Disclosure

 

 

 

The Chicago Board of Trade, part of CME Group, Inc., is the DSRO for CHS Hedging. The web address is www.cmegroup.com.

 

 

Information about filing a complaint can be found at: 

http://www.cftc.gov/ConsumerProtection/FileaTiporComplaint/index.htm  or http://www.cmegroup.com/market-regulation/dispute-resolution/.

 

 

The following items can be found at www.chshedging.com/financial-statements:

• Annual report information for the most recent fiscal year
• Daily statements of customer segregated, secured and cleared swaps funds for the most current 12-month period
• Monthly 1-FR FCM report information for the most current 12-month period
• Summary monthly capital balances as of the last day of each month for the 12 most recent months
• Protection of Customer Funds Overview, including information about segregation, collateral management, investments and futures commission merchants

 

Financial information regarding the Company, including how the Company invests and holds customer funds, can be found on the NFA website at http://www.nfa.futures.org/basicnet/welcome.aspx.

 

Financial information for all FCMs can be found on the CFTC website at https://www.cftc.gov/MarketReports/financialfcmdata/index.htm.

 

 

Margin is a good faith deposit for performance of futures contracts; therefore, customers must make margin deposits in a timely manner. Exchange Rules require that customers deposit margin call funds IMMEDIATELY upon notice of the margin call. Regulations also require CHS Hedging to restrict all risk-reducing trades once a margin call is past four days.   Additionally, 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 our policy not to permit any customer to withdraw funds from their account, even in the case of favorable market movement. Failure to meet a margin call will preclude customer from initiating new positions and will ultimately result in the closing of the account. 

    
CHS Hedging will not cancel any margin calls except in cases of (1) total liquidation or (2) error. Failure to promptly deposit adequate margin funds shall entitle CHS Hedging to liquidate any position customer may have with CHS Hedging without prior notification to the customer. This liquidation does not release customer from any liability previously incurred. In the event liquidation proceeds are insufficient for the payment of all liabilities, customer shall promptly, upon demand, pay to CHS Hedging the deficit, together with interest equal to 1 ½ percent monthly, an all costs of collection (including attorney’s fees, should CHS Hedging refer the matter to legal counsel). 
    
Customers may use one of the following methods to meet margin calls: 
    

1. Please contact CHS Hedging at 800-814-0505 for detailed wire instructions. 
2. Please complete and sign the ACH (Automated Clearing House) form.  Return 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 CHS Hedging account. In addition, CHS Hedging cannot accept cash or credit cards for payment of margin calls.

Security Loan Agreement: Third-party loan agreements between Customer, CHS Hedging and your 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.

Disclosure of Futures Commission Merchant Material Conflicts of Interest 

The purpose of this document is to provide you with information about some of the material conflicts of interest that may arise between you and CHS Hedging LLC. in connection with CHS Hedging LLC. performing services for you with respect to the futures, options on futures, swaps (as defined by the Commodity Exchange Act), forwards or other commodity derivatives (“Contracts”). Conflicts of interests can arise in particular when CHS Hedging LLC. has an economic or other incentive to act, or persuade you to act, in a way that favors CHS Hedging LLC. or its affiliates. 

Under applicable law, including regulations of the Commodity Futures Trading Commission (“CFTC”), 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 CHS Hedging LLC. 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 CHS Hedging LLC. may not be a member of, or may not otherwise be able to submit your swap to, the Clearing House of your choice. CHS Hedging LLC. consequently has an incentive to persuade you to use a Clearing House of which CHS Hedging LLC. or its affiliate is a member.

You also should be aware that CHS Hedging LLC. or its affiliate 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 Contracts may be executed and/or cleared.  As a result, CHS Hedging LLC. or its affiliate may receive financial or other benefits related to its ownership interest when Contracts are executed on a given Trading Facility or cleared through a given Clearing House, and CHS Hedging LLC would, in such circumstances, have an incentive to cause Contracts to be executed on that Trading Facility or cleared by that Clearing House. In addition, employees and officers of CHS Hedging LLC. or its affiliate 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. CHS Hedging LLC. or its affiliate 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 a Contract.  In such circumstances, that counterparty may make payments and/or pay a commission to CHS Hedging LLC. 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), CHS Hedging LLC., 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 CHS Hedging LLC. or a person affiliated with CHS Hedging LLC. has a direct or indirect interest, or may effect any such order with a counterparty that provides CHS Hedging LLC. or its affiliates with discounts related to fees for Contracts or other products. In cases where we have offered you a discounted commission or clearing fee for Contracts executed through CHS Hedging LLC. as agent or with CHS Hedging LLC. or its affiliate acting as counterparty, CHS Hedging LLC. or its affiliate may be doing so because of the enhanced profit potential resulting from acting as executing broker or counterparty.

