Investment Products

 

Effective as of October 29, 2024

 

The DriveWealth Platform supports various types of investment products within a brokerage account; the range of available products may vary from time to time in DriveWealth’s sole discretion. Certain types of investment products and particular securities may not be available in all jurisdictions and may be subject to trading restrictions or limitations. The specific products or set list of securities made available to you within a category of product are determined by your Introducing Firm and may be subject to additional terms as decided by your Introducing Firm. 

Before making any investment you should carefully evaluate if a product is suitable for your individual needs, financial situation, and risk tolerance. DriveWealth does not guarantee that a particular product will meet your investment goals and we make no representations as to the suitability of a particular investment product or investment strategy. 

This section is intended to provide a general description of various types of investment products including a non-exhaustive, and non-personalized, summary of important risk considerations. Your Introducing Firm may charge you specific fees for trading activity in a particular product. DriveWealth may collect that fee on behalf of your Introducing Firm.

 

U.S. Equities

 

  • What are Equities?

    DriveWealth supports trading in certain NYSE and NASDAQ listed equities, as well as select over-the-counter (OTC) securities.

    A stock represents a fractional ownership interest in a company - also known as equity shares. You participate in returns, both appreciation and depreciation, based on the success or failure of that company. There are two primary ways to earn a return with respect to stocks: (1) Dividends - when a company chooses to distribute earnings to shareholders by paying a dividend; and (2) Capital Gains - changes to the market value of a security based on trading in the market. ‘

    In addition to participating in investment returns, ownership of a stock also will typically give you the ability to vote on important company issues and policies. 

    In the event of a particular company’s bankruptcy, a shareholder will have a claim on that company’s assets; provided, however, that stockholders receive only that portion of assets remaining after the company’s creditors are paid.

  • Important Risk Factors:

    Stock prices may vary, swing wildly, and can react unpredictably based on a number of factors including, but not limited to, broader market conditions, the company’s business risks and financial condition, sector-specific factors, sociopolitical factors, country risk, currency risk, and available liquidity.

    If a company becomes insolvent, its stocks are repaid only after all other debts of the company have been repaid. This can result in a loss of all, or substantially all, of the investment value.

    Liquidity in a particular security may vary. Stocks that have a smaller market capitalization, trade less frequently, and in smaller volumes, may be more vulnerable to economic, market, and industry changes, and potentially subject to greater price fluctuations.

    Additional Information:

    Additional information on stock basics is available at: https://www.finra.org/investors/learn-to-invest/types-investments/stocks/stock-basics 

    Additional information on investment risk is available at:

    https://investment.jpmorgan.com/securities/available-products#equities-stocks 

    See below for additional considerations on OTC securities.


Over-the-Counter (OTC) Securities

 

  • What Are Over-the-Counter Securities?

Over-the-counter (OTC) securities are securities that are not listed on a major exchange in the United States, such as the NYSE or NASDAQ, and are instead traded via a broker-dealer network. Generally, smaller companies may not meet the requirements to be listed on a formal exchange trade OTC because they do not trade enough shares, their shares do not trade above a minimum price, or they may not want to pay the listing fees of major exchanges. 

You should consider the following points prior to engaging in trading in OTC securities

  • How Do OTC Securities Trade?

    • OTC Bulletin Board. The OTCBB is an electronic inter-dealer quotation system that displays quotes, last-sale prices, and volume information for many OTC equity securities that are not listed on a national securities exchange. Under the OTCBB’s eligibility rule, companies that want to have their securities quoted on the OTCBB must seek sponsorship by a market maker firm that is a registered broker-dealer as well as file current financial reports with the SEC or with their banking or insurance regulator. The OTCBB operated by the Financial Industry Regulatory Authority (FINRA). The OTCBB is not part of The Nasdaq Stock Market. 

    • OTC Link LLC. OTC Link is an electronic inter-dealer quotation system that displays quotes, last-sale prices, and volume information in exchange-listed securities, OTC equity securities, foreign equity securities and certain corporate debt securities. In addition to publishing quotes, OTC Link provides, among other things, broker-dealer subscribers the ability to send and receive trade messages, allowing them to negotiate trades. OTC Link is registered with the SEC as a broker-dealer and as an Alternative Trading System, and is a member of FINRA.


