USA PATRIOT Act Section 326 Disclosure
The USA PATRIOT Act, Section 326, mandates all financial institutions to implement a Customer Identification Program (“CIP”) as a tool to protect the U.S. financial system from money laundering, terrorist financing, identity theft and other forms of fraud. As part of the CIP, Commerzbank AG (“Commerzbank”), Commerzbank AG, New York Branch (“CBNY”) and Commerz Markets LLC (“CMLLC”) must provide a disclosure notice to new customers in order to acquaint them with the information requirements.
To help the government fight the funding of terrorism and money laundering activities, the USA PATRIOT Act, a Federal law, requires all financial institutions to obtain, verify, and record information that identifies each person and each legal entity that opens an account. If you are opening an account on behalf of a business entity, documents relating to the entity’s formation, business address, existence and authority may be requested, as well as a US Patriot Act Certificate and/or FinCEN CDD form, where required. For individuals, such as Beneficial Owners, name, address, date of birth, photo identifications (such as a driver’s license or passport) or other information that allows Commerzbank to identify you may also be requested.
Sect. 311 Notice on Special Measures against Specified Entitie
Pursuant to U.S. regulations issued under section 311 of the USA PATRIOT Act, 31 USC 5318A, CBNY and CMLLC are prohibited from opening or maintaining a correspondent account in the United States for, or on behalf of, entities and/or in a jurisdiction designated as a primary money laundering concern through a final rule issuance by FinCEN. As a matter of policy, Commerzbank AG, New York Branch and Commerz Markets LLC will not conduct business related to such “311 entities” for which FinCEN has issued a notice of finding, notice of proposed rulemaking or final rule. The current list includes the following:
- ABLV Bank
- Banco Delta Asia
- Bank of Dandong
- Commercial Bank Of Syria (includes Syrian Lebanese Commercial Bank)
- FBME Bank Ltd. (formerly Federal Bank of the Middle East Ltd)
- Halawi Exchange Co.
- Kassem Rmeiti & Co. For Exchange
A complete list of the FinCEN jurisdictions, financial institutions and international transactions of primary money laundering concern can be accessed by means of the link below: https://www.fincen.gov/resources/statutes-and-regulations/311-special-measures
The regulations also require us to notify our clients and counterparties that they may not provide the aforementioned entities or any of their subsidiaries, or any designated jurisdictions with access, whether direct or indirect, to any account held at our financial institution. If CBNY or CMLLC become aware that the accounts held at our financial institution have been used to provide direct or indirect access or processed any transactions involving the aforementioned entities, their subsidiaries or identified jurisdictions, we will be required to take appropriate steps to prevent such access, including termination of the account(s) held with us.
Investor Education and Protection Disclosure – FINRA Rule 2267
The Financial Industry Regulatory Authority (“FINRA”) under Rule 2267 requires that CMLLC annually notify you in writing of the availability of an investor brochure that includes information describing FINRA’s public disclosure program known as BrokerCheck. BrokerCheck provides investors with the ability to research the professional backgrounds, business practices, and conduct of FINRA-registered brokerage firms and brokers. To obtain a brochure or more information about BrokerCheck, contact FINRA’s public disclosure program hotline at (800) 289- 9999 or access FINRA’s website at https://brokercheck.finra.org
SIPC Disclosure - FINRA Rule 2266
Please be advised that you may obtain information about the Securities Investor Protection Corporation (“SIPC”), including how to obtain a copy of the SIPC brochure by calling (202) 371- 8300 or visiting their website at https://www.sipc.org
Trading Outside of Normal Market Hours – FINRA Rule 2265 and CBOE Rule 6.1A(j)
Under FINRA Rule 2265 and Chicago Board Options Exchange (“CBOE”) Rule 6.1A(j), CMLLC may not accept an order from a customer for execution in the pre-market or post-market session without disclosing the potential risks involved in such extended-hours trading, such as:
1. Risk of Lower Liquidity. Liquidity refers to the ability of market participants to buy and sell securities. Generally, the more orders that are available in a market the greater the liquidity. Liquidity is important because with greater liquidity it is easier for investors to buy or sell securities, and as a result, investors are more likely to pay or receive a competitive price for securities purchased or sold. There may be lower liquidity in extended hours trading as compared to regular market hours. As a result, your order may only be partially executed, or not at all.