CHS Hedging LLC or its affiliate 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, CHS Hedging LLC, 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 Contract 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 CHS Hedging LLC or its affiliate 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 Contract or related financial instrument. Acting in one or more of the capacities noted above may give CHS Hedging LLC or its affiliate access to information relating to markets, investment and products. As a result, CHS Hedging LLC or its affiliate may be in possession of information which, if know to you, might cause you to seek to dispose of, retain or increase your position in one or more Contracts or other financial instruments. CHS Hedging LLC and its affiliate 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.  

 

Affiliate Risk – CHS Inc., the parent of CHS Hedging and other affiliates, is a cooperative that engages in a variety of business activities relating to energy, grains and foods.  Operations include refineries, rural retail locations, processing, marketing, and distribution. 

 

CHS has identified a number of material risks that could adversely affect its business, including commodity prices and economic downturns and risks; competition; environmental liabilities; real or perceived quality, safety or health risks associate with its products; seasonality; business interruptions and casualty losses; its cooperative structure; industry consolidation; alternative fuels; volatile agronomy business; technological improvements in agriculture; joint ventures where CHS has limited control; and changes in laws and regulations regarding tax, environment, energy and agriculture.  A substantially material adverse event for CHS could affect the Company’s ability to obtain liquidity and capital from CHS on a timely basis.  Revenues, results of operations and cash flow could also be adversely affected.  Such an event could also damage CHS Hedging’s reputation by association.

 

Counterparty Risk – A customer, clearinghouse or FCM may fail to meet its obligations to CHS Hedging or other industry participants.  The Company has contributed to the guaranty funds of the CME Group and the Minneapolis Grain Exchange.  In the event of a default, the guaranty deposits may be accessed to cover unpaid obligations of the defaulting party. 

 

Sector Risk – CHS Hedging serves many customers in the agriculture and energy sectors that are similarly situated in terms of their business activities.  Consolidation among customers and with other entities that are not customers could affect revenue and operating results of the Company if the customer chooses to move all or part of its business to another FCM.  Sustained conditions of either lower prices and volatility or extremely high prices and volatility, which can be driven by factors such as weather and growing conditions, supply and demand and activities of other market participants, could also have a negative effect on revenue, operating results and cash flow. 

 

Regulatory Risk – The regulations governing the FCM industry are subject to change.  CHS Hedging is committed to maintaining compliance with the rules and engages with regulators, industry groups and other FCMs to provide input regarding proposed rulemaking.  Regulatory changes may affect the Company’s ability to maintain its current structure and profitability.

 

Liquidity & Capital Risk – CHS Hedging obtains liquidity and capital exclusively from CHS and/or affiliates on an as needed basis.  As such, the Company is dependent on the creditworthiness of the parent to ensure that adequate funds are available in case of need.  CHS has one or more lines of credit with a consortium of banks that impose specific covenants in order to maintain the financial health of CHS and the safety of the banks’ investments.  A breach of the covenants or other catastrophic financial failure of the parent could have a material effect on the Company’s access to liquidity and capital.

 

Leverage & Liability Risk – The regulatory leverage risk of the Company is primarily driven by the proprietary trading of the parent and affiliates for the purpose of hedging commodity and other business-related risks.  CHS Hedging does not itself maintain a proprietary position.  If the business attributable to the parent and affiliates rises, there may be additional risk to the Company’s balance sheet if a substantially material event occurs with the parent or an affiliate.  Other than proprietary trading, the Company may also carry an intercompany net payable to the parent for settlement of various payables and receivables.   

 

Investment Risk – CHS Hedging maintains a conservative investment approach and utilizes only investments that meet the requirements of CFTC Rule 1.25.  Although very safe, these investments are not 100% guaranteed and the Company itself bears the financial risk if any investment fails to perform as expected.  

 

 

1. You may sustain a total loss of the funds that you have deposited to establish or maintain your positions and may incur additional losses beyond these amounts;  
2. You may be called upon to deposit additional margin funds, on short notice;
3. If you do not provide the additional funds within the time we require, your positions may be liquidated at a loss; 
4. You will be liable for any resulting deficit in your account.

 

The business address for all principals is 5500 Cenex Drive, Inver Grove Heights, MN  55077.