OTC Link organizes OTC securities into three marketplaces based, in part, on the quality and quantity of available information.

 

  • Eligible Securities, Order Types & Other Conditions

  • OTC Availability. DriveWealth supports only those OTCs listed on its instruments list. OTC security availability may vary based on your Introducing Firm.

  • Orders. DriveWealth accepts market, limit and stop orders for whole share trading in OTC Securities. DriveWealth accepts market and stop orders, but not limit orders, for Fractional Trading in OTC Securities. DriveWealth may impose maximum trade size limitations in OTC transactions, which may be further limited by your Introducing Firm. 

  • Whole Shares Only and Fractional Trading: DriveWealth supports both whole share orders and Fractional Trading in Fractional Shares in OTC Securities (as those terms are defined in DriveWealth’s Trading Disclosure). 

  • Eligible Securities. DriveWealth supports a limited number of OTC securities. If a security becomes delisted and falls to the OTC markets, DriveWealth will continue to support liquidations in the security but may refuse or limit the ability to increase your existing position. 

  • Market Hours Only. OTC securities may not be available for Extended Hours Trading.

  • No Transfers. ACATs, free deliveries and other transfers associated with OTC securities are not permitted. 

  • Additional Fees May Apply. There may be additional steps and fees when trading OTC securities because trades must be made through market makers who carry an inventory of securities to facilitate trading.

  • Important Considerations for OTC Securities: 

Trading in OTC securities may not be suitable for all investors. All investments involve risk, but OTC securities are among the riskiest and are not generally appropriate for individuals with a low risk tolerance. Potential risks may include, but are not limited to: lack of publicly available information, no minimum listing standards, lower liquidity, higher volatility, and business risk.

 Lack of Publicly Available Information: Most large public companies file reports with the SEC that any investor can get for free from the SEC's website. Professional stock analysts regularly research and write about larger public companies, and it's easy to find their stock prices on the internet or in newspapers and other publications. In contrast, information about OTC security companies can be extremely difficult to find, making them more vulnerable to investment fraud schemes and making it less likely that quoted prices in the market will be based on full and complete information about the company.

No Minimum Listing Standards.  Companies that trade their stocks on exchanges must meet minimum listing standards. For example, they must have minimum amounts of net assets and minimum numbers of shareholders. In contrast, companies on the OTCBB or OTC Link generally do not have to meet any minimum standards, although companies quoted in OTC Link’s OTCQX marketplace are subject to initial and ongoing requirements and companies quoted in the OTCQB marketplace must be SEC reporting companies.

Lower Liquidity. Generally, the more demand for a security, the greater the liquidity for that security.  Liquidity makes it easier for investors to buy or sell securities and they are better able to receive a competitive price for stock bought or sold.  OTC securities may be illiquid and infrequently traded, which may mean that they are more difficult to sell and price accurately. DriveWealth does not guarantee that there will be any market in an OTC security.

Higher Volatility. OTC securities may experience greater price fluctuation and wider spreads due to lack of liquidity and other factors. An order in an OTC security may not execute or may execute at a substantially different price.

Business Risk. Many OTC security companies are new and have no proven track record. Some of these companies have no assets, operations, or revenues. Others have products and services that are still in development or have yet to be tested in the market. Another risk that pertains to OTC Securities involves the low volumes of trades. Because many OTC Securities trade in low volumes, any size of trade can have a large percentage impact on the price of the stock.

Additional information about the risks associated with OTC securities is available from the SEC at: Microcap Stocks: A Guide for Investors. 

Exchange Traded Funds (ETFs)

 

Exchange-traded funds (“ETFs”) are securities that generally track a basket of other securities, without requiring that investors purchase those securities individually. ETF shares are bought and sold on an exchange. Among other things, ETFs combine features that are similar to stocks and mutual funds. For instance, like individual stocks, ETF shares are traded throughout the day at prices on the exchange that change based on market forces. Like mutual fund shares, ETF shares represent partial ownership of a portfolio that is assembled by professional managers.

