Appendix A: CD Review Findings on IRC Compensation

IFM Size	Range of Aggregate IRC Compensation	Range of IRC Compensation for Individual IRC Chairs	Range of IRC Compensation for Individual IRC Members (Non-IRC Chairs)
AUM < $1 Billion	$12,000 to $33,000	$4,000 to $13,000	$3,000 to $10,000
AUM between $1 Billion and less than $50 Billion	$20,160 to $154,603	$10,600 to $53,000	$8,100 to $48,000
AUM between $50 Billion and $100 Billion	$113,500 to $132,800	$41,500 to $50,000	$36,000 to $40,000
AUM > $100 Billion	$60,000 to $246,250	$24,000 to $88,750	$18,000 to $78,750

Appendix B: Staff Categorization of Various IRC Standing Instructions Observed from CD Review

THEMES

Related Entities	Unitholders	Service Providers and Oversight	Fund Operations, Allocation, Fees, Valuation and Performance	Employee Behaviour
In Species Transactions	Capacity Issues	Broker Selection	Management Fees	Outside Business Activity
Prohibited Investments	Showing Favoritism to Unitholders	Oversight of Service Providers	NAV Calculation / Frequency of Calculation	Employee / Managers COIs
Foreign Exchange Transactions with Related Party	Complaints Handling	Transition Management Services & Affiliated Brokerage Services	Performance Incentives
	Large Unitholders		Benchmark Indices
Transactions Through Related Dealer		Oversight of Sub-Advisor Compliance	Omnibus
		Referral Arrangements	Redemption / Disposition for Investments in Funds
		Reasonable Enquiries of Sub-Advisor COI	Fund Gain / Loss Accounting
		Related Supplier Fees and Quality Monitoring	Valuation of Illiquid & Private Placements
		Non-Audit Services	Discretionary Trades in Securities where Selling Commission is Earned
		Guidelines re Serving as Director	Distribution Issues
		Outsourcing to Third Parties	Allocation of Income, Surpluses & Scholarships
			ETF / IPU Purchases for Retail Investment Funds
			Portfolio Holdings Release
			Dissemination of Portfolio Info
			Transfer Agency Error Correction
			Auditor
			Custody
			Launching, Merging, Closing of Funds
			Underlying (Alternative) Fund Investment
			Mutual Fund Sales
			Flow-Through Limited Partnership Merging into Fund
			Supplements to Base Shelf Prospectus
			Short Term Trading Fees
			Market Timing
			Manual Pricing

{1} Examples include Environmental, Social and Governance, Cryptocurrency, Alternative Funds and the expansion of certain exemptions in NI 81-107 to include non-reporting issuer investment funds, among other new developments.

{2} Paragraph 3.11(1)(a) of NI 81-107.

{3} Paragraph 1.2(a) of NI 81-107.

{4} Commentary 3 to section 3.11 of NI 81-107.

{5} Subsection 3.3(4) of NI 81-107.

{6} See Form 81-101F1 Contents of Simplified Prospectus -- Part A -- Item 4.16(2), Form 81-101F2 Contents of Annual Information Form -- Item 15(2) and Form 41-101F2 Information Required in an Investment Fund Prospectus -- Item 19.1(12)

{7} Commentary 3 to section 5.1 of NI 81-107.

 

Orders

Mirati Therapeutics, Inc.

Headnote

National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- The issuer ceased to be a reporting issuer under securities legislation.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).

[Original text in French]

March 12, 2024

IN THE MATTER OF THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR CEASE TO BE A REPORTING ISSUER APPLICATIONS AND IN THE MATTER OF MIRATI THERAPEUTICS, INC. (the Filer)

ORDER

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for an order under the securities legislation of the Jurisdictions (the Legislation) that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (the Order Sought).

Under the Process for Cease to be a Reporting Issuer Applications (for a dual application):

a) the Autorité des marchés financiers is the principal regulator for this application,

b) the Filer has provided notice that subsection 4C.5(1) of Regulation 11-102 respecting Passport System (Regulation 11-102) is intended to be relied upon Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island and Saskatchewan, and

c) this order is the order of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in Regulation 14-101 respecting Definitions, Regulation 11-102 and, in Québec, in Regulation 14-501Q on definitions have the same meaning if used in this order, unless otherwise defined.

Representations

This order is based on the following facts represented by the Filer:

1. the Filer is not an OTC reporting issuer under Regulation 51-105 respecting Issuers Quoted in the U.S. Over-the-Counter Markets;

2. the outstanding securities of the Filer, including debt securities, are beneficially owned, directly or indirectly, by fewer than 15 securityholders in each of the jurisdictions of Canada and fewer than 51 securityholders in total worldwide;

3. no securities of the Filer, including debt securities, are traded in Canada or another country on a marketplace as defined in Regulation 21-101 respecting Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported;

4. the Filer is applying for an order that the Filer has ceased to be a reporting issuer in all of the jurisdictions of Canada in which it is a reporting issuer; and

5. the Filer is not in default of securities legislation in any jurisdiction.

Order

Each of the Decision Makers is satisfied that the order meets the test set out in the Legislation for the Decision Maker to make the order.

The decision of the Decision Makers under the Legislation is that the Order Sought is granted.

OSC File #: 2024/0086

 

Marathon Gold Corporation

Headnote

National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- Application for an order that the issuer is not a reporting issuer under applicable securities laws -- issuer has outstanding warrants exercisable into securities of acquirer -- holders of outstanding securities no longer require public disclosure in respect of the issuer -- relief granted.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR CEASE TO BE A REPORTING ISSUER APPLICATIONS AND IN THE MATTER OF MARATHON GOLD CORPORATION (the Filer)

ORDER

Background

The principal regulator in the Jurisdiction has received an application from the Filer for an order under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (the Order Sought).

Under the Process for Cease to be a Reporting Issuer Applications (for a passport application):

a) the Ontario Securities Commission is the principal regulator for this application, and

b) the Filer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon Territory, Northwest Territories and Nunavut.

Interpretation

Terms defined in National Instrument 14-101 -- Definitions and MI 11-102 have the same meaning if used in this order, unless otherwise defined.

Representations

This order is based on the following facts represented by the Filer:

1. The Filer is a corporation existing under the federal laws of Canada with its head office located in Toronto, Ontario.

2. The Filer is a reporting issuer or the equivalent in each of the of the provinces and territories of Canada and the common shares of the Filer (the Filer Shares) were listed and traded on the Toronto Stock Exchange (the TSX) under the symbol "MOZ" until their de-listing on January 26, 2024.

3. All of the issued and outstanding Filer Shares are owned by Calibre Mining Corp. (Calibre).

4. Calibre, the parent company of the Filer, is a corporation existing under the Business Corporations Act (British Columbia). Calibre is a reporting issuer in the provinces of British Columbia, Alberta and Ontario, and the common shares of Calibre (the Calibre Shares) are listed and traded on the TSX under the symbol "CXB".

5. Upon completion of the court approved plan of arrangement (the Arrangement) under section 192 of the Canada Business Corporations Act (the CBCA), that was made effective at 12:01 a.m. (Toronto time) (the Effective Time) on January 24, 2024 (the Effective Date), pursuant to the arrangement agreement between Calibre and the Filer dated November 12, 2023 (the Arrangement Agreement), Calibre acquired all of the outstanding Filer Shares not already held by Calibre, in exchange for 0.6164 (the Exchange Ratio) of a Calibre Share (the Consideration).

6. On November 13, 2023, the Filer issued a news release, publicly announcing the Arrangement Agreement.

7. Immediately prior to the Effective Time, the Filer had the following issued and outstanding securities: (a) 469,163.035 Filer Shares (including 66,666,667 Filer Shares held by Calibre); (b) 16,298,450 stock options (the Filer Options); (c) 1,497,882 restricted share units (the RSUs); (d) 1,857,735 share-settled deferred share units (the Shares Settled DSUs); (e) 392,000 cash-settled deferred share units (the Cash Settled DSUs); (f) 1,549,767 performance share units (the PSUs); (g) 10,000,000 common share purchase warrants (the Filer Certificated Warrants) expiring on January 31, 2028, each exercisable to acquire one Filer Share at a price of $1.35 per Filer Share; and (h) 78,409,300 common share purchase warrants (the Filer Indenture Warrants, and together with the Filer Certificated Warrants, the Filer Warrants) expiring on September 20, 2024, each exercisable to acquire one Filer Share at a price of $1.35 per Filer Share.

8. Upon completion of the Arrangement, Calibre acquired all of the issued and outstanding Filer Shares (excluding the 66,666,667 Filer Shares already held by Calibre) in exchange for the Consideration for each Filer Share, resulting in Calibre owning all of the issued and outstanding Filer Shares and the Filer becoming a wholly-owned subsidiary of Calibre.

9. Pursuant to the Arrangement, each outstanding RSU, Share Settled DSU, Cash Settled DSU, and PSU was deemed to be fully vested and was surrendered to the Filer in exchange; (i) in the case of each outstanding RSU, Share Settled DSU, and PSU, for one Filer Share, which was subsequently exchanged for the Consideration; and (ii) in the case of each Cash Settled DSU, for cash.

10. Pursuant to the Arrangement, each outstanding Filer Option was exchanged for a replacement option (each, a Replacement Calibre Option) exercisable for Calibre Shares, with the number and price of such Replacement Calibre Options adjusted by the Exchange Ratio.

11. Pursuant to the Arrangement, the terms of the Filer Certificated Warrants and the terms of the Filer Indenture Warrants, each holder of a Filer Warrant outstanding immediately prior to the Effective Date, became entitled upon completion of the Arrangement, to receive, upon the exercise of such holder's Filer Warrant, in lieu of each Filer Share to which such holder was previously entitled, 0.6164 of a Calibre Share. As a result of the Arrangement, the terms of the Filer Certificated Warrants and the terms of the Filer Indenture Warrants, Calibre is now obligated to issue Calibre Shares to satisfy the exercise of Filer Warrants.

12. The Filer distributed the meeting materials (which included, among other things, the management information circular, notice of meeting, and letter of transmittal) on December 22, 2023, to the holders of Filer Shares (the Filer Shareholders), Options, RSUs, Share Settled DSUs, Cash Settled DSUs, PSUs and Warrants, as well as the directors and auditors of the Filer, and to the Director appointed under the CBCA, in connection with the special meeting (the Filer Meeting) of Filer Shareholders that took place on January 16, 2024 to consider the Arrangement, in accordance with the interim order of the Ontario Superior Court of Justice (Commercial List) rendered December 11, 2023.

13. As was required pursuant to the terms of the Arrangement:

(a) the resolution approving the Arrangement was approved by the Filer Shareholders at the Filer Meeting called for such purpose by an affirmative vote of at least 66 2/3% of the votes cast in person or by proxy at the Filer Meeting; and

(b) the Ontario Superior Court of Justice (Commercial List) granted its final approval of the Arrangement on January 22, 2024.

14. As a result of the completion of the Arrangement, 249,813,422 additional Calibre Shares were issued and listed and posted for trading on the TSX, up to 10,046,332 Calibre Shares were reserved for issuance upon exercise of the Replacement Calibre Options, and up to 54,495,490 Calibre Shares were reserved for issuance upon exercise of the Filer Warrants.

15. The Filer Shares were delisted from the TSX at the close of business on January 26, 2024 and following such date, no securities of the Filer are currently listed for trading on any stock exchange.

16. On completion of the Arrangement, the Filer Warrants continued to exist as warrants of the Filer. The Filer Warrants are not, and were not, listed on the TSX for trading. The Filer Warrants are the only outstanding securities of the Filer held by persons other than Calibre.

17. Calibre, on behalf of the Filer, has made diligent enquiry (the Investigation) to determine the number and jurisdiction of the beneficial holders of the Filer Warrants, however, it has been unable to determine with certainty the total number of beneficial holders of Filer Warrant. The Investigation included a request for geographical breakdown of ownership from Broadridge, resulting in the procurement of each of: (i) a Canadian geographical analysis report; and (ii) a United States geographical analysis report. Based on the Investigation, there are at least 457 beneficial holders of Filer Warrants, including (a) 132 beneficial holders of Filer Warrants resident in British Columbia (representing approximately 4.31% of the total aggregate Filer Warrants); (b) 56 beneficial holders of Filer Warrants resident in Alberta (representing approximately 1.36% of the total aggregate Filer Warrants); (c) 1 beneficial holder of Filer Warrants resident in Saskatchewan (representing approximately less than 0.01% of the total aggregate Filer Warrants); (d) 7 beneficial holders of Filer Warrants resident in Manitoba (representing approximately 0.11% of the total aggregate Filer Warrants); (e) 208 beneficial holders of Filer Warrants resident in Ontario (representing approximately 34.94% of the total aggregate Filer Warrants); (f) 4 beneficial holder of Filer Warrants resident in Quebec (representing approximately 0.44% of the total aggregate Filer Warrants); (g) 4 beneficial holders of Filer Warrants resident in Nova Scotia (representing approximately 0.02% of the total aggregate Filer Warrants); (h) 3 beneficial holders of Filer Warrants resident in New Brunswick (representing approximately 0.02% of the total aggregate Filer Warrants); (i) 5 beneficial holders of Filer Warrants resident in Newfoundland and Labrador (representing approximately 0.10% of the total aggregate Filer Warrants); (j) 18 beneficial holders of Filer Warrants resident in the United States (representing approximately 17.02% of the total aggregate Filer Warrants); and (k) 19 beneficial holders of Filer Warrants resident in international countries (i.e. outside of Canada and the United States) (representing approximately 27.95% of the total aggregate Filer Warrants). Each Filer Warrant is exercisable only for the Consideration, being 0.6164 of a Calibre Share. No Filer Shares or other securities of the Filer are issuable upon exercise of any Filer Warrants.

18. The Filer is not required to obtain any consents or approvals to cease to be a reporting issuer in any jurisdiction under any contractual arrangement between the Filer and the holders of the Filer Warrants.

19. The Filer cannot rely on the exemption available in Section 13.3 of National Instrument 51-102 --- Continuous Disclosure Obligations (NI 51-102) for issuers of exchangeable securities because the Filer Warrants are not "designated exchangeable securities" as defined in NI 51-102. The Filer Warrants do not provide their holders with voting rights in respect of Calibre.

20. The Filer is not eligible to surrender its status as a reporting issuer pursuant to the simplified procedure under section 19 of National Policy 11-206 Process for Cease to be a Reporting Issuer Applications as the Filer Warrants are not beneficially owned, directly or indirectly, by fewer than 15 securityholders in each of the jurisdictions of Canada and fewer than 51 securityholders in total worldwide.

21. The Filer is not an OTC reporting issuer under Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets.

22. No securities of the Filer, including debt securities, are traded in Canada or another country on a marketplace as defined in National Instrument 21-101 Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported.

23. The Filer is not a reporting issuer in any jurisdiction of Canada other than the jurisdictions identified in this order. The Filer is applying for an order that it has ceased to be a reporting issuer in all of the jurisdictions of Canada in which it is a reporting issuer.

