II-E. Stop-on-Quote Orders - Risks and Disclosures

Stop-on-Quote Orders: A stop-on-quote order is an order to buy or sell a security when the National Best Bid Offer ("NBBO") reaches or surpasses a specified level, or trigger, called a stop price. When placing a stop-on-quote order or a stop-on-quote limit order online, the stop price must be at least $0.10 below the current bid on sell orders and $0.10 above the current ask price on a buy order. If you place a stop-on-quote or stop-on-quote limit order with a broker, the $0.10 spread requirement is waived. The triggering event for all stop-on-quote orders (including stop-limit-on-quote and trailing stop-on-quote) will occur when the bid price (sell orders) or ask price (buy orders) reaches or surpasses your stop price. As a result of the SEC's Regulation NMS Plan to Address Extraordinary Market Volatility which provides for a market-wide limit up and limit down (LULD) mechanism to prevent trades in NMS stocks from occurring outside of specified price bands, coupled with trading pauses in the event of more significant and prolonged price moves, the stop-on-quote orders will trigger and execute off what is considered an executable quote. A quote is executable when it is priced at or within the specified price bands. Once triggered, the stop-on-quote order becomes a market order and is then handled as a market order. Depending on market conditions, once a stop-on-quote order is triggered, there is no guarantee of the execution price and the price received may be several points away from your stop price.

Trailing Stop-on-Quote Orders: A trailing stop-on-quote order is similar to a stop-on-quote order, but instead of a stop price, you are able to set a stop condition, creating a moving ("trailing") activation price. You can enter a stop condition in points or by percentage. The minimum for any point trailing stop-on-quote sell or buy to cover order is $0.01 and the minimum percentage for any point trailing stop-on-quote sell or buy to cover order is 1%. Scottrade holds your trailing stop-on-quote order on our servers on a "not held, best-efforts basis;" this means that we do not deliver your order to a market center until your stop condition is met. If your stop condition is met, we will send your order as a market order. Similar to a stop-on-quote order, your trailing stop-on-quote order will trigger and execute off an executable quote. Like a regular stop-on-quote order, your order may not be filled at your stop price, especially in certain fast market conditions. Our trailing stop-on-quote service is provided "as-is" and there may be delays, omissions or inaccuracies in the service. A trailing stop-on-quote order is subject to automatic cancelation pursuant to Scottrade's GTC Order Cancelation Schedule. Scottrade is not responsible for trailing stop-on-quote orders affected by system failures or for trailing stop-on-quote orders affected by quote data issues. Trailing stop-on-quote orders face risk from mechanical malfunction, system disruptions, some types of corporate actions (e.g. cash dividends), and data transmission errors, including errors involving quote data. In the event of misquotes or failures to receive quotes, orders may be erroneously delivered to the market center, or may fail to be delivered. In volatile market conditions, rapid NBBO quote movements may trigger your stop condition. On occasion, rapid quote movements or out-of-range quotes may trigger your stop condition. In an effort to avoid some of the market data risks, trailing stop-on-quote orders cannot be triggered by: (i) trades that occur during pre-market or extendedhours trading; (ii) trades with Late Reports; (iii) out-of-sequence trades; (iv) trades outside the then-current best bid and offer in the market, unless it is the third trade outside the best bid and offer.

Corporate Actions

A corporate action or bankruptcy proceeding may affect a company's investors. Shareholders may be asked to exchange their shares for new shares in the event of a company reorganization, sometimes for less value than their original investment. When a company is reorganized, the rights of investors are explained in the reorganization plan.

When mandatory corporate reorganizations and stock spin-offs/splits occur, you may receive new shares from the reorganized company. It is important to note how a corporate action may impact your account. The process of a corporate action involves the canceling of the old securities in exchange for the issuance of new shares of a security. The previously issued security is canceled and is no longer available for trading. A transfer agent will issue shares of the new security in exchange for the canceled shares. Scottrade will post the new shares resulting from a corporate reorganization to your account only after receiving the shares from a depository firm or the applicable transfer agent.

Scottrade does not allow sell transactions on any unlisted security, which includes trades on the over-the-counter bulletin board or the pink sheets, prior to the new shares posting to your account.

The information and content provided in the Scottrade® Knowledge Center is for informational and/or educational purposes only. The information presented or discussed is not, and should not be considered, a recommendation or an offer of, or solicitation of an offer by, Scottrade or its affiliates to buy, sell or hold any security or other financial product or an endorsement or affirmation of any specific investment strategy. You are fully responsible for your investment decisions. Your choice to engage in a particular investment or investment strategy should be based solely on your own research and evaluation of the risks involved, your financial circumstances and your investment objectives. Scottrade, Inc. and its affiliates are not offering or providing, and will not offer or provide, any advice, opinion or recommendation of the suitability, value or profitability of any particular investment or investment strategy.