There are a number of different types of ETFs, each with a different investment focus. ETFs can, for example, track widely followed stock market benchmarks, specific stocks, market sectors, or subsets of broader indices. Other ETFs are actively managed portfolio investments, which may include a variety of different types of securities that may change over time.

ETFs are subject to risks that are like those of other diversified investments. Investing in ETFs involves a variety of different risks, including, but not limited to, market risks and the possible loss of principal, liquidity risks, trading risks relating to transaction costs, and risks that the ETF will close and liquidate. Although ETFs are designed to provide investment results that generally correspond to the performance of their respective underlying benchmarks or indices, they may not be able to replicate exactly that performance because of expenses and other factors. ETFs are required to distribute portfolio gains to shareholders at year-end, which may be generated by portfolio rebalancing or the need to meet diversification requirements. ETF trading may also have tax consequences.

Certain types of ETFs may not be appropriate for all investors. An ETF’s prospectus describes its unique investment objectives, risks, charges, expenses, and other important information. Investors should read and carefully consider all the information in an ETF’s prospectus before investing in that or any other ETF. 

The DriveWealth Ice 100 Index ETF (Symbol: CETF) is an exchange-traded fund (ETF). DriveAdvisory, LLC, an affiliate of DriveWealth, LLC, is the advisor to the fund. As the advisor, DriveAdvisory will provide certain services to the fund and may receive certain payments in connection with the sale and/or distribution of fund shares or the retention and/or servicing of fund investors and fund shares. DriveWealth, LLC does not receive any compensation in connection with the fund. More information on the fund is available at drivewealth.com/advisory/dwi-us100/ and the prospectus can be found at https://www.drivewealth.com/wp-content/uploads/2023/04/DriveWealth_ICE_100_Index_ETF_Prospectus_Q2.pdf.

 

Leveraged and Inverse ETFs

 

Leveraged and inverse ETFs use financial debt to amplify the returns of an underlying stock, index, or other benchmark. These funds seek to deliver positive or negative multiples of the performance of the underlying index or benchmark they track. They are complex investments that come with a unique set of risks and are not appropriate for most retail investors. Potential risks include resetting daily, lack of predictable performance, fees, and tax consequences. Leveraged and Inverse ETFs are complex investments that come with a unique set of risks and may be unsuitable for retail investors.

Leveraged and Inverse ETFs differ from other types of index funds because rather than simply tracking an index, they attempt to provide either a positive or negative multiple of an index’s performance over a specified time—usually just one day (although some may offer monthly or quarterly exposure). For example, a leveraged ETF may offer returns equivalent to 1.5x, 2x, or even 3x the performance of an index during a single day. If the index rose 2%, a 2x leveraged ETF would aim for a 4% return (if it fell, the loss would also be magnified by 2x). Inverse ETFs, on the other hand, deliver multiples in the opposite direction, so if the index rose 2%, a 2x inverse ETF would generate a negative 4% return. These funds use a variety of complex strategies and are not designed to be held longer than the reset periods stated in their prospectuses. That means a fund that aims for a daily multiple should not be held for longer than a single day.

In addition, some ETFs may be linked to single stocks rather than an index or benchmark. These single-stock leveraged or inverse ETFs peg their returns to the stock performance of single companies, including some of the most volatile growth stocks, with inverse ETFs delivering the opposite or multiple of the opposite of the stock gain or loss and leveraged ETFs delivering a multiple of the gain or loss on a given day.

Important considerations for Leveraged and Inverse ETFs:

●      Short term: Leveraged and inverse ETFs are generally used for short term trading. Most of these products are designed to achieve a daily leveraged or inverse objective on a daily basis and reset each day. There is a compounding effect associated with the daily resets which makes the performance unpredictable if the product is held longer than one day.

●      Risk and Lack of Predicted Performance: These securities perform differently than other products. They have the propensity to be more volatile and are inherently riskier than their non-leveraged, non-inverse counterparts. There is always a risk that not every leveraged or inverse ETF will meet its stated objective on any given trading day. The closure rate of these products is significantly higher than non-leveraged or non-inverse product.

