Money Market Sweep

This Money Market Sweep Disclosure (the “Disclosure”) is provided to you by the financial services provider (“Correspondent”) with whom you have opened your brokerage account (“Account”) and is supplementary to the terms and conditions set forth between you (“you” or “your”) and Interchange Clearing LLC (“we”, “our” or “us”) in your Customer Account Agreement. The terms described herein govern the Money Market Sweep (“Sweep”) feature and will apply to your Account as long as valid Sweep instructions are received and remain in effect. You may opt-out of participating in the Sweep feature.

1. Overview of the Money Market Sweep Feature

The Sweep feature is a cash management tool designed to optimize unencumbered cash (“Cash”) by automatically investing it in designated money market mutual fund(s). Cash affecting your Account is automatically swept into the designated fund prior to the fund’s purchase cutoff time. This process constitutes an automatic purchase or redemption of money market mutual fund shares.

Deposits and other Cash activity that occur after the daily cutoff may temporarily remain in your Account until the next business day, potentially resulting in a split between a Cash balance and a Sweep balance. All remaining Cash balances carried overnight will be swept on the next business day, excluding market holidays.

Sweep balances are redeemable on demand and may be used to settle securities transactions, make withdrawals, or satisfy other account obligations.

Confirmations for Sweep transactions are not sent pursuant to Rule 10b-10(b)(1) under the Securities Exchange Act of 1934. All Sweep transactions that occur in your Account will be reflected in your monthly Account statement, including the month-end Sweep balances and a description of the money market mutual fund(s) into which your Cash is swept.

2. Eligible Funds and Availability

• The specific money market mutual fund(s) into which your Cash may be swept are selected by us and made available by the Correspondent. You may request a list of currently available funds from your Correspondent.

• All purchases and redemptions are transacted at a net asset value (NAV) of $1.00 per share. This structure is intended to minimize the realization of capital gains or losses from Sweep activity.

• The Sweep feature will not be available if you are, or are later, determined by us or by the Correspondent to be a non-U.S. resident, based on information provided to the Correspondent.

3. Dividend Accrual and Payments

• Sweep-eligible balances swept prior to the daily cutoff time will begin accruing dividends on the same business day.

• Dividends accrue daily and are paid monthly, on the first non-holiday business day following month-end.

• If the daily accrual is less than $0.00001, no dividend will be recorded for that day.

• You must accrue at least $0.01 during the monthly accrual period to receive a dividend payment for that period.

• All dividend income earned through the Sweep feature will be reported to the IRS on Form 1099.

4. Risks and Limitations

• While all designated Sweep funds are intended to maintain a stable NAV of $1.00 per share, there is no guarantee that a fund will be able to do so. In the event a fund is unable to maintain a stable NAV, you authorize us, without further notice, to redeem your shares and either (a) transfer proceeds into another eligible Sweep fund, or (b) credit them to your Account as Cash.

• It is your responsibility to review the current prospectus of the designated money market mutual fund(s) before participating. The most recent fund documents are publicly available at https://www.interchange.com/disclosures.

• Interest rates and yields are variable.  You should compare the terms, interest rates, APY, rates of return, required minimum amounts, charges and other features with other accounts and alternative investments before deciding to maintain balances in your Account.

5. Important Information Regarding Money Market Funds

Effective October 14, 2016, the U.S. Securities and Exchange Commission (SEC) requires all non- government money market funds that operate at a constant NAV of $1.00 per share to adopt a “liquidity fees and redemption gates” regime. The regulation permits the board of directors of these non-government money market funds to implement fees or gates if they determine it is in the best interest of shareholders to do so with the intent of protecting shareholders’ value in the fund in the event of heavy redemption activity during periods of market stress.

A “liquidity fee” is a fee (up to a maximum of 2%) on redemptions and a “gate” is a restriction on any redemption from a money market fund (up to a maximum of 10 business days). In the event a fee or gate is implemented by a fund’s board, we will be required to take steps to implement protocols to comply. The boards of the money market funds on the Sweep feature have not expressed any intention to impose a fee upon the sale of shares or temporarily suspend redemptions but, if the liquidity of a money market fund falls below certain levels, boards do reserve the ability to do so, in which case they would provide notice to shareholders.

