BMO Nesbitt Burns Inc. and BMO Nesbitt Burns Securities Ltd.

Headnote

Under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations a registered firm must not permit an individual to act as a dealing, advising or associate advising representative of the registered firm if the individual is registered as a dealing, advising or associate advising representative of another registered firm. The Filers are affiliated entities and have valid business reasons for their representatives, within a designated class, to be registered with both firms. The Filers have policies in place to handle potential conflicts of interest. The Filers are exempted from the prohibition. Due to the broader scope of this relief, the decision subject to a sunset clause to permit evaluation of the implementation of the dual registration of individuals.

Applicable Legislative Provisions

Multilateral Instrument 11-102 Passport System, s. 4.7.

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 4.1 and 15.1.

November 3, 2022

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 NESBITT BURNS INC. (NBI) AND BMO NESBITT BURNS SECURITIES LTD. (NBSL, AND TOGETHER WITH NBI, THE FILERS)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for relief from the restriction under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) (such restriction, the Dual-Registration Restriction), pursuant to section 15.1 of NI 31-103, to permit the individuals identified in Schedule "A" to the Application and any future advising, associate advising, and/or dealing representatives (collectively, theRepresentatives) to be registered as an advising representative or associate advising representative of NBSL, as the case may be, and as a dealing representative of NBI (the Relief 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 Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Quebec, Saskatchewan and Yukon (collectively 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 Filers:

1. NBI is a corporation incorporated under the federal laws of Canada. Its head office is located in Toronto, Ontario.

2. NBI carries on business in all of the Jurisdictions with offices located in all of the provinces of Canada.

3. NBI is registered (i) as an investment dealer in each of the Jurisdictions and is a member of the Investment Industry Regulatory Organization of Canada (IIROC); (ii) as a dealer (futures commission merchant) in Manitoba; (iii) as a futures commission merchant in Ontario; (iv) as a derivatives dealer in Québec; and (v) as an investment fund manager in Newfoundland & Labrador, Ontario and Québec.

4. NBI provides the full range of dealer services that IIROC member firms are authorized to provide to retail and institutional clients across Canada.

5. NBI is not registered under U.S. federal securities law or any other applicable U.S. securities law to (and does not) carry on the business of a registered broker-dealer or registered investment adviser in the U.S. NBI does not trade (or provide advice with respect to trading) in securities to, with, or on behalf of clients resident in the U.S. (other than in respect of Canadian tax-advantaged retirement savings plans held by clients resident in the U.S. who were formerly resident in Canada and who have moved to the U.S. with tax-advantaged retirement savings plans). NBI conducts this activity in reliance on an U.S. Securities and Exchange Commission (SEC) registration exemption.

6. NBSL is a direct, wholly-owned subsidiary of NBI. Both NBSL and NBI are wholly-owned indirect subsidiaries of the Bank of Montreal. As such, each of NBSL and NBI are affiliates of the other.

7. NBSL is incorporated under the federal laws of Canada with its head office in Toronto, Ontario.

8. The Filers operate their businesses out of the same premises in all of the provinces of Canada. Wherever NBSL has an office in Canada, NBSL operates out of the same premises as NBI.

9. NBSL is registered with the SEC as an investment adviser under the U.S. Investment Advisers Act of 1940. NBSL is also registered as a broker-dealer under The Securities Exchange Act of 1934 and is a member of the Financial Industry Regulatory Authority (FINRA).

10. NBSL provides discretionary advisory and financial planning services, as well as broker-dealer services, to U.S. clients that are individuals, trusts, non-profits and corporations (the NBSL U.S. Clients). NBSL provides these services to NBSL U.S. Clients from Ontario pursuant to exemptions from the dealer and adviser registration requirements available in OSC Rule 32-505 Conditional Exemption from Registration for United States Broker-Dealers and Advisers Servicing U.S. Clients from Ontario. NBSL provides these services to NBSL U.S. Clients from Jurisdictions other than Ontario pursuant to relief granted by the British Columbia Securities Commission on November 3, 2022.

11. In Canada, NBSL has provided advisory and broker dealer services to clients who have moved to Canada or are temporarily in Canada (the NBSL Canadian Clients) under exemptive relief pursuant to a decision document dated June 2, 2017 and extended on June 2, 2022 (the Prior Decision). Amongst other relief, the Prior Decision provides NBSL with relief from the adviser registration requirement.

12. NBSL will no longer rely on the relief from the adviser registration requirement granted in the Prior Decision. Instead, NBSL has applied for registration as an adviser in the category of portfolio manager in each of Ontario, Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island Québec, Saskatchewan and Yukon in order to permit NBSL to continue to provide portfolio management services to the NBSL Canadian Clients who have moved to Canada. NBSL has been granted relief from the dealer registration requirement pursuant to a decision of the Commission dated November 3, 2022 in order to provide broker-dealer services to NBSL U.S. Clients who are temporarily in Canada.

13. Each Representative will be registered as an advising representative or associate advising representative of NBSL and as a dealing representative of NBI who is authorized under applicable IIROC Rules to provide portfolio management services on behalf of NBI.