●      Fees: Leveraged or inverse ETFs may be more costly than traditional ETFs due to constant rebalancing of their holdings.

●      Tax Consequences: Daily resets can cause these products to realize significant short-term capital gains that may not be offset by a loss. There may be additional tax-related issues, so it is important to check with your tax advisor about the consequences of investing in these products.

As with all products, DriveWealth reserves the rights to, without notice, remove leveraged or inverse ETFs from the platform or designate them liquidate-only due to the volatile and unpredictable nature of these products.

Additional information about the risks associated with leveraged and inverse ETFs is available from the SEC at: https://www.sec.gov/investor/pubs/leveragedetfs-alert.htm and from FINRA at: https://www.finra.org/investors/insights/lowdown-leveraged-and-inverse-exchange-traded-products.




Alternative Investments & Complex Products

 

  • What is an Alternative Investment?

    Alternative investments may include non-traditional, or certain publicly or non-publicly traded alternative investment assets, such as investments in hedge funds, private equity funds, real estate funds and other unregistered funds. Such types of investments may be organized pursuant to exemptions from registration under the federal securities laws and therefore are not offered to the general public.

  • Risks:

Alternative investment products may be both more complex, and more risky, than traditional investment products. Alternative investments may have different and additional tax consequences or structures, suitability determinations, liquidity concerns, may be hard to value, may not be subject to the same regulatory requirements as mutual funds, and may be subject to additional fees. DriveWealth does not endorse or make any recommendations as to the appropriateness of any investment, including alternative investment products. 

Additional information on the risks associated with alternative investments is available at: https://www.finra.org/investors/learn-to-invest/types-investments/alternative-and-complex-products 



Mutual Funds

 

  • What is a Mutual Fund?

Mutual funds are professionally managed, pooled, investment vehicles. The mutual fund raises money by selling its own shares to investors. The proceeds are pooled together to purchase stocks, bonds, and other securities based on the fund’s specific investor goals  When you buy shares of a fund you become a part owner of the fund. Each share represents an ownership piece of the Fund and gives the investor a proportional right, based on the number of shares he or she owns, to income and capital gains that the Fund generates from its investments.

The particular investments a Fund makes are determined by its objectives and, in the case of an actively managed Fund, by the investment style and skill of the fund's professional manager or managers. The holdings of the mutual fund are known as its underlying investments, and the performance of those investments, minus Fund fees, determine the Fund's investment return.

Most mutual funds available to U.S. citizens or residents are registered with the United States Securities and Exchange Commission. Most mutual funds available to non-U.S. citizens and non-U.S. residents are called offshore mutual funds. Certain mutual funds may not be available to all investors based on jurisdiction of registration or other limiting factors. Mutual funds pricing is based on the Net Asset Value (“NAV”). To figure its NAV, a Fund adds up the total value of its investment holdings, subtracts the Fund's fees and expenses, and divides that amount by the number of Fund shares that investors are currently holding.

  • Risks & Other Important Factors

Mutual Fund investors own the shares in the specific fund; they do not actually own the underlying securities in which the funds invest. 

NAV may not necessarily be the only measure of a Fund's performance. NAV is calculated once per day and, therefore, a Fund could be subject to large price swings and the investor would not benefit from intraday price availability. 

Funds frequently have their own restrictions and rules, which may be found in a Fund’s prospectus. Some restrictions may include, among other things, limitations on who may invest (including by country of residency, which may affect your ability to invest in a Fund or remain invested in a Fund if you move); frequent-trading restrictions governing movement in and out of the Fund; minimum investment requirements for both initial and subsequent purchases; and caps on purchase sizes. Please consult a Fund’s prospectus prior to investing for a full list of all applicable restrictions and rules.

Other limitations, which may be found in a Fund’s prospectus, may apply. For instance, investments in one Fund may be permitted to be exchanged for another Fund within the same Fund family, but not all Funds allow exchanges and additional limitations may apply, including but not limited to minimum amounts eligible for exchange and cut-off times. Please consult a Fund’s prospectus prior to investing for a full list of all applicable limitations.