If a fee was implemented pursuant to the regulation, it would result in a fee being charged for any redemption processed from that money market fund. If a gate was implemented, it would mean the balance held in that money market fund would not be available to redeem until the expiration of the redemption gate period. It is important to note that both fees and gates may apply to money market funds made available by us during periods of market stress. In addition, while the regulation does not mandate these requirements for government money market funds, government money market funds may voluntarily impose fees and gates in times of stress, if permissible under the fund’s prospectus and if determined by the board to be in the best interest of shareholders. Some issuers have elected to restrict the use of liquidity fees and redemption gates in their government money market funds and have updated fund prospectuses accordingly. Balances in a money market fund are considered securities and included in Securities Investor Protection Corporation (SIPC) coverage, up to applicable limits. You could lose money by investing in a money market fund. Although a money market fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The sponsor of a money market fund has no legal obligation to provide financial support to the money market fund, and you should not expect that the sponsor will provide financial support to a money market fund at any time. Carefully review the prospectus of a specific money market fund prior to any purchase for additional information.

6. Changes to Sweep Funds and Instructions

• The list of available Sweep funds may be changed by us at our discretion. In some cases, we may select a default fund for your Account and receive compensation from that fund or its affiliates.

• If the designated Sweep fund must be replaced, you will be notified in writing. Unless you instruct your Correspondent otherwise within the stated time frame, you are deemed to:

  • Consent to the change, and

  • Instruct us to redeem your existing Sweep balances and invest them in the new designated Sweep fund.

Please note that Sweep instructions provided through the Correspondent may override or supplement default settings. Any questions concerning instructions provided should be directed to the Correspondent.

7. Account Protection and SIPC Coverage

We are a member of SIPC. SIPC provides protection up to $500,000 (including up to $250,000 for uninvested Cash). SIPC coverage does not protect against a decline in the market value of securities, nor does coverage extend to certain securities that are considered ineligible for coverage. Sweep balances are treated as eligible securities for SIPC purposes. For more details on SIPC, or to request a SIPC brochure, visit the SIPC website at www.sipc.org, call SIPC at 202.371.8300, or email SIPC at asksipc@sipc.org.

You are responsible for monitoring the total amount of investments held by us in order to determine the extent of SIPC insurance coverage. If your total balance of eligible assets in a given capacity (e.g., individual, joint) exceeds the SIPC coverage limits, the amount over the limit may not be protected by SIPC coverage.

8. Additional Considerations

• The Sweep feature is a service, not an obligation. We may, at our discretion and without prior notice (except where required by law), modify, suspend, or terminate the Sweep arrangement.

• Participation in the Sweep feature does not create a fiduciary relationship between you and the Correspondent or us.

• This Disclosure is subject to change. Any material changes will be communicated, in accordance with your Customer Account Agreement.

9. Conflicts of Interest

There are conflicts of interest relating to the Sweep feature. If you hold cash balances in your Account, we benefit financially when your cash is “swept” to and invested using the Sweep feature.  We receive compensation related to Sweep balances, including distribution (Rule 12b-1), shareholder service fees and other payments. These fees, which vary depending on the money market fund (and class thereof) used, are paid directly by the money market fund advisor and/or their distributor but ultimately borne by you as a shareholder in the fund.

Mutual fund companies typically offer multiple share classes with different levels of fees and expenses. When selecting the share class for the Sweep feature, we do not in all cases choose the lowest-cost share class available. Our decisions may be influenced by the additional compensation we receive in connection with your Sweep balances.

Specific arrangements vary by fund family and may change over time (for example, with interest-rate conditions). A portion of the fees we receive may be shared with your Correspondent.

If you have any questions or require further details regarding the Sweep feature or eligible money market funds, please contact your Correspondent.