Disclosure

The Company is an FCM that provides full-service commodity brokerage and market intelligence to its customers, primarily through the use of exchange-traded futures and options but also through the use of non-cleared, over-the-counter products. The Company has remained focused on the agriculture and energy sectors, which compliments the businesses of its parent, CHS Inc. CHS Hedging utilizes 98.0% of its assets for exchange-cleared activity and 0.3% for over-the-counter activity. Of the 98.0%, 47.8% is related to customer business and 52.2% to affiliates of the Company. CHS Hedging utilizes 98% of its net capital for exchange-cleared activity. Of the net capital used for exchange-cleared activity, 82% is related to customer business and 18% to affiliates of the Company.

The Company provides individualized consulting and education in the areas of agriculture, energy and crop nutrients. The Energy Risk Management Program puts dedicated energy market expertise to work for commercial energy business. The Crop Nutrient Risk Management Program delivers consultation for crop nutrient dealers and retailers, with a special emphasis on inventory and risk management strategies. The Company uses approximately 0.8% of its assets and 0% of its net capital for consulting and education.

The Company’s customer base consists primarily of commercial agriculture and energy businesses, such as grain elevators, energy supply companies, large producers and large ranchers. The Company also offers futures and options clearing services to other FCMs on a limited basis. The Company’s customers are primarily located in the U.S., with less than 1% of its active customer accounts domiciled outside of the U.S.

The CBOT (Chicago Board of Trade), which is a Division of CME Group, Inc., is the Company’s DSRO. It’s web address is www.cmegroup.com.

A customer may file a complaint about the Company or one of its employees with the CFTC by contacting the CFTC’s Division of Enforcement either electronically at https://www.cftc.gov/Forms/tipsandcomplaints.html or by calling the Division of Enforcement toll-free at 866-FON-CFTC (866-366-2382).

A customer may file a complaint about the Company or one of its employees with NFA electronically at http://www.nfa.futures.org/basicnet/Complaint.aspx or by calling NFA directly at 800-621-3570.

A customer may file a complaint about the Company or one of its employees with the Company’s DSRO, CBOT, electronically here.

Financial information for all FCMs can be found on the CFTC website at http://www.cftc.gov/.

 With respect to the Company, the following items can be found here:

• Annual audited financials for the most recent fiscal year;
• Daily statements of customer segregated, secured and cleared swaps funds for the most recent 12-month period;
• Monthly 1-FR FCM reports for the most recent 12-month period;
• Summary net capital balances as of the last day of each month for the 12 most recent months; and
• Protection of Customer Funds Overview, including information about segregation, collateral management, investments and FCMs.
  

Customers should also be aware that NFA publishes on its website certain financial information with respect to each FCM. The FCM Capital Report provides each FCM’s most recent month-end adjusted net capital, required net capital, and excess net capital. (Information for a twelve-month period is available.) In addition, NFA publishes a twice-monthly Customer Segregated Funds report, which shows for each FCM: (i) total funds held in Customer Segregated Accounts; (ii) total funds required to be held in Customer Segregated Accounts; and (iii) excess segregated funds (i.e., the FCM’s Residual Interest). This report also shows the percentage of Customer Segregated Funds that are held in cash and each of the permitted investments under CFTC Rule 1.25. Finally, the report indicates whether the FCM held any Customer Segregated Funds during that month at a depository that is an affiliate of the FCM. The Customer Segregated Funds report shows the most recent semi-monthly information, but the public also has the ability to see information for the most recent 12-month period. The CFTC Rule 30.7 Customer Funds report and the Customer Cleared Swaps Collateral report provide the same information with respect to a CFTC Rule 30.7 Account and a Cleared Swaps Customer Account.

The above reports can be found by conducting a search for a specific FCM in NFA’s BASIC system (http://www.nfa.futures.org/basicnet/). With respect to the Company, you can enter the NFA ID 0192593 and then click “Search”. The reports can be found under the heading “FCM Financial Data Reporting” on the FCM’s BASIC Details page.

Margin is a good faith deposit for the performance of commodity interest contracts. Your margin obligation as a customer and the Company’s rights with respect to margin are set forth in the Futures Customer Agreement. Set forth below is a general description of the Company’s policy with respect to margin.

Margin requirements established by the Company may exceed the margin required by an exchange. Additionally, the Company may increase or decrease margin requirements by any amount in its sole discretion and at any time without advance notice to you.

Customers must make margin deposits when and as demanded by the Company and must satisfy immediately all margin calls in such manner as the Company shall designate in its sole discretion. Customers will be required to wire funds for any margin call which is $10,000 or greater.* Until the required margin deposit has been received, it is the Company’s policy not to permit any customer to withdraw funds from their account, even in the case of a favorable market movement.

