TRADE Futures intraday, such funds transferred intraday to E*TRADE Futures may not be available for use on any affiliate of E*TRADE Futures until Client elects to make such funds so available.
18. Client Representations, Warranties and Agreements – Client represents and warrants to and agrees with E*TRADE Futures that:
a) Client, if an individual, is of legal age and competence to enter into this Futures Agreement and to transact in Contracts consistent with and subject to its terms and conditions;
b) Client, if a legal entity, is duly organized, validly existing, and empowered to enter into this Agreement, to establish the Account, to enter into transactions in Contracts as contemplated hereby and that such transactions do not violate any of Client’s constituent documents and that the person executing this Futures Agreement on its behalf has been duly and validly authorized under Applicable Law to do so;
c) Neither Client nor any partner, director, officer, member, manager or employee of Client nor any affiliate of Client is a partner, director, officer, member, manager or employee of a futures commission merchant, broker-dealer, introducing broker, or regulatory or self-regulatory organization except as previously disclosed in writing to E*TRADE Futures;
d) Except as previously disclosed in writing to E*TRADE Futures, Client (or its Authorized Agent, as applicable) (i) is not a commodity pool operator or a commodity trading advisor and Client is acting solely as principal and no one other than the Client has an interest in the Account or (ii) is a registered commodity pool operator or commodity trading advisor, or (iii) is otherwise exempt from registration under CFTC Regulations and if exempt, Client (or Authorized Agent) has properly listed its exemption in accordance with Applicable Law requirements. Client (or Authorized Agent) agrees to notify E*TRADE Futures of the identity of any other person or entity that controls the trading of the Account, has a financial interest of 10% or more in the Account (or in any Authorized Agent), or the identity of any other Account which the Client (or Authorized Agent) controls or in which Client (or Authorized Agent) has a 10% or greater ownership interest;
e) E*TRADE Futures is under no obligation to accept any account as a “hedge account” or to extend favorable Margin treatment to any such account or transaction executed in such account;
f) If Client’s Account is a hedging account as defined under CFTC Regulations, Client has so designated the Account and notified E*TRADE Futures of such designation;
g) Client will maintain its Account in accordance with and shall be solely responsible for compliance with Applicable Law;
h) Client shall, as required by Applicable Law, create, retain and produce upon request documents and records relating to Client’s transactions in Contracts (including related transactions underlying exchanges of futures for related positions);
i) Client consents to the electronic recording of any or all written and oral communications with E*TRADE Futures (by any means, without automatic tone warnings), the use of same as evidence by either party in any action or proceeding arising out of this Futures Agreement, and E*TRADE Futures’ retention or erasure of any such recording in conformance with its procedures for the handling of recordings and in accordance with Applicable Law;
j) Client understands and agrees that marketing materials, educational materials, market data, research, statements of investment philosophy and principles, descriptions of strategies and risks, and generic advice are not recommendations and are incidental to the conduct of E*TRADE Futures’ business as an FCM and such communications shall not serve as the primary basis for any decision made by or on behalf of Client in connection with its transactions in Contracts;
k) Client understands and agrees that, apart from the right to liquidate Client’s account pursuant to this Agreement, E*TRADE Futures shall have no discretionary authority, power or control over any decisions made by or on behalf of Client in respect of the Account, regardless of whether Client relies on the advice of E*TRADE Futures in making any such decision;
l) Client understands and agrees that E*TRADE Futures is not acting hereunder as a municipal advisor within the meaning of Section 975 of the Dodd-Frank Wall Street Reform & Consumer Protection Act;
m) Absent a separate written agreement between Client and E*TRADE Futures with respect to “give-up” transactions, E*TRADE Futures, in its discretion, may, but shall have no obligation to, accept from other brokers Contracts executed by such brokers for Client and proposed to be “given up” to E*TRADE Futures for clearance and/or carrying in the Account; if E*TRADE Futures does accept such Contracts, Client authorizes E*TRADE Futures to pay and charge to Client’s Account any give-up or give-in fee that may be charged by any exchange or clearing house or by an executing firm or broker whom Client or its agents have authorized to execute transactions for Client’s Account;
n) E*TRADE Futures, for and on behalf of Client, is authorized and empowered to place orders for Contracts through one or more electronic or automated trading systems maintained or operated by E*TRADE Futures, or by or under the auspices of, any exchange. E*TRADE Futures shall not be liable or obligated to Client for any loss, damage, liability, cost or expense (including but not limited to, loss of profits, loss of use, incidental or consequential damages) incurred or sustained by Client and arising in whole or in part, directly or indirectly, from any fault, delay, omission, inaccuracy or termination of any such system or from E*TRADE Futures inability to enter, cancel or modify an order on behalf of Client on or through a system. Client further acknowledges that pending orders submitted to any exchange may be cancelled upon loss of connection to such exchange and that orders submitted to an exchange may be outside of that exchange’s established price parameters and such order may therefore fail to be submitted. With respect to the preceding sentence, Client will not hold E*TRADE Futures liable for losses, actual or perceived, that may arise from such loss of connection. The provisions of this Section 18(n) shall apply regardless of whether any Client claim arises in contract, negligence, tort, strict liability, breach of fiduciary obligations or otherwise;
o) If the Client maintains separate accounts in which, pursuant to applicable CFTC Regulations, offsetting positions are not closed out, E*TRADE Futures hereby advises the Client that any offsetting long and short hedge position held open in separate accounts may result in the Client being charged additional fees and commissions and the payment of additional Margin;
p) Client represents that it will at all times maintain the Self-Directed Account at MSSB while maintaining the Account with E*TRADE Futures; and
q) The accompanying Futures Account Application (including any financial statements furnished in connection therewith) is true, correct and complete, and will be promptly updated by Client to reflect any material changes.
