In addition to the disclosures listed here, Canaccord Genuity Inc. maintains the following policies and makes the following disclosures.
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ANTI-MONEY LAUNDERING (CUSTOMER IDENTIFICATION PROGRAM NOTICE) (Customers of Canaccord Genuity Inc.)
Important Information You Need to Know About Opening A New Account
To help the government fight the funding of terrorism and money laundering activities, federal law requires financial institutions to obtain, verify, and record information that identifies each person who opens an account.
This Notice answers some questions about Canaccord Genuity’s Customer Identification Program.
What types of information will I need to provide?
When you open an account, Canaccord Genuity is required to collect information such as the following from you:
- Your name
- Date of birth
- Identification number
- US Citizen: taxpayer identification number (social security number or employer identification number)
- Non-US Citizen: taxpayer identification number, passport number, and country of issuance, alien identification card number, or government-issued identification showing nationality, residence, and a photograph of you
- You may also need to show your driver's license or other identifying documents
A corporation, partnership, trust or other legal entity may need to provide other information, such as its principal place of business, local office, employer identification number, certified articles of incorporation, government-issued business license, a partnership agreement, or a trust agreement.
US Department of the Treasury, Securities and Exchange Commission, FINRA, and New York Stock Exchange rules already require you to provide most of this information. These rules also may require you to provide additional information, such as your net worth, annual income, occupation, employment information, investment experience and objectives, and risk tolerance.
What happens if I don't provide the information requested or my identity can't be verified?
Canaccord Genuity may not be able to open an account or carry out transactions for you. If we have already opened an account for you, we may have to close it.
We thank you for your patience and hope that you will support the financial industry's efforts to deny terrorists and money launderers access to the financial services industry.
© 2007. FINRA.
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BUSINESS CONTINUITY PLAN NOTICE
Canaccord Genuity is committed to providing a consistently high level of service to its clients. Certain events beyond the control of the firm could impact our ability to meet this goal. These events, or significant business disruptions, may include temporary inability to access facilities due to storms or local or regional power outages; natural disasters such as fire, flood, or hurricane; or intentional malicious attacks on facilities, systems, or personnel. In accordance with NASD Rules 3510 and 3520, NYSE Rule 446, and IIROC By-Law 17.19, Canaccord Genuity has developed and maintains a Business Continuity Plan (BCP) to address the impact of potential significant business disruptions. The BCP has been reasonably designed to enable Canaccord Genuity to provide for continued operations of critical functions to meet its obligations to customers.
Canaccord Genuity has designated a senior executive in charge of its business continuity program who is responsible for conducting an annual review of the plan. Named business continuity representatives are responsible for maintaining the plan to reflect any material changes to the firm's operations, structure, business, or locations. Additionally, the business continuity representatives are called upon to lead the resumption of operations should a significant business disruption occur.
The Canaccord Genuity’s BCP assesses the financial and operational risks of varying degrees of significant business disruptions, including building, citywide, and regional events. It identifies plans to protect and restore critical business processes, records, data, systems, and facilities. Depending on the nature of the disruption, our goal is to restore the most critical functions within a matter of hours, while less critical functions would be restored within several days. For security reasons, the specific details of our business resumption plan are not disclosed in this notice. However, Canaccord Genuity would like its clients to know that our BCP provides for a wide range of business continuance mechanisms, such as power generators, redundant components, systems, and communication technologies, and the implementation of alternate work and computing facilities.
The BCP addresses methods for communicating to customers, employees, counter-parties and other constituents in the event of a disruption, as well as ongoing communication with and reporting to regulators. Finally, in the event that a serious disaster forces Canaccord Genuity to discontinue operations, the plan addresses the mechanisms to provide customers with prompt access to their funds.
Canaccord Genuity’s BCP is subject to periodic review and modification. Should material changes to the plan occur, this notice will be updated accordingly. Customers may request more information regarding the Canaccord Genuity’s BCP by contacting firstname.lastname@example.org.
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As a Canaccord Genuity client, you have entrusted to us your assets and your personal and financial data. We recognize that your relationship with us is based on trust, and that you expect us to act responsibly and in your best interest. Because your personal and financial information is private, we hold ourselves to the highest standards in its safekeeping and use.