14. The Filers have policies and procedures in place that set out under what circumstances an NBI dealing representative can become dually registered with NBSL.

15. On behalf of NBI, the Representatives provide the full range of dealer services that IIROC member firms are authorized to provide to retail and institutional clients across Canada, including acting as portfolio manager to client accounts.

16. On behalf of NBSL with respect to the NBSL U.S. Clients, the Representatives provide discretionary advisory and financial planning services, as well as broker-dealer services, to individuals, trusts, non-profits and corporations. On behalf of NBSL with respect to NBSL Canadian Clients, the Representatives principally provide discretionary advisory services to clients residing in Canada but who were previously resident in the United States in respect of their U.S. tax-advantaged retirement accounts.

17. Each Representative will be registered at both Filers so that clients may continue their established relationship with their Representative as they move between the U.S. and Canada. For this reason, the Filers will from time to time share some clients.

18. Each current Representative is listed in Schedule "A". It is anticipated that any future Representatives that are located in Canada would have similar duties at NBI and NBSL in respect of clients to those described above for the current Representatives.

19. NBI and NBSL have operated their respective businesses relying on individuals acting on behalf of both firms since 2012. Relief from the Dual-Registration Restriction was not required because NBSL was not registered in Canada.

20. The Filers are affiliates and both are indirectly wholly-owned by Bank of Montreal. Accordingly, the dual registration of the Representatives will not give rise to the conflicts of interest present in a similar arrangement involving unrelated, arm's length firms. The interests of the Filers are aligned in conjunction with the services provided to their respective clients and therefore the potential for conflicts of interest arising from the dual registration is mitigated.

21. Each Representative is or will be subject to supervision by each of the Filers and come under the applicable compliance requirements of both Filers.

22. Since each NBSL Representative is also an NBI Representative, NBSL has policies and procedures in place to address any potential conflicts of interest that may arise as a result of the dual registration of the Representatives and will be able to deal appropriately with any such conflicts, should they arise. The Representatives are subject to, and aware of, these policies and procedures. These policies include controls with respect to disclosure to clients in client facing communication, shared clients and compensation practices and internal outside activity reporting and approvals. Representatives also receive education and training regarding the responsibilities of a fiduciary, including the need for having a reasonable and independent basis for the investment advice provided to clients, without regard to a client's relationship with a Filer's affiliate.

23. NBSL also has policies and procedures in place to:

a. mitigate or eliminate any client confusion that may result from the dual registration of the Representatives;

b. ascertain the responsible Filer in respect of the supervision of each Representative;

c. ensure that the appropriate records are kept for each Filer for its respective services to its clients; and

d. ensure necessary and timely interaction between the compliance personnel of each Filer to resolve any matters in respect of the dual registration of the Representatives.

24. The respective compliance teams of the Filers are equipped to:

a. manage and address the complexity and size of the Filers and their respective businesses;

b. adequately communicate amongst each other;

c. manage any conflicts of interest that may arise specific to large affiliated registered firms and organizations;

d. mitigate any client confusion stemming from the dual registration of the Representatives within a large affiliated organization;

e. supervise a large number of registered individuals across affiliated registrants; and

f. provide adequate compliance for each Filer's business lines.

25. The Filers are confident that each Representative will have sufficient time to adequately serve both firms.

26. Each of the Filers' respective Ultimate Designated Persons will provide sufficient supervision and promote a culture of compliance such that a Representative has sufficient time and resources to adequately serve each Filer. Each of the Filers' respective Chief Compliance Officers will ensure that each Filer has adequate policies and compliance systems in place to monitor and assess whether a Representative has sufficient time and resources to adequately serve each Filer and its clients.

27. Disclosure regarding the dual registration of a Representative will be disclosed in writing to the shared clients of NBI and NBSL who deal with a Representative, as applicable.

28. Each Representative will act in the best interest of all clients of each Filer and will deal fairly, honestly and in good faith with these clients.

29. The Filers are not in default of any requirement of securities legislation in any of the Jurisdictions.

30. In the absence of the Relief Sought, the Filers would be prohibited by the Dual-Registration Restriction from permitting a Representative to be registered as an advising representative or associate advising representative of NBSL while the individual is registered as a dealing representative of NBI, even though the Filers are affiliates and have controls and compliance procedures in place to deal with such advising, associate advising and/or dealing activities.

Decision

i. 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 Relief Sought is granted, for a period of seven years from the date of this decision, on the following conditions:

ii. The Representatives are subject to supervision by, and the applicable compliance requirements of, both Filers;

iii. The Filers ensure that the Representatives have sufficient time and resources to adequately serve each Filer and its respective clients;

iv. The Filers each have adequate policies and procedures in place to address any potential conflicts of interest that may arise as a result of the dual registration of the Representatives and deal appropriately with any such conflicts; and

v. The relationship between the Filers, and the fact that the Representatives are dually registered with them, is disclosed in writing to shared clients of NBI and NBSL that deal with a Representative.

Schedule "A"

List of Representatives as at October 21, 2022