Market Access Disclosure

Consistent with the obligation to maintain a fair and orderly market, Velocity Clearing, LLC reserves the right to reject an order based on its systemic controls as required pursuant SEC Rule 15c3-5.

Order Handling, Clearance and Settlement Disclosure

Velocity Clearing, LLC, may, in its sole discretion, accept or reject any order transmitted to it for order handling, clearance or settlement.

Not Held Order Handling Disclosure

Unless otherwise approved by Velocity Clearing, LLC, all client orders, including immediate or cancel (“IOC”) orders and orders that do not include specific instructions, will be accepted and handled as not held orders, which allows the Firm to exercise a certain degree of price and time discretion when executing the order consistent with the Firm s duty of best execution. Velocity Clearing, LLC does not accept non-directed held orders.

FINRA 5320 Compliance

FINRA Rule 5320 (“Rule 5320”) generally prohibits a broker-dealer from trading for its own account on terms that would satisfy a customer order. Rule 5320 provides certain exemptions that Velocity Clearing, LLC relies upon, such as an exemption for not held orders which give Velocity Clearing, LLC time and price discretion. Velocity Clearing, LLC may trade in its own account prior to the completion of the client order when handling not held orders. Additionally, Rule 5320 permits a broker-dealer to trade for its own account while in possession of certain large sized orders (orders of 10,000 shares or more and have a value of $100,000 or more) for an institutional account (as that term is defined in FINRA Rule 4512(c)), provided that the broker-dealer provides clear and comprehensive written disclosure at account opening and annually thereafter. Additionally, the broker-dealer is required to provide its institutional accounts with the opportunity to opt into the protections of Rule 5320 with respect to all or a portion of its order(s). You may opt in” to the protections of Rule 5320 by contacting the Compliance Department at compliance@velocityclearingllc.com.

If you do not opt into the Rule 5320 protections with respect to all or a portion of your order(s), Velocity Clearing, LLC may reasonably conclude that you have consented to the Firm trading a security on the same side of the market for its own account at a price that would satisfy your order, as described above. Even when a customer has opted in to the FINRA Rule 5320 protections, Velocity Clearing, LLC may seek and the client may provide consent to trade along on an order-by-order basis.

Net Trading

If you agree to net trading as part of your Account Agreement, you authorize Velocity Clearing, LLC to execute not held orders as principal on a net basis. When executing orders on a net basis, Velocity Clearing, LLC accumulates a position in a principal account to fill your order and then executes your order at a price(s) that is typically above its average accumulation cost in the case of a buy order or below its average accumulation cost in the case of a sell order. The difference between Velocity Clearing, LLC’s average cost to accumulate a position to fill your order and the price reported to you and the consolidated tape is compensation to Velocity Clearing, LLC for executing your order. Details regarding the individual executions used to fill your order(s) are available upon request. Velocity Clearing, LLC may incur a profit (or sustain a loss) in its proprietary account as a result of executing trades on a net basis. For orders traded on a net basis, you will receive an execution at or better than your limit price.

If you would like more information or no longer wish to have your orders executed on a net basis, you need to notify Velocity Clearing, LLC in writing to trading@velocityclearingllc.com or to Velocity Clearing, LLC, 199 Water Street, 17th Floor, New York, NY 10038. Orders that are not transacted on a net basis may be subject to a commission or markup/markdown and pass through of market center fees.

Professional Capacity Options Designation – The 390 Orders Threshold

The Chicago Board Options Exchange (“Cboe”) Rulebook defines a “Professional” as any person or entity that (a) is not a broker or dealer in securities, and (b) places more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s).

Customers that cross the 390 order threshold are designated as “professional customers” for the duration of the quarter following the month in which the threshold was crossed. For example, if a customer averages more than 390 option orders in January (Q1), the professional customer designation will apply from April 1st to June 30th (the duration of Q2).

The Professional designation established by the options exchanges aims to identify professional customers who should not receive priority over certain orders. For this reason, accounts labeled as Professional require distinct handling and reporting by the Firm via its trade reporting requirements.

Note: All submitted option orders are considered under this rule, including orders that are executed in full, partially executed, and placed but not executed. An option order is counted as a single order if it is submitted as one of the following types:

  • Single leg order
  • Complex order of less than eight (8) legs
  • A complex order comprised of nine (9) legs or more counts as multiple orders with each option leg counting as its own separate order
  • Parent/child orders
  • Cancel and replace
  • Pegged Orders

For more information regarding the 390 Orders Professional Customer Rule, please see the SEC release here.

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read a copy of the Characteristics and Risks of Standardized Options, also known as the options disclosure document (“ODD”). It explains the characteristics and risks of exchange traded options.