Failure to promptly satisfy a margin call may preclude a customer from initiating new positions and may result in the liquidation and closing out of all or some of the customer's positions without prior notice to you. Any liquidation or related action by the Company does not release you from any liability previously incurred. In the event liquidation proceeds are insufficient for the payment of all liabilities, the customer shall promptly, upon demand, pay to the Company the deficit and all unpaid liabilities and damages, together with interest thereon and all costs of collection, including reasonable attorney's fees.

Customers may use one of the following methods to meet margin calls:

1. Please contact the Company at 800-814-0505 for detailed wire instructions.
2. Please complete and sign the ACH Direct Payment Authorization Form and return it to margin@chshedging.com

IMPORTANT NOTE: The legal name on the originating bank account being used to satisfy a margin call must match the legal name on the account with the Company to which the funds are being credited. All checks and funds to be credited to an account held with the Company must be payable only to the Company. All deposits will be deemed made when cleared funds are actually received by the Company. If a check is not honored or paid by a bank upon presentment, the Company will immediately debit the account for the amount of the returned check as well as any fees incurred. The Company cannot accept cash or credit cards for payment of margin calls.

Security Loan Agreement: Third-party loan agreements between a customer, the Company, and the customer's bank are available. For more information, contact our Compliance Department at 800-814-0505.

*A customer may be allowed to replace a wire transfer with an ACH under certain pre-approved circumstances.

In the event of any conflict between this Margin Policy and the Futures Customer Agreement, the Futures Customer Agreement shall prevail and control.

Disclosure of FCM Material Conflicts of Interest

Material conflicts of interest may arise between you and the Company in connection with the Company’s provision of services to you with respect to the futures, options on futures, swaps, forwards and other commodity derivatives (collectively, “Commodity Interests”). Conflicts of interests can arise in particular when the Company has an economic or other incentive to act, or persuade you to act, in a way that favors the Company or its affiliates.


Under applicable law, including CFTC rules, not all swaps are required to be executed on an exchange or swap execution facility (each, a “Trading Facility”), even if a Trading Facility lists the swap for trading. In such circumstances, it may be financially advantageous for the Company or its affiliate to execute a swap with you bilaterally in the over-the-counter market rather than on a Trading Facility and, to the extent permitted by applicable law, we may have an incentive to persuade you to execute your swap bilaterally.


Applicable law may permit you to choose the CFTC-registered derivatives clearing organization (“Clearing House”) to which you submit a swap for clearing. You should be aware that the Company may not be a member of or may not otherwise be able to submit your swap to, the Clearing House of your choice. The Company, consequently, has an incentive to persuade you to use a Clearing House of which the Company or its affiliate is a member.


You also should be aware that the Company or its affiliates may own stock in, or have some other form of ownership interest in, one or more U.S. or foreign Trading Facilities or Clearing Houses where your transactions in Commodity Interests may be executed and/or cleared. As a result, the Company or its affiliates may receive financial or other benefits related to its ownership interest when Commodity Interests are executed on a given Trading Facility or cleared through a given Clearing House, and the Company would, in such circumstances, have an incentive to cause Commodity Interests to be executed on that Trading Facility or cleared by that Clearing House. In addition, employees and officers of the Company or its affiliates may also serve on the board of directors or on one or more committees of a Trading Facility or Clearing House.


In addition, Trading Facilities and Clearing Houses may from time to time have in place other arrangements that provide their members or participants with volume, market-making or other discounts or credits, may call for members or participants to pre-pay fees based on volume thresholds, or may provide other incentive or arrangements that are intended to encourage market participants to trade on or direct trades to that Trading Facility or Clearing House. The Company or its affiliates may participate in and obtain financial benefits from such incentive programs.


When we provide execution services to you (either in conjunction with clearing services or in an execution-only capacity), we may direct orders to affiliated or unaffiliated market-makers, other executing firms, individual brokers or brokerage groups for execution. When such affiliated or unaffiliated parties are used, they may, where permitted, agree to price concessions, volume discounts or refunds, rebates or similar payment in return for receiving such business. Likewise, where permitted by law and the rules of the applicable Trading Facility, we may solicit a counterparty to trade opposite your order or enter into transactions for its own account or the account of other counterparties that may, at times, be adverse to your interests in Commodity Interests. In such circumstances, that counterparty may make payments and/or pay a commission to the Company in connection with that transaction. The results of your transactions may differ significantly from the results achieved by us for our own account, our affiliates, or for other customers.