We may collect non-public personal information about you from the following sources:
- Information we receive from you on account applications or other forms, such as your name, address, telephone number, social security number/social insurance number, income, assets, and investment objectives;
- Information about your transactions with us, our affiliates, or others, such as your account numbers and balances, investment activity, and other transaction information; and
- Information from employers that administer employee benefits programs through us.
We have adopted polices and procedures that are reasonably designed to ensure the security and confidentiality of customer information which includes consumer report information. In addition, these policies and procedures are designed to prevent unauthorized access to or use of customer records or information that could result in substantial harm or inconvenience to any customer.
We use the information described above when administering your account. We may disclose non-public personal information in order to provide a service or complete a transaction that you request or authorize, or as otherwise required or permitted by the laws and industry standards that apply to us (i.e. anti-money laundering, regulatory requests). We may also disclose nonpublic personal information within our family of affiliated companies in order to inform you of other financial products and services that we offer.
We restrict access to non-public personal information about you to our employees who need to access the information to provide products and services to you. We maintain physical, electronic and procedural safeguards to protect your nonpublic personal information. Confidential customer information is destroyed or shredded prior to disposal.
Our privacy policies and procedures will continue to apply to your information even if your account is no longer active.
For your protection, we recommend that you do not provide your account information to anyone. If you become aware of any suspicious activity relating to your account, please contact us immediately.
You may receive notices of changes to our privacy policies and procedures or periodic updates of this notice, as required by law.
At Canaccord Genuity, we are proud of the trust and confidence we have earned from you. We will continue to earn that trust and confidence by keeping your non-public personal information secure and confidential.
In the United States, please contact Canaccord Genuity Inc. at 1.800.225.6201 or 1.617.317.3900 or in writing to Canaccord Genuity Inc., 99 High Street, Suite 1200, Boston, MA, 02110.
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EQUITIES ORDER HANDLING PRACTICE
Client instructions may determine how orders are prioritized. Client understanding and experience of the overall market, client’s dealing profiles and the nature of the dealing service required are all factored.
In the absence of express client instruction, the firm will exercise discretion in determining the factors that need to be taken into account for the purpose of providing customers with best execution.
Canaccord’s commitment to provide the best execution quality possible does not create any fiduciary responsibilities above the specific regulatory obligations placed upon the firm or as may be otherwise contracted. At no time will Canaccord place its own financial interest ahead of the customer’s interest.
Finding liquidity and increasing the likelihood of execution are important for larger middlemarket and institutional orders. Canaccord Genuity Inc. may use its own capital to enhance liquidity in individual stocks in an effort to improve the speed and likelihood of execution. For the avoidance of doubt, use of capital is entirely at the firm’s discretion and is not guaranteed for any trading scenario or prevailing customer. For smaller middle-market and broker-dealer orders, displayed liquidity on regulated markets and multilateral trading facilities is typically available unless dealing in illiquid stocks.
Order-size will be a key determining factor on how to achieve best execution. Order-size and market impact are directly correlated, subject to the relative liquidity of the stock in question. Orders of larger size and/or in less liquid stocks are likely to be worked over a period of time to reduce market impact. Orders of lesser size and in more liquid stocks are generally executed as quickly as possible after receipt. At no time will an order be executed contrary to the instructions received from the customer.
Price will always be important but not necessarily determinative in achieving the best outcome for the client. Price is a sub-set of other considerations such as timeliness, order size and market impact. Price assumes a higher priority for client orders where the transactions are low in size/value and have minimal market impact. Broker-dealer client orders will be executed as quickly as possible and where the best-available price is present. Institutional client orders will have less immediate emphasis on price and more on market impact. Larger orders, for example, may be worked over a period of time with an emphasis on minimizing market impact in an effort to achieve the best possible outcome.
Our order execution efforts include venues that will allow us to obtain, on a consistent basis, the best execution for each order in a financial instrument which we execute a client’s behalf. Those execution venues may include, as appropriate for each financial product, regulated markets, multilateral trading facilities, systemic internalizers, our own propriety trading desks and third party investment firms and/or affiliates acting as a market maker. The choice of execution venues is based on client demand, liquidity and displayed price.
To obtain best execution for you, where we have client consent, we may execute orders on your behalf outside a regulated market or a multilateral trading facility.
In relation to some financial instruments, there may be only one possible execution venue. When executing an order on a client’s behalf under such circumstances, it will be assumed that we have achieved best execution.