24. The Filer and Calibre are not in default of any requirement under securities legislation in any jurisdiction.

25. The Filer has no intention to seek public financing by way of an offering of securities and has no intention of issuing any securities other than the issuance of securities to Calibre or its affiliates.

26. Upon the granting of the Order Sought, the Filer will not be a reporting issuer or the equivalent in any jurisdiction of Canada.

Order

The principal regulator is satisfied that the order meets the test set out in the Legislation for the principal regulator to make the order.

The decision of the principal regulator under the Legislation is that the Order Sought is granted.

DATED at Toronto on this 7th, day of March, 2024.

OSC File #: 2024/0080

SEDAR+ File #: 6083494

 

Latitude Uranium Inc.

Headnote

National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- The issuer ceased to be a reporting issuer under securities legislation.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).

March 14, 2024

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR CEASE TO BE A REPORTING ISSUER APPLICATIONS AND IN THE MATTER OF LATITUDE URANIUM INC. (the Filer)

ORDER

Background

The principal regulator in the Jurisdiction has received an application from the Filer for an order under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (the Order Sought).

Under the Process for Cease to be a Reporting Issuer Applications (for a passport application):

a) the Ontario Securities Commission is the principal regulator for this application, and

b) the Filer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia and Alberta.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this order, unless otherwise defined.

Representations

This order is based on the following facts represented by the Filer:

1. the Filer is not an OTC reporting issuer under Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets;

2. the outstanding securities of the Filer, including debt securities, are beneficially owned, directly or indirectly, by fewer than 15 securityholders in each of the jurisdictions of Canada and fewer than 51 securityholders in total worldwide;

3. no securities of the Filer, including debt securities, are traded in Canada or another country on a marketplace as defined in National Instrument 21-101 Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported;

4. the Filer is applying for an order that the Filer has ceased to be a reporting issuer in all of the jurisdictions of Canada in which it is a reporting issuer; and

5. the Filer is not in default of securities legislation in any jurisdiction.

Order

The principal regulator is satisfied that the order meets the test set out in the Legislation for the principal regulator to make the order.

The decision of the principal regulator under the Legislation is that the Order Sought is granted.

OSC File #: 2024/0119

 

Playmaker Capital Inc. -- s. 1(6) of the OBCA

Headnote

Applicant deemed to have ceased to be offering its securities to the public under the Business Corporations Act (Ontario).

Statutes Cited

Business Corporations Act, R.S.O. 1990, c. B.16, as am., s. 1(6).

IN THE MATTER OF THE BUSINESS CORPORATIONS ACT (ONTARIO), R.S.O. 1990, c. B.16, AS AMENDED (the OBCA) AND IN THE MATTER OF PLAYMAKER CAPITAL INC. (the Applicant)

ORDER (Subsection 1(6) of the OBCA)

UPON the application of the Applicant to the Ontario Securities Commission (the Commission) for an order pursuant to subsection 1(6) of the OBCA to be deemed to have ceased to be offering its securities to the public;

AND UPON the Applicant representing to the Commission that:

1. The Applicant is an "offering corporation" as defined in subsection 1(1) the OBCA;

2. The Applicant has no intention to seek public financing by way of an offering of securities; and

3. On March 7, 2024 the Applicant was granted an order (the Reporting Issuer Order) pursuant to subclause 1(10)(a)(ii) of the Securities Act (Ontario) that it is not a reporting issuer in Ontario and is not a reporting issuer or the equivalent in any other jurisdiction in Canada in accordance with the simplified procedure set out in National Policy 11-206 Process for Cease to be a Reporting Issuer Applications. The representations set out in the Reporting Issuer Order continue to be true.

AND UPON the Commission being satisfied that to grant this order would not be prejudicial to the public interest;

IT IS HEREBY ORDERED by the Commission pursuant to subsection 1(6) of the OBCA that the Applicant is deemed to have ceased to be offering its securities to the public.

DATED at Toronto on this 18th day of March, 2024.

OSC File #: 2024/0108

 

Reasons and Decisions

Northwest & Ethical Investments L.P. and NEI Long Short Equity Fund

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted from National Instrument 81-101 Mutual Fund Prospectus Disclosure to combine the simplified prospectus of an alternative mutual fund with the simplified prospectus of a conventional mutual fund.

Applicable Legislative Provisions

National Instrument 81-101 Mutual Fund Prospectus Disclosure, ss. 5.1(4) and 6.1(1).

March 12, 2024

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF NORTHWEST & ETHICAL INVESTMENTS L.P. (the Filer) AND NEI LONG SHORT EQUITY FUND (the Existing Alternative Fund)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Existing Alternative Fund and any alternative mutual fund established or restructured in the future and managed by the Filer or an affiliate of the Filer (collectively with the Existing Alternative Fund, the Alternative Funds), for a decision under the securities legislation of the principal regulator that grants relief to the Alternative Funds from the requirement in subsection 5.1(4) of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) that states that a simplified prospectus (SP) for an alternative mutual fund must not be consolidated with an SP of another mutual fund if the other mutual fund is not an alternative mutual fund to permit consolidation of the SP of one or more of the Alternative Funds with the SP of one or more of the funds existing today listed in Schedule A or created in the future that (i) are reporting issuers to which NI 81-101 and National Instrument 81-102 Investment Funds (NI 81-102) apply, (ii) are not alternative mutual funds, and (iii) are managed by the Filer or an affiliate of the Filer (collectively, the Conventional Funds and together with the Alternative Funds, the Funds) (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (together with Ontario, the Canadian Jurisdictions).

Interpretation

Unless otherwise defined, terms in this decision have the respective meanings given to them in NI 81-101, NI 81-102, National Instrument 14-101 Definitions, and MI 11-102.

Representations

The decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a limited partnership formed under the laws of Ontario which acts through its general partner Northwest & Ethical Investments Inc., a corporation formed under the laws of Canada with its head office in Toronto, Ontario.

2. The Filer is registered as (i) a commodity trading manager in Ontario; (ii) a portfolio manager in British Columbia and Ontario; (iii) an exempt market dealer in Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Prince Edward Island, Québec and Saskatchewan; and (iv) an investment fund manager in British Columbia, Newfoundland and Labrador, Ontario and Québec.

3. The Filer, or an affiliate of the Filer, is or will be, the manager, portfolio advisor and/or trustee of each of the Funds.

4. Neither the Filer nor the Funds are in default of securities legislation in any of the Canadian Jurisdictions.

The Funds

5. The Alternative Funds are, or will be, established under the laws of Ontario or Canada as a mutual fund that is a trust or a class of shares of a mutual fund corporation and is, or will be, a reporting issuer in one or more of the Canadian Jurisdictions.

6. The Conventional Funds are not, or will not be, an alternative mutual fund.

7. The securities of the Funds are, or will be, qualified for distribution in one or more of the Canadian Jurisdictions using an SP, as applicable, and fund facts documents prepared and filed in accordance with the securities legislation of such Canadian Jurisdictions.

8. Each Fund is, or will be, a mutual fund to which the requirements of NI 81-101 and NI 81-102 apply, subject to any exemptions therefrom that have been, or may be, granted by the applicable securities regulatory authorities.

Reasons for the Exemption Sought

9. The Filer wishes to combine the SPs of the Alternative Funds with the SP of the Conventional Funds in order to reduce renewal, printing and related costs of the SPs.

10. Even though the Alternative Funds are, or will be, alternative mutual funds, they share, or will share, many common operational and administrative features with the Conventional Mutual Funds. Combining the Funds in the same SP will allow investors to more easily compare the features of the Alternative Funds and the Conventional Funds and will streamline disclosure across the Filer's fund platform.

11. Filing the same SP for the Alternative Funds and the Conventional Funds will ensure that the Filer can make corresponding changes to the operational and administrative features of Alternative Funds and the Conventional Funds in a consistent manner, if required.

12. The fund facts document of the Funds will continue to be provided to investors when purchasing securities of the Funds as required by applicable securities legislation. The form and content of the fund facts documents of the Funds will not change as a result of the Exemption Sought.

13. The SP of the Funds will continue to be provided to investors, upon request, as required by applicable securities legislation.

14. National Instrument 41-101 General Prospectus Requirements (NI 41-101) does not contain a provision equivalent to subsection 5.1(4) of NI 81-101. Accordingly, an investment fund manager that manages exchange-traded funds (ETFs) is permitted to consolidate a prospectus under NI 41-101 for its ETFs that are alternative mutual funds with a prospectus for its ETFs that are conventional mutual funds. The Filer submits that there is no reason why mutual funds filing a prospectus under NI 81-101 should be treated differently from ETFs filing a prospectus under NI 41-101.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted.

Application File #: 2024/0100

SEDAR+ File #: 6092280

SCHEDULE A

LIST OF CONVENTIONAL FUNDS

1 NEI Money Market Fund

2 NEI Canadian Bond Fund

3 NEI Canadian Impact Bond Fund

4 NEI Global Impact Bond Fund

5 NEI Global Total Return Bond Fund

6 NEI Global High Yield Bond Fund

7 NEI Conservative Yield Portfolio

8 NEI Balanced Yield Portfolio

9 NEI Global Sustainable Balanced Fund

10 NEI Growth & Income Fund

11 NEI Canadian Dividend Fund

12 NEI Canadian Equity RS Fund

13 NEI Canadian Equity Fund

14 NEI ESG Canadian Enhanced Index Fund

15 NEI U.S. Dividend Fund

16 NEI U.S. Equity RS Fund

17 NEI Canadian Small Cap Equity RS Fund

18 NEI Canadian Small Cap Equity Fund

19 NEI Global Dividend RS Fund

20 NEI Global Value Fund

21 NEI Global Equity RS Fund

22 NEI Global Growth Fund

23 NEI Environmental Leaders Fund

24 NEI Clean Infrastructure Fund

25 NEI International Equity RS Fund

26 NEI Emerging Markets Fund

27 NEI Select Income RS Portfolio

28 NEI Select Income & Growth RS Portfolio

29 NEI Select Balanced RS Portfolio

30 NEI Select Growth & Income RS Portfolio

31 NEI Select Growth RS Portfolio

32 NEI Select Maximum Growth RS Portfolio

33 NEI Impact Conservative Portfolio

34 NEI Impact Balanced Portfolio

35 NEI Impact Growth Portfolio

36 NEI Income Private Portfolio

37 NEI Income & Growth Private Portfolio

38 NEI Balanced Private Portfolio

39 NEI Growth Private Portfolio

40 NEI Fixed Income Pool

41 NEI Canadian Equity Pool

42 NEI Global Equity Pool

43 NEI Managed Asset Allocation Pool

 

Guardian Partners Inc. and The Top Funds

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Mutual funds that are not reporting issuers granted extensions of the annual financial statement filing and delivery deadlines and the interim financial statement filing and delivery deadlines under NI 81-106 to permit the funds to file and deliver annual financial statements within 183 days of their most recently completed financial year and to file and deliver interim financial statements within 90 days of their most recently completed interim period -- Funds invest the majority of their assets in Underlying Funds with later financial reporting deadlines -- Relief subject to conditions including disclosure of extended financial reporting deadlines in the offering memorandum of the Fund.

Applicable Legislative Provisions

National Instrument 81-106 Investment Fund Continuous Disclosure, ss. 2.2, 2.4, 5.1(2) and 17.1.

March 14, 2024

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF GUARDIAN PARTNERS INC. (the Filer) AND THE TOP FUNDS (as defined below)

DECISION

Background

The principal regulator of the Jurisdiction has received an application from the Filer, the Filer's affiliates, I₃ Alternative Strategy Fund (the Initial Top Fund) and any other existing or future mutual fund that is not and will not be a reporting issuer, that is or will be organized under the laws of a jurisdiction of Canada, and that is, or will be, managed by the Filer or an affiliate of the Filer, and that invests or will invest in underlying funds (the Underlying Funds) as part of its investment strategy (the Future Top Funds and together with the Initial Top Fund, the Top Funds), for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation), to request relief from section 2.2, section 2.4, paragraph 5.1(2)(a) and paragraph 5.1(2)(b) of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) on behalf of the Filer.

The Filer, the Filer's affiliates and the Top Funds, request a decision, pursuant to section 17.1 of NI 81-106, exempting the Top Funds from:

(a) the requirement in section 2.2 of NI 81-106 that the Top Funds file their audited annual financial statements and auditor's report (the Annual Financial Statements) on or before the 90th day after the Top Funds' most recently completed financial year (the Annual Filing Deadline);

(b) the requirement in paragraph 5.1(2)(a) of NI 81-106 that the Top Funds deliver to securityholders their Annual Financial Statements by the Annual Filing Deadline (the Annual Delivery Requirement);

(c) the requirement in section 2.4 of NI 81-106 that the Top Funds file their unaudited interim financial statements (the Interim Financial Statements) on or before the 60th day after the Top Funds' most recently completed interim period (the Interim Filing Deadline); and

(d) the requirement in paragraph 5.1(2)(b) of NI 81-106 that the Top Funds deliver to securityholders their Interim Financial Statements by the Interim Filing Deadline (the Interim Delivery Requirement),

(collectively, the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator (the Principal Regulator) for this application as the head office of the Filer is located in Ontario, and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (the Other Jurisdictions and, together with the Jurisdiction, the Canadian Jurisdictions).

Definitions

Unless expressly defined herein, terms used have the respective meanings given to them in MI 11-102, National Instrument 14-101 Definitions, National Instrument 81-102 Investment Funds and NI 81-106.

Representations

The decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a corporation incorporated under the federal laws of Canada. The Filer's head office is located in Toronto, Ontario.

2. The Filer is registered in the categories of investment fund manager, portfolio manager and exempt market dealer in each of Ontario, Québec and Newfoundland & Labrador, and in the categories of portfolio manager and exempt market dealer in each of the remaining Canadian Jurisdictions.

3. The Filer or an affiliate of the Filer is, or will be, the investment fund manager and/or portfolio manager of each Top Fund.

4. The Filer, an affiliate of the Filer or a third party is or will act as trustee or general partner of each Top Fund.

5. The Filer is not a reporting issuer in any jurisdiction of Canada and is not in default of securities legislation of any jurisdiction of Canada.

The Top Funds

6. The Initial Top Fund is an investment fund established as a trust under the laws of Ontario. Each Future Top Fund will be organized as a limited partnership, trust or class of shares of a corporation under the laws of Ontario or of another jurisdiction of Canada.

7. Each of the Top Funds will be a "mutual fund" for purposes of the securities legislation of Ontario.

8. Securities of the Initial Top Fund are, and each Future Top Fund will be, offered for sale to qualified investors in one or more Canadian Jurisdictions pursuant to an exemption from the prospectus requirements, including the accredited investor exemption under National Instrument 45-106 Prospectus Exemptions or equivalent.

9. None of the Top Funds is, or will be, a reporting issuer in any of the Canadian Jurisdictions.

10. The Initial Top Fund has, and it is currently anticipated that each Future Top Fund will have, a financial year-end of December 31.

11. Each Top Fund's investment objective is to invest, or will be achieved by investing, in Underlying Funds, which may pursue a variety of investment strategies.