In addition, where permitted by applicable law (including, where applicable, the rules of the applicable Trading Facility), the Company, its directors, officers, employees and affiliates may act on the other side of your order or transaction by the purchase or sale for an account, or the execution of a transaction with a counterparty, in which the Company or a person affiliated with the Company has a direct or indirect interest, or may effect any such order with a counterparty that provides the Company or its affiliates with discounts related to fees for Commodity Interests or other products. In cases where we have offered you a discounted commission or clearing fee for Commodity Interests executed through the Company as agent or with the Company or its affiliates acting as counterparty, the Company or its affiliate may be doing so because of the enhanced profit potential resulting from acting as executing broker or counterparty.


The Company or its affiliates may act as, among other things, an investor, research provider, placement agent, underwriter, distributor, remarketing agent, structurer, securitizer, lender, investment manager, investment adviser, commodity trading advisor, municipal advisor, market maker, trader, prime broker or clearing broker. In those and other capacities, the Company, its directors, officers, employees and affiliates may take or hold positions in, or advise other customers and counterparties concerning, or publish research or express a view with respect to, a Commodity Interest or a related financial instrument that may be the subject of advice from us to you. Any such positions and other advice may not be consistent with, or may be contrary to, your interests or positions which are the subject of advice previously provided by the Company or its affiliates to you, and unless otherwise disclosed in writing, we are not necessarily acting in your best interest and are not assessing the suitability for you of any Commodity Interest or related financial instrument. Acting in one or more of the capacities noted above may give the Company or its affiliates access to information relating to markets, investment and products. As a result, the Company or its affiliates may be in possession of information which, if known to you, might cause you to seek to dispose of, retain or increase your position in one or more Commodity Interests or other financial instruments. the Company and its affiliates will be under no duty to make any such information available to you, except to the extent we have agreed in writing or as may be required under applicable law.

Nelson Neale, Vice President, CHS Inc./President, CHS Hedging, LLC.
5500 Cenex Drive, Inver Grove Heights, MN 55077
Mr. Neale joined CHS Inc. as Vice President in May 2019 and currently serves as the President of the Company.  As President, Mr. Neale is responsible for the management, operation, finances, and performance of the Company. He is a proven leader with expertise in in commodities, derivatives, finance, operations, risk management, business development, and commercial and producer programs. Prior to joining the Company, he spent seven years at WinField United, a subsidiary of Land O’Lakes.  Mr. Neale’s positions at WinField United included Director and Head of the Finance and Risk programs and President, WinSure Captive Insurance Company. His positions outside of the cooperative system included consulting, senior management, and global risk and commodity trading positions with Oliver Wyman Consulting, Inc., New York, New York.; The World Bank, Washington, D.C.; Tyson Foods, Springdale, Arkansas; UBS Investment Bank, Stamford, Connecticut; and Enron, Inc., Houston, Texas.

Joe Barker, Director of Commercial Brokerage Services, CHS Hedging, LLC.
5500 Cenex Drive, Inver Grove Heights, MN 55077Mr. Barker has spent 23 years providing commodity price risk management services for the Company’s agricultural clients. He began in the Indianapolis branch office as a commodity broker in 2000. From 2007 to 2014, he was the branch manager of the Kansas City office and spent several years in the Indianapolis office. Mr. Barker served on the Kansas City of Board of Trade and was on the KCBT Clearing Corporation Board of Directors while in Kansas City. He serves on an ad hoc committee for the National Council of Farmer Cooperatives as well as the Ag Advisory Committee for the CFTC. Mr. Barker provides industry perspective and policy feedback to the CFTC during its rule-making process related to implementation of the Dodd-Frank Act.

Sean O’Toole, Director of Commodity Brokerage, CHS Hedging, LLC. 600 Broadway, Suite 470, Kansas City, MO 64105
Mr. O’Toole oversees the Compass structured products program, dairy and livestock hedging, and professional trade execution services for the Company. He has 27 years of experience in the commodities industry including time spent in risk management, futures brokerage, and trading. He is a past member of MGEX, the Kansas City Board of Trade, and is currently a member of the CBOT. He was managing director of FC Stone Trading LLC overseeing the over-the-counter trading arm of INTL FC Stone, Inc.

Tony Headrick, Director of Commodity Brokerage, CHS Hedging, LLC.
5500 Cenex Drive, Inver Grove Heights, MN 55077Mr. Headrick specializes in energy, fertilizer and specialty products risk management. Mr. Headrick leads the team of commodity brokers that help commercial agribusinesses and other industry partners mitigate risk and achieve their financial goals through expert market and risk management consultation. Prior to joining the Company in 2013, Mr. Headrick was a refined fuels account manager in the energy division of CHS Inc. In addition to his energy and commodity brokerage experience, Mr. Headrick has experience in the lumber and millwork industry. He holds bachelor’s degrees in international business and marketing from St. Mary’s University in Winona, Minnesota.