Retirement and defined contribution plan administrators are eligible to participate in Defined Contribution Clearance & Settlement (“DCC&S”), which allows for streamlined purchase, redemption, and exchange transactions. Please contact your Introducing Firm for more information on whether it participates in DCC&S and its implications.

Under certain circumstances, a valid buy, sell or exchange order may not be booked and confirmed until the next day. For instance, if an order for a particular Fund is placed and received by DriveWealth after the Fund’s cut-off time for the day, the transaction will be booked and confirmed the next trading day at the next trading day’s NAV. Similarly, if DriveWealth does not receive a Fund’s NAV before DriveWealth begins processing that day’s Orders, DriveWealth may be unable to confirm an order for that Fund until the next trading day, but that Transaction will still be made at the previous trading day’s NAV. In these circumstances, trade confirmations and Account statements will reflect dates or NAV that may be different from those at the time that a Mutual Fund Trading Order was transmitted to DriveWealth. Notwithstanding the foregoing, if Company is using the DCC&S service, Company may, in some circumstances, transmit Orders to DriveWealth after the Fund’s cut-off time and those Orders may be booked and confirmed that same trading day.

When orders placed in notional amounts (for instance, orders expressed in U.S. dollars as opposed to the number of shares) are converted to the equivalent quantity of shares based on the relevant NAV, the quantity of shares is calculated out to the number of decimal places that the Fund accommodates, frequently three (3) decimal places, and then rounded up or down according to general rounding conventions, as appropriate. This may result in a notional order being converted to a quantity of shares that is slightly greater or lesser than the order amount when multiplied by the relevant NAV.

DriveWealth utilizes third party vendors for the performance of certain functions integral to its mutual fund program. In the event one of these vendors has a service disruption, DriveWealth may be unable to process trades in a manner consistent with DriveWealth’s normal operations.

Restrictions on who may own shares in a particular Fund may be imposed by that Fund, your Introducing Firm, or DriveWealth. Different jurisdictions may also impose requirements on mutual funds that may affect how you may transact in certain Funds. Please contact your Introducing Firm for further information.

You may not purchase an offshore Fund, outside some very narrow exceptions determined by the Fund itself, if you: are a U.S. person (as defined under Regulation S of the Securities Act of 1933, as amended); are purchasing shares as a nominee for, or for the account or benefit of, any U.S. person; were solicited to acquire shares while resident in the U.S.; are using Funds obtained from a U.S. person to acquire shares; or will transfer the shares to a U.S. person or transfer shares while in the U.S. or otherwise engage in a transaction that would give rise to the registration requirements of, or otherwise violate, the U.S. Securities Act of 1933 or the U.S. Investment Company Act of 1940 as amended, or other applicable U.S. legislation. Funds established and registered in the United States, or “onshore mutual funds,” may restrict who can acquire them based on whether the investor is a U.S. person and the jurisdiction in which they reside.

Some Funds cover the costs associated with an individual investor’s transactions and account by imposing fees and charges directly on the investor at the time of the transactions (or periodically with respect to account fees). These fees and charges are identified in the fee table, located in the Fund’s prospectus, under the heading "Shareholder Fees."

DriveWealth may receive fees when you are invested in certain mutual funds. These include but are not limited to “sales load” and “12b-1 fees.” Funds that use brokers to sell their shares typically compensate the brokers by imposing a fee on investors, known as a sales load (or sales charge), which is paid to the selling brokers. There are two general types of sales loads—a front-end sales load investors pay when they purchase fund shares and a back-end or deferred sales load investors pay when they redeem their shares. In addition, some Funds pay brokers, potentially including DriveWealth 12b-1 fees, for shareholder services out of a Fund's assets, typically pursuant to a Fund's distribution and/or servicing plan, know as a Rule 12b-1 plan.

Before buying any mutual fund, request a fund’s prospectus and, where applicable, its Statement of Additional Information or SAI, from your Introducing Firm and read it carefully. The prospectus and SAI contain important information on fees, charges, breakpoint discounts and investment objectives which should be considered carefully before investing.

