Important Risk Disclosures

Morton St. Trading Investments, LLC d/b/a Fanatics Markets FCM (the "Firm") clears event contracts for its clients as a clearing member of Commodity Futures Trading Commission ("CFTC") registered Designated Contract Markets ("DCM") and Derivatives Clearing Organizations ("DCO").

In compliance with CFTC Regulation 22.16, the Firm is advising you that in the unlikely event of the Firm's insolvency, your rights as a customer will be determined pursuant to the commodity broker liquidation provisions of the U.S. Bankruptcy Code and CFTC Part 190. However, if the insolvency proceeding is located outside of the United States, local insolvency law could impact your ability to recover or the speed with which you may recover your funds or positions.

The Firm is a clearing member of one or more CFTC-registered DCMs and DCOs. Each such DCM and DCO has rules that govern the use of cleared swaps customer collateral as well as the transfer, neutralization of risks, and liquidation of cleared swaps in the event of a default relating to a cleared swap customer account. The applicable DCM's and DCO's rulebook and additional risk disclosures are available on its website.

A description of event contracts and the material risks associated with transacting in event contracts is provided below. This statement does not describe all risks or other significant considerations associated with trading swaps, options, or fully collateralized event contracts. 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. You should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances. Your trading of event contracts through the Firm constitutes your acknowledgement that you have read and understood this risk disclosure statement and that you accept the risks and responsibilities of your decision to trade event contracts. This statement supplements, and should be read together with, the Firm's generic Risk Disclosure Statement for Futures and Options furnished under CFTC Regulation 1.55(b) and the Firm's FCM-Specific Disclosure Document furnished under CFTC Regulation 1.55(k), each of which contains additional important information about the Firm and the risks of trading.

Description of Event Contracts

Event contracts are a type of derivative that the CFTC classifies as "binary options" and "swaps," and which are sometimes referred to as forecast or prediction contracts. An event contract is a contract whose value is based on whether a specific condition, occurrence or extent of an occurrence will occur or not occur at or before a specific time. You can purchase a "Yes" or a "No" contract, which are two separate and unique event contracts.

All event contracts must be fully collateralized, which means that (i) you must have the funds to cover the full purchase price of the contracts in your account with the Firm when placing an order and (ii) the full purchase price of the event contract is sent to a DCO as collateral when the contract is executed.

An event contract expires and individual positions settle once the designated time by which the relevant event must occur passes. Once an event contract expires, it is no longer available. Subsequently, the outcome of the event contract will be determined and reported by the third-party source designated to determine the outcome of the event (as specified in the rules of the applicable DCM) and the contract will be settled. Depending on the outcome of the event, the holder of the event contract that reflects the outcome of the event will be entitled to receive $1.00, while holders of the opposing contract will receive $0.00.

Event contracts are a type of derivative, in that they derive their value from an underlying asset. However, event contracts have a number of differences from other derivative products. Unlike futures and options, event contracts are fully collateralized and cannot be purchased on margin.

Additionally, event contracts are not marked-to-market. As a result, event contracts do not currently require the deposit of additional funds to maintain an existing position. Event contracts are further differentiated from some other derivatives in that they are not restricted to using a physical commodity or tradable financial instrument as their underlying asset and are always settled by cash settlement. The value of a futures or in-the-money options contract at expiration will vary depending on the price of the underlying asset, whereas event contracts will typically have a binary settlement value, for example, of either $1.00 or $0.

Event contracts cannot be sold or transferred to another DCM. Event contracts can only be "exited" before settlement by acquiring an offsetting position (i.e., holding both a "Yes" and "No" position with the same event question).

Risks of trading in event contracts

Illustrative (and Non-Exhaustive) Event Contract Risks.

Market Risk

The risk of loss in trading event contracts can be substantial and complete. The outcome of an event contract cannot be known in advance, and past performance of event contracts or markets is not indicative of future results. Your expectations may not match the outcome of the event, which can lead to unexpected losses. Further, changes in the likelihood of an underlying event may not necessarily result in a change in the price available from a DCM, which could prevent you from offsetting an existing position at a profit. Before trading event contracts, you should be prepared for the possibility of losing your entire investment.

Pricing Risk

The prices of event contracts are dependent on the market's expected probability of events occurring, which makes some traditional derivative pricing models inapplicable to event contracts. Event contract prices may not always be reflective of the actual probabilities of the events occurring, which can lead to unexpected losses.