Client agrees to promptly notify E*TRADE Futures in writing if any of the warranties and representations contained in this Section 18 becomes inaccurate or in any way ceases to be true, complete and correct.
19. Successors and Assigns – This Agreement shall inure to the benefit of E*TRADE Futures and its successors and assigns. Client expressly agrees and acknowledges that E*TRADE Futures may, subject to Applicable Law, assign this Futures Agreement and transfer Client’s Account to another registered futures commission merchant. Client agrees that it may not assign, transfer, sell or otherwise convey its rights or obligations under this Agreement without the prior written consent of E*TRADE Futures and any such attempted assignment, transfer, sale or other conveyance without such consent shall be null and void and of no force or effect.
20. Amendment; No Waiver – Any amendment, supplement, or rescission of this Futures Agreement will be posted to etrade.com when made, and such posting shall constitute proper notice to you. If you continue to maintain your Account with E*TRADE Futures after such notice, you will be deemed to have accepted such changes and will be legally bound by such amended or supplemented terms and conditions. The rights and remedies conferred upon E*TRADE Futures shall be cumulative, and its forbearance to take any remedial action available to it under this Futures Agreement shall not waive its right at any time or from time to time thereafter to take such action.
21. Severability – If any term or provision hereof is, or at any times becomes, inconsistent with any present or future requirement of Applicable Law, the inconsistent provision shall be deemed superseded or modified to conform with the relevant requirement of Applicable Law, but in all other respects this Futures Agreement shall continue and remain in full force and effect.
22. Section Headings – All section headings used herein are for convenience only, are not a part of this Agreement, and are not to be used in construing or interpreting any aspect of this Agreement.
23. Termination – This Futures Agreement and all authority granted herein shall continue in force until written notice of termination is given by Client or E*TRADE Futures. Termination shall not relieve any party of any liability or obligation incurred prior to such notice. Upon giving or receiving notice of termination, Client will promptly take all action necessary to liquidate or transfer all open Contracts in the Account to another futures commission merchant. In the event that E*TRADE Futures terminates this Futures Agreement, and no liquidation or transfer instruction is received within 30 days, E*TRADE Futures reserves the right to liquidate all positions in accordance with Section 16 of this Futures Agreement, and transfer any funds resulting from such liquidation, however denominated and remaining in the Account, at its sole discretion, either to Client’s Self-Directed Account with MSSB, a third-party account based on instructions previously provided by Client or directly to Client by check to the address on file for Client.
24. Entire Agreement – Except as otherwise expressly provided in the preamble to this Futures Agreement, this Futures Agreement constitutes the entire agreement between Client and E*TRADE Futures with respect to the subject matter hereof and supersedes any prior agreements between the parties with respect to such subject matter.
25. Requests for Further Information – In order to comply with Applicable Law, E*TRADE Futures reserves the right to request such information as is necessary to verify the identity of Client as well as the source of any funds transmitted by Client. In the event of delay or failure of Client to produce any information required for such verification purposes, E*TRADE Futures may refuse to accept any further orders for transactions in or for an Account and may terminate this Futures Agreement. In certain circumstances, E*TRADE Futures may be required to provide information about Client to regulatory authorities and to take other or further actions as may be required or authorized by Applicable Law.
