Regulatory Disclosure
FINRA Rule 2266 SIPC Information
Huatai Securities (USA), Inc. (“Huatai” or “HTUS”) is a subsidiary of Huatai Securities Company, Ltd. HTUS is a broker/dealer registered with the Securities and Exchange Commission (“SEC”) and is a member of the Financial Industry Regulatory Authority (“FINRA”), and the Securities Investor Protection Corporation (“SIPC”). Investors may obtain information about SIPC, including the SIPC brochure, at www.sipc.org/for-investors/ or calling 202-371-8300.
FINRA Rule 2267 Investor Education & Protection
FINRA BrokerCheck gives investors the ability to research the professional backgrounds, business practices, and conduct of FINRA-registered brokerage firms and brokers. Investors may also call the BrokerCheck Help Line at 800-289-9999 and visit the FINRA website, https://brokercheck.finra.org. An investor brochure describing the FINRA BrokerCheck Program is also available through these contacts.
Filing a Complaint
If you have a complaint regarding our products or services, please send the complaint to: Chief Compliance Officer, Huatai Securities (USA), Inc., 280 Park Avenue 21 East, New York, New York 10017 or contact 212-763-8158.
Cash Equity Order Handling and Order Routing Practices
HTUS sends your orders to certain trading centers or broker/dealers and may receive remuneration that is net of rebates and costs from exchanges where the order is executed, and which is based on the liquidity we provide. The amount of such remuneration may exceed the amount that HTUS is charged by such trading venue. This practice does not alter HTUS’ policy to route customer orders to the trading center where it believes clients will receive the best execution quality considering factors such as price, transaction cost, volatility, market depth, liquidity, quality of service, speed, and efficiency.
Important Account Opening Information
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: when you open an account, HTUS will ask you your name, address, date of birth, and other identifying information. If you open a new account on behalf of a legal entity subject to the Customer Due Diligence Rule, we will ask for the names of the beneficial owners, their address, date of birth, social security number, passport number and documentation to verify their identity. If required information or documentation is not adequately provided, HTUS will not open an account with you.
“Not Held” Institutional Orders
When an order for an institutional account (an ‘institutional order’) is marked as “not held” or is not marked either as “held” or “not held,” HTUS will handle the order as a “not held” order. HTUS believes handling an institutional order on a “not held” basis allows us to “work” the order using our judgment and discretion as to the price at which, the time when, or the manner in which such orders will be represented, exposed to, or executed by a venue to achieve a high-quality execution. If you have any questions, or do not wish for your orders to be handled as described above, please contact your HTUS sales representative.
SEC Rule 606 Reporting
As a client of HTUS, you may request, free of charge, information on any of your orders routed for execution by HTUS in the six months prior to the request. Specifically, you may request the identity of the venue to which any of your orders were routed for execution, whether the order was a directed or non-directed order, and the time of any resulting transaction. In addition, hard copies of HTUS’ quarterly order routing reports prepared pursuant to SEC Rule 606 are available free of charge upon request.
Transfer Restrictions and Sales Pursuant to a Registration Statement
As a condition to acceptance of any order by HTUS from you, you represent that you will, prior to entering the order: (a) advise us (i) of any legal restrictions on the transfer of any securities you sell (including under Rule 144 or 145(d) under the Securities Act of 1933) and (ii) whether any securities you sell are being sold pursuant to a registration statement and (b) provide any necessary documents to us (including prospectuses or opinions) to satisfy legal transfer requirements. You are responsible for any delays, expenses, and losses associated with compliance or failure to comply with any restrictions on the transfer of securities.
Order Handling During Volatile Market Conditions
During times of extreme market volatility, keep in mind these considerations when routing an order to HTUS: 1. Delays: High volumes of trading during such periods, whether at market opening or intra-day, may cause delays in execution and executions at prices and sizes significantly away from the market price and size quoted or displayed at the time the order was entered. Quoted or displayed share sizes may also be smaller during such periods, making it harder to execute larger share orders. 2. Market Order Prices and Limit Order Liquidity: While you may receive a prompt execution of a market order during such periods, the execution may be at a price significantly different from the current quoted price for that security. To mitigate the adverse impact of market volatility, HTUS may place a limit price when accessing the market. While you receive price protection for a limit order because it is executed only at the specified limit price or better, there is the possibility that the order will not be executed during such periods. 3. Limited Access: You may suffer market losses during such periods if systems problems result in an inability to place buy or sell orders. HTUS will make reasonable efforts to communicate with clients as appropriate in the event of such system problems. 4. Trading Halts: In the event the primary listing exchange for the security or FINRA declares a trading halt in the security or across all NMS stocks, HTUS may be prohibited from trading the security during such periods.
Authorized Traders
HTUS requests that you do not send us a list of personnel who are authorized to place orders. HTUS expects your internal controls are effective in ensuring that personnel who place orders with HTUS are properly authorized to enter into those transactions on behalf of your organization.