Kristin Linnell, Chief Financial Officer, CHS Hedging, LLC.
5500 Cenex Drive, Inver Grove Heights, MN 55077
Kristin A. Linnell became Chief Financial Officer (“CFO”) of CHS Hedging LLC in October 2024 after joining the Firm in September 2024.  Ms. Linnell became registered as an associated person of CHS Hedging on October 11, 2024, and listed as a principal on October 15, 2024.  From September 2020 to August 2024, she was self-employed at Linnell Advisory Services, LLC as an outsourced CFO for financial services and technology companies.  Ms. Linnell also served as a former CFO and Chief Compliance Officer of Potamus Trading, LLC, a previously registered broker-dealer, where she was registered with the Financial Industry Regulatory Authority as a broker from January 2012 to August 2020.  Earlier in her career, Ms. Linnell was a Director of Finance for multi-strategy, multi-asset class hedge funds.  Ms. Linnell holds a bachelor’s degree in economics from Bowdoin College in Brunswick, ME and is licensed by the National Futures Association with her Series 3.

Amy Marchitto, Chief Compliance Officer and Compliance Director, CHS Hedging, LLC.
5500 Cenex Drive, Inver Grove Heights, MN 55077
Ms. Marchitto serves as Chief Compliance Officer and Director of Compliance for the Company. As Chief Compliance Officer she is responsible for administering the Company’s compliance program by developing and updating policies and procedures in support of business operations to comply with CFTC, NFA and exchange regulations. She works closely with front and back-office personnel to validate the Company’s regulatory requirements are being met. She works with the teams to educate them on their regulatory obligations and validates that business is transacted with integrity and regulatory compliance. Ms. Marchitto has extensive compliance expertise with 30 years of experience focused on futures, derivatives and cash markets. She served in a variety of senior compliance roles at Cargill Inc., Prudential Financial’s Global Commodities Division and Citigroup Global Markets. She was a member of the American Stock Exchange and New York Stock Options Exchange acting as a floor broker. Ms. Marchitto holds a bachelor’s degree in economics and public health administration from Rutgers University in New Jersey.

Anthony Khazen, Chief Risk Officer, CHS Hedging, LLC.
5500 Cenex Drive, Inver Grove Heights, MN 55077
Mr. Khazen joined the Company as Chief Risk Officer in May 2023. His responsibilities include the development and maintenance of risk governance for market risk, pre-trade risk limits, margin policies and the Risk Management Unit (“RMU”).

Mr. Khazen has 29 years of industry experience in risk and trading.  Before joining the Company, he spent nearly 10 years at ABN AMRO Clearing USA, LLC.  While at ABN, he was a senior member of the risk team, served as Head of Market Risk, was the risk liaison for exchanges and regulators, was a member of the Nodal Exchange Risk Committee and helped to establish and improve several ABN risk policies and procedures.  From 2006 to 2013, he was a partner and Head of Risk at Breakwater Trading LLC and from 2000 to 2005, he ran the risk department at Rosenthal Collins Group.  He started his career as a member and market maker on the floor at the CBOT in US Treasury Bond and Note options.

He holds a Series 3 license and received his bachelor’s degree in government from Harvard.

John Griffith, Chairman of CHS Hedging LLC Board of Managers and Executive Vice President, Ag Business CHS Inc.
5500 Cenex Drive, Inver Grove Heights, MN 55077
Mr. Griffith is Executive Vice President, Ag Business and the Company. He is responsible for all CHS global commodity and renewable fuels trading, agronomy operations, grain processing, supply chain management and risk management, including freight, currency, execution and trade finance. He also oversees the Company.

Mr. Griffith grew up on a corn, soybean and livestock farm in southwestern Minnesota and during his high school years, worked part-time at a local grain elevator. Today, he is a results-oriented, respected leader who champions expanding market access, operational excellence and develops strong, customer-focused teams to monitor market trends for opportunities that drive revenue growth and add stakeholder value across all global origination offices and operations.

Prior roles at [CHS Inc.] include Senior Vice President, Global Grain and Marketing, Vice President, Grain Marketing North America, Vice President and Merchandising Manager, Senior Durum Manager, Procurement Merchandiser, and Assistant Barley Merchandiser.

Prior leadership positions include Vice President, Supply Chain and Vice President, Global Sourcing at American Italian Pasta Company, Kansas City, Missouri, and Vice President and Chief Procurement Officer for Ralcorp Holdings, Inc., St. Louis, Missouri.

