Customer Identification Program Notification and the USA PATRIOT Act
To assist the Government in fighting the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies institutional accounts as such. Therefore, in order for us to expedite customer account approval, we require your assistance in providing the information requested. To assist us with verifying your identity, Millington Securities, Inc. ("Millington Securities", "Millington", or the "Firm") is required to collect information such as the following from you:
• Taxpayer Identification Number (Employer Identification Number)
• A corporation, partnership, trust or other legal entity will need to provide: address of principal place of business, local office (if applicable), certified articles of incorporation, government issued business license, a partnership agreement, trust agreement or other corporate documents.
• Principals of the entity may be required to provide other identifying documents, if necessary.
It is necessary for Millington Securities. to collect this information to meet regulatory requirements. All information supplied by you will be kept confidential in our office; however, please be aware that Millington Securities is registered with FinCEN, the United States Department of the Treasury’s website for the Financial Crimes Enforcement Network. Millington Securities reviews all accounts and reports any positive match with FinCEN criteria to the proper authorities. If Millington Securities has already opened an account but is unable to validate information provided by the customer, or, it does not receive information requested from the customer, the Firm may have to close the account.
No one associated with Millington Securities is authorized to render tax or legal advice to any customer, and any recipient of any information that might constitute such advice should not rely upon it. Any oral communication should be re-confirmed in writing in order to protect your rights, including your rights under the Securities Investor Protection Act (SIPA).
Customer Complaint Notification (SEC Rule 17a-3(a)(18)(ii))
FINRA Broker Check Program (FINRA Rule 2267)
For more information on Millington Securities and/or its registered representatives, please visit the FINRA Broker Check website at www.finra.org or by calling the FINRA Broker Check Hotline Number at (800) 289-9999.
SIPC Membership Notification (FINRA Rule 2266)
Millington Securities is a member of the Securities Investor Protection Corporation (SIPC) which protects securities of its customers up to $500,000 (including $250,000 for claims of cash). You may obtain information about SIPC, including the SIPC brochure, by contacting SIPC directly. The SIPC Web site address is www.sipc.org and the SIPC telephone number is (202) 371-8300.
Statement of Financial Condition (FINRA Rule 2261)
Millington Securities shall make available, upon request, the information relative to such member's financial condition as disclosed in its most recent balance sheet prepared either in accordance with such member's usual practice or as required by any state or federal securities laws, or any rule or regulation thereunder.
Fully Disclosed Clearing Arrangement Notification (FINRA Rule 4311(d))
Millington Securities has implemented a fully disclosed clearing agreement with Pershing LLC, a clearing broker dealer. Millington Securities pays clearing fees to Pershing, LLC in return for services performed, such as transaction settlement and the production and mailing of customer statements.
In the absence of express client instruction, the Firm will exercise discretion in determining the factors that need to be considered for the purpose of providing customers with best execution. Millington Securities’ commitment to provide the best execution quality possible does not create any fiduciary responsibilities above the specific regulatory obligations placed upon the Firm or as may be otherwise contracted.
Price will always be important but not necessarily determinative in achieving the best outcome for the client. Price is a sub-set of other considerations evaluated by the Firm’s traders including, but not limited to, order-size, security type, relative liquidity, relative volatility, explicit transaction costs, implicit transaction costs and timeliness. Orders of larger size and/or in less liquid securities are typically worked over longer periods of time as the Firm attempts to reduce implicit transaction costs. Orders of lesser size and/or in more liquid securities may be executed in relatively less time while the Firm still works to minimize implicit transaction costs.
While seeking to obtain best execution for its institutional customers, Millington attempts to minimize total transaction costs including both explicit transaction costs such as commissions as well as implicit transaction cost measurements such as market impact and performance versus the interval volume weighted average price (or “iVWAP”). Implicit transaction costs provide an indication of whether or not a trader made sound decisions, found liquidity, and accessed favorable prices in the time that was available. Implicit transaction cost measurements are also impacted by other factors such as the size of any bid/ask spreads, any implicit mark-up/downs or other proprietary profits earned by market makers effecting "net" basis or other principal capacity transactions, and would also include the potential impact on price that may result from any payment for order flow arrangements.
At no time will Millington Securities place its own financial interest ahead of the customer’s interest or execute an order contrary to instructions received from the customer.
Held/Not-Held Order Handling
Customers may enter "not-held" orders that give a trader time and price discretion while executing the trade in an attempt to get the best possible price without holding the trader responsible if the best price is not obtained. Block-sized orders are often “not-held” because of the complexity of executing large orders without unduly disrupting the market price.
“Held” orders are orders where client instruction is applied upon entry to immediately be submitted for execution at the best available market price given size and limit constraints. All or part of any client “held” order may not be executed at the same price or better than a Firm order entered by a trading desk that did not have knowledge of the order.
Orders received from Millington Securities institutional customers are generally treated as “not-held” orders unless specifically designated otherwise by the client upon submission. “Not-held” orders provide the Firm with necessary trading discretion regarding time and price of individual executions and allow for greater latitude to utilize the professional judgment of the Firm’s traders while seeking the best overall quality of execution under market circumstances. Please note that such orders do not guarantee execution at prices that are the same or better than orders on behalf of other customers of the Firm.
