Hedger or Speculator Election

When you open an account, HypeStrat Markets LLC (the “Firm”) asks whether your account will be used for hedging or for speculation, and records your answer in its books. For most customers the answer is speculator. Please read both choices; you choose on the application page.

1The two choices

1.1Speculator. You trade to profit from price movements, with your own money, and your positions do not offset a price risk in a business you run. Most individual customers are speculators.

1.2Hedger. You run a commercial business, and the positions in this account are meant to reduce the price risk of that business: from assets it owns or expects to own, liabilities it owes or expects to owe, or services it provides or buys (17 CFR 150.1, definition of “bona fide hedging transaction or position”). Hedging means offsetting a real business exposure. It does not include trading to protect the value of a personal investment portfolio.

2What the election means for you

2.1Trading, margin and fees. The election does not change your margin requirements, your fees or the contracts you may trade.

2.2If the Firm became bankrupt. The election matters mainly in the unlikely event of the Firm’s bankruptcy. The trustee may, as far as reasonably practicable and after consulting the CFTC, treat open contracts in an account designated as a hedging account in the Firm’s records as property specifically identifiable to that customer (17 CFR 190.03(c)(2)). That can let those positions be handled as yours rather than liquidated with the general pool. It is at the trustee’s discretion and is not guaranteed.

2.3No larger claim. The election does not give you a separate or larger claim. A hedging account and a speculative account of the same person are combined in calculating that person’s claim (17 CFR 190.08(b)(2)(vii)), and any shortfall is still shared pro rata among customers (17 CFR 190.00(c)(5)).

2.4Statements. You receive confirmations and monthly statements whichever you choose. CFTC Regulation 1.33(c)(3) exempts accounts holding only bona fide hedge positions from parts of the monthly statement requirement; the Firm sends monthly statements to every customer.

2.5Position limits. A hedger may exceed position limits only by meeting the separate requirements for an exemption in 17 CFR 150.3 and the Rules. This election is not an application for any exemption.

2.6Not a tax election. This election has no effect on how your gains and losses are taxed.

3If you choose hedger

3.1Be ready to describe the business exposure the account will hedge, and keep records that support it. The Firm may ask for evidence.

3.2Tell the Firm promptly if the exposure ends or changes. The Firm may change the designation to speculator if it reasonably believes the account is not used for hedging.

4Changing your election

You may change your election at any time by written notice to the Firm on its form. A change takes effect when the Firm records it and applies from then on.

Election

You choose on the application page.

Certification

I certify that the election above is true, and I will tell the Firm promptly if it changes.

You make this election on the application page.