Data Source Risk

Data published by a designated source is used to determine whether the event that is the subject of an event contract has occurred. Market participants may be exposed to risk of loss if a source experiences a security breach, reports inaccurate data, or does not report data at the expected date or time. Additionally, while CFTC rules require DCMs to list only contracts that are not readily susceptible to manipulation, and the Firm and DCMs prohibit trading in event contracts by certain persons who may have "inside" knowledge of, or be able to influence, the relevant event, there can be no guarantee against manipulation of the contract notwithstanding these protections.

Liquidation Risk

You might not be able to offset your position in an event contract at all or at a price that you believe is fair, including when there is insufficient volume in the opposing event contract or if the opposing event contract has insufficient bid depth. In such cases, the pricing of event contracts might not accurately correspond to the market's prediction of the underlying event, and you would be forced to pay higher prices to offset your positions.

Execution Risk

Order books for event contracts may be thin, particularly outside of peak news cycles, near binary outcomes, and around significant announcements or regulatory developments. As a result, you may experience wide bid/ask spreads, price slippage, and partial fills, and your orders may not be executed at the prices or in the quantities you expect. Stop orders and similar order types are not guaranteed to execute at any particular price and may be triggered at prices substantially less favorable than the stop price. During trading halts or fast-moving markets, indicative prices may be unavailable or unreliable, and your ability to enter or exit positions may be materially impaired, which could result in substantial losses.

Trading Halt Risk

DCMs have the authority to initiate trading halts in an emergency and, separately, if it deems such action to be in the interest of its users. DCMs may, through such DCM's rules, also have the authority to take other extraordinary measures in an emergency. The CFTC or a court can also direct a DCM to initiate a trading halt. A trading halt would prevent you from offsetting your positions and could affect your portfolios and strategies.

Clearinghouse Risk

Trading event contracts also exposes you to risks associated with DCMs and DCOs, including the failure of a DCM's and/or DCO's or its designated technology service provider's hardware and/or software and the bankruptcy of a DCM or DCO. You should consult the applicable DCM's or DCO's rules and/or consult the applicable DCM and/or DCO itself concerning the nature of protections in place to minimize these risks.

Terms and Conditions of Contracts; Modifications; Exchange Disclosures

You should review the terms and conditions of the specific event contract you are trading and associated obligations (e.g., any restrictions on partial sales and contract expiration). Under certain circumstances, specifications of outstanding contracts may be modified by the exchange or clearinghouse to reflect changes in the underlying.

The applicable DCM may provide additional information regarding trading in event contracts on its platform. The Firm was not involved in producing and is not responsible for the content of any information provided by any DCM, DCO, or other third party.

Regulatory and Litigation Risks

Regulators continue to evaluate event contract markets, and regulatory changes may adversely affect the ability of parties to offer or enter event contracts transactions, or the pricing levels at which event contracts may transact. Such changes, should they occur, could increase your costs or limit your ability to transact in material ways.

Event contracts, and particularly sports-related event contracts, currently are the subject of various litigations and legal challenges, and courts may interpret applicable laws and regulations differently across jurisdictions, or even in the same jurisdiction in different cases. Due to judicial orders, regulatory determinations, or legislative action, sports-related event contracts may in the future be required to cease trading in their current form, or in any form, in your jurisdiction, and could be modified, suspended, or terminated on little or no notice. You should be prepared for abrupt changes to market access, trading terms, settlement procedures, or product availability. The applicable DCM provides information on its procedures for addressing market or product issues in its rulebook, including its policies and procedures for the liquidation or close-out of contracts and disposition of customer property in the event such litigation requires the applicable DCM to cease offering such contracts in your state or territory. These risks are not hypothetical.

Sports-Related Event Contract Risk

Sports-related event contracts present additional legal and operational risks compared to other event contracts. The official determination of a sporting outcome may change after the fact as a result of protests, officiating or replay reviews, disciplinary actions, statistical corrections, or vacated results, and any such change may affect settlement under the contract's terms and the applicable DCM's rules, including after you believe a contract has been resolved. Sports leagues, governing bodies, and other rights holders may object to or challenge the listing, settlement terms, data sources, or marketing of these contracts, including on intellectual property or integrity grounds, and have requested that certain contract types be removed; such challenges or requests may lead to trading halts, settlement delays, modifications, or delisting. Sports-related contracts may also present heightened risks of manipulation or misuse of material nonpublic information, and integrity-monitoring programs may impose surveillance, reporting, or trading restrictions. Liquidity in these contracts may deteriorate sharply around the events to which they relate.

