Regulations Governing Custody and Investment of Funds by Securities Firms on Behalf of Customers Article 19

When a securities firm uses the funds in the cash management account to conduct repo-style transactions, if a single repo-style transaction is undertaken that consolidates the funds of two or more customers and some of the customers terminate the contract early, triggering the circumstances for early termination of the transaction, the securities firm shall obtain a written undertaking from the trading counterparty. In a case where there is early, partial termination of a single transaction, the part of the funds that continues to be used for a repo-style transaction with that trading counterparty shall generate interest at the originally stipulated interest rate. When a new contract for a repo-style transaction is entered into, it shall have the same expiration date and interest rates as the contract prematurely terminated. These restrictions shall not apply, however, when other stipulations exist between the securities firm and the customers that have not terminated the contract early, provided that customer rights and interests are not prejudiced thereby.A securities firm conducting repo-style transactions between the funds in the cash management account and its proprietary account shall do so pursuant to the provisions of the preceding paragraph.