12. The investment objective of the Initial Top Fund is to seek to outperform the Equity Alternative Benchmark (defined as a cumulative index with monthly returns equal to 0.50 X monthly returns of the MSCI World Index ) over a full business cycle -- without assuming a meaningful incremental increase in risk -- measured by comparative probability of a permanent loss of capital to that of the Equity Alternative Benchmark, through investment in alternative strategies including investment in (i) focused or niche long-only public equities and (ii) Underlying Funds, as well as direct investment in securities of any kind including financial instruments or derivatives.

13. The Initial Top Fund, through its investment in the Underlying Funds, will seek to generate attractive risk-adjusted returns which are differentiated and complementary to traditional equities and fixed income securities through investment in alternative strategies including, but not limited to, investment in focused or niche long-only public equities, hedge funds, commodity pools or other private or public investment vehicles, investment companies, managed accounts, funds of funds, exchange traded funds, or other investment entities that may invest or trade in securities of any kind, as well as direct investment in securities of any kind including financial instruments or derivatives.

14. The Underlying Funds will be managed by the Filer, an affiliate of the Filer or a third party.

15. The Filer believes that the Top Funds' investment in the Underlying Funds offers benefits not available through a direct investment in the investment vehicles, companies, other issuers or assets held by the relevant Underlying Fund(s).

16. Securities of the Top Funds will be typically redeemable at various intervals, as will securities of certain Underlying Funds. As each Top Fund has a medium- to long-term investment horizon, each Top Fund will be able to manage its own liquidity requirements taking into consideration the frequency at which securities of the Underlying Funds may be redeemed.

17. The net asset value of each Top Fund will be calculated no less frequently than monthly. Securityholders of each Top Fund will be provided with the net asset value of the Top Fund on a no less frequently than monthly basis.

18. Certain holdings of each Top Fund invested in securities of the Underlying Funds may be disclosed in the Top Fund's Annual Financial Statements and Interim Financial Statements.

The Underlying Funds

19. The Underlying Funds may be domiciled in Canada, the Cayman Islands or other international jurisdictions.

20. The Underlying Funds may have varying financial year-ends and may be subject to a variety of financial reporting deadlines. Currently, each of the Underlying Funds held by the Initial Top Fund has a financial year-end of December 31 except for one such Underlying Fund, which has a financial year-end of September 30. Therefore, in most cases, the Top Funds will not be able to obtain the finalized financial statements of the Underlying Funds prior to the Annual Filing Deadline or the Interim Filing Deadline for filing the Financial Statements and, in all cases, no sooner than other investors in the Underlying Funds receive the financial statements of the Underlying Funds. The Filer expects this timing delay in the completion of the Annual Financial Statements and the Interim Financial Statements of each Top Fund to occur every year for the foreseeable future.

21. All of the Underlying Funds currently invested in by the Initial Top Fund are managed by entities unrelated to the Filer (the Third-Party Underlying Funds). Approximately 57% of the Third-Party Underlying Funds currently invested in by the Initial Top Fund have up to 6 months from their year end to provide audited financial statements.

22. The offering memorandum of each Top Fund that will be provided to prospective investors will disclose, or such investors will be otherwise notified, that: (i) the Annual Financial Statements for such Top Fund will be delivered to each investor within 183 days of such Top Fund's financial year end; and (ii) the Interim Financial Statements for such Top Fund will be delivered to each investor within 90 days following the end of each interim period of such Top Fund.

23. The Filer will notify securityholders of the Top Funds that it has received and intends to rely on relief from the Annual Filing Deadline and Annual Delivery Requirement and the Interim Filing Deadline and the Interim Delivery Requirement.

Financial Statement Filing and Delivery Requirements

24. Section 2.2 and paragraph 5.1(2)(a) of NI 81-106 require a Top Fund to file and deliver its Annual Financial Statements by the Annual Filing Deadline. As each Top Fund's financial year-end is, or is currently anticipated to be, December 31, such Top Funds will have a filing and delivery deadline of March 31 in a non-leap year.

25. Section 2.4 and paragraph 5.1(2)(b) of NI 81-106 require a Top Fund to file and deliver its Interim Financial Statements by the Interim Filing Deadline. As each Top Fund's interim period-end is, or is currently anticipated to be, June 30, such Top Funds will have an interim filing and delivery deadline of August 29 in a non-leap year.

26. Section 2.11 of NI 81-106 provides an exemption from the filing requirements of the Annual Financial Statements and the Interim Financial Statements if, among other things, the Top Fund delivers such statements in accordance with Part 5 of NI 81-106 by the Annual Filing Deadline and the Interim Filing Deadline, as applicable.

27. As noted above, the Underlying Funds may have varying financial year-ends and may be subject to a variety of financial reporting deadlines. The Top Funds and the Underlying Funds may have financial reporting deadlines that are not aligned with the filing and delivery deadlines contemplated by NI 81-106 and that are applicable to the Top Funds. In addition, even if such reporting deadlines are aligned, they do not allow for sufficient time for the Filer, the Top Funds and the auditor of the Top Funds, as applicable, to prepare the applicable financial statements and reports in a manner to meet the deadlines set out in NI 81-106.

28. In order to formulate an opinion on the financial statements of each Top Fund, the Top Fund's auditor requires audited financial statements of its respective Underlying Fund(s) in order to audit the information contained in the Top Fund's Annual Financial Statements.

29. The auditors of the Initial Top Fund have advised the Filer that they will be unable to express an unmodified audit opinion in accordance with subsection 2.7(2) of NI 81-106 if the audited financial statements of the Underlying Funds are not completed and available to the respective Top Fund sufficiently in advance of the Annual Filing Deadline and the Annual Delivery Requirement.

30. With respect to Underlying Funds managed by the Filer or an affiliate of the Filer, the added costs associated with having such Underlying Funds change their financial reporting deadlines or pay for expedited auditing services in order to provide their financial statements at an earlier date outweigh the expected benefit to the unitholders of the Top Funds.

31. Each Top Fund therefore seeks an extension of the Annual Filing Deadline and the Annual Delivery Requirement to permit delivery within 183 days of such Top Fund's most recently completed financial year-end, to enable the Top Fund's auditors to first receive the audited annual financial statements and auditor's reports of the relevant Underlying Funds so as to be able to prepare such Top Fund's Annual Financial Statements.

32. Each Top Fund seeks an extension of the Interim Filing Deadline and the Interim Delivery Requirement to permit delivery within 90 days of such Top Fund's most recently completed interim period, to enable the Top Fund to first receive the interim financial reports of the relevant Underlying Funds so as to be able to determine the net asset value of the relevant Underlying Funds and prepare such Top Fund's Interim Financial Statements.

Decision

The Principal Regulator is satisfied that the decision meets the test set out in the Legislation for the Principal Regulator to make the decision.

The decision of the Principal Regulator under the Legislation is that the Exemption Sought is granted for so long as:

1. The Top Fund has a financial year ended December 31.

2. The Top Fund's investment strategy is to primarily invest the Top Fund's investable assets in securities of one or more Underlying Funds whose investment objectives are compatible with the Top Fund's investment objectives.

3. The Top Fund invests the majority of its assets in Underlying Funds.

4. No less than 25% of the total assets of the Top Fund at the time the Top Fund makes the initial investment decision in the Underlying Fund(s), are invested in investment entities that have financial reporting periods that end on December 31 of each year and are subject to laws of their jurisdictions, or applicable exemptive relief, that require that their annual financial statements be delivered within 183 days of their financial year ends and interim financial statements be delivered within 90 days of their most recent interim period.

5. The offering memorandum provided to prospective investors regarding the Top Fund discloses that:

a. the Annual Financial Statements for the Top Fund will be filed and delivered on or before the 183rd day after the Top Fund's most recently completed financial year; and

b. the Interim Financial Statements for the Top Fund will be filed and delivered on or before the 90th day after the Top Fund's most recently completed interim period, subject to regulatory approval.

6. The Top Fund notifies its securityholders that the Top Fund has received and intends to rely on relief from the filing and delivery requirements under section 2.2, section 2.4, paragraph 5.1(2)(a) and paragraph 5.1(2)(b) of NI 81-106.

7. The Top Fund is not a reporting issuer in any jurisdiction of Canada, and the Filer has the necessary registrations to carry out its operations in each jurisdiction of Canada in which it operates.

8. The conditions in section 2.11 of NI 81-106 will be met, except for subsection 2.11(b), and:

a. the Annual Financial Statements will be delivered to securityholders of the Top Fund in accordance with Part 5 of NI 81-106 on or before the 183rd day after the Top Fund's most recently completed financial year; and

b. the Interim Financial Statements will be delivered to securityholders of the Top Fund in accordance with Part 5 of NI 81-106 on or before the 90th day after the Top Fund's most recently completed interim period.

9. This Exemption Sought terminates within one year of the coming into force of any amendment to NI 81-106 or other rule that modifies how the Annual Filing Deadline, Annual Delivery Requirement, Interim Filing Deadline or Interim Delivery Requirement applies in connection with mutual funds under the Legislation.

Application File #: 2023/0625

SEDAR+ File #: 06062125

 

BMO Investments Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted from subsection 5.1(4) of NI 81-101 to permit simplified prospectus disclosure of alternative mutual funds to be consolidated with simplified prospectus disclosure of mutual funds that are not alternative mutual funds.

Applicable Legislative Provisions

National Instrument 81-101 Mutual Fund Prospectus Disclosure, ss. 5.1(4) and 6.1.

March 14, 2024

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF BMO INVESTMENTS INC. (the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer, on behalf of any alternative mutual fund established or restructured in the future and managed by the Filer (each, an Alternative Fund and collectively, the Alternative Funds) for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that grants relief to the Alternative Funds from the requirement in subsection 5.1(4) of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) which states that a simplified prospectus for an alternative mutual fund must not be consolidated with a simplified prospectus of another mutual fund if the other mutual fund is not an alternative mutual fund (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in all provinces and territories of Canada (the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102 and National Instrument 81-102 Investment Funds (NI 81-102) have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a corporation incorporated under the laws of the Province of Ontario. The Filer's head office is located in Toronto, Ontario.

2. The Filer is registered as an investment fund manager (IFM) in each of Ontario, Québec and Newfoundland and Labrador, and as a mutual fund dealer in each of the Jurisdictions.

3. The Filer or an affiliate of the Filer will be the IFM of each Alternative Fund.

4. The Filer is not in default of applicable securities legislation in any of the Jurisdictions.

The Funds

5. Each Alternative Fund will be established under the laws of Ontario or Canada as a mutual fund that is a trust or a class of shares of a mutual fund corporation that will be a reporting issuer in one or more of the Jurisdictions.

6. The securities of each Alternative Fund will be qualified for distribution in one or more of the Jurisdictions using a simplified prospectus and fund facts document prepared and filed in accordance with the securities legislation of such Jurisdictions. Each Alternative Fund will be subject to the requirements of NI 81-101 and NI 81-102.

Reasons for the Exemption Sought

7. The Filer wishes to combine the simplified prospectus of the Alternative Funds with the simplified prospectus of the mutual funds existing today or created in the future (i) that are reporting issuers to which NI 81-101 and NI 81-102 apply, (ii) that are not alternative mutual funds, and (iii) for which the Filer, or an affiliate of the Filer, acts or will act as the investment fund manager (the Conventional Funds) in order to reduce renewal, printing and related costs. Offering the Alternative Funds using the same simplified prospectus as the Conventional Funds would facilitate the distribution of the Alternative Funds in the Jurisdictions under the same prospectus disclosure and enable the Filer to streamline disclosure across the Filer's fund platform.

8. Even though the Alternative Funds will be alternative mutual funds, they will share many common operational and administrative features with the Conventional Funds and combining them in the same simplified prospectus will allow investors to more easily compare the features of the Alternative Funds and the Conventional Funds.

9. The ability to file the same simplified prospectus for the Alternative Funds and the Conventional Funds will ensure that the Filer can make corresponding changes to the operational and administrative features of the Alternative Funds and the Conventional Funds in a consistent manner, if required.

10. Investors will continue to receive the fund facts document(s) when purchasing securities of the Alternative Funds or the Conventional Funds as required by applicable securities legislation. The form and content of the fund facts document(s) of the Alternative Funds and the Conventional Funds will not change as a result of the Exemption Sought.

11. The simplified prospectus of the Alternative Funds and the Conventional Funds will continue to be provided to investors, upon request, as required by applicable securities legislation.

12. National Instrument 41-101 General Prospectus Requirements (NI 41-101) does not contain a provision equivalent to subsection 5.1(4) of NI 81-101. Accordingly, an investment fund manager that manages exchange-traded funds (ETFs) is permitted to consolidate a prospectus under NI 41-101 for its ETFs that are alternative mutual funds with a prospectus for its ETFs that are conventional mutual funds. There is no reason why mutual funds filing a simplified prospectus under NI 81-101 should be treated differently from ETFs filing a prospectus under NI 41-101.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted.

Application File #: 2024/0118

SEDAR+ File #: 6094780

 

EHP Funds Inc. and EHP Global Multi-Strategy Alternative Fund

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from fund multi-layering restriction in paragraph 2.5(2)(b) of NI 81-102 to permit an investment fund to invest in another investment fund under common management that holds more than 10% of its net assets in securities of other investment funds -- Top fund is an exchange-traded alternative mutual fund that seeks to achieve its investment objectives by investing part of its assets in related alternative funds with the same manager -- Underlying funds will be related alternative mutual fund that may invest up to 20% related and unrelated funds an efficient and cost-effective alternative to investing directly in the portfolio assets -- Relief granted from multi-layering restriction in paragraph 2.5(2)(b) to permit in the underlying funds, subject to conditions.

Applicable Legislative Provisions

National Instrument 81-102 Investment Funds, ss. 2.5(2)(b) and 19.1.

March 14, 2024

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF EHP FUNDS INC. (the Filer) AND IN THE MATTER OF EHP GLOBAL MULTI-STRATEGY ALTERNATIVE FUND (the Top Fund)

DECISION

Background

The principal regulator in the Jurisdiction has received an application (the Application) from the Filer on behalf of the Top Fund, which holds securities of EHP Advantage Alternative Fund and EHP Foundation Alternative Fund (the Underlying Funds and, each, an Underlying Fund), for a decision under the securities legislation (Legislation) of the Jurisdiction granting an exemption from paragraph 2.5(2)(b) of National Instrument 81-102 -- Investment Funds (NI 81-102) to permit the Top Fund to hold securities of the Underlying Funds (as defined below), each which Underlying Fund in turn will hold more than 10% of its net asset value (NAV) in securities of one or more investment funds (the Third Tier Funds and, each, a Third Tier Fund) (each, a Three-Tier Structure) (the Exemption Sought). The Third Tier Funds may be comprised of: (i) one or more other mutual funds, each of which is, or will be, subject to NI 81-102 and managed by the Filer or an affiliate thereof (each, an EHP Third Tier Fund, and, together with the Top Fund and the Underlying Funds, the Funds and, each, a Fund); and (ii) one or more other investment funds (the Other Funds and, each, an Other Fund).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for the Application; and

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (together with Ontario, the Jurisdictions).