Forced Liquidation; Account Closure, Suspension, and Loss of Eligibility

If you close your account while you hold open positions, if your account is suspended or terminated, or if you become ineligible to trade event contracts (including as a result of your location, residence, customer type, or a change in applicable law, regulation, court ruling, or exchange or clearinghouse rule), your open positions may be affected without your consent. Among other outcomes, you may be required to liquidate or transfer your positions immediately or on short notice with no assurance of liquidity or of liquidity at economically reasonable prices; your positions may be reduced, voided, force cash-settled, or converted to a different instrument; or you may be unable to liquidate or transfer your positions at all. The Firm may take, or be directed by an exchange, clearinghouse, regulator, or court to take, any of these actions without further notice to you, and any such action may occur at prices less favorable than those otherwise available and may result in losses up to the entire amount you have invested.

Settlement of Canceled, Postponed, or Altered Events

If the event underlying a contract is canceled, postponed, rescheduled, or materially altered, or if the outcome, its timing, or the source data is ambiguous or disputed, settlement may be delayed or may be determined under the fallback or discretionary provisions of the applicable contract specifications and DCM rules. The result of any such fallback determination may differ materially from your expectations and from prevailing market prices, and may result in losses.

FCM and Treatment of Funds Risk.

You will be exposed to risks associated with your use of the Firm or any other futures commission merchant ("FCM"), including potential risks such as the failure of the FCM's technology, the FCM's insolvency, and the FCM's failure to provide the DCO with adequate funds to establish its customers' event contract positions. These risks may result in your orders not being executed in accordance with your instructions or not being accepted.

Because event contracts are classified as cleared swaps, the funds you deposit with the Firm to trade event contracts are held as Cleared Swaps Customer Collateral and are required to be segregated in accordance with Section 4d(f) of the Commodity Exchange Act and CFTC Part 22. Although such funds may be operationally commingled with the funds of other cleared swaps customers in one or more accounts, the Firm is required to treat and account for them on a legally segregated basis, and your collateral generally may not be used by a DCO to satisfy the obligations of another customer. In addition, because event contracts are fully collateralized, no customer carries a margin deficit on a position, which reduces, but does not eliminate, the risk that other customers' losses could affect you. Notwithstanding these protections, in the event of the Firm's insolvency, or a shortfall in the cleared swaps customer account class resulting from, among other things, operational loss, fraud, misappropriation, or a loss on the investment of customer funds, you may not recover the full amount of your funds and may be required to share any such shortfall on a pro rata basis with other cleared swaps customers.

The funds you deposit with the Firm may be invested by the Firm in certain types of financial instruments that have been approved by the CFTC. Permitted investments are listed in CFTC Regulation 1.25. The Firm may retain the interest and other earnings realized from its investment of customer funds. You should be familiar with the types of financial instruments in which FCMs may invest customer funds.

Publicly Available Information.

In addition to the risks noted above, you should be familiar with the Firm. The CFTC requires each FCM, including the Firm, to make publicly available on its website certain information. That information with respect to the Firm is available at fanaticsmarkets.com/regulatory.

Other Risks

Operational risks, including, but not limited to, those associated with human error, systems failures, cyberattack, or inadequate procedures and controls, may pose a risk to the success of your event contract trading. The occurrence or any of such risks could lead to losses.

ELECTRONIC TRADING RISK DISCLOSURE

Electronic trading and order-routing platforms operate differently from traditional open-outcry pits and manual order-entry processes. Transactions executed through an electronic system are governed by the rules and regulations of the DCM, who is listing the contract. You are responsible for ensuring that your trading activity complies with the applicable procedures, policies, and trading rules of the applicable DCM and DCO to which your order is submitted. Before trading electronically, you should carefully review the governing rules of the applicable DCM which is offering access to the instruments you intend to trade. You should review the details of such DCM's trading system to understand the DCM's specific requirements, such as membership qualifications, termination provisions, and restrictions on order entry. Each DCM with markets available through the Firm utilizes an internet-based system, which poses additional vulnerabilities arising from connectivity, third-party service providers, or delays in receiving and monitoring electronic communications.

Risks of System or Component Failure

Trading through an electronic platform exposes you to potential failures of hardware, software, or network components. A system outage could prevent you from entering new orders, modifying or cancelling existing ones, or executing transactions during a given period. Such interruptions may also result in the loss of order data or priority, which could materially affect your ability to manage positions or exposures.

Limitations of Liability

DCMs offering an electronic trading or order routing system and/or listing the contract may have adopted rules to limit their liability as well as the liability of FCMs and software and communication system vendors, and the amount of damages you may collect for system failure and delays. These limitations of liability provisions vary among the DCMs. You should consult the rules and regulations of the relevant DCMs in order to understand these liability limitations.

Internet and Network Services

If you use the internet to transmit trading instructions, data, or other communications, be aware that such transmissions may be intercepted or delayed. The Firm disclaims responsibility for the interception, speed, accessibility, or security of any internet or network service and makes no representation or warranty as to their performance or reliability.