 

 C. Nelson Neale, Vice President CHS Inc./President CHS Hedging LLC
Nelson joined CHS Hedging as vice president, CHS Inc. in May 2019 and currently serves as President, CHS Hedging.  As President, Nelson is responsible for management and profitability of its commercial and producer programs. He is a proven risk management, finance and business development leader, with expertise in trading, insurance, agriculture and commodity environments. Prior to joining CHS Hedging, he spent seven years at Land O’Lakes and its subsidiary WinField United, as head of services and member of the leadership team.  Other WinField United positions included director and head, finance and risk programs; and president, WinSure Captive Insurance Company. Positions outside of the cooperative system included consulting, senior management, and global risk and commodity trading positions with Oliver Wyman Consulting, Inc., New York, N.Y.; The World Bank, Washington, D.C.; Tyson Foods, Springdale, Ark.; UBS Investment Bank, Stamford, Conn.; and Enron, Inc., Houston, Texas.

 

Joe Barker, Director of Commercial & Producer Brokerage Services, CHS Hedging LLC
Joe has spent 16 years providing commodity price risk management services for agricultural clients of CHS Hedging. 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 the several years in the Indianapolis office.  Joe 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, Joe provides industry perspective and policy feedback to the CFTC during its rule-making process related to implementation of the Dodd-Frank Act. 

 

 

John Griffith, Chairman of CHS Hedging Board of Managers and Sr Vice President, Ag Business
John is responsible for CHS global commodity and renewable fuels trading, supply chain management and risk management, including, CHS Hedging, which offers commodity brokerage services to growers and partner cooperatives.  He is a member of many trade associations and serves as a director on numerous boards including the Minneapolis Grain Exchange, North American Export Grain Association, North American Millers Association and the Market Street Terminal LLC.  

 

Dustin Haaland, Director of Commodity Risk, CHS Inc.
Dustin 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 for 26 years, with roles spanning its agriculture, processing, and energy divisions.

Josh Nuytten, Vice President, Sales CHS Agronomy
As vice president of sales for CHS Agronomy, Josh 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. Nuytten joined CHS 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 variety of positions, including field sales and leadership positions in sales, supplier relations, procurement and proprietary product management. Prior to joining West Central, he worked for Zeneca Ag Products in Nebraska. Nuytten grew up on a corn, soybean and beef cattle farm near Ghent, Minn., and graduated from Southwest Minnesota State University in Marshall, Minn.

 

Brent Dickson, Director of Credit, CHS Inc.
Brent leads the underwriting and collection functions for CHS Capital, LLC a wholly owned lending subsidiary of CHS Inc.  and the retail credit application and analysis of CHS Capital.  Brent’s career began as a location manager at River Country Cooperative in South St. Paul and progressed at CHS including staff auditor, financial analyst, controller, and most recently as 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.  Brent serves on the board of managers for CHS Hedging. 

Christopher Ludwig, Vice President, Trade and Risk Management, CHS Inc.
Chris leads CHS 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.  Chris brings with him over 30 years of industry leadership experience including international trade, risk management, and strategy development.  Prior to joining CHS, Chris served in a variety of management roles working for companies such as Land O'Lakes, Cargill, The Scoular Company, and Continental Grain.

 

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 Protection of customer funds.

 

Click here to view NFA profile.

 

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 Web site, www.chshedging.com. 

 

OPTIONS

 Variable degree of risk

13. Transactions in options carry a high degree of risk. Purchasers and seller 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.

14. 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 is ordinarily remote.

15. 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.

16. 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 Terms and conditions of contracts

17. You should ask the firm with which you deal about the term 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.

 

Suspension or restriction of trading and pricing relationships

18. 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.

19. 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.

 

Deposited cash and property

20. 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 specified legislation or local rules. In some jurisdictions, property which has 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.

 

Commission and other charges

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

 

Currency risks

22. 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.

 

Trading facilities

23. Most open-outcry and electronic trading facilities are supported by computer[1]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.

 

Electronic trading

24. Trading on an electronic trading system may differ not only from trading in an open[1]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 risk 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.

 

Off-exchange transactions

25. 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.

 

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:

26. 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.

27. 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.

 

 

CHS Hedging has established a Risk Management Program that is designed to monitor and manage the risks associated with the Company’s role as an FCM.  The Company has a Risk Management Unit as established in accordance with CFTC Rule 1.11., that is responsible for identification of risks, establishment of risk tolerance limits, periodic risk exposure reports, and supervision, review and testing of the relevant policies and procedures.  CHS Hedging also has a designated Risk Manager who is responsible for monitoring the risks of the Company.  Relevant policies and procedures include the Risk Management Program, FCM Compliance Manual, 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.com (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. CHS Hedging also agreed to implement various remediation-related undertakings 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).