Defined Terms

Unless expressly defined herein, terms in this Application have the respective meanings given to them in NI 81-102, National Instrument 14-101 -- Definitions or MI 11-102.

Representations

This decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a corporation incorporated under the laws of the Province of Ontario, with its head office located in Toronto, Ontario.

2. The Filer is registered as an investment fund manager in Ontario, Québec, and Newfoundland and Labrador and as a portfolio manager in Ontario.

3. The Filer or an affiliate is, or will be, the investment fund manager of the Top Fund, each Underlying Fund, and each EHP Third Tier Fund.

4. The Filer is not in default of securities legislation in any of the Jurisdictions.

The Funds

5. Each Fund is, or will be, an "alternative mutual fund" organized and governed by the laws of a Jurisdiction or the laws of Canada.

6. Each Fund is, or will be, a reporting issuer in one or more Jurisdictions governed by the provisions of NI 81-102, subject to any exemption therefrom that has been, or may be, granted by the securities regulatory authorities.

7. The securities of the Underlying Funds and the EHP Third Tier Funds may be sold to investors other than the Top Fund and Underlying Funds, respectively.

8. None of the Funds is in default of securities legislation in any of the Jurisdictions.

The Top Fund

9. The investment objective of the Top Fund is to generate superior risk adjusted investment returns over the long-term by utilizing a multi-strategy approach consisting of diversified quantitative and systematic investment strategies.

10. The Top Fund currently seeks to achieve its investment objective by investing in securities of alternative mutual funds managed or advised by the Manager, including the Underlying Funds, which in turn invest in long and short positions in high-yield bonds, investment grade corporate bonds, government bonds, convertible bonds, convertible debentures, preferred shares, options, futures, forward contracts, currencies, volatility instruments, short term debt instruments, distressed debt, cash and cash equivalents, equities, fixed-income exchange-traded funds (ETFs), equity ETFs, special purpose acquisition companies (SPACs), and other alternative mutual funds.

11. The Top Fund wishes to have the ability to purchase securities of the Underlying Funds, each of which will hold more than 10% of its NAV in securities of the Third Tier Funds, as described below.

12. The Top Fund will not sell short securities of any Underlying Fund.

The Underlying Funds

13. The investment objective of EHP Advantage Alternative Fund is to generate superior risk adjusted investment returns over the long-term by utilizing a multi-strategy approach consisting of diversified quantitative and systematic investment strategies. EHP Advantage Alternative Fund will use alternative investment strategies, including equity long/short, equity market neutral, and credit long/short, by investing in North American equities, fixed-income ETFs, equity ETFs, and treasury futures derivative contracts as a part of implementing these strategies.

14. The investment objective of EHP Foundation Alternative Fund is to provide a positive total return, regardless of market conditions or general market direction, with low correlation to North American equity markets. EHP Foundation Alternative Fund will use alternative investment strategies, including equity long/short, equity market neutral, and credit long/short, by investing in North American equities, fixed-income ETFs, equity ETFs, and treasury futures derivative contracts as a part of implementing these strategies.

15. Each Underlying Fund may invest in securities of Other Funds, including the EHP Third Tier Funds and ETFs, in accordance with its investment objective.

16. Each Underlying Fund currently invests in one or more Other Funds, where, at the time of purchase, the Underlying Fund holds, in aggregate, no more than 10% of its NAV in securities of such Other Funds, which excludes, for greater certainty, index participation units.

17. Each Underlying Fund wishes to invest in one or more EHP Third Tier Funds for tactical purposes, which investments will, when aggregated with securities of Other Funds held by the Underlying Fund (excluding index participation units), immediately after purchase, comprise, in aggregate, up to 30% of the NAV of the Underlying Fund.

18. As a result of market movement, Third Tier Funds may comprise more than 30% of the NAV of an Underlying Fund at any time.

19. No Underlying Fund will sell short securities of a Third Tier Fund, excluding index participation units.

General

20. Subsection 2.5(2)(b) of NI 81-102 prohibits an investment fund from investing in another investment fund if, at the time of purchase, the other investment fund has more than 10% of its net assets invested in securities of other investment funds (the Multi-Tier Prohibition).

21. Since an Underlying Fund's investment in securities of the Third Tier Funds may, from time to time, exceed 10% of the NAV of the Underlying Fund, the Multi-Tier Prohibition will prohibit the Top Fund from investing in the Underlying Fund.

22. An investment by the Top Fund in an Underlying Fund would not qualify for the exemptions in paragraph 2.5(4) of NI 81-102 from the Multi-Tier Prohibition because the Underlying Funds do not issue index participation units and are not clone funds or money market funds.

23. An investment in the Underlying Funds by the Top Fund is an efficient and cost-effective alternative to administering one or more investment strategies directly.

24. An investment by the Top Fund in an Underlying Fund or by an Underlying Fund in a Third Tier Fund represents the business judgment of responsible persons uninfluenced by considerations other than the best interests of the Top Fund or the applicable Underlying Fund, as the case may be.

25. The Other Funds are managed by investment fund managers other than the Filer and its affiliates. Neither the Filer nor its affiliates manage any Other Funds.

26. There will be no duplication of management fees or incentive fees between the Top Fund and the Underlying Funds, and between the Underlying Funds and the EHP Third Tier Funds. The prospectus of the Top Fund and the Underlying Funds will disclose that management fees and incentive fees will not be duplicated amongst such Funds as a result of a Three-Tier Structure.

Three-Tier Structure

27. The Filer will foster standards of fairness in the allocation of orders policy, the purpose of which is to seek the fair treatment for investors in all investment funds managed by the Filer that are involved in a fund of fund structure by assessing material costs between funds that pertain to transaction charges. This policy is designed to isolate material and/or excessive transaction costs associated with significant trades, at the Filer's discretion, and to prevent the dilution of a fund's assets when these material transactions occur by taking steps to ensure that the applicable fund or funds bear(s) the appropriate economic impact of such transaction costs.

28. The Filer will implement a liquidity risk management policy, the purpose of which is to monitor underlying liquidity of investment funds managed by the Filer, with each such investment fund potentially considered a large unitholder investment. This policy seeks to ensure that unitholders are not adversely impacted by trading activities of large unitholders.

29. To manage liquidity risk due to cross-ownership of funds within a Three-Tier Structure, the Filer will use a combination of risk management tools to address the significant investor risk, including: (i) Independent Review Committee (or IRC) approved governance policies that have been adopted to protect all investors in the Funds; (ii) internal portfolio manager notification requirements of significant cash flows into the Funds; (iii) ongoing liquidity monitoring of each Fund's portfolio; and (iv) real time cash projection reporting for the Funds. Each Fund in a Three-Tier Structure will be managed as a stand-alone investment for purposes of the application of these risk management tools,

30. The prospectus of the Top Fund discloses or will disclose in the next regularly scheduled renewal, or amendment if earlier, that the Top Fund invests in securities of the Underlying Funds, and that each Underlying Fund may invest more than 10% of its NAV in securities, on an aggregate basis, of other investment funds, including Third Tier Funds.

31. The prospectus of each Fund in a Three-Tier Structure discloses or will disclose in the next regularly scheduled renewal, or amendment if earlier, that the accountability for portfolio management is: (a) at the level of each Underlying Fund with respect to the selection of Third Tier Funds to be purchased by the Underlying Fund and with respect to the purchase and sale of any other portfolio securities or other assets held by the Underlying Fund; and (b) at the level of each EHP Third Tier Fund with respect to the purchase and sale of portfolio securities and other assets held by that EHP Third Tier Fund.

32. Each Fund in a Three-Tier Structure complies with the requirements under National Instrument 81-106 -- Investment Fund Continuous Disclosure (NI 81-106) relating to top 25 positions portfolio holdings disclosure in its management reports of fund performance and the requirements of Form 81-101F3 -- Contents of Fund Facts Document (Form 81-101F3) relating to top 10 position portfolio holdings disclosure in its Fund Facts as if the Fund was investing directly in the Third Tier Funds.

33. None of the Funds relies on any discretionary relief permitting the Fund to exceed the leverage exposure otherwise permitted under NI 81-102 through the use of borrowing, short selling, and specified derivatives.

34. Except for paragraph 2.5(2)(b) of NI 81-102, each investment by the Top Fund in securities of the Underlying Funds will be made in accordance with the provisions of section 2.5 of NI 81-102.

35. It would not be prejudicial to the public interest to grant the Exemption Sought.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

(i) the Filer is the registered investment fund manager of the Top Fund, each Underlying Fund, and each EHP Third Tier Fund;

(ii) an investment by the Top Fund in securities of the Underlying Funds is in accordance with the investment objectives and strategies of the Top Fund;

(iii) the prospectus of the Top Fund discloses or will disclose in the next regularly scheduled renewal, or amendment if earlier, that the Top Fund invests in securities of the Underlying Funds, and that each Underlying Fund may invest more than 10% of its NAV in securities, on an aggregate basis, of other investment funds, including Third Tier Funds;

(iv) the Top Fund's investment in securities of each Underlying Fund and each Underlying Fund's investment in each Third Tier Fund in a Three-Tier Structure is otherwise made in compliance with all other requirements of section 2.5 of NI 81-102, except to the extent that discretionary relief has been granted from any such requirement;

(v) there is no duplication of management fees, incentive fees or administrative fees between each tier of the Three-Tier Structure;

(vi) the Three-Tier Structure is implemented in a manner that seeks the fair treatment for investors in all of the investment funds managed by the Filer that are involved in a Three-Tier Structure by assessing material portfolio transaction costs among all of such investment funds;

(vii) the Filer maintains investor protection policies and procedures that address liquidity and redemption risk due to cross-ownership of funds within a Three-Tier Structure, and each Fund in a Three-Tier Structure is managed as a stand-alone investment for purposes of these policies and procedures;

(viii) each Fund in a Three-Tier Structure complies with the requirements under NI 81-106 relating to top 25 positions portfolio holdings disclosure in its management reports of fund performance and the requirements of Form 81-101F3 relating to top 10 position portfolio holdings disclosure in its Fund Facts as if the Fund was investing directly in the Third Tier Funds; and

(ix) none of the Funds relies on any discretionary relief permitting the Fund to exceed the leverage exposure otherwise permitted under NI 81-102 through the use of borrowing, short selling, and specified derivatives.

Application File #: 2024/0093

SEDAR+ File #: 6087484

 

Embark Student Corp. et al.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted under section 62(5) of the Securities Act to permit extension of scholarship plans' prospectus lapse date -- no conditions.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 62(5).

March 14, 2024

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the "Jurisdiction") AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF EMBARK STUDENT CORP. (the "Filer") AND IN THE MATTER OF THE FLEX FIRST PLAN AND THE FAMILY SINGLE STUDENT EDUCATION SAVINGS PLAN (the "Terminating Plans")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer, on behalf of the Terminating Plans, for a decision under the securities legislation of the Jurisdiction (the "Legislation") that the time limits for the renewal of the prospectus of each Terminating Plan dated May 8, 2023 (together, the "Current Prospectus") be extended to the time limits that would apply if the lapse date was July 1, 2024 (the "Exemption Sought").

Under National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon by the Filer and the Terminating Plans in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Québec, Saskatchewan and Yukon (together with Ontario, the "Jurisdictions").

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a corporation amalgamated under the Canada Business Corporations Act having its head office in Mississauga, Ontario.

2. The Filer is registered as a scholarship plan dealer in each of the provinces and territories of Canada and an investment fund manager in Ontario, Québec and Newfoundland and Labrador.

3. The Filer is the investment fund manager and scholarship plan dealer of the Terminating Plans and Embark Student Foundation is the sponsor of the Terminating Plans.

4. The Filer is not in default of securities legislation in any of the Jurisdictions.

The Terminating Plans

1. Each Terminating Plan is a reporting issuer in the Jurisdictions in which its securities are distributed.

2. Securities of the Terminating Plans are qualified for sale in each of the Jurisdictions under the Current Prospectus, which has been prepared in accordance with National Instrument 41-101 General Prospectus Requirements (NI 41-101).

3. At the special meeting of the unitholders of the Terminating Plans held on December 12, 2023, the Filer received approval to wind up the Terminating Plans and transfer the existing assets of the Terminating Plans to the Embark Student Plan and Embark Select Conservative Plan (collectively, the "Embark Plans") by July 1, 2024.

4. All the assets of the Terminating Plans will be transferred to the Embark Plans on July 1, 2024 (the "Termination Date") and thereafter, the Terminating Plans will be terminated.

5. Current unitholders may subscribe for or purchase securities of the Terminating Plans directly from the Filer in accordance with existing contribution schedules. The Filer ceased to sell units of the Terminating Plans to new customers as of March 1, 2023 when it began offering units of the Embark Plans under the initial prospectus for those plans dated February 6, 2023. The application is being made in order to preserve these existing contribution schedules after May 8, 2024 and until the Termination Date.

6. Pursuant to section 62(1) of the Securities Act (Ontario) (the "Act"), the lapse date for the Current Prospectus is May 8, 2024 (the "Current Lapse Date"). Accordingly, if a new prospectus for each Terminating Plan is not otherwise filed and receipted by the Current Lapse Date, under section 62(2) of the Act, the distribution of securities of each of the Terminating Plans would have to cease on the Current Lapse Date unless: (i) the Terminating Plans file a pro forma prospectus at least 30 days prior to the Current Lapse Date; (ii) the final prospectus is filed no later than 10 days after the Current Lapse Date; and (iii) a receipt for the final prospectus is obtained within 20 days after the Current Lapse Date.

7. The Terminating Plans are not in default of securities legislation in any of the Jurisdictions.

The Exemption Sought

1. The Exemption Sought will allow the Filer to avoid incurring unnecessary costs and any confusion that may result from renewing the Terminating Plans under the Current Prospectus and later terminating the Terminating Plans.

2. There have been no undisclosed material changes in the business, operations or affairs of each Terminating Plan since the date of the Current Prospectus. Accordingly, the Current Prospectus represents current information regarding the applicable Terminating Plan.

3. Given the disclosure obligations of the Filer and the Terminating Plans, should any material change in the business, operations or affairs of the Terminating Plans occur, the Current Prospectus of the Terminating Plans will be amended as required under the Legislation.

4. The Exemption Sought will not affect the currency or accuracy of the information contained in the Current Prospectus of each Terminating Plan and therefore will not be prejudicial to the public interest.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted.

Application File #: 2024/0064

SEDAR+ File #: 6081415

 

Auspice Capital Advisors Ltd. et al.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted under subsection 62(5) of the Securities Act to permit extension of a prospectus lapse date by 42 days to facilitate the incorporation by reference of more recent financial statements and auditors' consent letter after change of auditor -- no conditions.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5 as am., s. 62(5).