GEOGRAPHIC ACCESS AND SERVICE AVAILABILITY DISCLOSURE

The Firm's services are available only in certain geographic territories and may be limited in certain geographic territories. Access to trading systems and related functionality is determined using geolocation technology.

If you open or hold an event contract while located in a jurisdiction where the technology service provider is operational, you should be aware that you may not be able to access, modify, or close your position if you subsequently travel to or attempt to access the platform from a jurisdiction where the technology service provider's services are not available or authorized (for example, purchasing a sports event contract while in Alabama but later attempting to manage that position while in New York).

You are strongly encouraged to consider any expected travel outside of the technology service provider's supported jurisdictions for the duration of your position before entering into any contract. Additionally, there is a risk that the services available in any given jurisdiction may change with little to no notice due to changes in law, regulation or other operational or business considerations.

COMMISSION, FEES, AND OTHER CHARGES

Before you begin to trade, obtain a clear understanding 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.

AFFILIATION DISCLOSURE

Scope and Applicability

This disclosure applies to services related to trading on a DCM and clearing on a DCO.

Affiliation and Market Participation

Morton St. Market Maker, LLC ("Market Maker Affiliate") is affiliated and under common control with the Firm. Market Maker Affiliate is currently a participant of one or more DCMs and may in the future become, or apply to become, a participant of other DCMs.

Information Controls and Shared Services

Market Maker Affiliate does not receive preferential treatment from Fanatics Markets FCM. It has no access to nonpublic customer or order information of the customers of the Firm or to the nonpublic aspects of the FCM's operations. Personnel of the Firm with access to such information (including orders, stop levels, margin status, and liquidation plans) are subject to information barriers and use restrictions that prohibit disclosure or use for the benefit of any affiliate, including Market Maker Affiliate.

Affiliate Market-Making, Incentives, and Fair Access

Market Maker Affiliate may receive programmatic incentives offered by a DCM on fair and non-discriminatory terms and may participate in a DCM's liquidity provider program pursuant to such DCM's rules. It is subject to the same DCM access criteria and must abide by the same trading rules as non-affiliated market makers.

CONFLICT OF INTEREST DISCLOSURE

The following outlines certain material conflicts of interest that may arise between a customer and the Firm in connection with its clearing and execution services related to event contracts. Conflicts may occur if the Firm has an economic or other incentive to act, or to influence a customer to act, in a manner that benefits Fanatics Markets or its affiliates.

Clearing and Membership Considerations

Customers should be aware that the Firm is registered as an FCM and is a clearing member of one or more CFTC-registered DCMs and DCOs and, under its current arrangements, clears event contracts that customers execute on such DCMs. The DCMs and DCOs on which the Firm is able to execute and clear event contracts may change over time and may limit the products available to you and the venues on which your orders can be executed and cleared.

Other Business Activities and Information Access

Affiliates of the Firm may operate in various capacities, including as an investor, research provider, or market maker. In these or similar roles, such affiliates may take or hold positions in, provide advice regarding, or publish research about a contract or related financial instruments that are also the subject of recommendations or services provided to you. Unless otherwise stated in writing, the Firm does not represent that it is acting as your fiduciary, nor does it undertake an independent suitability assessment with respect to any contract or related instrument.

By virtue of its various activities, the Firm or its affiliates may have access to information regarding markets, investments, or products that is not publicly available. Possession of such information may influence trading decisions or market behavior in ways that could affect your positions. The Firm and its affiliates have no obligation to share such information with you unless explicitly agreed in writing or required by applicable law.

ADDITIONAL DISCLOSURES

No event contract has been endorsed by any sports league or association ("Association"), any Association participant that is part of such Association, or any Individual in any Association. The use of the name of any Association, Association participant, or individual in any Association does not indicate any endorsement of an event contract. To the extent an event contract references an agency, data or pricing source, index, or other measure, such reference does not indicate an endorsement of this tradeable financial instrument.

All stats, results, news, and other information, including any "live" information, are unofficial, may not be up to date, and are provided AS IS and for informational and entertainment purposes only. You should not rely on such information for any purposes, including in connection with trading. Not available in all states. Must be 21+ US resident.

This disclosure statement is provided for risk-disclosure purposes only and does not constitute, and should not be relied upon as, legal, tax, accounting, or investment advice. It does not modify or supersede any agreement between you and the Firm. The Firm may amend, supplement, or replace this disclosure statement at any time, including to reflect changes in law, regulation, litigation, exchange or clearinghouse rules, or market practice, and any such changes may be made without prior notice to you.