Mr. Griffith earned a bachelor’s degree in business management from St. John’s University, Collegeville, Minnesota, and a Master of Business Administration from Rockhurst University, Kansas City, Missouri. He is a member of many trade associations and serves in leadership positions and serves as the board chairman for both the North American Export Grain Association and the Company.

Dustin Haaland, Director Commodity Risk, CHS Inc. - Member of the Board of Managers CHS Hedging, LLC.
5500 Cenex Drive, Inver Grove Heights, MN 55077
Mr. Haaland leads refined fuels trading and renewable fuels trading and supply for CHS Refined Fuels. He is responsible for Renewable Identification Numbers (RINS), low carbon fuel standard (LCFS) credits and carbon allowances on behalf of CHS Energy. Dustin is a member of the MN Biodiesel Task Force and advocates for liquid fuels amidst the U.S. energy transition at both the federal and state policy level. Dustin has been with CHS Inc. for 26 years, with roles spanning its agriculture, processing, and energy divisions.

Josh Nuytten, Vice President, Sales, CHS Inc. - Member of the Board of Managers CHS Hedging, LLC.
5500 Cenex Drive, Inver Grove Heights, MN 55077
As Vice President of Sales for CHS Agronomy, Mr. Nuytten leads the sales and customer strategy for crop nutrients and crop protection products and services. For two decades, he has collaborated with cooperatives to help them build successful agronomy operations. Mr. Nuytten joined CHS Inc. with the acquisition and integration of West Central Distribution where he was a member of the company’s senior leadership team. In his 14 years with the respected crop protection distributor, he held a variety of positions, including field sales and leadership positions in sales, supplier relations, procurement and proprietary product management. Prior to joining West Central Distribution, he worked for Zeneca Ag Products in Nebraska. Mr. Nuytten grew up on a corn, soybean and beef cattle farm near Ghent, Minnesota, and graduated from Southwest Minnesota State University in Marshall, Minnesota.

Brent Dickson, Director of Credit, CHS Inc. - Member of the Board of Managers CHS Hedging, LLC.
5500 Cenex Drive, Inver Grove Heights, MN 55077
Mr. Dickson leads the Retail Credit team for CHS Inc. and the underwriting and collection functions for CHS Capital, LLC, a wholly owned lending subsidiary of CHS Inc.  Mr. Dickson’s career began as a location manager at River Country Cooperative in South St. Paul, Minnesota before joining CHS Inc. where he progressed within the finance department including positions in Internal Audit, Accounting, and Treasury.  Before taking the role in Credit, Mr. Dickson held the position of Treasury Director where he managed banking relationships, oversaw the cash management function, managed interest rate risk, and supported the Treasurer and the Capital Committee of the CHS Board of Directors.  Mr. Dickson also serves on the Company’s Board of Managers.

Christopher Ludwig, Vice President, Trade and Risk Management, CHS Inc. - Member of the Board of Managers CHS Hedging, LLC.
5500 Cenex Drive, Inver Grove Heights, MN 55077
Mr. Ludwig leads CHS Inc’s global trading and distribution teams for feed grains, ethanol, and corn byproducts. He is responsible for leveraging the CHS enterprise to generate value for our farmers. Mr. Ludwig brings with him over 30 years of industry leadership experience including international trade, risk management, and strategy development. Prior to joining CHS Inc., Mr. Ludwig served in a variety of management roles working for companies such as Land O'Lakes, Cargill, The Scoular Company, and Continental Grain.

Thomas J. Erickson, Erickson Law & Consulting, PLLC – Member of the Board of Managers CHS Hedging, LLC.
Mr. Erickson is the founder of Erickson Law & Consulting, PLLC, a global commodities and financial markets practice based in Washington, DC, serving clients on matters of international trade, derivatives compliance, ESG and related policy advisory services.  Mr. Erickson is a former Commissioner of the U.S. Commodity Futures Trading Commission (CFTC), a position he was nominated to by then President Clinton.  Prior to establishing his own practice, he held senior executive positions at both Bunge, Ltd. and Cargill, Inc.  Mr. Erickson received a juris doctor degree from the University of South Dakota School of Law and is a member of the South Dakota and District of Columbia bar associations.  

CHS Hedging LLC respects the privacy of our customers, visitors, and others who share their Personal Information with The Firm. This Privacy Policy sets forth the privacy principles the Firm follows with respect to the collection, protection, and transfer of Personal Information of non-employee individuals that provide information to the Firm.

View full privacy notice

Click Here to view information regarding the protection of customer funds.

