Margin Disclosure

Margin Accounts
The following information pertains only to clients who are opening margin accounts with HBW. A special customer security hypothecation agreement must be signed.
Purchases of securities on credit, commonly known as margin purchases, enable you to increase the buying power of your equity and thus increase the potential for profit or loss. A portion of the purchase price is deposited when buying securities on margin, and credit is extended for the remainder. This loan appears as a debit balance on your monthly statement of account. Interest is charged on the debit balance and requires you to maintain securities, cash, or other property to secure repayment of funds advanced and interest due.
Interest will be charged for any credit extended to you for the purpose of buying, trading, or carrying any securities, for any cash withdrawals made against the collateral of securities, or for any other extension of credit. When funds are paid in advance of settlement on the sale of securities, interest will be charged on such amount from date of payment until settlement date. In the event that any other charge is made to the account for any reason, interest may be charged on the resulting debit balance.
The initial minimum amount of collateral, which you must provide when you buy securities on margin is determined by the rules of the Board of Governors of the Federal Reserve. The present initial margin requirement is 50%. (Thus, you must provide a minimum of 50% of the market value of the stock you purchased on margin and credit is extended to you for the balance of the purchase price.) The initial margin requirement is subject to change by the Federal Reserve Board without prior notice. In addition to the Federal Reserve Board's initial margin requirement, you must have a minimum of $5,000 equity every time you enter into a new commitment in your margin account.

Interest Rates
Interest will be charged to your account for any credit extended to you for the purpose of buying or trading or carrying any securities or for other purposes.

The annual interest rates on borrowed funds shall be applied as follows:
Average Debit Balance           Interest to be Charged Above
                                                    Brokers’ Call Money Rate
$0 – $24,999                                         3.75%
$25,000 – $99,999                                3.25%
$100,000 – and over                             2.25%

The rate at which interest is charged on your net debit balance is based upon the broker's call money rate in effect during the applicable interest period.
Adjustment of Rate Without Prior Notice: The annual rate of interest will change up or down without prior notice in accordance with shifts in the broker’s call money rate. If your interest rate is to be increased for any other reason, you will be provided with at least 30 days written notice prior to such change.

 It is important that you understand the risks involved in trading securities on margin.  These risks include the following:

• You can lose more funds than you deposit in the margin account. A decline in the value of securities you purchased on margin may require you to provide additional funds or margin-eligible securities to avoid the forced sale of any securities or assets in your account. 

• We can force the sale of securities or other assets in your account. If the equity in your account falls below the maintenance margin requirements or higher “house” requirements, we can sell the securities or other assets in your account to cover the margin deficiency. You also will be responsible for any short fall in the account after such a sale, possibly including costs related to collecting the short fall. If you are a director, officer or 10% shareholder of an issuer whose securities are sold to cover a margin deficiency in your account, you could be liable to this issuer for profits from the forced sale, as compared with any purchases you may have made of securities of the same issuer within six months of the sale (note that you could receive such a profit even if a shortfall remains in the account after the sale).

• Your securities or other assets can be sold without contacting you. Some investors mistakenly believe that a firm must contact them for a margin call to be valid, and that the firm cannot liquidate securities or other assets in their accounts to meet the call unless the firm has contacted them first. This is not the case. Most firms will attempt to notify their customers of margin calls, but they are not required to do so. In addition, even if a firm has contacted a customer and provided a specific date by which the customer can meet a margin call, the firm can still take necessary steps to protect its financial interests prior to that date, including immediately selling the securities without notice to the customer. 

• You are not entitled to choose which securities or other assets in your account are liquidated or sold to meet a margin call. Because the securities and any other assets in your account are collateral for the margin loan, we have the right to decide which assets to sell in order to protect our interests.

• “House” maintenance margin requirements can be increased at any time and we are not required to provide you advance notice. These changes in firm policy often take effect immediately and may result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause us to liquidate or sell securities or any other assets in your account. 

• You are not entitled to an extension of time on a margin call. While an extension of time to meet margin requirements may be available to customers under certain conditions, a customer does not have a right to the extension.

• Short selling is a margin account transaction and entails the same risks as described above. We can buy in your account securities to cover a short position without contacting you, and may use all or any portion of the assets in your account to make such a purchase. If the assets in your account are not sufficient to cover the cost of such a purchase, you will be responsible for any shortfall, possibly including costs in collecting the shortfall. 

• The securities held in your margin account, which collateralize your margin borrowing, can be loaned to others.  As a result of these loans, you may not be entitled to receive certain benefits of a securities owner, such as the ability to exercise voting rights and/or receive interest, dividends, and/or other distributions with respect to the securities lent. While a security in your account is lent, you may only be allocated and receive substitute payments in lieu of such interest, dividends, and/or other distributions. Substitute payments may not be afforded the same tax treatment as actual interest, dividends, and/or other distributions, and you may incur additional tax liability for substitute payments that you receive. We may allocate substitute payments in any manner permitted by law, rule, or regulation, including, but not limited to, by means of a lottery allocation method. You are not entitled to any compensation in connection with securities lent from your account or for additional taxes you may be required to pay as a result of any tax treatment differential between substitute payments and actual interest, dividends, and/or other distributions.