Citation: Re Auspice Capital Advisors Ltd., 2024 ABASC 47

March 18, 2024

IN THE MATTER OF THE SECURITIES LEGISLATION OF ALBERTA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF AUSPICE CAPITAL ADVISORS LTD. (the Filer) AND AUSPICE DIVERSIFIED TRUST AND AUSPICE ONE FUND TRUST (the Funds)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (each a Decision Maker) has received an application from the Filer on behalf of the Funds for a decision under the securities legislation of the Jurisdictions (the Legislation) that the time limits for the renewal of the simplified prospectus of the Funds dated February 28, 2023 (the Current Prospectus) be extended to the time limits that would apply if the lapse date of the Current Prospectus was April 10, 2024 (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application),

(a) the Alberta Securities Commission is the principal regulator for this application;

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each jurisdiction of Canada, other than Alberta and Ontario; and

(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102, and National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a quantitative investment specialist that was established in 2006.

2. The Filer is registered as a portfolio manager, investment fund manager and exempt market dealer in Alberta, as a commodity trading manager, investment fund manager and exempt market dealer in Ontario, as an investment fund manager in British Columbia, Québec, and Newfoundland and Labrador, and as an exempt market dealer in British Columbia and Québec. The Filer's head office is in Calgary, Alberta.

3. Each Fund is a mutual fund organized as an open-ended unit trust governed by the laws of the Province of Alberta.

4. Each Fund is an alternative mutual fund as defined in National Instrument 81-102 Investment Funds (NI 81-102).

5. Each Fund is a reporting issuer in each jurisdiction of Canada.

6. Prior to February 28, 2023, the Funds were offered through an offering memorandum only and were not reporting issuers during such prior period.

7. Neither the Filer nor the Funds are in default of securities legislation in any jurisdiction of Canada.

8. The Funds currently distribute securities in each jurisdiction of Canada under the Current Prospectus.

9. Pursuant to section 2.5(2) of NI 81-101, the lapse date of the Current Prospectus is February 28, 2024 (the Lapse Date). Accordingly, under subsection 2.5(4) of NI 81-101, the distribution of securities of each of the Funds must cease on the Lapse Date unless: (i) the Funds file a pro forma prospectus at least 30 days prior to the Lapse Date; (ii) the final prospectus is filed no later than 10 days after the Lapse Date; and (iii) a receipt for the final prospectus is obtained within 20 days of the Lapse Date.

10. The renewal prospectus for the Funds is therefore required to be filed by March 9, 2024 in order for securities of the Funds to continue to be distributed after the Lapse Date.

11. During 2023, the auditor of the Funds was changed from KPMG LLP (KPMG) to EY LLP (EY).

12. The fiscal year-end of each of the Funds is December 31 and, pursuant to section 2.2 of National Instrument 81-106 Investment Fund Continuous Disclosure, the annual financial statements and auditor's report are required to be filed on or before the 90th day after each Fund's most recently completed financial year, which for each Fund since it became a reporting issuer, is the financial period ended December 31, 2023 (the 2023 Fiscal Year-End).

13. The audited financial statements of the Funds for the financial period ended December 31, 2022 (the 2022 Fiscal Year-End) were filed as required on May 15, 2023, with an unqualified audit report (the 2022 Audit Report) from KPMG dated March 16, 2023. An auditors' consent letter from KPMG in respect of these financial statements, also dated March 16, 2023, was also filed on May 15, 2023.

14. Given the change in the auditor of the Funds, the Filer has determined that that it will not be possible to obtain from KPMG the required auditor's consent letter relating to the use of its 2022 Audit Report in the final renewal simplified prospectus of the Funds (the Renewal SP) prior to the date that is 20 days after the Lapse Date. Furthermore, the Filer has determined that the Funds would incur unduly high costs to obtain the consent letter from KPMG.

15. In the circumstances, the Filer considers that it is not in the best interests of the Funds to obtain the required auditor's consent letter relating to the incorporation by reference in the Renewal SP of KPMG's 2022 Audit Report, which would be required to be incorporated by reference into the Renewal SP at this time.

16. EY is in the process of completing the audited financial statements of the Funds for the 2023 Fiscal Year-End, which will be completed by EY on or before March 30, 2024. EY has advised the Filer that it expects to be in a position to provide its consent to the incorporation of its auditor's report on such financial statements by reference in the Renewal SP in early April 2024. EY has also advised that it expects to charge a significantly lower fee for such consent than that requested by KPMG for its consent in respect of the 2022 Audit Report.

17. The Filer considers that it is in the interests of the securityholders of the Funds that the Exemption Sought be granted, such that the Funds may wait to renew the Current Prospectus until the audited financial statements of the Funds for the 2023 Fiscal Year-End are completed and EY is able to provide the required auditor's consent in respect of its report on such financial statements for purposes of the Renewal SP.

18. Extending the Lapse Date to April 10, 2024 will also allow the Filer to update the Fund Facts to include more up-to-date information for the 2023 Fiscal Year-End.

19. Other than the change of the auditor of the Funds, which was previously disclosed, there have not been any other material changes in the affairs of the Funds since the Current Prospectus was filed. Accordingly, the Current Prospectus continues to provide accurate information regarding the Funds.

20. Extending the Lapse Date will also not be prejudicial to anyone buying securities of the Funds between the date hereof and when the Renewal SP is finalized.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted.

 

Brookfield Reinsurance Ltd.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted from the requirements of paragraph 9.3(1)(b) of National Instrument 44-102 Shelf Distributions requiring the securities distributed under an ATM prospectus be equity securities -- relief granted on terms and conditions.

Applicable Legislative Provisions

National Instrument 44-102 Shelf Distributions, ss. 9.3(1)(b) and 11.1.

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 53 and 74.

February 7, 2024

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF BROOKFIELD REINSURANCE LTD.

DECISION

Background

The principal regulator in the Jurisdiction has received an application from Brookfield Reinsurance Ltd. (the company or the Filer) for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that, in respect of the class A-1 exchangeable non-voting shares of the company (Class A-1 Exchangeable Shares), the Filer be exempt from requirements contained in section 9.3(1)(b) of National Instrument 44-102 -- Shelf Distributions (NI 44-102) that distributions by way of an at-the-market distribution using the shelf procedures be limited to distributions of equity securities (the At-the-Market Distribution Eligibility Requirements or the Exemption Sought). The Class A-1 Exchangeable Shares are the economic equivalent of, and exchangeable for, class A limited voting shares (Brookfield Class A Shares) of Brookfield Corporation, as more particularly described below. The Class A-1 Exchangeable Shares are also convertible into class A exchangeable limited voting shares of the company (Class A Exchangeable Shares).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission (the OSC) is the principal regulator for this application; and

(b) the Filer has provided notice that subsection 4.7(1)(c) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the Northwest Territories, Yukon and Nunavut, as applicable.

Interpretation

Terms defined in National Instrument 14-101 Definitions (NI 14-101), MI 11-102 and NI 44-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

Relevant Entities

Brookfield Corporation

1. Brookfield Corporation was formed by articles of amalgamation dated August 1, 1997 and is organized pursuant to articles of amalgamation under the Business Corporations Act (Ontario) dated January 1, 2005 and articles of amendment by arrangement dated December 9, 2022.

2. Brookfield Corporation's registered and head office is located at Suite 100, Brookfield Place, 181 Bay Street, Toronto, Ontario, M5J 2T3.

3. The Brookfield Class A Shares are co-listed on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX) under the symbol "BN".

4. The authorized share capital of Brookfield consists of (a) an unlimited number of preference shares designated as class A preference shares, issuable in series, (b) an unlimited number of Brookfield Class A Shares and (c) 85,120 class B limited voting shares.

5. Brookfield Corporation is a reporting issuer in each of the provinces and territories of Canada and is not in default of any requirement under securities legislation in the jurisdictions in which it is a reporting issuer.

The Company

6. The company was incorporated on December 10, 2020 under the Companies Act 1981 of Bermuda, as amended, as an exempted company limited by shares.

7. The registered and head office of the company is located at Ideation House, 1st Floor, 94 Pitts Bay Road, Pembroke HM 08 Bermuda.

8. The authorized share capital of the company consists of (a) Class A Exchangeable Shares, (b) Class A-1 Exchangeable Shares, (c) class B limited voting shares, (d) class C non-voting shares, (e) class A junior preferred shares, issuable in series, (f) class B junior preferred shares, issuable in series, (g) class A senior preferred shares, issuable in series and (h) class B senior preferred shares, issuable in series.

9. The Class A Exchangeable Shares are listed on the NYSE and the TSX under the symbol "BNRE".

10. The Class A-1 Exchangeable Shares are listed on the NYSE and the TSX under the symbol "BNRE.A".

11. The company is a reporting issuer in each of the provinces and territories of Canada and is not in default of any requirement under securities legislation in the jurisdictions in which it is a reporting issuer.

12. An investment in the Class A-1 Exchangeable Shares is intended to be, as nearly as practicable, functionally and economically, equivalent to an investment in Brookfield Class A Shares or an investment in Class A Exchangeable Shares. As such, the company expects that investors will hold or purchase Class A-1 Exchangeable Shares as an alternative way of owning Class A Exchangeable Shares or Brookfield Class A Shares rather than a separate and distinct investment.

13. Brookfield Corporation and the company are party to an amended and restated support agreement dated March 21, 2023 (Support Agreement), pursuant to which Brookfield Corporation has agreed to support the economic equivalence of the Exchangeable Shares by agreeing to take all actions reasonably necessary to enable the company to pay quarterly distributions, the liquidation amount or the amount payable on a redemption of Exchangeable Shares, as the case may be.

14. In addition to the Support Agreement, the Exchangeable Share provisions contain terms that provide holders of Exchangeable Shares directly with protections designed to make the Exchangeable Shares the economic equivalent of the Brookfield Class A Shares.

15. The Class A-1 Exchangeable Shares are exchangeable into Brookfield Class A Shares and convertible into Class A Exchangeable Shares on a one-for-one basis. Except for the fact that the Class A-1 Exchangeable Shares do not carry voting rights and that they are convertible into Class A Exchangeable Shares on a one-for-one basis, the rights, privileges, restrictions and conditions attached to the Class A Exchangeable Shares as a class and the Class A-1 Exchangeable Shares as a class are identical in all respects. Holders of Class A-1 Exchangeable Shares can exercise their voting rights in either the company or in Brookfield Corporation, by converting their Class A-1 Exchangeable Shares into Class A Exchangeable Shares, or by exchanging their Class A-1 Exchangeable Shares for Brookfield Class A Shares.

At-the-Market Distributions

16. Following the issuance and listing of Class A-1 Exchangeable Shares on the NYSE and the TSX that occurred in November 2023, the company wishes to be eligible to distribute Class A-1 Exchangeable Shares by way of an at-the-market distribution under NI 44-102.

17. The At-the-Market Distribution Eligibility Requirements are outlined in section 9.3(1)(b) of NI 44-102, pursuant to which, only equity securities may be distributed by way of an at-the-market distribution using the shelf procedures.

18. The term "equity security" is defined under the Legislation as a security that carries a residual right to participate in the earnings of the issuer and, on the liquidation or winding up of the issuer, in its assets.

19. The Class A-1 Exchangeable Shares do not carry a residual right to participate in the assets of the company upon liquidation or winding-up of the company, and accordingly, are not equity securities under the Legislation.

20. The Class A-1 Exchangeable Shares provide holders thereof with a security of a reporting issuer having an economic return equivalent to an investment in Brookfield Class A Shares, which are equity securities under the Legislation.

21. Based upon the rationale provided in paragraph 17 above, it would not be prejudicial to the public interest to exempt the company from the At-the-Market Distribution Eligibility Requirements in respect of a distribution of Class A-1 Exchangeable Shares.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted and the company does not have to comply with the At-the-Market Distribution Eligibility Requirements in respect of a distribution of Class A-1 Exchangeable Shares so long as:

(a) the company otherwise satisfies the conditions set out in section 9.3 of NI 44-102 to distribute securities under an ATM prospectus (as defined in NI 44-102) as part of an at-the-market distribution;

(b) the securities being distributed are Class A-1 Exchangeable Shares; and

(c) the Brookfield Class A Shares qualify as equity securities under NI 44-102.

OSC File #: 2024/0021

 

Cease Trading Orders

Temporary, Permanent & Rescinding Issuer Cease Trading Orders

Company Name	Date of Temporary Order	Date of Hearing	Date of Permanent Order	Date of Lapse/Revoke
THERE IS NOTHING TO REPORT THIS WEEK.

Failure to File Cease Trade Orders

Company Name	Date of Order	Date of Revocation
Tombill Mines Limited	March 5, 2024	March 11, 2024
Besra Gold Inc.	March 6, 2024	March 18, 2024
First Growth Funds Limited	March 6, 2024	March 15, 2024

Temporary, Permanent & Rescinding Management Cease Trading Orders

Company Name	Date of Order	Date of Lapse
THERE IS NOTHING TO REPORT THIS WEEK.

Outstanding Management & Insider Cease Trading Orders

Company Name	Date of Order or Temporary Order	Date of Hearing	Date of Permanent Order	Date of Lapse/Expire	Date of Issuer Temporary Order
Performance Sports Group Ltd.	19 October 2016	31 October 2016	31 October 2016	__________	__________

 

Company Name	Date of Order	Date of Lapse
Agrios Global Holdings Ltd.	September 17, 2020	__________
Sproutly Canada, Inc.	June 30, 2022	__________
iMining Technologies Inc.	September 30, 2022	__________
Alkaline Fuel Cell Power Corp.	April 4, 2023	__________
mCloud Technologies Corp.	April 5, 2023	__________
FenixOro Gold Corp.	July 5, 2023	__________
HAVN Life Sciences Inc.	August 30, 2023	__________
PlantFuel Life Inc.	January 30, 2024	__________
Odd Burger Corporation	January 30, 2024	__________
Biovaxys Technology Corp.	February 29, 2024	__________

 

IPOs, New Issues and Secondary Financings

INVESTMENT FUNDS

Issuer Name:

Type and Date:

Offering Price and Description:

Underwriter(s) or Distributor(s):

Promoter(s):

Filing #06043277

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Issuer Name:

Type and Date:

Offering Price and Description:

Underwriter(s) or Distributor(s):

Promoter(s):

Filing #06077091

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Issuer Name:

Type and Date:

Offering Price and Description:

Underwriter(s) or Distributor(s):

Promoter(s):

Filing #06096976

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Issuer Name:

Type and Date:

Offering Price and Description:

Underwriter(s) or Distributor(s):

Promoter(s):

Filing #06097021

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Issuer Name:

Type and Date:

Offering Price and Description:

Underwriter(s) or Distributor(s):

Promoter(s):

Filing #03545384

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Issuer Name:

Type and Date:

Offering Price and Description:

Underwriter(s) or Distributor(s):

Promoter(s):

Filing # 03520821

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NON-INVESTMENT FUNDS

Issuer Name:

Principal Regulator -- British Columbia

Type and Date:

Offering Price and Description:

Filing # 06095478

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Issuer Name:

Principal Regulator -- British Columbia

Type and Date:

Offering Price and Description:

Filing # 06096055

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Issuer Name:

Principal Regulator -- Ontario

Type and Date:

Offering Price and Description:

Filing # 06084945

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Issuer Name:

Principal Regulator -- Quebec

Type and Date:

Offering Price and Description:

Filing # 06095170

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Issuer Name:

Principal Regulator -- Ontario

Type and Date:

Offering Price and Description:

Filing # 06094932

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Registrations

Registrants

Type	Company	Category of Registration	Effective Date
New Registration	iAM Independent Asset Management Corp.	Portfolio Manager and Investment Fund Manager	March 12, 2024
Change in Registration Categories	Patrimonica Asset Management Inc.	From: Portfolio Manager and Exempt Market Dealer	March 15, 2024
		To: Portfolio Manager, Exempt Market Dealer and Investment Fund Manager
Change in Registration Categories	Investors Group Financial Services Inc.	From: Mutual Fund Dealer	March 18, 2024
		To: Mutual Fund Dealer and Exempt Market Dealer

 

CIRO, Marketplaces, Clearing Agencies and Trade Repositories

Marketplaces

Toronto Stock Exchange -- Housekeeping Rule Amendments to the TSX Company Manual -- Notice

TORONTO STOCK EXCHANGE

NOTICE OF HOUSEKEEPING RULE AMENDMENTS TO THE TSX COMPANY MANUAL

Introduction

In accordance with the Process for the Review and Approval of Rules and the Information Contained in Form 21-101F1 (the "Protocol"), Toronto Stock Exchange ("TSX") has adopted, and the Ontario Securities Commission (the "OSC") has approved, amendments (the "Amendments") to Sections 429, 429.1, 614(j), and 620(d) of the TSX Company Manual (the "Manual"). The Amendments are Housekeeping Rules under the Protocol and therefore have not been published for comment. The OSC has not disagreed with the categorization of the Amendments as Housekeeping Rules. In accordance with Section 5 of the Protocol, TSX has obtained a waiver from the OSC in connection with the requirements to obtain approval by the board of directors of TSX.