26. Governing Law; Consent to Jurisdiction
a) In case of a dispute between Client and E*TRADE Futures arising out of or relating to the making or performance of this Futures Agreement or any transaction pursuant to this Futures Agreement, (i) this Futures Agreement and its enforcement shall be governed by the laws of the State of New York without regard to principles of conflicts of laws, and (ii) Client will bring any legal proceeding against E*TRADE Futures, in, and Client hereby consents in any legal proceeding by E*TRADE Futures, to the jurisdiction of, any state or federal court located within the State and City of New York in connection with all legal proceedings arising directly, indirectly or otherwise in connection with, out of, related to or from Client’s Account, transactions contemplated by this Futures Agreement or the breach thereof. Client hereby waives all objections Client, at any time, may have as to the propriety of the court in which any such legal proceedings may be commenced. Client also agrees that any service of process mailed to Client at any address specified to E*TRADE Futures shall be deemed a proper service of process on the undersigned.
b) Notwithstanding the provisions of Section 26(a)(ii) of this Futures Agreement, Client may elect to have all disputes described in this Section 26 resolved by arbitration. To make such an election, Client must sign the Arbitration Agreement set forth in Section 30 of this Futures Agreement. Notwithstanding such election, any question relating to whether Client or E*TRADE Futures has commenced an arbitration proceeding in a timely manner, whether a dispute is within the scope of the Arbitration Agreement, or whether a party (other than Client or E*TRADE Futures) has consented to arbitration and all proceedings to compel arbitration shall be determined by a court as specified in Section 26(a)(ii) hereof.
27. Limitations Period – CUSTOMER AGREES THAT ANY CLAIM, ACTION OR PROCEEDING ARISING UNDER OR IN ANY WAY RELATING TO THIS AGREEMENT MUST BE BROUGHT, IF AT ALL AND TO THE EXTENT NOT INCONSISTENT WITH APPLICABLE LAW, WITHIN ONE YEAR OF THE DATE OF THE EVENT(S) GIVING RISE THERETO.
28. Joint Account Provisions
a) Each Client having an interest in a joint account shall have the authority to issue such instructions and generally to deal with E*TRADE Futures as fully and completely as if the other person had no interest therein. E*TRADE Futures shall be under no duty or obligation to inquire into the purpose or propriety of any instruction given by any Client in the case of a joint account and shall not be under any obligation to see the application of any funds delivered to any Client upon his order.
b) In the event of the death of any of the clients having an interest in a joint account, the survivors shall immediately give E*TRADE Futures written notice thereof, and E*TRADE Futures, before or after receiving such notice, may take such actions, institute such proceedings, require such papers, retain such portion of the Account, and restrict transactions in the Account as E*TRADE Futures may deem advisable to protect E*TRADE Futures against any tax, liability, penalty, or loss under Applicable Law or otherwise. The estate(s) of any of the clients who shall have died shall be liable, and the survivors shall continue to be liable, to E*TRADE Futures for any debit balance or loss in the Account in any way resulting from the completion of transactions initiated prior to the receipt by E*TRADE Futures of the written notice of the death of the decedent, or incurred in the liquidation of the Account or one or more Contracts therein, or the adjustment of the interests of the respective parties.
29. Acceptance – This Futures Agreement shall not be deemed to be accepted by E*TRADE Futures or become a binding contract between Client and E*TRADE Futures until approved at E*TRADE Futures’ main office by the department responsible for approving new futures accounts.
30. Arbitration Agreement (Optional) – Every dispute between Client and E*TRADE Futures, or any of its employees or agents, arising out of or relating to the making or performance of this Futures Agreement or any transaction pursuant to this Futures Agreement may be submitted to arbitration. Such arbitration shall be conducted before and in accordance with the rules then in effect of any of the following entities before which the controversy may be arbitrated, as the Client may elect: the National Futures Association (or any successor entity) or the contract market upon which the transaction giving rise to the claim was executed. If Client does not make such election by registered mail addressed to the Legal Department, 10 S. Riverside Plaza, Fifth Floor, Chicago, Illinois, Client, within 45 days after demand by E*TRADE Futures that the Client make such election, then E*TRADE Futures may make such election. E*TRADE Futures agrees to pay any incremental fees which may be assessed by a qualified forum for making available a “mixed panel” of arbitrators unless the arbitrators determine that Client has acted in bad faith in initiating or conducting the proceedings. Judgment upon any award rendered by the arbitrators may be entered in any court having jurisdiction thereof.