When acting in an agency capacity, multiple orders in the same security from multiple clients or for the firm’s own accounts may be presented. Canaccord applies fair and equitable methods of allocating executions among those orders in accordance with all applicable regulatory requirements. Allocation methodology may vary and be conducted on the basis of time priority, proportional or even split’s, or any other methodology determined to be fair and equitable among multiple orders. Canaccord Genuity Inc. is entirely committed to handling and executing client orders in a manner that in no way disadvantages clients, or place the financial interests of either the firm, or other clients ahead of yours.
Trading Along with Customers
FINRA Rule 5320 generally prohibits a broker-dealer that accepts and holds an order in an equity security from its customer or a customer of another broker-dealer without immediately executing the order from trading that security on the same side of the market for its own account at a price that would satisfy the customer order, unless it immediately thereafter executes the customer order up to the size and at the same or better price at which it traded for its own account. Certain exceptions to the rule exist including exceptions for large orders and orders for institutional accounts, “no-knowledge” exceptions, riskless principal exceptions, intermarket sweep order (“ISO”) exceptions as well as odd lot and bona fide error transactions. (http://finra.complinet.com/en/display/display.html?rbid=2403&record_id=14666&element_id=9989&highlight=5320#r14666)
With respect to the orders of an “institutional account,” as defined in FINRA Rule 4512(c), or for Large orders (10,000 shares or more and greater than $100,000 in value), Rule 5320 permits a broker-dealer to, and Canaccord Genuity Inc. may, trade an equity security on the same side of the market for its own account at a price that would satisfy such customer order provided notice is provided to the customer and the customer is provided an opportunity to opt in to the Rule 5320 protections with respect to all or any portion of its order. Institutional accounts and persons placing orders for 10,000 shares or more not otherwise subject to the protections afforded by Rule 5320 may “opt in” to the Rule 5320 protections by providing written notice with respect to any particular order, at the time of placing the order with the Canaccord Genuity Inc. representative taking the order, and with respect to all orders specific to that account.
Canaccord Genuity Inc. acts as a market maker in various equity securities. With respect to NMS stocks, as defined in Rule 600 of SEC Regulation NMS, Canaccord Genuity Inc. may send orders for NMS stocks to other market centers on an agency basis. Canaccord Genuity Inc. has developed and implemented internal controls, including information barriers, that operate to prevent one of the firm’s three aggregation units from obtaining knowledge of customers orders not routed to it and, as a result, the firms market making desk may trade for its own account prior to completion a client order and at the same or a better price than the customer receives.
The Riskless Principal Exceptions affords proprietary traders the opportunity to facilitate client orders on a riskless basis. Customer orders must be received prior to the principal transaction, which must be at the same price as the customer order. This exception is contingent on the firm identifying the trades as such to FINRA. In addition, pursuant to the rule, the firm maintains policies and procedures ensuring compliance with regulatory mandates.
The Intermarket Sweep Order (ISO) exception states that “A member shall be exempt from the obligation to execute a customer order in a manner consistent with this Rule with regard to trading for its own account that is the result of an ISO routed in compliance with Rule 600(b)(30)(ii) of SEC Regulation NMS ("ISO") where the customer order is received after the member routed the ISO.” ISO’s routed for the purpose of facilitating client orders where the customer has agreed to not receiving the better prices stemming from ISO executions also exempt the firm from any trading on a proprietary basis that is a result of the ISO.
As stated in the rule, odd lots (orders less than 100 shares), and orders entered in an effort to correct a bona fide error are exempt from the rule. As it pertains to orders entered for the purpose of covering error’s, documentation must be made indicating the purpose of the transaction.
Held/Not Held order handling
Customers may enter "not held" orders which are market orders that give the trader time and price discretion in executing the trade to get the best possible price without holding the trader responsible if the best price is not obtained. Block-sized orders are often not held because of the complexity of executing large orders without unduly disrupting the market price.
“Held” orders are orders where client instruction is applied upon entry to immediately be submitted for execution at the best available market price given size and limit constraints. All or part of any client “held” order may not be executed at the same price or better than a firm order entered by a trading desk that did not have knowledge of the order.