Reasons for the Amendments

The Amendments are being made: (i) in response to industry changes in North America to move to a cycle where settlement occurs one trading day after the trade date ("T+1"), as set out in CSA Staff Notice 24-318 -- Preparing for the Implementation of T+1 Settlement (the "CSA Staff Notice"); and (ii) to clarify in Section 429 that the ex-dividend date is set and published by TSX.

The Amendments relate to non-public interest changes and include aligning the Manual with the T+1 settlement cycle as set out in the CSA Staff Notice.

Summary of the Amendments

Section	Amendment
429 -- Ex-Dividend Trading	Amend language to reflect that one trading day is permitted for the completion of the registration of a securities transaction and consequently, indicate that the shares will commence trading on an ex-dividend basis on the record date.
	Update language in the example provided as a result of the aforementioned amendments.
	Update language to clarify that the ex-dividend date is set and published by TSX.
429.1 -- Due Bill Trading	Amend language to indicate that trading on an ex-distribution basis, without the use of Due Bills, will commence at the opening of trading on the record date of the distribution.
614(j) -- Rights Offerings	Amend language to indicate that rights are listed on TSX at the opening of trading on the record date.
620(d) -- Stock Split	Amend language to indicate that, where the push-out method is used, securities will commence trading on TSX on a split basis at the opening of business on the record date.

Text of the Amendments

The Amendments are set out as blacklined text at Appendix A. For ease of reference, a clean version of the Amendments are set out at Appendix B.

Timing and Transition

The Amendments become effective on May 27, 2024.

APPENDIX A

BLACKLINES OF NON-PUBLIC INTEREST AMENDMENTS TO THE MANUAL

Ex-Dividend Trading

Sec. 429.

Determining whether the seller or the buyer is entitled to the dividend is accomplished through the procedure known as ex-dividend trading. On shares selling ex-dividend the seller retains the right to a pending dividend payment, and the opening bid quotation is usually reduced by the value of the dividend payable.

Since two one trading days are is allowed for the completion of the registration of a securities transaction, it is necessary that the shares commence trading on an ex-dividend basis at the opening of trading on the date which is one trading day prior to the record date for the dividend. For example, if the record date for a dividend is Friday, the shares will commence trading on an ex-dividend basis at the opening of trading on that Friday the preceding Thursday (in the absence of statutory holidays). If the record date is Monday, the shares will commence trading on an ex-dividend basis at the opening of trading on Friday of the previous week (in the absence of statutory holidays).

When a distribution is paid entirely in securities which are immediately consolidated following the distribution, resulting in no change to the number of securities held by security holders, ex-dividend trading will not apply.

The ex-dividend date is set and published by TSX.

[...]

Due Bill Trading

Sec. 429.1.

For the purposes of this Section 429.1, "distribution" means any dividend, distribution, interest, security or right to which holders of listed securities have an entitlement, based on a specific record date.

Due Bill trading may be used at the discretion of the Exchange based on various relevant factors. However, the Exchange will normally defer ex-distribution trading and use Due Bills when the distribution per listed security represents 25% or more of the value of the listed security on the declaration date. Without the use of Due Bills, trading on an ex-distribution basis would commence at the opening of trading one trading day prior to on the record date for the distribution and could result in a significant adjustment of the market price of the security. Security holders will then be deprived of the value of the distribution between the ex-distribution date and the payment date. By deferring the ex-distribution date through the use of Due Bills, sellers of the listed securities during this period can realize the full value of the listed securities they hold, by selling the securities with the Due Bills attached. The use of Due Bills will also avoid confusion regarding the market value of the listed securities.

[...]

The Exchange may also use Due Bills for distributions which are subject to a condition which may not be satisfied before the normal ex-distribution trading date (i.e., one trading day before on the record date). When Due Bills are used for conditional distributions, the condition must be met prior to the payment date.

[...]

D. Rights Offerings

Sec. 614.

[...]

(j) Rights are listed on TSX at the opening of trading on the first trading day preceding the record date. At the same time, the underlying listed securities of the listed issuer commence trading on an ex-rights basis, which means that purchasers of the listed securities at that time are not entitled to receive the rights. Due Bill trading may be used in certain circumstances for conditional rights offerings as determined at the discretion of the Exchange. See Section 429.1.

[...]

Sec. 620. Stock Split

(d) Where the push-out method is used, the securities will commence trading on TSX on a split basis at the opening of business on the first trading day preceding the record date. Due Bill trading may be used in certain circumstances as determined at the discretion of the Exchange. See Section 429.1.

[...]

APPENDIX B

NON-PUBLIC INTEREST AMENDMENTS TO THE TSX COMPANY MANUAL

Ex-Dividend Trading

Sec. 429.

Determining whether the seller or the buyer is entitled to the dividend is accomplished through the procedure known as ex-dividend trading. On shares selling ex-dividend the seller retains the right to a pending dividend payment, and the opening bid quotation is usually reduced by the value of the dividend payable.

Since one trading day is allowed for the completion of the registration of a securities transaction, it is necessary that the shares commence trading on an ex-dividend basis at the opening of trading on the record date for the dividend. For example, if the record date for a dividend is Friday, the shares will commence trading on an ex-dividend basis at the opening of trading on that Friday (in the absence of statutory holidays).

When a distribution is paid entirely in securities which are immediately consolidated following the distribution, resulting in no change to the number of securities held by security holders, ex-dividend trading will not apply.

The ex-dividend date is set and published by TSX.

[...]

Due Bill Trading

Sec. 429.1.

For the purposes of this Section 429.1, "distribution" means any dividend, distribution, interest, security or right to which holders of listed securities have an entitlement, based on a specific record date.

Due Bill trading may be used at the discretion of the Exchange based on various relevant factors. However, the Exchange will normally defer ex-distribution trading and use Due Bills when the distribution per listed security represents 25% or more of the value of the listed security on the declaration date. Without the use of Due Bills, trading on an ex-distribution basis would commence at the opening of trading on the record date for the distribution and could result in a significant adjustment of the market price of the security. Security holders will then be deprived of the value of the distribution between the ex-distribution date and the payment date. By deferring the ex-distribution date through the use of Due Bills, sellers of the listed securities during this period can realize the full value of the listed securities they hold, by selling the securities with the Due Bills attached. The use of Due Bills will also avoid confusion regarding the market value of the listed securities.

[...]

The Exchange may also use Due Bills for distributions which are subject to a condition which may not be satisfied before the normal ex-distribution trading date (i.e., on the record date). When Due Bills are used for conditional distributions, the condition must be met prior to the payment date.

[...]

D. Rights Offerings

Sec. 614.

[...]

(j) Rights are listed on TSX at the opening of trading on the record date. At the same time, the underlying listed securities of the listed issuer commence trading on an ex-rights basis, which means that purchasers of the listed securities at that time are not entitled to receive the rights. Due Bill trading may be used in certain circumstances for conditional rights offerings as determined at the discretion of the Exchange. See Section 429.1.

[...]

Sec. 620. Stock Split

(d) Where the push-out method is used, the securities will commence trading on TSX on a split basis at the opening of business on the record date. Due Bill trading may be used in certain circumstances as determined at the discretion of the Exchange. See Section 429.1.

[...]

 

Toronto Stock Exchange -- Housekeeping Amendments to the Rules of Toronto Stock Exchange -- Notice of Housekeeping Rule Amendments

TORONTO STOCK EXCHANGE

NOTICE OF HOUSEKEEPING RULE AMENDMENTS

HOUSEKEEPING AMENDMENTS TO THE RULES OF TORONTO STOCK EXCHANGE

Introduction

In accordance with the Process for the Review and Approval of Rules and the Information Contained in Form 21-101F1 (the "Protocol"), TSX Inc. ("TSX") has adopted, and the Ontario Securities Commission (the "OSC") has approved, amendments (the "Amendments") to the TSX Rule Book. The Amendments are Housekeeping Rules under the Protocol and therefore have not been published for comment. The OSC has not disagreed with the categorization of the Amendments as Housekeeping Rules. In accordance with Section 5 of the Protocol, TSX has obtained a waiver from the OSC in connection with the requirements to obtain approval by the board of directors of TSX.

Reasons for the Amendments

The Amendments are being made in response to industry changes in North America to move to a cycle where settlement occurs one trading day after the trade date ("T+1"), as set out in CSA Staff Notice 24-318 -- Preparing for the Implementation of T+1 Settlement (the "CSA Staff Notice").

Summary of the Amendments

Amendments to Rules 5-103(1), 5-103(2)(a)(i), 5-103(2)(a)(ii), 5-103(2)(b)(i), 5-103(b)(ii), 5-103(2)(c), 5-301(2), and 5-301(9) are being made to conform to applicable amendments being made in North America to move to T+1 as set out in the CSA Staff Notice.

Text of the Amendments

The Amendments are set out as blacklined text at Appendix A. For ease of reference, a clean version of the Amendments is set out at Appendix B.

Timing

The Amendments become effective May 27, 2024.

APPENDIX A

BLACKLINE OF HOUSEKEEPING AMENDMENTS TO TORONTO STOCK EXCHANGE RULE BOOK

Rule 5-103 Settlement of Exchange Trades

(1) Exchange trades in securities shall settle on the secondfirst Settlement Day after the trade date, unless otherwise provided by the Exchange or the parties to the trade by mutual agreement.

(2) Notwithstanding Rule 5-103(1), unless otherwise provided by the Exchange or the parties to the trade by mutual agreement:

(a) trades on a when issued basis made:

(i) prior to the first Trading Day before of the anticipated date of issue of the security shall be settled on the anticipated date of issue of such security, and

(ii) on or after the first Trading Day before the anticipated date of issue of the security shall settle on the secondfirst settlement day after the trade date, provided if the security has not been issued on the date for settlement such trades shall be settled on the date that the security is actually issued;

(b) trades for rights, warrants and installment receipts made:

(i) on the second and first Trading Day before the expiry or payment date, shall be cash trades for next day settlement, and Repealed (May 27, 2024)

(ii) on expiry or payment date shall be cash trades for immediate settlement and trading shall cease at 12:00 Noon (unless the expiry or payment time is set prior to the close of business in which case trading shall cease at the close of business on the first Trading Day preceding the expiry or payment), provided selling Participating Organizations must have the securities that are being sold in their possession or credited to the selling account's position prior to such sale; and

(c) cash trades in securities for next day delivery shall be settled through the facilities of the Clearing Corporation on the first settlement cycle following the date of the trade or, if applicable, over-the-counter, by noon of the first settlement day following the trade; and Repealed (May 27, 2024)

(d) cash trades in securities that have been designated by the Exchange for same day settlement shall be settled by over-the-counter delivery no later than 2:00 p.m. on the trade day.

(3) Notwithstanding Rule 5-103(1), an Exchange Contract may specify delayed delivery which shall provide the seller with the option to deliver at any time within the period specified in the contract, and, if no time is specified, delivery shall take place at the option of the seller within thirty days from the date of the trade unless the parties by mutual agreement specify a delivery date more than thirty days from the date of the trade.

Amended (September 5, 2017 and May 27, 2024)

[...]

DIVISION 3 -- CLOSING OUT CONTRACTS

Rule 5-301 Buy-Ins

[...]

(2) Security Loans

In the absence of any agreement to the contrary, a loan of securities between Participating Organizations may be called through service of notice in writing of termination of the loan to the borrowing Participating Organization and the borrowing Participating Organization shall return securities of the same class as those loaned in the specified quantity by the close of business on the secondfirst Settlement Day following the date of receipt of such notice.

[...]

(9) Settlement

Unless otherwise required or agreed to by the Exchange, a buy-in shall be executed on a cash basis for cash samenext day delivery.

Amended (April 18, 2019 and May 27, 2024)

APPENDIX B

CLEAN VERSION OF HOUSEKEEPING AMENDMENTS TO TORONTO STOCK EXCHANGE RULE BOOK

Rule 5-103 Settlement of Exchange Trades

(1) Exchange trades in securities shall settle on the first Settlement Day after the trade date, unless otherwise provided by the Exchange or the parties to the trade by mutual agreement.

(2) Notwithstanding Rule 5-103(1), unless otherwise provided by the Exchange or the parties to the trade by mutual agreement:

(a) trades on a when issued basis made:

(i) prior to the first Trading Day of the anticipated date of issue of the security shall be settled on the anticipated date of issue of such security, and

(ii) on or after the first Trading Day before the anticipated date of issue of the security shall settle on the first settlement day after the trade date, provided if the security has not been issued on the date for settlement such trades shall be settled on the date that the security is actually issued;

(b) trades for rights, warrants and installment receipts made:

(i) Repealed (May 27, 2024)

(ii) on expiry or payment date shall be cash trades for immediate settlement and trading shall cease at 12:00 Noon (unless the expiry or payment time is set prior to the close of business in which case trading shall cease at the close of business on the first Trading Day preceding the expiry or payment), provided selling Participating Organizations must have the securities that are being sold in their possession or credited to the selling account's position prior to such sale; and

(c) Repealed (May 27, 2024)

(d) cash trades in securities that have been designated by the Exchange for same day settlement shall be settled by over-the-counter delivery no later than 2:00 p.m. on the trade day.