Additional information is available at:

https://www.finra.org/investors/learn-to-invest/types-investments/investment-funds/mutual-funds  https://www.investor.gov/sites/investorgov/files/2019-02/mutual-funds-ETFs.pdf https://www.finra.org/sites/default/files/Industry/p010543.pdf https://www.sec.gov/investor/pubs/sec-guide-to-mutual-funds.pdf

 

Fixed Income

 

I. What is a Fixed Income Investment?

Fixed income investments are securities that pay investors fixed interest payments until a specific maturity date. A bond issuer is obligated to pay a bondholder a set amount of money at specific intervals and to repay the principal amount of the loan at maturity. Fixed income investments can be classified according to their maturity date. Maturities can be short-term, such as less than three years, medium-term, such as four to 10 years, or long-term, such as more than 10 years. DriveWealth offers the trading of corporate bonds and U.S. Treasuries, both of which are types of Fixed income investments.

  • Corporate Bonds

An investor that buys a corporate bond lends money to the company issuing the bond. In return, the company makes a legal commitment to pay interest on the principal loaned and typically agrees to return the principal to the investor when the bond matures. Purchase of a corporate bond does not give the investor equity in the company. Rather, the investor has a coupon that the company is obligated to pay regardless of how profitable the company becomes, or if it experiences financial difficulty. Companies may use proceeds from bond sales for various purposes like research and development, shareholder dividends, financing mergers and acquisitions, and buying new equipment.

Corporate bonds can be classified based on their credit worthiness, as either investment grade or non-investment grade. Investment grade bonds receive higher ratings by credit rating agencies and are thought to be more likely than non-investment grade bonds to be paid on time. These bonds are typically issued at lower yields than non-investment grade bonds. Non-investment grade bonds, also known as high-yield bonds, are issued by companies with a greater estimated default risk, and as a result have higher interest rates.

  • U.S. Treasury Securities

U.S. treasury securities are issued by the U.S. federal government and include treasury bills, treasury notes, and treasury bonds. Treasury bills are short-term debt securities that mature in less than one year, treasury notes are medium-term securities that mature in two, three, five, seven, or 10 years, and treasury bonds are long-term securities that mature in 20 or 30 years. U.S. treasuries are exempt from state and local taxes.

Holders of longer-term U.S. treasuries receive a fixed interest rate, a coupon, every six months until maturity. On the maturity date, holders will receive the face value of the bond. Depending on market demand at the time of maturity, the price paid for the treasury security can be greater or less than the face value.

II. Risks

The bond market can be volatile and bond prices are sensitive to factors including but not limited to interest rates, inflation, credit ratings, regulations, and political changes.

  • Credit or Default Risk

A company can fail to make timely interest or principal payments or even default on its bonds and go bankrupt. In that instance, bondholders would have a claim on the company’s assets and cash flows but the terms of the bond would determine the bondholder’s priority of the claim. Bondholders are usually not a company’s only creditors in a bankruptcy proceeding and other parties such as banks, suppliers, and customers may have claims with higher priority than certain bondholders. A bond may also have its credit rating downgraded, which would potentially result in the bond price to fall. The expectation of a credit rating downgrade may also have the same effect.

  • Interest Rate Risk

All fixed income securities are susceptible to interest rate risk, even U.S. treasury securities. If market interest rates rise, the price of a bond will fall. Long-term bonds are more susceptible to interest rate risk because the longer a bond’s maturity, the more time there is for interest rates to change and eventually affect the price of the bond. 

  • Inflation Risk

Inflation is the general increase in the cost of goods and services which leads to a decline in purchasing power. Due to inflation and because fixed income investments yield fixed interest, the amount of money received on the bond’s interest and principal payments will purchase fewer goods and services than before.