The risk of loss in trading commodity futures contracts can be substantial. You should, therefore, carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should be aware of the following points:

1. You may sustain a total loss of the funds that you deposit with your broker to establish or maintain a position in the commodity futures market, and you may incur losses beyond these amounts. If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice, in order to maintain your position. If you do not provide the required funds within the time required by your broker, your position may be liquidated at a loss, and you will be liable for any resulting deficit in your account.

    

2. The funds you deposit with a futures commission merchant for trading futures positions are not protected by insurance in the event of the bankruptcy or insolvency of the futures commission merchant, or in the event your funds are misappropriated.

    

3. The funds you deposit with a futures commission merchant for trading futures positions are not protected by the Securities Investor Protection Corporation even if the futures commission merchant is registered with the Securities and Exchange Commission as a broker or dealer.

    

4. The funds you deposit with a futures commission merchant are generally not guaranteed or insured by a derivatives clearing organization in the event of the bankruptcy or insolvency of the futures commission merchant, or if the futures commission merchant is otherwise unable to refund your funds. Certain derivatives clearing organizations, however, may have programs that provide limited insurance to customers. You should inquire of your futures commission merchant whether your funds will be insured by a derivatives clearing organization and you should understand the benefits and limitations of such insurance programs.

    

5. The funds you deposit with a futures commission merchant are not held by the futures commission merchant in a separate account for your individual benefit. Futures commission merchants commingle the funds received from customers in one or more accounts and you may be exposed to losses incurred by other customers if the futures commission merchant does not have sufficient capital to cover such other customers’ trading losses.

    

6. The funds you deposit with a futures commission merchant may be invested by the futures commission merchant in certain types of financial instruments that have been approved by the Commission for the purpose of such investments. Permitted investments are listed in Commission Regulation 1.25 and include: U.S. government securities; municipal securities; money market mutual funds; and certain corporate notes and bonds. The futures commission merchant may retain the interest and other earnings realized from its investment of customer funds. You should be familiar with the types of financial instruments that a futures commission merchant may invest customer funds in.

    

7. Futures commission merchants are permitted to deposit customer funds with affiliated entities, such as affiliated banks, securities brokers or dealers, or foreign brokers. You should inquire as to whether your futures commission merchant deposits funds with affiliates and assess whether such deposits by the futures commission merchant with its affiliates increases the risks to your funds.

    

8. You should consult your futures commission merchant concerning the nature of the protections available to safeguard funds or property deposited for your account.

    

9. Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market reaches a daily price fluctuation limit (“limit move”).

    

10. All futures positions involve risk, and a “spread” position may not be less risky than an outright “long” or “short” position.

     

11. The high degree of leverage (gearing) that is often obtainable in futures trading because of the small margin requirements can work against you as well as for you. Leverage (gearing) can lead to large losses as well as gains.

     

12. In addition to the risks noted in the paragraphs enumerated above, you should be familiar with the futures commission merchant you select to entrust your funds for trading futures positions. The Commodity Futures Trading Commission requires each futures commission merchant to make publicly available on its Web site firm specific disclosures and financial information to assist you with your assessment and selection of a futures commission merchant. Information regarding this futures commission merchant may be obtained by visiting our website at https://chshedging.com/.

     

    ALL OF THE POINTS NOTED ABOVE APPLY TO ALL FUTURES TRADING WHETHER FOREIGN OR DOMESTIC. IN ADDITION, IF YOU ARE CONTEMPLATING TRADING FOREIGN FUTURES OR OPTIONS CONTRACTS, YOU SHOULD BE AWARE OF THE FOLLOWING ADDITIONAL RISKS:

     

13. Foreign futures transactions involve executing and clearing trades on a foreign exchange. This is the case even if the foreign exchange is formally “linked” to a domestic exchange, whereby a trade executed on one exchange liquidates or establishes a position on the other exchange. No domestic organization regulates the activities of a foreign exchange, including the execution, delivery, and clearing of transactions on such an exchange, and no domestic regulator has the power to compel enforcement of the rules of the foreign exchange or the laws of the foreign country. Moreover, such laws or regulations will vary depending on the foreign country in which the transaction occurs. For these reasons, customers who trade on foreign exchanges may not be afforded certain of the protections which apply to domestic transactions, including the right to use domestic alternative dispute resolution procedures. In particular, funds received from customers to margin foreign futures transactions may not be provided the same protections as funds received to margin futures transactions on domestic exchanges. Before you trade, you should familiarize yourself with the foreign rules which will apply to your particular transaction.

     

14. Finally, you should be aware that the price of any foreign futures or option contract and, therefore, the potential profit and loss resulting therefrom, may be affected by any fluctuation in the foreign exchange rate between the time the order is placed, and the foreign futures contract is liquidated or the foreign option contract is liquidated or exercised.

