This document provides you with basic information about purchasing securities on margin and alerts you to the risks involved with trading securities using margin. Consult customer support at Long Bridge Securities LLC (“Longbridge”, “we” or “us”) regarding any questions or concerns you may have with your margin account.

We have entered into a fully disclosed clearing agreement with APEX Clearing Corporation where your account will be held (“Clearing Broker”). Before trading securities in a margin account, you should carefully review the margin agreement provided to you when you open an account as well as this Statement in its entirety. Please contact us if you have any questions or concerns.

When you purchase securities, you may pay for the securities in full or you may borrow part of the purchase price from us. If you choose to borrow funds from us, you will need to do so through a margin account with us through the Clearing Broker. The securities purchased are used as for the loan to you. If the securities in your account decline in value, so does the value of the collateral supporting your loan, and, as a result, we can take action, such as issue a margin call and/or sell securities or other assets in any of your accounts, in order to maintain the required equity in the account.

It is important that you fully understand the risks involved in trading securities on margin.

These risks include, without limitation, the following:

  • You can lose more funds than you deposit in the margin account. A decline in the value of securities that are purchased on margin may require you to provide additional funds to the firm that has made the loan to avoid the forced sale of those securities or other securities or assets in your account(s).

  • We can force the sale of securities or other assets in your account(s). If the equity in your account falls below the maintenance margin requirements, or the firm’s higher “house” requirements, we can sell the securities or other assets in any of your accounts held at the firm to cover the margin deficiency. You also will be responsible for any shortfall in the account after such a sale.

  • We can sell your securities or other assets 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. However, even if we or the Clearing Broker have contacted you and provided a specific date to meet a margin call, we can still take necessary steps to protect our financial interests, including immediately selling the securities without notice to you. We may forcibly liquidate all or part of your account without prior notice, regardless of your intent to satisfy a margin call, in order to protect your interests or our interests.

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

  • The firm can increase its “house” maintenance margin requirements at any time and is not required to provide you advance written notice. 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 or the Clearing Broker to liquidate or sell securities in your account(s).

  • 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.

  • The IRS requires broker dealers to treat dividend payments on loaned securities positions as a substitute payment in lieu of a dividend. A substitute payment is not a qualified dividend and is taxed as ordinary income.

  • Industry regulations may limit your ability to exercise voting rights of securities that have been lent or pledged to others. You may receive proxy materials indicating voting rights for a fewer number of shares than are in your account or you may not receive any proxy materials for shares that are loaned out to others.

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Disclosure of Credit Terms and Policies

The following Disclosure of Credit Terms and Policies is required by the U.S. Securities and Exchange Commission and is part of your agreement with Longbridge and the Clearing Broker. It describes the terms under which the clearing and carrying firm (on behalf of Longbridge) extend credit and charge interest and how your obligations are secured by property in your account.

Interest Charges. You will be charged interest on a daily basis on the credit extend to you. The daily interest charges are calculated by multiplying your “daily adjusted debit balance” by the “daily margin interest rate.” Generally speaking, your daily adjusted debit balance is the actual settled debit balance in your margin and short account, increased by the value of securities held short and reduced by the amount of any settled credit balance carried in your cash account.

Your daily-adjusted debit balance is calculated each day by adjusting your previous day’s balance by any debits and credits to your account and by changes in the value of short positions. If your “daily-adjusted debit balance” is reduced because you deposit a check or other item that is later returned to us unpaid, your account may be adjusted to reflect interest charges you have incurred.

Longbridge or its clearing firm reserves the right to charge interest on debit balances in your cash account. Periodically, Longbridge, or its clearing firm, will send you a comprehensive statement showing the activity in your account, including applicable interest charges, interest rates and adjusted daily debit balances.

Daily Margin Interest Rate. The “daily margin interest rate” is based on a 360-day year. It is calculated for each day by dividing the base margin interest rate by 360.

(Note: that the use of a 360-day year results in a higher effective rate of interest than if a year of 365 days were used.)

The applicable margin interest rate is the base rate (“Base Rate”) for all daily adjusted debit balances. Your margin interest rate will be adjusted automatically and without notice to reflect any change in the Base Rate. If your interest rate increases for any reason other than a change in the Base Rate, you will receive written notice at least 30 days prior to that change.

Compounding Interest Charges. Interest is compounded on a daily basis. Interest charges will accrue to your account each day. Any charges will be included in your next day’s opening debit balance and interest will be charged accordingly. The interest rates described above do not reflect compounding of unpaid interest charges; the effective interest rate, taking into effect such compounding, will be higher.

Initial Margin Requirements. The Federal Reserve Board and various stock exchanges determine margin loan rules and regulations. When you purchase securities on margin, you agree to deposit the required initial equity by the settlement date and to maintain your equity at the required levels. The maximum amount the Clearing Broker currently may loan for common stock (equity) securities is 50% of the value of marginable securities purchased in your margin and short Account. Different requirements apply to non-equity securities, such as bonds or options. If the market value of stock held as collateral increases after you have met the initial margin requirements, your available credit may increase proportionately. Conversely, if the market value decreases, your available credit may proportionately decrease.

Initial margin requirements may change without prior notice. Longbridge may, impose anytime and without prior notice, more stringent requirements on positions that, in its sole discretion, involve higher levels of risk; for example, higher limits may apply for thinly traded, speculative or volatile securities, or concentrated positions of securities.

You may purchase only certain securities on margin or use them as collateral in your margin and short Account. Most stocks traded on national securities exchanges, and some over-the-counter securities are marginable. Longbridge reserves the right, in its sole discretion, not to extend credit on certain securities. 

Equity securities with a market value of less than $3 per share are not eligible to be purchased on margin or deposited as margin collateral. If the market value of a security drops below $3 per share, the security will not be assigned any value as collateral to secure your margin loan obligations.