Millington Securities generally routes its institutional client “not-held” orders to market makers or other destinations that typically execute orders on a “net” basis. Additionally, orders may be confirmed at an average price when multiple executions are required to complete the “not-held” order. Trades executed by these market makers or other destinations acting in a principal capacity on a “net” basis are done so with the following understanding: a “net” transaction is one in which the market maker, after having received an order to buy (sell) a security from Millington Securities, buys (sells) the security at one price and then sells to (buys from) Millington Securities at a different price, with the difference representing the market maker’s compensation for executing the transaction. Millington Securities acts as agent in all transactions and passes the price received from the market maker or other destination, including any implicit mark-up or down, to its customers.
Payment for Order Flow and Order Routing Practices (SEC Rule 607)
Millington Securities receives compensation (commonly referred to as “payment for order flow”) for directing client orders to certain market makers or other destinations for execution. Payment for order flow (“PFOF”) may take such forms as monetary payments, financial credits, rebates in the form of a reduction of fees charged, and volume discounts. PFOF paid by market makers to Millington Securities may impact the "net" prices received by Millington from such market makers and therefore the prices ultimately received by customers of Millington. While Millington Securities considers payment for order flow when making order routing decisions, Millington currently requires all market makers and other destinations to which Millington routes orders in equities and ETPs to pay Millington the same PFOF rate to avoid creating an incentive for the Firm to direct trades to a particular market maker based upon the amount of PFOF received. Further details regarding these payments, including the compensation received by Millington related to your orders, is available upon written request.
In addition to the availability of PFOF from a particular market center, and absent a specific instruction from a customer directing Millington to route orders to a particular market center, Millington considers a number of factors in determining the market maker or other destination to which it will route an order. These factors include (i) execution price, including the ability to negotiate fair and reasonable prices for routed orders worked over time using multiple executions, and the likelihood of receiving price improvement versus the national best bid or offer ("NBBO"), (ii) order size, (iii) relative liquidity and volatility of the security, (iv) liquidity enhancement (i.e., the likelihood that a market center will execute orders in a size greater than the displayed size at the time of the route or execution), (v) potential to complete an order at a specified pace or speed, (vi) potential for price improvements due to reductions in the explicit and implicit costs of execution, (vi) the availability of efficient and reliable order handling systems and (vii) overall service. Millington regularly monitors the execution quality provided by market centers to which the firm routes orders.
Extended Hours Trading
Millington Securities is required to provide the following disclosures regarding risks associated with customer trading in the pre-market and post-market sessions. When participating in extended hours trading clients are expected to understand the risks associated with this activity and the fact that this strategy may not be suitable for every investor. Millington Securities is devoted to providing the most efficient executions at the best overall market prices. The Firm takes a host of factors into account when delivering execution quality based on specific needs and instructions from the customer. Best execution for some clients may mean utilizing opportunities to secure set prices or liquidity superior to the overall market while for others execution speed, transparency, and the most cost efficient access to liquidity take priority. In addition to prevailing market price, transaction costs, and need for prompt execution, relevant market liquidity, order size, nature of the transaction and venue of execution are all considered.
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.
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 markets hours.
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 the opening of the next morning. As a result, you may receive an inferior price in extended hours trading than you would during regular market hours.
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.
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.
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.
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.
REG SHO – Failure to Deliver Securities Sold Long
When you enter an order to sell a security “long”, you represent to us that you own the securities being sold without restriction and that you will deliver them to us by the settlement date. Failure to deliver the securities by the settlement date may result in the cancellation of the sale transaction or the purchase of like securities for your account as necessary to complete the sale transaction. If such a purchase is made, you may not be given notice of the purchase and you assume any transaction risk associated with the purchase.
REG SHO – Failure to Deliver Securities Sold Short
In the event that you enter an order with Millington Securities to sell securities “short” for your account and you do not deliver them to us by the settlement date, your sale transaction will be marked as a “fail-to-deliver” position. While Millington Securities will make its best effort to minimize the impact of any fail-to-deliver trade status, in compliance with applicable exchange and SRO regulation we may be required to purchase securities from another source to cover your position should you be unable to deliver the securities in time for settlement.
Regulation SHO requires that any fail-to-deliver position resulting from a “short” sale in equity securities be closed out by the opening of trading on T+4 (trade date plus four business days). In order for Millington Securities to ensure delivery by this time, the firm or its clearing counterparty may initiate a “buy-in.” If a buy-in occurs, the exchange where the transaction took place is notified and securities of like kind and quantity are purchased by Millington Securities in order to make delivery to the purchaser’s account. You would be responsible for making payment for the securities that are purchased.
If the SEC, FINRA, an SRO or any other regulatory body determines that an executed transaction is “clearly erroneous” or should otherwise be cancelled, Millington Securities will be required to cancel the transaction and will not be able to honor the executed price or any other terms. Additionally, Millington Securities reserves the right to adjust, cancel, correct or take any other appropriate actions when it reasonably deems an executed transaction to be erroneous in nature, even if such transaction would not be subject to modification or cancellation pursuant to the various clearly erroneous rules referenced above. In either circumstance, Millington Securities shall have no responsibility for the canceled or corrected portion of the transaction.