THREE FORUMS EXIST FOR THE RESOLUTION OF COMMODITY DISPUTES: CIVIL COURT LITIGATION, REPARATIONS AT THE COMMODITY FUTURES TRADING COMMISSION, AND ARBITRATION CONDUCTED BY A SELF-REGULATORY OR OTHER PRIVATE ORGANIZATION. THE CFTC RECOGNIZES THAT THE OPPORTUNITY TO SETTLE DISPUTES BY ARBITRATION MAY IN SOME CASES PROVIDE MANY BENEFITS TO CUSTOMERS, INCLUDING THE ABILITY TO OBTAIN AN EXPEDITIOUS AND FINAL RESOLUTION OF DISPUTES WITHOUT INCURRING SUBSTANTIAL COSTS. THE CFTC REQUIRES, HOWEVER, THAT EACH CUSTOMER INDIVIDUALLY EXAMINE THE RELATIVE MERITS OF ARBITRATION AND THAT A CUSTOMER’S CONSENT TO THIS ARBITRATION AGREEMENT BE VOLUNTARY.
BY ELECTING TO BE BOUND BY THE ARBITRATION AGREEMENT SET FORTH IN THIS SECTION 30 OF THIS FUTURES AGREEMENT, YOU (1) MAY BE WAIVING YOUR RIGHT TO SUE IN A COURT OF LAW AND (2) ARE AGREEING TO BE BOUND BY ARBITRATION OF ANY CLAIMS OR COUNTERCLAIMS WHICH YOU OR E*TRADE FUTURES MAY SUBMIT TO ARBITRATION UNDER THIS AGREEMENT. YOU ARE NOT, HOWEVER, WAIVING YOUR RIGHT TO ELECT INSTEAD TO PETITION THE CFTC TO INSTITUTE REPARATIONS PROCEEDINGS UNDER THE COMMODITY EXCHANGE ACT AND APPLICABLE CFTC REGULATIONS WITH RESPECT TO ANY DISPUTE WHICH MAY BE ARBITRATED PURSUANT TO THIS AGREEMENT. IN THE EVENT A DISPUTE ARISES, YOU WILL BE NOTIFIED IF E*TRADE FUTURES INTENDS TO SUBMIT THE DISPUTE TO ARBITRATION. IF YOU BELIEVE A VIOLATION OF THE COMMODITY EXCHANGE ACT IS INVOLVED AND IF YOU PREFER TO REQUEST A REPARATION PROCEEDINGS BEFORE THE CFTC, YOU WILL HAVE 45 DAYS FROM THE DATE OF SUCH NOTICE IN WHICH TO MAKE THAT ELECTION.
YOU NEED NOT AGREE TO THIS ARBITRATION AGREEMENT TO OPEN AN ACCOUNT WITH E*TRADE FUTURES. ACCEPTANCE OF THIS ARBITRATION AGREEMENT REQUIRES A SEPARATE SIGNATURE.
31. Authorization to Transfer Funds – Without limiting other provisions herein or the Authorization to Transfer Funds accompanying this Agreement, E*TRADE Futures is authorized to transfer from any segregated Account subject to the CEA and CFTC Regulations carried by E*TRADE Futures for the Client to any other Account carried by E*TRADE Futures for the Client such amount of excess funds as in E*TRADE Futures’ judgment may be necessary at any time to avoid a Margin call or to reduce a debit balance in said Account. It is understood that E*TRADE Futures will confirm in writing each such transfer of funds made pursuant to this authorization within a reasonable time after such transfer.
32. USA PATRIOT Act Compliance – Client agrees that it shall not at any time, in connection with the establishment or use of any account maintained with E*TRADE Futures, engage in transactions involving, on behalf of or benefiting any government or country that is the subject of sanctions administered by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”). Client further agrees that it will not engage in transactions involving, on behalf of or benefiting any person (individual or entity), designated on OFAC’s List of Specially Designated Nationals and Blocked Persons.
33. Consent to Delivery of Electronic Statements – The CFTC permits Client to receive daily statements/confirmations and monthly statements for the Account by electronic media, subject to obtaining Client’s consent. E*TRADE Futures maintains proprietary internet-based systems that deliver confirmations, statements and other reports to Client in lieu of delivery by ordinary mail. Client should be aware of the following: (i) Client’s consent, if given, will be effective upon execution of this Futures Agreement and shall remain effective thereafter until revoked; (ii) Client may revoke its consent at any time by written notice of revocation to E*TRADE Futures which will be effective upon receipt by E*TRADE Futures; (iii) Client will receive an email alert, at the email address(es) provided pursuant to this Futures Agreement, when any electronic daily statement/confirmation or monthly statement is available on the internet-based system; and (iv) electronic daily statements/confirmations and monthly statements are accessible on the internet-based system for a limited time following its initial posting. Client hereby consents to receiving confirmations and statements by electronic means in lieu of ordinary mail. If an Authorized Agent is executing this Futures Agreement on behalf of Client as Client’s agent and attorney-in-fact, Authorized Agent hereby represents and warrants that it shall, at all times that this consent to delivery of electronic statements is in force, make access to the internet-based systems that deliver confirmations, statements and other reports available to Client.