The EBC Rules do not change the fundamental conflict of interest that is inherent in every swap or SBS because a positive performance for one party will inevitably be a negative performance for the other party.  Because of this unavoidable conflict of interest, communications from Jefferies with respect to swaps and SBS are not, and should not be treated or relied upon as, or considered by you to be, investment advice or an offer, inducement, recommendation, suggestion or call for you to enter into any swap or SBS.

Additional material conflicts of interest may arise between you and Jefferies in connection with swaps or SBS that are subject to mandatory clearing.  Under applicable law, including regulations of the CFTC and SEC, all such swaps or SBS are required to be executed on an exchange or swap or SBS execution facility (each, a “Trading Facility”) if at least one Trading Facility makes such swaps or SBS available to trade.  In such circumstances, Jefferies or an affiliate may receive fees, discounts and/or other financial benefits if the swap or SBS is executed on a Trading Facility in which Jefferies or an affiliate has an interest as a member, market-maker, equity owner, board member and/or some other form of interested party.

If more than one Trading Facility makes a cleared swap or SBS available to trade, Jefferies may decline to execute the swap or SBS unless it is executed on a Trading Facility preferred by Jefferies.  Applicable law also permits an end-user counterparty to choose the CFTC-registered DCO or SEC-registered clearing agency to which a cleared swap or SBS is submitted for clearing. Jefferies or an affiliate may receive fees, discounts and/or other financial benefits if the swap or SBS is cleared at a DCO or clearing agency in which Jefferies or an affiliate has an interest as a member, market-maker, equity owner, board member and/or some other form of interested party.

Jefferies may decline to execute a swap or SBS unless it will be cleared at a DCO or clearing agency preferred by Jefferies rather than one chosen by you.  Jefferies may also decline to execute a swap or SBS to be cleared at a DCO or clearing agency chosen by you if it does not have the ability to submit swaps or SBS for clearing to that DCO or clearing agency.

Another potential conflict of interest with respect to Trading Facilities, DCOs and clearing agencies in which Jefferies or an affiliate has an interest is that individual employees and officers of Jefferies or its affiliates may also serve on the board of directors or on one or more committees of such a Trading Facility,  DCO or clearing agency and may consequently be able to influence policies and practices of the organization.

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