  • Liquidity Risk

DriveWealth uses third-party trading venues to execute fixed income orders. Unlike trading equities, in the bond market, there is no centralized exchange or quotation service for most fixed income products. Prices therefore generally reflect activity by market participants or dealers linked to various trading systems. Only a small number of corporate bonds are listed on national exchanges. There is no general market for fixed income products, and no consolidated market data feed. As a result, there may be liquidity limitations for certain fixed income securities, and for larger orders, an order may be executed at different price points. A trade may be canceled or modified if the third-party trading venue determines that it is clearly erroneous. Third-party trading venues that DriveWealth uses to execute fixed income orders may restrict or cut off trading in selected securities or trading entirely, which may restrict trading of fixed income products on the DriveWealth platform.

  • Call Risk

Some bonds - called callable bonds - can be called back, or redeemed, by a bond issuer prior to maturity. Typically this means that the bondholder will receive payment on the bond’s value at that time and may be reinvesting in a bond with a lower interest rate, lowering your potential return.

  • Rates Dependent on Maturity Date

Any fixed income investment sold or redeemed prior to maturity may be subject to a substantial gain or loss.

  • Event Risk

Unforeseen circumstances like natural disasters, mergers or acquisitions, and regulatory changes may impact an issuer and negatively impact the price of a fixed income product.

  • International Risk

International fixed income securities may face additional risks, such as vulnerability to exchange rates or decisions made by foreign governments regarding bonds issued by a foreign government.

  • Tax Risk

Please contact your tax professional for advice regarding the tax implications of investing in and selling fixed income products.

III. Fees 

DriveWealth and your Introducing Firm may earn a fee or commission on your trades in fixed income products. Details will be available on your trade confirmation and account statement. Please contact your Introducing Firm for more information.  

IV. Other

Data related to your trading interests, including transaction history, will be displayed to potential trading counterparties.

DriveWealth may not be able to provide notice of all voluntary corporate actions for all fixed income securities as a result of issuer restrictions or delays, or for any other reason whatsoever.

Fixed Income Trading may be limited to certain order types and have other restrictions not applicable to other investment products. Orders may be canceled by DriveWealth or third party providers, including third-party trading venues, at any time and for any reason. Certain order types may have limitations, including that limit orders may be canceled at the end of each trading day if not filled or if there is a market event. For more information, please contact your Introducing Firm.

 


American Depository Receipts

 

American Depository Receipts (ADRs) are a form of equity securities that offer U.S. investors a way to gain investment exposure to non-U.S. stocks without having to invest through foreign stock markets. ADRs are certificates issued by a U.S. bank or broker that represent one or more shares in foreign stock. To create the ADR, the bank or broker first purchases shares of the foreign-company stock on a foreign exchange, which it holds in the foreign market. Then, after the bank or broker issues the ADR certificate, it may trade on a U.S stock exchange, such as the New York Stock Exchange, or it may be traded over the counter (OTC). ADRs that are listed can be traded, settled, and held as if they were ordinary shares of US -based companies.

ADRs are denominated and traded in U.S Dollars and are cleared through U.S. settlement systems. ADR holders are not subject to non-U.S. stock transaction fees. Proceeds from selling an ADR, however, may be subject to U.S. captain gains taxation.

ADRs are subject to periodic fees that are intended to compensate the agent bank that is providing custodial services in connection with the ADR.  Custodial services normally include inventorying the foreign stocks underlying the ADR and managing all registration, compliance and record-keeping services. In 2009, the Depository Trust Company (DTC) received approval from the US Securities & Exchange Commission to begin to collect these fees on behalf of the agent banks for ADRs which do not pay periodic dividends.  DTC collects these fees from its participant brokers, including DriveWealth, that hold the ADRs for customers; these fees are collected by the broker from its customers as “pass-through fees.”

ADR fees tend to range from $0.01 - $0.03 per share, the amount varying by ADR. Please refer to the prospectus for the ADR for information on the ADR Fee. 


Options

 

Options carry significant risk and are not suitable for all investors. Options trading may expose investors to potentially rapid and substantial losses. Individuals should not enter into an options transaction until they have read and understand the options disclosure document, “Characteristics and Risks of Standardized Options”, which outlines the purposes and risks of options transactions. A copy of the Characteristics and Risks of Standardized Options (the “ODD”), including supplements, issued by the Options Clearing Corporation, can be found here.