Orders received on behalf of institutional customers are generally handled as “not held” orders unless designated otherwise by the client upon submission. “Not held” orders afford the firm greater latitude to utilize the professional judgment of the firm’s traders and any applicable algorithm’s in seeking the best overall quality of execution under market circumstances. These orders provides the firm with necessary trading discretion when managing client orders factoring in order size and potential market impact of the order as well as depth and liquidity of the current market. Please note that such orders do not guarantee execution at prices that are the same or better than orders on behalf of other customers of the firm.
FINRA defines a Net Transactions as a “principal transaction in which a market maker, after having received an order to buy/sell an equity security, purchases/sells the equity security at one price (from/to another broker-dealer or another customer) and sells/buys the stock with the customer at a different price.” As per FINRA Rule 2124 (Net Transactions with Customers), Canaccord Genuity Inc. is obligated to provide disclosure and obtain consent from the customer prior to executing a Net Transaction. Orders will only be executed on a net basis when requested by the customer.
As it pertains to Institutional customers, Canaccord Genuity Inc. must obtain a customer’s consent and understanding of the terms and conditions of the order prior to executing a Net transaction. This consent can be done both verbally or documented consent. Orally, the disclosure to and consent from the customer must be on an order-by-order basis. Such disclosure and consent must clearly explain the terms and conditions from handling the customer order and provide the institutional customer with a meaningful opportunity to object the execution on the transaction on a net basis. Written consent must also be furnished on an order-by-order basis prior to execution. However if an institutional customer wishes to always trade on a net basis, a signed consent document must be kept in the customers file. Confirmation by the client, understanding the terms and conditions of the order must also be provided.
Canaccord Genuity Inc. requires non-institutional customers to provide written consent on an order-by-order basis prior to executing a transaction on a net basis. Confirmation by the client, understanding the terms and conditions of the order must also be provided.
Short Selling and Affirmative Determination
When Canaccord Genuity Inc. accepts a short sale orders from clients, it is required to obtain the “borrow” information from the client and then document it on the order ticket the client prior to accepting the order. If the customer has the ability to send orders to Canaccord Genuity Inc. via electronic methods (i.e. FIX), they should be aware that the system will not accept the order unless the locate field provided is populated with the correct “borrow” information. It is mandatory that the information should at least include where the “borrow” was obtained, but may also include who the customer spoke with if applicable and/or the quantity borrowed. If the “borrow” information contains only information evidencing where the “borrow” was obtained, it is to be assumed that the “borrow” is at least for the quantity of the entire order.
Indications of interest
An indication of interest, commonly referred to as an “IOI”, is an expression evidencing potential interest a security on a non-binding basis. IOI’s are used as an advertisement of trading interest on both a customer and proprietary basis in an attempt to generate orderflow. These indications are posted via the firms servers and the information is then passed to specific clients or the market place. Indications of interest generally contain security name, quantity of interest and price.
Indications of interest that are represented as bona fide orders are considered “natural” IOI’s. IOI’s considered to be natural by the firm are those orders Canaccord has already received and indications of interest communicated verbally or via electronic communication by an institutional client. Additionally proprietary interest for an in house account of the firm that is bona fide in nature is considered to be a natural IOI. Canaccord considers the above natural IOI’s to be actionable on a firm commitment basis.
Extended Hours Trading Risk Disclosure
Pursuant to both FINRA and NASDAQ rules, Canaccord Genuity is required to provide the following disclosures regarding risk associated with customer trading in the Pre-Market and Post-Market Sessions:
Canaccord Genuity Inc. is devoted to providing the most efficient executions at the best overall market prices. The firm takes a host of factors into account when delivering execution quality based on specific needs and instructions from the customer. Best execution for some clients may mean utilizing opportunities to secure set prices or liquidity superior to the overall market while for others execution speed, transparency, and the most cost efficient access to liquidity take priority. In addition to prevailing market price, transaction costs, and need for prompt execution, relevant market liquidity, order size, nature of the transaction and venue of execution are all considered.
Risk of Lower Liquidity. Liquidity refers to the ability of market participants to buy and sell securities. Generally, the more orders that are available in a market, the greater the liquidity. Liquidity is important because with greater liquidity it is easier for investors to buy or sell securities, and as a result, investors are more likely to pay or receive a competitive price for securities purchased or sold. There may be lower liquidity in extended hours trading as compared to regular market hours. As a result, your order may only be partially executed, or not at all.
