Plain English Alpaca Customer Agreement

Set out below is a summary of the Alpaca Customer Agreement (Agreement). THIS DOCUMENT IS NOT A SUBSTITUTE FOR YOU READING AND UNDERSTANDING THE AGREEMENT IN ITS ENTIRETY.

The Agreement sets out the terms and conditions which governs the relationship between Alpaca and its customers, and the customers’ use of Alpaca’s trading platform (Platform). The Agreement refers to other supplementary documents, some of which will form part of the Agreement. Please ensure that you also read through and understand any supplementary documentation.

As a guide for potential customers, we have prepared this executive summary which provides a general overview of some of the Agreement’s key provisions and implications.

     1. Creating and Maintaining Account

Customers must be legally permitted to open an account with Alpaca (including with respect to the laws and regulations of the customer’s jurisdiction). All information provided to Alpaca must be accurate and up to date. Certain persons (individuals and corporate entities) are restricted from opening and operating an account unless otherwise disclosed and agreed by Alpaca. For example, those who are subject to regulatory trading restrictions. All customers must maintain their account in good standing and comply with all of Alpaca’s requirements. Alpaca reserves the right to refuse opening an account or may impose restrictions on trading activities if it deems necessary.

As part of the on-boarding process Alpaca may require specific information from the customer for regulatory compliance, Anti Money Laundering (AML) / Combating the Financing of Terrorism (CFT) and safety purposes. This information may include (but is not limited to), copies of a customer’s identification, credit history reports, Politically Exposed Person (PEP) checks and proof of address. Certain customer information may be disclosed by Alpaca to third parties including to listed issuers.

Customers are responsible for keeping their accounts safe, including keeping their login/pin details secure. If a customer wishes to grant a third-party control over their pin and account, they must have a Limited Power of Attorney in place and submit this to Alpaca. Customers will remain responsible for a third party’s actions over a customer’s account and Alpaca is not liable for any losses resulting from the actions of the customer or a third party.

Customers confirm that they are, at all times, complying with all applicable laws and regulations (including with respect to tax). Alpaca may require customers to provide certain information for tax purposes.

     2. Termination of Account

Alpaca may terminate, deactivate or block a customer’s account at any time and for any reason. If a customer operates their account in an illegal or inappropriate manner, or engages in inappropriate behaviour with Alpaca or its employees/agents, this will almost certainly result in the termination of a customer’s account.

If Alpaca decides to terminate a customer’s account, Alpaca reserves the right to sell any securities held in the customer's account and pass the sale proceeds on to the customer.

     3. Representations and Warranties

By signing the Agreement, customers represent and warrant to Alpaca that (among other things) all information provided to Alpaca is true and correct and that the customer has carefully reviewed, understood and agrees to the terms and conditions of the Agreement, including those supplementary documents referenced in the Agreement.

     4.Trading Authorization

Accounts on the Platform are self-directed. Once a customer has successfully created an account, they grant Alpaca authority to execute trades, place and withdraw orders and take all other steps necessary to carry out their directions. Transactions will only be processed with the Customer’s authorisation and customers are solely responsible for all order placed through their account. Customers are legally required to complete all transactions which have been processed (including payment of the purchase price). Alpaca may take formal steps to recover its losses from customers who have insufficient credit to pay for a transaction which has been processed by Alpaca.

All trades placed through the Platform are deemed to be correct and it is the customer’s responsibility to review trades prior to and after they have been executed. 

     5. Fees

Alpaca may charge fees for certain services it provides to customers. These charges are included in the Alpaca Securities Brokerage Fee Schedule. Customers authorise Alpaca to automatically debit their account for all charges, fees and taxes. The fees are subject to change and may occur without notice. Alpaca may charge interest on any unpaid fees.

     6. Risk Disclosure

The Agreement emphasises the risks inherent in the trading of securities. Customers acknowledge and understand that investing may result in losses that exceed the customer’s initial investment and past performance of a security, industry sector, market or financial product does not guarantee future performance or returns. All customers should consider their risk profile and financial position before deciding whether to invest in the securities market.

Customers acknowledge that price fluctuation is inherent to the securities market. The price received for a market order or limit order may be different than initially expected. Alpaca is not liable for these price fluctuations.

Securities may trade at far greater or lower prices than the previous closing price or anticipated price. Customers understand that the price at which an order is made, and the price when that order is executed may differ. This risk can be somewhat mitigated by placing limit orders. Orders submitted outside market trading hours shall be queued and routed to the market maker the next morning trading is open.

As required by regulation, Alpaca is required to disclose certain information to customers as part of the transaction process. This includes but is not limited to where a customer makes purchase/sell orders for cryptocurrencies (see the Alpaca Crypto Customer Agreement for further information). 

     7. Trading Restrictions 

Alpaca in its sole discretion may prohibit or restrict the trading of securities on its Platform without notice or a customer’s prior approval and may refuse to accept any buy/sell orders placed by its customers. In addition, Alpaca may restrict access to the use of its App or its website without notice.

Alpaca may impose trading or volume limits on a customer’s account without notice and its sole discretion.

