Markets exhibiting unusually large trading volume and/or great price variations are known as "fast markets". High volume conditions may occur at the market opening, or intra-day, affecting trade execution and reporting. Fast market conditions may be caused by various factors. A common factor is an order imbalance - - where there are significantly greater orders of one type (such as "buys") than another type (such as "sells"). Recently fast market conditions have occurred with trading in high technology stocks, particularly companies with an Internet-related business. These companies' initial public offerings (IPO's), as well as their secondary market trading, have often been characterized by heavy volume and large price swings, resulting in significant volatility.

Delays in execution and trade reporting may occur in a fast market. Also, a security's price may change very rapidly, causing significant differences between the security's quoted price, and the ultimate execution price for that security. The quote "size" for a security also may change rapidly, and an entire order may not always be filled at the quoted price. As a result, there is a substantial risk that all or part of an order may be executed at a price substantially away from the market price quoted when the order was placed.

The Financial Industry Regulatory Authority(FINRA) recommends that we inform you as to certain practices by market-makers in the NASDAQ and other over-the-counter securities markets. During normal market conditions, market-makers often utilize automated execution systems or services for eligible stocks, up to certain share sizes. These executions include automated price improvement opportunities and acceptance of stop orders. However, during fast market conditions, market-makers may decide to execute orders manually, and not utilize such systems or services. This may result in possible delays in order execution, resulting in executions at less favorable prices.

A "market order" is an order to buy or sell a stock at the best available price when the order is executed on the market. Market orders are more likely to be filled, although not at a particular price

A "limit order" is an order to buy or sell a security at a particular price, or better. A limit order will allow you to set a price limit, although it will not guarantee that your order will be filled. A limit order allows you to restrict the minimum price you are willing to receive (in the case of a sell order) or the maximum price you are willing to pay (in the case of a buy order). Your order will be executed at either your limit price, or at a better price to you. However, even when the market moves to your limit price, you are not assured an execution, because there may be other limit orders ahead of your own order.

Use of Limit Orders

A limit order may reduce risk in a fast and/or volatile market. A market order may be executed at a higher price (in the case of a buy) or at lower price (in the case of a sell) than you had anticipated. A limit order permits you to establish a maximum buy price, or a minimum sale price. You should consider placing limit orders, instead of market orders, in a fast or volatile market. Again, however, there is no guarantee in a fast market that your limit order will be executed. During the initial day of secondary market trading in an IPO security, Capital Securities will only accept limit orders - - Capital Securities will not accept market orders.

On occasions, fast or volatile markets may effect your access to the internet. Due to heavy volume, or other factors increasing system traffic, you may not be able to obtain Internet access. Additionally, due to high volume or system capacity limitations, you may encounter difficulties in obtaining portfolio status, access to on-line information, or similar services offered through Capital Securities. If you encounter difficulty in accessing the internet, we urge you to contact us at 630-705-9800. Capital Securities will attempt to take your order when the internet access is limited due to market conditions.

A margin account cannot be opened unless the customer signs a margin agreement. Under the agreement, the customer pledges the securities that are purchased in the account to the brokerage firm. In return for the pledge of securities, the brokerage firm loans the customer a portion of the purchase price. If you plan to borrow money to buy stock, you also need to know the terms of the loan your broker gave you and the inherent risks involved. In volatile markets, an investor who puts up an initial margin payment for the purchase of stock may be required to deposit additional funds, (thus the term "margin call"), in his/her account if the price of the stock falls. If you do not respond in a timely manner, stocks in your account could be sold to cover the call and you would be held responsible for any losses. Your broker has the legal right to sell your securities, without consulting you first, if your account falls below the required minimum maintenance level.

Capital Securities also may raise margin requirements for particular securities trading under fast market conditions. Where warranted, Capital Securities may designate a security as not marginable, in which case you will be required to purchase the security with 100% initial margin. Increasing margin requirements helps ensure that there is adequate equity in your margin account as protection in case of a large change in a security's value, which reduces the likelihood that we will be required to liquidate your account assets to meet a margin call.

Although the Internet makes it seem as if you have a direct connection to the securities market, you do not. The online investor's order generally goes through the same process that it would, had he/she called his/her broker directly. Moreover, by placing an order online, the investor opens the door to a host of new, potential problems. These potential problems can consist of clogged lines, system failure(s) anywhere between the investor's PC and the actual exchange or electronic marketplace, and the fact that in fast markets orders can, and often will, back up.

Delayed Trade/Cancellation Confirmations

With the large volume of securities being traded online, you may occasionally experience trouble getting initial trade/cancellation confirmations after execution/cancellation. The fact that you did not immediately receive a trade report does not mean your order was not executed. Avoid the temptation to re-enter the order, otherwise, you may end up entering multiple orders for the same security that cannot be canceled. Another misconception is that an order is canceled when you hit cancel on your computer. In fact, the order is canceled only when the market receives the cancellation. You may receive electronic confirmation of cancellation, but that only means your cancellation request was received - not that your order was actually canceled.

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