THIS BRIEF STATEMENT CANNOT, OF COURSE, DISCLOSE ALL THE RISKS AND OTHER ASPECTS OF THE COMMODITY MARKETS.

The Company has established a Risk Management Program (“RMP”) that is designed to monitor and manage the risks associated with its FCM business. The Company has created a Risk Management Unit (“RMU”) in accordance with CFTC Rule 1.11.  The RMU is responsible for identifying risks, establishing risk tolerance limits, preparing periodic risk exposure reports, supervising the Company’s risk management activities, and reviewing and testing the Company’s risk management policies and procedures. The Company also has a Risk Department that is responsible for monitoring risks relating to the Company’s business.

Relevant risk management policies and procedures include the RMP, the FCM Compliance Manual, and Liquidity, Excess Customer Funds, Information Systems Security, Anti-money Laundering, Privacy, Electronic Communications and Red Flags policies.

In the normal course of business, CHS Hedging may be named as a defendant or respondent in civil actions and arbitrations and receives and responds to subpoenas and requests for information from regulatory authorities.  Material administrative, civil, enforcement, or criminal complaints or actions filed against CHS Hedging can be accessed on NFA’s website at: www.nfa.futures.org (see CHS Hedging, LLC, Firm NFA ID #0192593).  In addition, CHS Hedging notes the following:

• On December 19, 2022, the CFTC issued an Order accepting an offer of settlement from CHS Hedging relating to anti-money laundering, risk management, books and records, and supervisory practices regarding a customer’s account.  CHS Hedging agreed to pay a civil monetary penalty of $6.5 million and enter into a cease-and-desist order with respect to such findings.  CHS Hedging also agreed to implement various remediation-related undertakings and cooperated with the CFTC throughout the course of the investigation.

• On September 26, 2024, the CFTC issued an Order accepting an offer of settlement from CHS Hedging relating to recordkeeping deficiencies and a failure to obtain customer trade authorizations.  CHS Hedging agreed to pay a civil monetary penalty of $650,000 and enter into a cease-and-desist order with respect to such findings.  CHS Hedging also agreed to comply with certain conditions and undertakings set forth in the Order and cooperated with the CFTC throughout the course of the investigation.

Enforcement complaints or actions filed against CHS Hedging can be accessed on the National Futures Association’s website at: https://www.nfa.futures.org/basicnet (see CHS Hedging, LLC, Firm NFA ID #0192593).

The Futures Industry Association has created a Frequently Asked Question document which provides a basic overview of customer fund segregation, FCM collateral management and investments, as well as a number of other topics. This document is available to view by clicking here.

This brief statement does not disclose all of the risks and other significant aspects of trading in futures and options. In light of the risks, you should undertake such transactions only if you understand the nature of the contracts (and contractual relationships) into which you are entering and the extent of your exposure to risk. Trading in futures and options is not suitable for many members of the public. You should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances.

Futures

1. Effect of ‘Leverage’ or ‘Gearing’
Transactions in futures carry a high degree of risk. The amount of initial margin is small relative to the value of the futures contract so that transactions are ‘leveraged’ or ‘geared’. A relatively small market movement will have a proportionately larger impact on the funds you have deposited or will have to deposit this may work against you as well as for you. You may sustain a total loss of initial margin funds and any additional funds deposited with the firm to maintain your position. If the market moves against your position or margin levels are increased, you may be called upon to pay substantial additional funds on short notice to maintain your position.

2. Risk-Reducing Orders or Strategies
The placing of certain orders (e.g., ‘stop-loss’ orders, where permitted under local law, or ‘stop limit’ orders) which are intended to limit losses to certain amounts may not be effective because market conditions may make it impossible to execute such orders. Strategies using combinations of positions, such as ‘spread’ and ‘straddle’ positions, may be as risky as taking simple ‘long’ or ‘short’ positions.

Options

3. Variable Degree of Risk
Transactions in options carry a high degree of risk. Purchasers and sellers of options should familiarize themselves with the type of option (i.e., put or call) which they contemplate trading and the associated risks. You should calculate the extent to which the value of the options must increase for your position to become profitable, taking into account the premium and all transaction costs.

The purchaser of options may offset or exercise the options or allow the options to expire. The exercise of an option results either in a cash settlement or in the purchaser acquiring or delivering the underlying interest. If the option is on a future, the purchaser will acquire a futures position with associated liabilities for margin (see the section on Futures above). If the purchased options expire worthless, you will suffer a total loss of your investment which will consist of the option premium plus transaction costs. If you are contemplating purchasing deep-out-of-the-money options, you should be aware that the chance of such options becoming profitable ordinarily is remote.