(3) Notwithstanding Rule 5-103(1), an Exchange Contract may specify delayed delivery which shall provide the seller with the option to deliver at any time within the period specified in the contract, and, if no time is specified, delivery shall take place at the option of the seller within thirty days from the date of the trade unless the parties by mutual agreement specify a delivery date more than thirty days from the date of the trade.

Amended (September 5, 2017 and May 27, 2024)

[...]

DIVISION 3 -- CLOSING OUT CONTRACTS

Rule 5-301 Buy-Ins

[...]

(2) Security Loans

In the absence of any agreement to the contrary, a loan of securities between Participating Organizations may be called through service of notice in writing of termination of the loan to the borrowing Participating Organization and the borrowing Participating Organization shall return securities of the same class as those loaned in the specified quantity by the close of business on the first Settlement Day following the date of receipt of such notice.

(9) Settlement

Unless otherwise required or agreed to by the Exchange, a buy-in shall be executed for cash same day delivery.

Amended (April 18, 2019 and May 27, 2024)

 

TSX Inc. -- Proposed Amendments and Request for Comments -- Notice

NOTICE OF PROPOSED AMENDMENTS AND REQUEST FOR COMMENTS

TSX INC.

TSX Inc. ("TSX" or "we") is publishing this Notice of Proposed Amendments and Request for Comments in accordance with the "Process for the Review and Approval of Rules and the Information Contained in Form 21-101F1 and the Exhibits Thereto" regarding amendments to the Toronto Stock Exchange Rule Book (the "TSX Rules") to facilitate proposed changes to Contingent Option Trades (as defined below) linked to trades of options on the Montreal Exchange ("MX"), all as described below.

Market participants are invited to provide comments. Comments should be in writing and delivered by April 22, 2024 to:

Joanne Sanci

Senior Counsel, Regulatory Affairs

TMX Group

100 Adelaide Street West, Suite 300

Toronto, Ontario M5H 1S3

Email: tsxrequestforcomments@tsx.com

A copy should also be provided to:

Market Regulation Branch

Ontario Securities Commission

20 Queen Street West

Toronto, Ontario M5H 3S8

Email: marketregulation@osc.gov.on.ca

Comments will be made publicly available unless confidentiality is requested. Upon completion of the review by staff at the Ontario Securities Commission ("OSC"), and in the absence of any regulatory concerns, a notice will be published to confirm approval by the OSC.

Background, Outline and Rationale for the Amendments

Contingent Option Trades play a pivotal role in the strategic operations of many market participants. A "Contingent Option Trade" is the trade of securities on TSX (that are underlying an option traded on MX) that are effected as part of a pre-existing MX Trade (as defined below).

Currently, Contingent Option Trades are resource intensive and a manual process for both TMX staff and MX clients. To effect a Contingent Option Trade, an MX client ("Client A") is required to contact a market supervisor of MX and indicate that they wish to effect a trade of the option as a cross. Pursuant to the applicable MX rules, 50% of the volume (the "50% MX Rule") must be made available to qualified market makers on MX before a cross can be effected. The market supervisor of MX will telephone the qualified market makers to "shop around" the trade. If there are no interested parties, then Client A can complete the full volume of the option cross trade. If the MX market supervisor finds an interested MX market maker ("Client B"), then Client B will be the opposite side of the option trade. When a match is found (whether with Client B or the full cross for Client A), a timestamp is created for that match (the "MX Trade"). The MX market supervisor then contacts TSX staff (via email and telephone) to advise and provide details of the MX Trade including the timestamp. TSX staff will then manually effect the trade of the underlying equities securities on TSX at the timestamp between Client A and Client B (or in the case of a full cross, just Client A). Client A and Client B are always approved participants of MX and TSX. Under the current procedures, a Contingent Option Trade must occur within the existing market price (the "NBBO") for the underlying security at the timestamp.

Given that price discovery occurs on MX and the relative price of the options instrument to the underlying securities is what drives trading on Contingent Option Trades, TSX is proposing to amend the Contingent Option Trade procedures to allow for the trade in securities on TSX to execute at a price within the daily high and low price, which may be outside the NBBO (the "COT Amendments"). Contingent Option Trades will continue not setting the last sale, open, close, high or low prices, and will be disseminated using the existing "MS" special terms marker on the TSX public market data feeds. The COT Amendments seek to provide TSX participants and MX members with the flexibility and confidence to effect both the equity and derivative components of a Contingent Option Trade with ease. The COT Amendments are a result of client demand and aim to align our Contingent Option Procedures with other markets who offer this functionality as described in the MX proposal found here.

The scenario below illustrates how a Contingent Option Trade would be treated under the current procedures and under the Amendments:

• A dealer creates the following contingent option instrument on MX:

• Expiry date: June 1, 2024

• Strike Price: $43.00

• Call option

• Underlying Equities Price: $42.20

• Delta: 45%

• If the option quantity traded is 200 call option contracts, the underlying equities trade that would be routed to TSX is 9,000 shares at $42.20 per share calculated as follows:

• 200 options x 100 (option multiplier) x 45% (delta) = 9,000 shares at $42.20 per share.

In this scenario, if the NBBO was $42.00 at the time of the trade, the equities portion would not trade under the current procedures as the price for the underlying equities security is outside of the NBBO. However pursuant to the COT Amendments, the underlying equities securities would now trade even though the price is outside of the NBBO.

In connection with COT Amendments, TSX is also proposing to automate the process for Contingent Option Trades (the "Automation Amendments", and together with the COT Amendments, the "Amendments").

While Rule 4-1103 -- Exchange for Physicals and Contingent Option Trades of the TSX Rules ("Rule 4-1103") permits the Amendments, TSX is proposing that the policies and procedures as set out in Policy 4-1103 Exchange for Physicals and Contingent Option Trades be removed from the TSX Rules. TSX is of the view that these policies and procedures are not required to be reflected in the TSX Rules. The applicable policies and procedures will be communicated to participants from time to time, and can be found in the Order Types and Functionality Guide.

Blackline of Amendments

A blackline of the Amendments against the existing rules is attached as Appendix A hereto for ease of reference.

Analysis of Impacts

(i) Impact on Market

TSX anticipates that the Amendments will have a positive impact on the market structure, members, investors, issuers or the capital markets. As noted above, the Amendments will provide MX clients, and ultimately TSX clients, with the flexibility and confidence to effect both the MX Trade and Contingent Option Trade.

TSX believes that the Amendments are fair and reasonable, and will not create barriers to access.

For the reasons mentioned above, TSX is of the view that the Amendments are not contrary to the public interest. While the Contingent Option Trades may be within the TSX's daily high and low price, the parties to the trade are the same parties to the MX Trade who have made informed decisions in respect of both the MX Trade and the Contingent Option Trade. In addition, Contingent Option Trades do not set the "last sale" price for securities on TSX.

(ii) Impact on Members and Service Vendors

The Amendments are expected to have a positive impact on members.

TSX does not require any systems change for TSX clients. However, we understand that the changes proposed by MX will require significant systems changes for MX members.

In order to ensure client readiness and a seamless transition with no impact on the market, even after the Amendments are implemented, TSX anticipates that there will be a six-month period by which Contingent Option Trades could be effected manually in the same manner as they are today. TSX staff will support this transition period by manually handling any of the trades until the transition period is completed. There are no changes required by TSX clients.

Under the automated process, Contingent Option Trades will continue to be marked as "MS".

(iii) Impact on Compliance with Applicable Securities Laws

The Amendments will not impact TSX's compliance with applicable securities laws requirements for fair access and maintenance of fair and orderly markets. As noted above, TSX is of the view that the Amendments will support the maintenance of fair and orderly markets.

Consultations Undertaken in Formulating the Amendments

TSX did not conduct any consultations in regards to the Amendments.

However, TSX understands that MX consulted its members regarding its proposed amendments, which included automating Contingent Option Trades.

Alternatives Considered

No alternatives were considered.

Timing

Following receipt of regulatory approval, TSX intends to implement the Amendments in Q2 2024, subject to MX members having made the necessary changes to take into account the Amendments.

APPENDIX A

BLACKLINED VERSION OF TSX RULES REFLECTING THE AMENDMENTS

Rule 4-1103 Exchange for Physicals and Contingent Option Trades

Orders which are conditional upon a simultaneous trade in a derivative on another exchange shall be special terms trades and shall only be traded in accordance with the prescribed procedures and conditions as may be amended by the Exchange from time to time.

Amended (XX, 2024)

Policy 4-1103 Exchange for Physicals and Contingent Option Trades

(1) Application

This Policy applies to each person who has been granted trading access to the Exchange and who seeks to enter an order on the Exchange for a security which is contingent upon the execution of one or more trades in an option on the Montreal Exchange or who seeks to exchange an index futures contract that is traded on the Exchange for the equivalent number of securities underlying the futures contract (including an equivalent number of index participation units) on a contingent basis.

(2) Procedure for Contingent Option Trade

If a person to whom this Policy applies seeks to enter an order on the Exchange for a security which is contingent upon the execution of one or more trades in an options market, the following rules shall apply:

(a) the trade in the security and the offsetting option trades must be for the same account;

(b) the option portion of the trade must be approved by a floor governor or other exchange official of the stock exchange on which the option is listed and such approval shall be evidenced by the initials of the governor or official on the options trade ticket;

(c) the options trade ticket shall be time stamped;

(d) the person shall telephone Trading and Client Services of the Exchange at (416) 947-4440 and provide the details of the contingent trade including the name of the person with trading access to the Exchange with whom the contingent trade has been made;

(e) the trade in the security must be within the existing market for the security on the Exchange at the time of the telephone call to Trading and Client Services;

(f) a copy of the options trade ticket as initialled by a floor governor or exchange official and time stamped shall be provided by facsimile transmission to Trading and Client Services at (416) 947- 4280 within ten minutes following the time stamp on the ticket; and

(g) provided the trade has been made and reported in accordance with the above rules, the Exchange shall manually execute the trade in the security as a special terms trade with the marker "MS" effective as of the time stamped on the option trade ticket.

(3 Procedure for Exchange for Physicals

If a person to whom this Policy applies seeks to exchange a futures contract for the equivalent number of securities underlying the futures contract (including an equivalent number of units of the applicable Index Participation Fund or mutual fund), the following provisions shall apply:

(a) the trade in the security and the trade in the futures contract must be for the same account;

(b) the equities component may be made as a cross or as a trade between persons with trading access on the Exchange;

(c) the futures portion of the trade must be approved by a floor governor or other exchange official of the stock exchange on which the future is listed and such approval shall be evidenced by the initials of the governor or official on the futures trade ticket;

(d) the futures trade ticket shall be time stamped;

(e) the person shall telephone Trading and Client Services of the Exchange at (416) 947-4440 and provide the details of the exchange including the name of the person with trading access to the Exchange with whom the exchange has been made;

(f) the trade in the securities made during the Regular Session will be at the bid price of the securities on the Exchange at the time of the telephone call to Trading and Client Services and the trade in securities made after the end of the Regular Session will be at the last sale price of the securities on the Exchange provided that where the last sale price is outside of the closing quotes for any security the price for that security shall be the bid or offer which is closest to the last sale price;

(g) a copy of the futures trade ticket as initialled by a floor governor or exchange official and time stamped shall be provided to Trading and Client Services within ten minutes following the time stamp on the ticket;

and provided the trade has been made and reported in accordance with the above rules, the Exchange shall manually execute the trade in the securities as a special terms trade with the marker "MS" effective as of the time stamped on the futures trade ticket.

Amended (February 24, 2012 and March 1, 2021)

 

Cboe Canada Inc. -- Housekeeping Rule Amendment to the Trading Policies -- Notice

CBOE CANADA INC.

NOTICE OF HOUSEKEEPING RULE AMENDMENT TO THE TRADING POLICIES

Introduction

In accordance with the Process for the Review and Approval of Rules and the Information Contained in Form 21-101F1 and the Exhibits Thereto, Cboe Canada Inc. ("Cboe Canada" or the "Exchange") has adopted certain amendments to its trading rules (the "Trading Policies") that are of a housekeeping nature (collectively, the "Housekeeping Rule Amendment"). The Ontario Securities Commission has not disagreed with the housekeeping categorization. The Housekeeping Rule Amendment comprises the amendments described below.

Housekeeping Rule Amendment and Rationale for Classification

The Housekeeping Rule Amendment comprises the following:

• The correction of a clerical error to reflect the actual (ongoing) practice of limiting the number of Trader IDs available for each Odd Lot Liquidity Provider ("OLLP") sending orders to the MATCHNow Odd Lot Facility (consistent with the description of this limitation in section 6.1 of the MATCHNow In Detail Specification, available at https://cdn.cboe.com/resources/membership/MN_In_Detail_Specification-EN.pdf), along with an increase in the applicable limit from 15 Trader IDs to 25 Trader IDs; and

• Various typographical and other non-substantive corrections, as described further in the table below.

The Housekeeping Rule Amendment does not have a significant impact on the Exchange, its market structure, members, issuers, investors or the Canadian capital markets, and it is consistent with the types of changes described in subsection 6.1(5) of Companion Policy 21-101CP to National Instrument 21-101 Marketplace Operation.

Additional details are provided in the table below.

