Transaction-specific Pre-trade Disclosure

1. Material Information.  Jefferies will disclose to you the material terms of each specific proposed swap and will, if Jefferies deems it to be necessary or appropriate, supplement the general risk disclosures that have been provided to you with additional specific disclosures concerning the material risks and characteristics of the proposed swap.  Any disclosures of such material terms and additional risk information that are made orally by Jefferies will be confirmed in writing.  We will provide you upon request with a draft of all relevant documentation for a proposed swap.  In the event of inconsistency between any general and specific disclosures or information provided about a proposed swap, please rely on the specific disclosures.  If there is any material information that you do not understand, please ask your Jefferies representative for further information or clarification. Please click on the Product Disclosures & METs link on the left to find the general risk disclosures and the relevant transaction-specific disclosures that are applicable to the products that you trade with us. 

2. Scenario Analyses.  Upon request, Jefferies will provide you with a scenario analysis with respect to any proposed swap with us.  Such a scenario analysis will illustrate how a proposed swap may perform from your perspective under different assumed factual scenarios that are identified in the analysis.  If you so elect, we will consult with you concerning the design of the scenario analysis, but if you do not affirmatively make such an election, you will receive a form of scenario analysis solely designed by Jefferies.  

Since a scenario analysis does not present all possible outcomes for a proposed swap, it cannot be relied upon as an indicator of the actual results you will obtain if you enter into the proposed swap with us.  The information in the scenario analysis also cannot be relied upon as an indicator of the unwind price, if any, which you might have to pay or might receive for terminating the proposed swap prior to its stated termination date under the same assumptions.  However, unless the terms of a proposed swap give you a contractual early termination right, you cannot terminate a swap prior to maturity without the consent of Jefferies and the price quoted for such consent could cause a significant loss under the swap from your perspective.

3. Pre-trade Mid-Market Marks. As required by CFTC rule 23.431(a)(3)(i), we will provide you with a mid-market mark for each proposed swap at or about the time we provide you with an executable price.  For a full understanding of our pre-trade mid-market marks, please click on the Important Information Regarding Marks for Swaps under the Additional Notifications and Disclosures on the left.  Each pre-trade mid-market mark will, as required by the rule, exclude amounts for profit, credit reserves, hedging, funding and liquidity reserves and other costs, reserves and adjustments so it is highly unlikely to be the same as the executable price that will be quoted by Jefferies to enter into the proposed swap.

4. Clearing.  You are hereby notified that, if you execute a swap with Jefferies that is intended to be cleared, upon acceptance of the swap for clearing by a “derivatives clearing organization,” as such term is defined in Section 1a(15) of the Commodity Exchange Act and CFTC rules (“DCO”): 

a. The original swap between Jefferies and you is extinguished;
b. The original swap between Jefferies and you is replaced by equal and opposite swaps with the DCO (so that, from your perspective, you will have an identical swap with the DCO and no swap with Jefferies); and
c. All terms of the swap shall conform to the product specifications of the cleared swap established under the DCO’s rules.

5. Clearing Notification.  Pursuant to CFTC rule 23.432, you are hereby further notified that if you are an end-user and have entered into a swap with Jefferies, then:

a. For swaps required to be cleared, an end-user has the sole right to select the DCO at which the swap will be cleared; and
b. For swaps not required to be cleared, an end-user may elect to require clearing of the swap and has the sole right to select the DCO at which the swap will be cleared (although Jefferies has the right to decline to execute the swap on the terms proposed by the end-user).


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