Selling (‘writing’ or ‘granting’) an option generally entails considerably greater risk than purchasing options. Although the premium received by the seller is fixed, the seller may sustain a loss well in excess of that amount. The seller will be liable for additional margin to maintain the position if the market moves unfavorably. The seller will also be exposed to the risk of the purchaser exercising the option and the seller will be obligated to either settle the option in cash or to acquire or deliver the underlying interest. If the option is on a future, the seller will acquire a position in a future with associated liabilities for margin (see the section on Futures above). If the position is ‘covered’ by the seller holding a corresponding position in the underlying interest or a future or another option, the risk may be reduced. If the option is not covered, the risk of loss can be unlimited.

Certain exchanges in some jurisdictions permit deferred payment of the option premium, exposing the purchaser to liability for margin payments not exceeding the amount of the premium. The purchaser is still subject to the risk of losing the premium and transaction costs. When the option is exercised or expires, the purchaser is responsible for any unpaid premium outstanding at that time.

Additional Risks Common to Futures and Options

4. Terms and Conditions of Contracts
You should ask the firm with which you deal about the terms and conditions of the specific futures or options which you are trading and associated obligations (e.g., the circumstances under which you may become obligated to make or take delivery of the underlying interest of a futures contract and, in respect of options, expiration dates and restrictions on the time for exercise). Under certain circumstances the specifications of outstanding contracts (including the exercise price of an option) may be modified by the exchange or clearing house to reflect changes in the underlying interest.

5. Suspension or Restriction of Trading and Pricing Relationships
Market conditions (e.g., illiquidity) and/or the operation of the rules of certain markets (e.g., the suspension of trading in any contract or contract month because of price limits or ‘circuit breakers’) may increase the risk of loss by making it difficult or impossible to effect transactions or liquidate/offset positions. If you have sold options, this may increase the risk of loss.

Further, normal pricing relationships between the underlying interest and the future, and the underlying interest and the option may not exist. This can occur when, for example, the futures contract underlying the option is subject to price limits while the option is not. The absence of an underlying reference price may make it difficult to judge ‘fair’ value.

6. Deposited Cash and Property
You should familiarize yourself with the protections accorded money or other property you deposit for domestic and foreign transactions, particularly in the event of a firm insolvency or bankruptcy. The extent to which you may recover your money or property may be governed by specific legislation or local rules. In some jurisdictions, property which had been specifically identifiable as your own will be pro-rated in the same manner as cash for purposes of distribution in the event of a shortfall.

7. Commission and Other Charges
Before you begin to trade, you should obtain a clear explanation of all commissions, fees and other charges for which you will be liable. These charges will affect your net profit (if any) or increase your loss.

8. Transactions in Other Jurisdictions
Transactions on markets in other jurisdictions, including markets formally linked to a domestic market, may expose you to additional risk. Such markets may be subject to regulation which may offer different or diminished investor protection. Before you trade you should enquire about any rules relevant to your particular transactions. Your local regulatory authority will be unable to compel the enforcement of the rules of regulatory authorities or markets in other jurisdictions where your transactions have been effected. You should ask the firm with which you deal for details about the types of redress available in both your home jurisdiction and other relevant jurisdictions before you start to trade.

9. Currency Risks
The profit or loss in transactions in foreign currency-denominated contracts (whether they are traded in your own or another jurisdiction) will be affected by fluctuations in currency rates where there is a need to convert from the currency denomination of the contract to another currency.

10. Trading Facilities
Most open-outcry and electronic trading facilities are supported by computer-based component systems for the order routing, execution, matching, registration or clearing of trades. As with all facilities and systems, they are vulnerable to temporary disruption or failure. Your ability to recover certain losses may be subject to limits on liability imposed by the system provider, the market, the clearing house and/or member firms. Such limits may vary; you should ask the firm with which you deal for details in this respect.

11. Electronic Trading
Trading on an electronic trading system may differ not only from trading in an open-outcry market but also from trading on other electronic trading systems. If you undertake transactions on an electronic trading system, you will be exposed to risks associated with the system, including the failure of hardware and software. The result of any system failure may be that your order is either not executed according to your instructions or is not executed at all.

12. Off-Exchange Transactions
In some jurisdictions, and only then in restricted circumstances, firms are permitted to effect off- exchange transactions. The firm with which you deal may be acting as your counterparty to the transaction. It may be difficult or impossible to liquidate an existing position, to assess the value, to determine a fair price or to assess the exposure to risk. For these reasons, these transactions may involve increased risks. Off-exchange transactions may be less regulated or subject to a separate regulatory regime. Before you undertake such transactions, you should familiarize yourself with applicable rules and attendant risks.