Risk of Higher Volatility. Volatility refers to the changes in price that securities undergo when trading. Generally, the higher the volatility of a security, the greater its price swings. There may be greater volatility in extended hours trading than in regular market hours. As a result, your order may only be partially executed, or not at all, or you may receive an inferior price in extended hours trading than you would during regular markets hours.
Risk of Changing Prices. The prices of securities traded in extended hours trading may not reflect the prices either at the end of regular market hours, or upon the opening of the next morning. As a result, you may receive an inferior price in extended hours trading than you would during regular market hours.
Risk of Unlinked Markets. Depending on the extended hours trading system or the time of day, the prices displayed on a particular extended hours system may not reflect the prices in other concurrently operating extended hours trading systems dealing in the same securities. Accordingly, you may receive an inferior price in one extended hours trading system than you would in another extended hours trading system.
Risk of News Announcements. Normally, issuers make news announcements that may affect the price of their securities after regular market hours. Similarly, important financial information is frequently announced outside of regular market hours. In extended hours trading, these announcements may occur during trading, and if combined with lower liquidity and higher volatility, may cause an exaggerated and unsustainable effect on the price of a security.
Risk of Wider Spreads. The spread refers to the difference in price between what you can buy a security for and what you can sell it for. Lower liquidity and higher volatility in extended hours trading may result in wider than normal spreads for a particular security.
Risk of Lack of Calculation or Dissemination of Underlying Index Value or Intraday Indicative Value ("IIV"). For certain Derivative Securities Products, an updated underlying index value or IIV may not be calculated or publicly disseminated in extended trading hours. Since the underlying index value and IIV are not calculated or widely disseminated during the pre-market and post-market sessions an investor who is unable to calculate implied values for certain Derivative Securities Products in those sessions may be at a disadvantage to market professionals.
When participating in extended hours trading the client is expected to understand the risks associated with this activity. Clients are to understand that pre and post market strategy may not be suitable to every investor.
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SEC REQUIRED DISCLOSURE OF ORDER EXECUTION AND ROUTING INFORMATION
Canaccord Genuity trades National Market System Securities as a market maker in the Over-the-Counter market. Pursuant to Rule 605 adopted by the Securities and Exchange Commission, Canaccord Genuity is presenting certain information with respect to orders executed during the preceding month. You can obtain this information by accessing the following links: http://www.tta.thomson.com/msi/public1_5.html
(http://www.tagaudit.com/rule5.asp?user=adam for data prior to October 2007)
Pursuant to Rule 606 adopted by the Securities and Exchange Commission, Canaccord Genuity is presenting certain information with respect to orders executed during the preceding quarter. You can obtain this information by accessing the following links: http://www.tta.thomson.com/reports/ or http://www.tagaudit.com/do/display?page=Public::R606N&user=adam (for data prior to October 2007) or quarterly reports are available upon request.
Please note that the vast majority of Canaccord Genuity’s customer trading activity is institutional in nature. Due to the size and trading strategies employed by these customers, most institutional orders are not subject to or relevant for Rule 605 or 606 reporting.
The SEC requires that the disclosure of a market center's order execution information be made available in an electronic data file, standard, pipe delimited, ASCII format, and compressed using standard Zip compression.
To effectively download and open Canaccord Genuity’s order execution information, installation of a Zip utility program such as WinZip (www.winzip.com) is required.
For an explanation of how to read these data, please refer to the SEC instructions for data presentation found in "Downloadable File Structure and Naming Conventions" on the www.tta.thomson.com or www.tagaudit.com website.
If you have any questions regarding this information, please contact us at email@example.com.
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SEC SHORT SALE ORDER AMENDMENT OF SEPTEMBER 21, 2008
Pursuant to the SEC Amendment to Emergency Order Pursuant to Section 12(k)(2) of the Securities Exchange Act of 1934 Taking Temporary Action to Respond to Market Developments dated September 21, 2008 (the "Order"), market makers may not knowingly effect a short sale as part of bona fide market making and hedging activity related directly to bona fide market making in a derivative security based on a Covered Security, if the customer's or counterparty's transaction will result in the customer or counterparty establishing or increasing an economic net short position (i.e., through actual positions, derivatives, or otherwise) in the issued share capital of a firm covered by the Order.
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