Arrow Hedge Partners Inc. - ss. 38(1) of the CFA

Headnote

Subsection 38(1) of the Commodity Futures Act(Ontario) (the CFA) - relief from the registration requirementsof paragraph 22(1)(b) of the CFA granted to an extra-provincialadviser in respect of the provision of investment advisory servicesrelating to commodity futures activities to a Fund in Ontario,subject to certain terms and conditions in which Arrow HedgePartners Inc. accepts legal responsibility for the advisoryservices provided under such exemption.

Statutes Cited

Commodity Futures Act, R.S.O. 1990. c. C.20,as amended, 22(1)(b), 38(1).

OSC Rule 35-502 -- Non-Resident Advisors.

IN THE MATTER OF

THE COMMODITY FUTURES ACT,R.S.O. 1990,

CHAPTER C.20, AS AMENDED (THE"CFA")

AND

IN THE MATTER OF

ARROW HEDGE PARTNERS INC.

ORDER

(Subsection 38(1) of the CFA)

UPON the application of Arrow Hedge PartnersInc. (the Applicant), the manager of Arrow ClocktowerPlatinum Global Fund (the Fund), to the Ontario SecuritiesCommission (the Commission) for an Order pursuant tosubsection 38(1) of the CFA that Clocktower Capital LLC (Clocktower)and its officers, partners, directors and representatives beexempt from the registration requirements of subsection 22(1)(b)of the CFA respecting investment advisory services providedto the Applicant with respect to commodity futures activitiesof the Fund, subject to certain terms and conditions (the Order);

AND UPON considering the applicationand the recommendation of staff of the Commission;

AND UPON the Applicant having representedto the Commission that:

1. The Applicant is a corporation incorporatedunder the laws of Ontario with its head office located inToronto, Ontario.

2. The Applicant is registered under the SecuritiesAct (Ontario) (the Act) as an advisor in the categoriesof investment counsel and portfolio manager and as dealerin the category of limited market dealer. The Applicant isregistered under the CFA as an advisor in the category ofcommodity trading manager.

3. The Applicant is the manager and trusteeof the Fund.

4. The Fund is an unincorporated open-endedmutual fund created under the laws of Ontario and is offeredin all Canadian provinces and territories in accordance withprivate placement exemptions.

5. The Applicant is responsible for providinginvestment advice to the Fund.

6. The Applicant retains the services of Clocktowerin connection with the management of the investment portfolioof the Fund. In retaining Clocktower, the Applicant complieswith the requirements of Section 7.3 of Ontario SecuritiesCommission Rule 35-502 (the Rule).

7. Clocktower is a limited liability companylocated in California.

8. The Applicant is proposing to permit Clocktowerto advise the Applicant in respect of commodity futures activitiesof the Fund (Proposed Services).

9. The Applicant has entered into a writtenagreement with Clocktower outlining the duties and obligationsof Clocktower.

10. The Applicant has contractually agreedwith the Fund to be responsible for any loss that arises outof the failures of Clocktower in connection with the ProposedServices;

- to exercise the powers and discharge theduties of its office honestly, in good faith and in thebest interests of the Applicant and the Fund; or

- to exercise the degree of care, diligenceand skill that a reasonably prudent person would exercisein the circumstances.

11. The Applicant will not be relieved bythe Fund from its responsibility for any loss described inparagraph 10.

12. The offering memorandum for the Fund disclosesthat the Applicant is responsibille for any advice given byClocktower and that there may be difficulty in enforcing anylegal rights against Clocktower because Clocktower is residentoutside of Canada and all or a substantial portion of itsassets are situated outside of Canada.

AND UPON the Commission being satisfiedthat to do so would not be prejudicial to the public interest;

IT IS RULED, pursuant to subsection 38(1)of the CFA, that Clocktower and its officers, partners, directorsand representatives are not subject to the requirements of paragraph22(1)(b) of the CFA in respect of the Proposed Services, providedthat:

(a) the obligations and duties of Clocktowerare set out in a written agreement with the Applicant;

(b) the Applicant contractually agrees withthe Fund to be responsible for any loss that arises out ofthe failure of Clocktower:

(i) to exercise the powers and dischargethe duties of its office honestly, in good faith and inthe best interests of the Applicant and the Fund; and

(ii) to exercise the degree of care, diligenceand skill that a reasonably prudent person would exercisein the circumstances;

(c) the Applicant cannot be relieved by theFund from its responsibility of loss under paragraph (b);

(d) the offering documents for the Fund, ifany, disclose that the Applicant has responsibility for anyinvestment advice given by Clocktower and that, to the extentapplicable, there may be difficulty in enforcing any legalrights against Clocktower because Clocktower is resident outsideof Canada and all or a substantial portion of its assets aresituated outside of Canada;

(e) the Applicant maintains its status asa registered commodity trading manager under the CFA; and

(f) this Order shall terminate three yearsfrom the date of the Order.

June 10, 2003.