     8. Margin Account and Trading

Alpaca may permit a customer to operate a margin account. There are inherent risks with margin trading, and customers must declare that they acknowledge and understand these risks as described in Appendix A of the Agreement and the Margin Disclosure Statement.

     9. Short Selling

Alpaca allows certain customers the ability to execute “short sales”. Customers may only be permitted to engage in short sales if their local jurisdiction permits trading of this type and only with Alpaca’s permission. All short sales must comply with the applicable short selling rules. Alpaca may charge a fee to borrow a security in connection with a short sale.

     10. Securities Investor Protection Corporation (SIPC) Protections

Customers understand and acknowledge that funds held in their account(s) are treated differently and subject to separate regulatory regimes depending on whether such funds are held with Alpaca Securities LLC (for securities trading) or are held in an Alpaca Crypto Account. Funds held by Alpaca Securities LLC for securities trading are insured against certain risks up to a certain amount. However, funds held in an Alpaca Crypto Account are not insured against failure by Alpaca Crypto or malfeasance by an Alpaca Crypto employee and as such the insurance which is afforded to members of the Securities Investor Protection Corporation will not apply.

     11. No Investment Advice

Neither Alpaca nor its employees provide investment advice or will recommend customers undertake any transaction. Alpaca may provide customers with research materials for educational purposes only. Alpaca takes no responsibility for their accuracy and should not be relied upon. Customers understand that at no point will communications, services or other actions between Alpaca and its customers constitute investment advice or otherwise.

     12. Market Data

Securities exchanges may disclose proprietary market data. There are no guarantees that market data will be uninterrupted or error-free. Alpaca may make market data available to its customers but takes no responsibility over such data and is provided on “as is”, “as available” basis. Customers agree that neither Alpaca nor any other party who disseminates data is liable for any damage or loss a customer may incur in respect of that data whatsoever.

     13. No Liability on Alpaca

Alpaca reiterates throughout the Agreement that it is not responsible or liable for the losses, costs or damages which its customers may suffer while using its Platform. This includes losses suffered as a result of trading securities and cryptocurrency, a customer’s reliance on data or information, the actions of third parties including actions taken by governments, regulators, security exchanges, up to and including malicious actions by bad actors (hackers). Customers will have no claim whatsoever against Alpaca for special, indirect, incidental or consequential damages or losses incurred while using the Platform.

Alpaca and its affiliates are not responsible or liable for any acts or omissions by any exchange, clearing organisation, third parties or their respective agents or affiliates. Customers agree to indemnify Alpaca for any loss arising from the actions of third parties whom a customer allows access to the Platform and any losses Alpaca suffers from the customer or their agent’s alleged misrepresentation, or act or omission.

All disputes a customer may have with Alpaca shall be settled by arbitration. Each party gives up their right to sue the other in court except as provided by the rules of the arbitration forum. Rather, disputes must be resolved by way of arbitration.

     14. Additional Terms and Condition

Over the Counter (OTC) Trading

Alpaca permits the trading of certain over-the-counter securities (being securities which are traded outside of an exchange). Customers understand that this type of trading comes with particular risks, in part because they are relatively less liquid and more volatile than actively traded securities listed on a major exchange and subject to different regulations.

Fractional Trading

Alpaca allows the trading of fractional shares (rounded to the ninth decimal place). Alpaca rounds dividends paid on fractional shares to the lowest cent, so the actual dividend received may be less than the amount a customer would otherwise be entitled to receive. Fractional orders will be fulfilled at the price received for the corresponding whole share. Alpaca may group a customer’s fractional shares with its own inventory so whole shares can be sold. This may have an effect on the price which the customer ultimately receives. Customers should note that they cannot trade their fractional shares outside of the Platform.

Mutual Funds

Where a customer purchases or holds a mutual fund, they agree to read and understand the terms of its prospectus and understand the mechanics of how the mutual fund operates.

Exchange Traded Funds (ETF)

Investors should consider the investment objectives and unique risk profile of Exchange Traded Funds (ETFs) carefully before investing. ETFs are subject to risks similar to those of other diversified portfolios. Leveraged and Inverse ETFs may not be suitable for all investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies.

Pattern Day Trading

If Alpaca believes a customer’s trading behaviour meets the definition of a pattern day trader as defined under FINRA Rule 4210(f)(8)(B), being four or more day-trades within five business days, Alpaca may alert that customer that they have met the definition of a pattern day trader. Pattern day traders are required to maintain $25k equity at all times to continue to day trade.

Telephone Conversations and Electronic Communications

Alpaca may record and monitor any telephone or electronic communications with its customers unless otherwise agreed in writing in advance. Alpaca does not consent to customers recording telephone conversions.

Distributions

There may be circumstances where customers receive dividends or distributions in error. For example, where the relevant security has been sold prior to the distribution. In these circumstances, the customer agrees to repay Alpaca all dividends or distributions which they were not legally entitled to.

Amendments

Alpaca may amend this Agreement without notice to the customer. The amended version will be posted on Alpaca’s website and a customer’s continued use of the Platform will be deemed acceptance of such changes.