	Trading Policies Section	Amendment		Rationale
1.	Part I. Definitions and Interpretations	"Liquidity Taking Order" means an active Limit or Market FOK/IOC order entered in any of the Trading Books (including a "Market Flow Order" on the MATCHNow Trading Book, sometimes referred to as an "Immediate or Cancel" or "IOC" order, as further described in the In Detail Specification, which is an appendix to the Exchange's Trading Functionality Guide).		To reflect the fact that the MATCHNow In Detail Specification has remained a stand-alone Cboe Canada document.
	1.01 Definitions
2.	Part I. Definitions and Interpretations	"UMIR" means the Universal Market Integrity Rules adopted by CIRO as amended, supplemented, and in effect from time to time.		To make a grammatical (punctuation) change for clarity.
	1.01 Definitions
3.	Part IX. Trading in MATCHNow	Commentary		To reflect the fact that the MATCHNow In Detail Specification has remained a stand-alone Cboe Canada document.
	9.02 Commentary	For additional defined terms and other functionality information unique to the MATCHNow Trade Book, please see the In Detail Specification, which is an appendix to the Exchange's Trading Functionality Guide).
4.	Part IX. Trading in MATCHNow	(1)	In MATCHNow, orders from all accounts may interact with each other, unless otherwise specified in the In Detail Specification, which is an appendix to the Exchange's Trading Functionality Guide).	To reflect the fact that the MATCHNow In Detail Specification has remained a stand-alone Cboe Canada document.
	9.04(1)
5.	Part IX. Trading in MATCHNow	(d)	Each There is no limit on the number of Trader IDs available to each Odd Lot Liquidity Provider is limited to a maximum of 25 Trader IDs at any given time for sending orders to the MATCHNow Odd Lot Facility, provided that each Trader ID represents an individual DEA Client, a distinct proprietary trading desk or algorithmic trader of the Member, and/or an individual Approved Trader.	To correct a clerical error (i.e., an incorrect suggestion that no limit applies to the number of Trader IDs for each OLLP) and increase the applicable limit on the number of Trader IDs per OLLP from 15 to 25
	9.07(4)(d)
6.	Part IX. Trading in MATCHNow	9.08 Cboe BIDS Canada (Conditionals)		To simplify the title of Section 9.08 and make a consequential adjustment to the wording of Section 9.08(1)
	9.08 Cboe BIDS Canada 9.08(1)	(1)	Conditionals may be originated by a Member or a Sponsored User through Cboe BIDS Canada.
7.	Part IX. Trading in MATCHNow	Replace the erroneous term "Subscriber" with the correct term "Member" throughout the respective Commentary for the aforementioned Sections.		To make typographical corrections
	9.08(1) Commentary
	9.08(2) Commentary
	9.08(5) Commentary
8.	Part IX. Trading in MATCHNow	Commentary		To reflect the fact that the MATCHNow In Detail Specification has remained a stand-alone Cboe Canada document.
	9.08(6) Commentary	For up-to-date details on how each Sponsored User feature works, please see the In Detail Specification, which is an appendix to the Exchange's Trading Functionality Guide).
9.	Part XI. General Provisions Regarding Market Making	(4)	Any reassignment will be made in accordance with the Exchange procedures set out under this Section 1011.07.	To correct the numbering of the cross-reference
	11.07(4)
10.	Part XIII. Clearing and Settlement	13.01 Clearing and Settlement		To correct the numbering of each cross-reference
		[...]
	13.01(5)	(5)	Members shall obtain agreement from their clients that the client will provide instructions with respect to the receipt or delivery of the securities to the settlement agent promptly upon receipt by the client of the confirmation referred to in Section 1213.01(4) and that the client will ensure that its settlement agent affirms the transaction in accordance with National Instrument 24-101 Institutional Trade Matching and Settlement.
	13.03(2)
	13.03(3)
	13.05(2)
	13.05(3)
		13.03 Settlement of the Exchange Trades of Listed Securities
		[...]
		(2)	Notwithstanding Section 1213.03(1), unless otherwise provided by the Exchange or the parties to the trade by mutual agreement: [...]
		(3)	Notwithstanding Section 1213.03(1), a trade on the Exchange may specify delayed delivery, which gives the seller the option to deliver at any time within the period specified in the contract, and, if no time is specified, delivery will be at the option of the seller within thirty days from the date of the trade.
		13.05 Failed Trades in Rights, Warrants, and Instalment Receipts
		[...]
		(2)	Where a demand has been made in accordance with Section 1213.05(1), payment by purchasing Members for [...]
		(3)	Where a demand has not been made in accordance with Section 1213.05(1), settlement shall be in accordance with normal settlement procedures, but delivery of the subject securities, as the case may be, is not required.
11.	Various Parts	Correct the use and capitalization of the word "Section" throughout the Trading Policies and make other minor typographical and/or grammatical corrections.		To improve internal consistency
	1.02(3)
	2.02(2)
	3.07(1)
	4.01(3) and (5)
	4.02 Commentary
	5.09(1)
	7.07(6)
	7.08(1)
	9.07(5)
	11.04(3) Commentary
	15.01(2)
	16.01(4)

The Trading Policies can be viewed at: https://www.cboe.ca/en/resources

The Housekeeping Rule Amendment is effective as of the date hereof.

 

Cboe Canada Inc. -- Proposed Public Interest Rule Amendments to the Cboe Canada Trading Policies -- Request for Comments

CBOE CANADA INC.

PROPOSED PUBLIC INTEREST RULE AMENDMENTS TO THE CBOE CANADA TRADING POLICIES

REQUEST FOR COMMENTS

Introduction

Cboe Canada Inc. ("Cboe Canada" or the "Exchange") is publishing certain proposed public interest rule amendments (the "Public Interest Rule Amendments") to Cboe Canada's trading rules (the "Trading Policies") in accordance with the Process for the Review and Approval of Rules and the Information Contained in Form 21-101F1 and the Exhibits Thereto, which is attached as Schedule 4 to the Exchange's recognition order. The Public Interest Rule Amendments were filed with the Ontario Securities Commission (the "OSC") and are being published for comment. A description of the Public Interest Rule Amendments is set out below, and the text of the Public Interest Rule Amendments is set out in Appendix A. Subject to any changes resulting from the comments received, the Public Interest Rule Amendments will be effective upon publication of the notice of approval on the OSC's website.

I. Reaffirmation of Broker Preferencing over MMVA on NEO-L and NEO-N in All Circumstances

Description of the Public Interest Rule Amendment

We are proposing to reaffirm the predominance of broker preferencing as the first matching priority on Cboe Canada's NEO-L and NEO-N Trading Books (as those terms are defined in Section 1.01 of the Trading Policies), including in cases where Market Maker Volume Allocation (or "MMVA") would otherwise prevail.

The main purpose of the proposed change is to ensure that broker preferencing is always predominant on NEO-L and NEO-N-even in edge cases where a Designated Market Maker's ("DMM") resting order would be entitled to matching priority based on MMVA, as is the case today under the existing matching logic of the NEO-L and NEO-N Trading Books.

The proposed change does not require any modification to the main text of Sections 6.07 and 8.04 of the Trading Policies, which describe matching priorities on NEO-L and NEO-N, respectively; rather, it is reflected in amendments to the commentary for those two rules, which call out specific edge cases. The amendments include a clarification for how MMVA works (i.e., to expressly acknowledge that DMM orders are a subset of Latency Sensitive Trader ("LST") orders and that broker preferencing prevails over MMVA).

Expected Date of Implementation

We are seeking to implement the Public Interest Rule Amendment in Q2 of 2024.

Rationale and Relevant Supporting Analysis

The proposed change is in line with the original intention of the Exchange for NEO-L and NEO-N and with the general thrust of the matching priorities for those two Trading Books as already outlined in the main text of Sections 6.07 and 8.04-namely, to respect broker preferencing above all other matching priority factors. Furthermore, we believe it is in line with the expectations of our Members, not to mention a positive factor for execution quality overall. See, e.g., Joint CSA/IIROC Staff Notice 23-327, Update on Internalization within the Canadian Equity Market (2020), 43 OSCB 6504 (Aug. 20) (available at https://www.osc.ca/sites/default/files/2020-11/csa_20200820_23-327_csa-iiroc-internalization-canadian-equity-market.pdf), s. IV ("[B]roker preferencing is a longstanding part of Canadian market structure. As currently functioning, broker preferencing may allow dealers to benefit from interaction with their own orders, and may also benefit individual clients with improved execution quality.").

Expected Impact on Market Structure, Members, Investors, Issuers and Capital Markets

We do not expect this proposed change to have a negative impact on market structure, our Members, or any other stakeholders.

Expected Impact on Exchange's Compliance with Ontario Securities Law and on Requirements for Fair Access and Maintenance of Fair and Orderly Markets

The proposed change will not impact Cboe Canada's compliance with Ontario securities law and, in particular, the requirements for fair access and maintenance of fair and orderly markets. The change will be well publicized in advance of implementation and will simply result in a different matching allocation in certain edge cases going forward.

Expected Impact on the Systems of Members or Service Vendors

We do not expect any impact on the systems of Members or service vendors, as no systems changes will be required on their end.

Alternatives Considered

No alternatives were considered.

New Feature or Rule

Broker preferencing is a long-standing and fundamental principle of trading on Canadian marketplaces, and the proposed change simply further aligns NEO-L and NEO-N with that principle.

II. Removal of Matching Priority Factors to Make NEO-D a Simple Price-Time Priority Model

Description of the Public Interest Rule Amendments

We are proposing to remove broker preferencing, NEO Trader order priority, and Size-Time (as those terms are used and/or defined in the Trading Policies) as matching priorities in the NEO-D Trading Book, resulting in a simple price-time priority model. The proposed change is reflected in amendments to Section 7.04, namely, the replacement of the former paragraphs (a), (b), (c) with a simple description of the new price-time priority that will apply to continuous trading on NEO-D. We have also proposed a consequential change (a minor deletion) in the defined term "Size-Time" in Section 1.01.

Expected Date of Implementation

We are seeking to implement the Public Interest Rule Amendment in Q2 of 2024.

Rationale and Relevant Supporting Analysis

We have received several requests from Cboe Canada Members for the proposed change to NEO-D. In addition, the proposed change will help to differentiate the functionality of NEO-D (a dark book) from that of the Exchange's other dark book-the MATCHNow Trading Book-thereby providing our clients with a more diverse array of service offerings to meet their needs.

Expected Impact on Market Structure, Members, Investors, Issuers and Capital Markets

We do not expect this proposed change to have a negative impact on market structure, our Members, or any other stakeholders. We believe the simpler matching priority being proposed for NEO-D will offer Members a more meaningful alternative between the NEO-D and MATCHNow Trading Books by making the respective matching logic of the two books more distinctive from one another. Furthermore, the removal of broker preferencing from NEO-D may help small and mid-sized dealers compete more successfully with larger dealers for liquidity on the new NEO-D Trading Book, as compared with other dark (or lit) venues. We believe this is a fair and worthwhile counterbalance to the predominance of broker preferencing on Canadian marketplaces as a whole.

Expected Impact on Exchange's Compliance with Ontario Securities Law and on Requirements for Fair Access and Maintenance of Fair and Orderly Markets

The proposed change will not impact Cboe Canada's compliance with Ontario securities law and, in particular, the requirements for fair access and maintenance of fair and orderly markets. The change will be well publicized in advance of implementation and will result in a different (simpler) matching allocation going forward, as a result of the proposed removal of certain existing matching priorities. The differentiation of matching priorities and other key features is summarized in the following table:

Feature	NEO-D Current	NEO-D Proposed	MATCHNow
Matching Model	Midpoint & MPI matching only -- with ability to segment on size ("MAQ") and counterparty election	Back to basics	Price improvement for active order flow
		(No order preferencing, including no broker preferencing -- price/time allocation only)	Midpoint, MPI, and At The Touch trading
	Auto-ex odd lots		Odd Lot Liquidity Provider program
			Size discovery
			Cboe BIDS Canada (Conditionals) integration
Allocation	Price / Broker / Size-Time{1} for Neo Trader / Other	Price / Time	Regular: Broker / Pro-rata
			Conditional: Price / Broker / Size / Time
Pricing	Inverted for Retail Fee-Fee for Non-Retail	Inverted for Retail Fee-Fee for Non-Retail{2}	Fee -- Fee

We note that, given the much larger size of order flow on the NEO-L and NEO-N Trading Books as compared to NEO-D{3}, the proposed changes to the latter Trading Book will have no material impact whatsoever on the overall approach of the Exchange, which will continue to promote, through NEO-L and NEO-N, a more level playing field between high-frequency traders (referred to as "Latency Sensitive Traders" or "LSTs" in the Trading Policies) and traders who work on behalf of long-term investors (referred to as "NEO Traders" in the Trading Policies).

Expected Impact on the Systems of Members or Service Vendors

We do not expect any impact on the systems of Members or service vendors, as no systems changes will be required on their end.

Alternatives Considered

No alternatives were considered.

New Feature or Rule

The CSE2 order book of the Canadian Securities Exchange is based on a similar simple price-time priority matching logic, with no broker preferencing. See, e.g., In re Canadian Securities Exchange -- Significant Change Subject to Public Comment -- Amendments to Trading System Functionality & Features -- Notice and Request for Comment, (2022), 45 OSCB 2437 (Mar. 3) at 2438 ("[CSE2] [t]rades both lit and dark orders with Price/Time priority. There is no broker priority ('broker preferencing').") (available at https://www.osc.ca/sites/default/files/2022-03/cse_20220303_significant-change-subject-to-public-comment.pdf), approved by In re Canadian Securities Exchange -- System Functionality -- Second Trading Book -- CSE2 -- Notice of Approval (2022), 45 OSCB 7835 (Sept. 1) (available at https://www.osc.ca/sites/default/files/2022-09/cse_20220901_second-trading-book.pdf).

Comments

Comments should be provided, in writing, no later than April 22, 2024, to:

Joacim Wiklander

Interim Chief Executive Officer and President

Cboe Canada Inc.

65 Queen Street West

Suite 1900

Toronto, ON M5H 2M5

jwiklander@cboe.com

with a copy to:

Market Regulation Branch

Ontario Securities Commission

20 Queen Street West

22nd Floor

Toronto, ON M5H 3S8

marketregulation@osc.gov.on.ca

Please note that, unless confidentiality is requested, all comments will be publicly available.

APPENDIX A

TEXT OF THE PUBLIC INTEREST RULE AMENDMENT

Trading Policies Section	Amendment
Part I. Definitions and Interpretations	"Size-Time" means the following allocation methodology utilized in NEO-D and NEO-N when multiple potential matches have been identified at a given price:
1.01 Definitions			(1)	if an incoming order can be completely filled by a single resting order, that resting order will trade; or
			(2)	if more than one resting order is large enough to completely fill the incoming order, the lowest Size-Time Rank will determine which one of those orders will trade; or
			(3)	if no resting orders are large enough to completely fill the incoming order, the Size-Time Rank of all orders at that price level will determine in which order they will trade from lowest to highest.
Part VI. Trading in NEO-L	Commentary
6.07(2)	A DMM order can only receive MMVA priority over other LST orders, including in certain circumstances where both offsetting DMM and LST orders are by the same Member and there are no offsetting NEO Trader orders in the Trading Bookwhen the LST order is from the same Member as the incoming order. However, for greater clarity, we note that offsetting orders by the same Member always execute first, notwithstanding any other matching priorities, including MMVA.
Part VII. Trading in NEO-D	(4)	A Liquidity Providing Order resting in NEO-D at a particular price will be executed prior to or after any orders at the same price in accordance according to with the followingtime priority rules:
7.04(4)		(a)	against an offsetting order entered in NEO-D by the same Member (if there is more than one, then against offsetting NEO TraderTM orders by the same Member according to Size-Time priority of the offsetting order, then all other offsetting orders by the same Member, according to Size-Time priority of the offsetting order, provided none of the orders is a jitney order); then
		(b)	against offsetting NEO TraderTM orders in NEO-D, according to Size-Time priority of the offsetting order; then
		(c)	against offsetting orders in NEO-D according to Size-Time priority.
Part VIII. Trading in NEO-N	Commentary
8.04(3)	A DMM order can only receive MMVA priority over other LST orders, including in certain circumstances where both offsetting DMM and LST orders are by the same Member and there are no offsetting NEO Trader orders in the Trading Bookwhen the LST order is from the same Member as the incoming order. However, for greater clarity, we note that offsetting orders by the same Member always execute first, notwithstanding any other matching priorities, including MMVA.

{1} Size-Time ranking based on order size, time entered, and time of last partial fill.

{2} We are currently studying potential changes to fees applicable to the different types of order flow on NEO-D; any such changes would be part of a future Form 21-101F1 amendment.

{3} For 2023, in terms of volume traded, NEO-L and NEO-N flow combined represented approximately 118 times the flow of NEO-D. Source: Canadian Investment Regulatory Organization, Reports of Market Share by Marketplace (https://www.iiroc.ca/markets/reports-statistics-and-other-information/reports-market-share-marketplace).