2. Risk of Higher Volatility. Volatility refers to the changes in price that securities undergo when trading. Generally, the higher the volatility of a security, the greater its price swings. There may be greater volatility in extended hours trading than in regular market hours. As a result, your order may only be partially executed, or not at all, or you may receive an inferior price in extended hours trading than you would during regular trading hours.
3. Risk of Changing Prices. The prices of securities traded in extended hours trading may not reflect the prices either at the end of regular market hours, or upon opening the next morning. As a result, you may receive an inferior price in extended hours trading than you would during regular trading hours.
4. Risk of Unlinked Markets. Depending on the extended hours trading system or the time of day, the prices displayed on a particular extended hours system may not reflect the prices in other concurrently operating extended hours trading systems dealing in the same securities. Accordingly, you may receive an inferior price in one extended hours trading system than you would in another extended hours trading system.
5. Risk of News Announcements. Normally, issuers make news announcements that may affect the price of their securities after regular market hours. Similarly, important financial information is frequently announced outside of regular market hours. In extended hours trading, these announcements may occur during trading, and if combined with lower liquidity and higher volatility, may cause an exaggerated and unsustainable effect on the price of a security.
6. Risk of Wider Spreads. The spread refers to the difference in price between what you can buy a security for and what you can sell it for. Lower liquidity and higher volatility in extended hours trading may result in wider than normal spreads for a particular security.
7. Risk of Lack of Calculation or Dissemination of Underlying Index Value or Intraday Indicative Value (“IIV”). For certain derivative securities products, an updated underlying index value or IIV may not be calculated or publicly disseminated in extended trading hours. Since the underlying index value and IIV are not calculated or widely disseminated during the pre-market and post-market sessions an investor who is unable to calculate implied values for certain derivative securities products in those sessions may be at a disadvantage to market professionals.
8. Index Values. The Exchange (CBOE) will not report the value of an index underlying an index option trading during Extended Trading Hours, because the value of the underlying index will not be recalculated during or at the close of Extended Trading Hours.
Business Continuity Program – FINRA Rule 4370
Commerz Markets LLC (“Commerz Markets”) is committed to protecting its employees, clients and their assets, including during emergencies or significant business disruptions. Commerz Markets’ Business Continuity Program was developed to enable it to continue and provide an assurance of business continuity in the event of a disruption to its normal operations.
- Recovery Plans - The business continuity plan (the “Business Continuity Plan”) is reviewed annually and identifies critical processes, personnel and technology to ensure continued operations during an emergency or business disruption. The Business Continuity Plan includes a Business Impact Analysis (“BIA”) and information common to all business units.
- Incident Management - The Incident Management Team has a specific set of roles and responsibilities that must be performed during an incident, including but not limited to disaster declaration, recovery management, guidance for restoration activities, business strategy and communications.
- Testing Procedures and Frequency- Comprehensive business continuity tests are held on an annual basis at the business continuity site. Tests include representatives from technology, critical business units, internal audit, office support services, vendors and the Business Continuity Team. In addition, a test of the emergency notification system is conducted at least twice a year.
- Training and Awareness - A business continuity training program provides relevant training to target groups, in addition to general staff awareness. General staff awareness is provided to all employees to create an understanding of emergency planning. Relevant training is also provided to staff involved in business continuity activities, e.g. staff involved in testing at the recovery site.
- Regulatory Coverage - Measures have been taken to ensure that the Business Continuity Program conforms to the applicable regulations. An annual review of relevant regulations ensures changes are identified and incorporated into the program.
- Business Continuity Committee- The Business Continuity Committee convenes on a quarterly basis and provides a forum for dissemination and discussion of relevant business continuity information and topics.
The Business Continuity Plan is a confidential document and is therefore not made available to the public. A copy of this disclosure statement will be sent to you upon request.
Telephone Recordkeeping Disclosure
As part of our compliance with applicable laws and regulations, certain telephone lines in our sales and trading department will be recorded.
Investment products offered through Commerz Markets are not insured by the FDIC or any other federal government agency, are not deposits or other obligations of, or guaranteed by, a bank or any bank affiliate, and are subject to investment risks, including possible loss of the principal amount invested.
Customer Questions or Complaints
If you have a complaint related to your activity with Commerzbank, CBNY or CMLLC, please direct it to:
Commerzbank AG, New York Branch/Commerz Markets LLC
225 Liberty Street New York, NY 10281-1050
Attn: Markets Compliance Officer (212) 266-7200