Zicix Corp (ZICX)

[NASCOW]

Penson Discontinues Execution for Certain Non-DTCC Eligible Securities

Effective May 2, 2011, Penson Financial Services, Inc. ("Penson") (the clearing agent for Trading Direct) will discontinue execution through the managed (mngd) route for certain Non-DTCC eligible securities due to increasing pass-through costs. (The effected stocks are primarily all pink sheet stocks).

For various reasons, certain securities cannot be made DTCC-eligible or have had their eligibility revoked, usually due to operating or financial issues with the underlying company. As a result, the clearing of these physical positions can carry significant pass-through charges to settle the trade. Trades routinely carry with them the following pass-through charges: Execution Fee-$7.50, DTC Fee-$80.00, Deposit Fee-$75.00, and a New York Window Fee of $34.00. Additional pass-through fees from Transfer Agents ranging from $25.00 to $500.00 can also be associated with these securities that would increase the cost Penson passes through for clearing and execution. Please note that trades executed outside of Penson's MNGD'd route will also be subject to these fees for the clearance of these trades.

We intend to discontinue execution for the securities on the attached list (on a best-efforts basis). As Penson identifies additional securities that are Non-DTCC-eligible, they will bed added to the list and they will not be able to be traded through the MNGD route.

As more detailed information is made available from Penson regarding fee information for the effected securities, this memo and subsuquent stock list will be updated accordingly.

View the Non-DTCC eligible stock list. {pdf,154kb}

If you require additional information, please contact [e-mail].

Thank you,
Trading Direct.

www.tradingdirect.com/Static/StandAlone/non_dtcc_memo.html

The DTCC (the clearing house for Penson) is finding some/many of these shares to be counterfeit and are now determining it is better to simply not clear electronic trades made on ANY company with unregistered shares in the market. Instead, the trade must be accounted for physically, which is where the exorbinent costs arise. These actions (physical clearing) saves the DTCC from the possibility of being stuck with bogus shares by, basically, using the principle 'better safe than sorry'.

It is likely that all other brokerage firms who clear trades themselves, will eventually follow suit. However, this will pose a major problem for them, as they will find they hold counterfeit shares and certainly won't want to be forced to cover that loss, if they cannot dump them elsewhere first. The DTCC is smart. They're ahead of the inevitable 'implosion'. They're eliminating their risk exposure first, before it becomes an 'across the board' dilemma. You won't find the DTCC holding any counterfeit shares. When all the other brokerage firms begin charging clearing costs, watch for the implosion of all non-reporting companies. Non-reporting companies will either be forced to begin reporting, or they'll fold for lack of funds required to become current.

This means sooner or later the penny stock market is toast. Who knows when, how, if. Mainly, it means low commissions on PK, OTCBB stocks are gone because the broker has to eat the cost.