Information and Privacy Related to Access to Research through Third Parties
Electronic access to HTUS-affiliate research through HTUS distribution outlets is subject to Information and Privacy terms of the agreements governing these applications, and by accessing HTUS-affiliate research through third parties such as Bloomberg, FactSet, Thomson Reuters, etc., you consent to the communication and disclosure on a delayed basis of all information and data in respect of your use of HTUS-affiliate research on these services.
Alpha Capture Platforms
HTUS sales representatives communicate trade ideas to 3rd-party alpha capture platforms (“ACPs”). In certain circumstances, HTUS sales representatives may deem it appropriate to share trade ideas, in whole or in part, with you and other users on one or more ACPs. Consequently, trade ideas provided to you through those platforms may also be shared with other clients who participate in those platforms. As a registered broker/dealer, HTUS reserves the right to review any trade idea submission and modify and close any such submission. HTUS employees may personally hold investments or enter transactions for any issuer(s) or financial instrument(s) to which such trade idea(s) directly or indirectly relate, including in response to the trade idea(s). Trade idea(s) are prepared in accordance with HTUS’ policy on managing conflicts of interest. If you have questions regarding the manner in which HTUS is handling the use of trade ideas submitted to ACPs, please contact your HTUS sales representative.
FINRA Rule 4370 Business Continuity Plan
HTUS policies and procedures seek to assure that business continuity and contingency plans are adequate to respond to an unexpected disruption of our information systems and office facilities. The following business continuity control practices are in place: 1. Recovery plans designed to restore the HTUS environment, which include alternative workspaces and back-up computer systems. 2. The recovery plans are subject to annual assessment. 3. The recovery tests assess off-site copies of data, applications, and system software. 4. Materials identified as necessary to resume operations are stored at off-site locations with security controls. 5. A regular assessment of capacity and resource needs is performed to update processing and storage requirements if needed. In addition, call-forward and other telecommunication services are in place to provide continued communication between HTUS and its clients. Precautionary measures include the back-up and storage of critical data files on a regular basis at two separate sites. HTUS will attempt to continue business on behalf of its clients on that same business day during a disruption, recognizing that service may be impacted for longer periods depending on the nature of the disruption. In the event of a disaster or business disruption, if you are unable to contact your HTUS account representative, please contact the firm at huatai@htsc-us.com or 212-763-8160. HTUS does not guarantee that for every event or business disruption: (i) such plans will be successfully implemented; or (ii) such plans, if implemented, will be sufficient and appropriate to avoid, deter, or mitigate the event or business disruption. HTUS is dependent upon various infrastructures (e.g., transportation, telecommunications, exchanges, industry utilities, etc.) which may affect HTUS’ ability to implement its plans.
Order Handling with Respect to Orders Executed by Huatai Financial Holdings (Hong Kong) Limited
When handling your orders, Huatai Financial (Hong Kong) Limited (“HTFH”) will take all reasonable steps to provide execution on best available terms under the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. Where you send your order to HTUS for execution by HTFH in Asia markets, you hereby authorize HTUS to send your specific trade instructions (e.g., “not held” or the execution capacity in which HTFH may fill your order) for and on your behalf to HTFH. HTFH will endeavor to execute your order in Hong Kong listed equities as your agent unless HTFH and/or HTUS reasonably understand your instructions otherwise whereupon HTFH may endeavor to act as the principal to your order. HTUS intermediates securities transactions effected by HTFH for, or with, its US clients pursuant to SEC Rule 15a-6.
Privacy
HTUS will not sell or disclose your information to anyone except with our affiliates for the purpose to operate, evaluate, and develop our business including new product and service offerings and the effectiveness of our communications. We may also share your information with agents and service providers; however, we do not authorize these agents or service providers to use or disclose your information except as necessary to perform services on our behalf or to comply with legal requirements. We also may disclose information about you (1) if we are required to do so by law or legal process (such as a court order or subpoena); (2) in response to requests by government agencies, such as law enforcement authorities; (3) to establish, exercise or defend our legal rights; (4) when we believe disclosure is necessary or appropriate; (5) in connection with an investigation of suspected or actual illegal activity; or (6) otherwise with your consent.
Research Services
For any fees paid by your executing broker, CSA manager or other party at your direction, to HTUS for research services, including its third-party affiliate research reports, research analysts and other corporate access events, you represent that such payment(s) comply with Section 28(e) of the Exchange Act of ‘34.
Sales Pursuant to a Registration Statement
For any sale transaction placed with HTUS, you represent you will, prior to placing the order, (1) advise us of any legal restrictions on the transfer of any security you sell (e.g. Rule 144 and 145(d) under the Securities Act of ’33), and whether any security you sell is to be sold pursuant to a registration statement, and (2) provide HTUS all documents, including prospectuses and opinions, to satisfy legal transfer requirements. You will be responsible for any delays, expenses and losses associated with compliance, and failure to comply with, any restrictions during the transfer of securities process.
Should you have any questions regarding these Regulatory Disclosures, please contact your HTUS sales representative. Thank you for your continued business.