The Newedge USA system provides electronic access to all major American options exchanges. All of the exchanges have rules and policies regarding the kinds of orders and activities that are prohibited from entry onto their electronic execution systems. The following represents Newedge USA’s policy for option orders on the Newedge USA system.

Access and Account Type Representation
Customer and Broker Dealer accounts are permitted to have access to the options exchanges’ execution systems. These different account types are subject to different order handing rules at the exchange level. For this reason, Newedge USA requires that accounts in which Broker Dealers and or Exchange members have an interest disclose this interest at the time the account is opened, or when an interest occurs.

Unbundling/Multiple Orders
Newedge USA does not permit an account (or accounts with beneficial ownership or financial relationship) to enter multiple orders in all classes of the same underlying security to an exchange within a 15 second time period. The Newedge USA system will reject a second option order entered within 15 seconds entered by the same or related account for an option of the same underlying security.

Manipulation
It is a violation of Exchange rules and Newedge USA’s policy to enter a limit order for placement on an Exchange’s limit order book for the purpose of effecting the execution price of other option orders on the same or competing exchanges. This is the case whether or not the limit order is actually executed in whole or in part or instead cancelled, and regardless of whether another electronic trade actually is executed at a price influenced by the limit order. Such activity may constitute manipulation and is an egregious violation of Newedge USA’s policy, exchange rules and federal law.

Electronically Generated and Communicated Orders
Newedge USA requires accounts sending orders via the Newedge USA system that are created and communicated electronically without manual input, to send all orders in accordance with the various Exchanges’ rules regarding electronically generated and communicated orders. A computer system that generates orders may directly transmit those orders (via the Newedge USA system) if they are eligible for execution in this fashion on an options exchange’s auto-execution system at the time of entry.

Market – Making
The option exchanges prohibit the entering of option orders that may constitute unregistered market making. Market making is defined as entering limit orders on a regular and continuous basis through the exchanges’ automated system onto the order book to simultaneously work orders to buy and sell the same option series for the same account or accounts of the same beneficial owner.

Excessive Order Cancellation
The option exchanges have determined that a practice of entering option orders onto the exchanges’ automated systems and canceling immediately thereafter when the order is not executed instantly is disruptive to the maintenance of fair and orderly markets. Newedge USA reserves the right to charge clients an "Excessive Order Cancellation Fee." This fee of $1 per order cancellation is applied monthly when the total number of orders cancelled exceeds the number of orders executed within a one month period.

Option Trade Busts/Adjusts
Options exchanges have rules governing the circumstances in which electronic trades may be busted or adjusted. In the absence of mutual agreement by both parties to a particular transaction, electronic option trades may be busted or adjusted per the individual exchange’s rules. Busted/adjusted trades may result from situation arising from but not limited to: System problems - Autoquote system problems causing the dissemination of an erroneous option market, stale quotes, incorrect underlying value causing bad option market, etc. or human error – error by quote reporter in updating markets, operator error in inputting autoquote parameters, etc.

The abuse of the Newedge USA system or failure to adhere to the above policies may result in the restriction of the activity of the account or its access to the Newedge USA system.

Version 01/02/2008