Credit Suisse Financial Products and Credit Suisse First Boston Corporation

Headnote

Subsection 74(1) of the Act - relief granted from the prospectus and registrationrequirements in connection with certain over-the-counter derivatives transactionsentered into between sophisticated or "qualified" parties, subject to conditions.

Statutes Cited

Securities Act, R.S.O. 1990, c.S.5, as am., ss.25, 53 and 74(1)

Regulations Cited

Regulation made under the Securities Act, R.R.O. 1990, Reg. 1015, as am., ss.28,59(1) of Schedule 1

Rules Cited

Proposed Rule 91-504 - Over-The-Counter Derivatives (2000), 23 OSCB 51.

UPON the application of Credit Suisse Financial Products ("CSFP") and CreditSuisse First Boston Corporation ("CSFBC") (collectively, the "Applicants") to theOntario Securities Commission (the "Commission") for (i) a ruling under subsection74(1) of the Act that certain over-the-counter ("OTC") derivatives transactions enteredinto between the Applicants and certain counterparties are not subject to sections 25and 53 of the Act, and (ii) an exemption pursuant to subsection 59(1) of Schedule 1 ofthe Regulation from the fees required to be paid under section 28 of Schedule 1 of theRegulation in respect of such OTC derivatives transactions;

AND UPON considering the application and the recommendation of the staff ofthe Commission;

AND UPON the Applicants having represented to the Commission that:

1. CSFP is an unlimited liability company and an authorized institution under theBanking Act 1987 (U.K.), and is regulated in the U.K. by the Financial ServicesAuthority and by the Securities and Futures Authority. CSFP is not registeredunder the Act.

2. CSFBC is a wholly-owned indirect subsidiary of Credit Suisse First Boston, aSwiss bank that is the 80% owner of CSFP. CSFBC is a United States broker-dealer registered under applicable legislation in the United States, and isregistered under the Act as an international dealer.

3. CSFP designs, creates and markets a full range of interest rate, foreignexchange, equity, commodity and credit-related products that address the broadfinancing, risk management and investment needs of its clients. The marketingactivity in respect of such products is carried on by CSFBC.

4. The Applicants propose to market OTC Derivatives (as defined in Appendix 2to this Ruling) to a specified class of counterparties in Ontario.

5. The Underlying Interest of the OTC Derivatives transacted between theApplicants and the counterparties will consist entirely of an interest rate,Canadian or foreign currency, a foreign exchange rate, a commodity, a security,an index, a benchmark, or other variable, or another OTC Derivative, or somerelationship between, or combination of, one or more of any of them.

6. The counterparties to such transactions will consist exclusively of parties thatmeet the following criteria:

a) they are Qualified Parties, as defined in Appendix 1 to this Ruling; and

b) they enter into OTC Derivative transactions solely in order to hedge orotherwise manage specific risks or liabilities associated with theirbusinesses as part of the ordinary course of their businesses.

AND UPON the Commission being satisfied that to do so would not beprejudicial to the public interest;

IT IS RULED, pursuant to subsection 74(1) of the Act, that OTC Derivativestransactions entered into between the Applicants and certain counterparties in Ontarioas contemplated by paragraphs 4, 5 and 6 of this Ruling shall be exempt from sections25 and 53 of the Act, provided that:

(i) each transaction involves an OTC Derivative of which the UnderlyingInterest consists entirely of an interest rate, Canadian or foreigncurrency, a foreign exchange rate, a commodity, a security, an index, abenchmark, or other variable, or another OTC Derivative, or somerelationship between, or combination of, one or more of any of them; and

(ii) each transaction is between CSFP and a Qualified Party, each acting asprincipal; and

(iii) no settlement of an OTC Derivative transaction is made by way of thephysical delivery of securities that are not Freely Tradeable, as definedin Appendix 2 to this Ruling.

AND PURSUANT to section 59 of Schedule 1 of the Regulation, thetransactions entered into in reliance on this Ruling are hereby exempted from the feeswhich would otherwise be payable pursuant to section 28 of Schedule 1 of theRegulation.

THIS Ruling will automatically expire upon proposed Rule 91-504 - Over-The-Counter Derivatives coming into force and being adopted as a rule in Ontario.

March 10^th, 2000.

"Howard I. Wetston"     "Morley P. Carscallen"

Appendix 1

Interpretation

(1) The terms "subsidiary" and "holding body corporate" used in paragraphs (w), (x)and (y) of subsection (3) of this Appendix 1 have the same meaning as theyhave in the Business Corporations Act (Ontario).

(2) All requirements contained in this Appendix 1 that are based on the amountsshown on the balance sheet of an entity apply to the consolidated balance sheetof the entity.

Qualified Parties Acting as Principal

(3) The following are Qualified Parties for all OTC Derivatives transactions, if actingas principal:

Banks

(a) A bank listed in Schedule I or II to the Bank Act (Canada).

(b) The Business Development Bank of Canada incorporated under theBusiness Development Bank of Canada Act (Canada).

(c) A bank subject to the regulatory regime of a country that is a member ofthe Basel Accord, or that has adopted the banking and supervisory rulesset out in the Basel Accord, if the bank has a minimum paid up capitaland surplus, as shown on its last audited balance sheet, in excess of $25million or its equivalent in another currency.

Credit Unions and Caisses Populaires

(d) A credit union central, federation of caisses populaires, credit union orregional caisse populaire, located, in each case, in Canada.

Loan and Trust Companies

(e) A loan corporation or trust corporation registered under the Loan andTrust Corporations Act (Ontario) or under the Trust and Loan CompaniesAct (Canada), or under comparable legislation in any other province orterritory of Canada.

(f) A loan company or trust company subject to the regulatory regime of acountry that is a member of the Basel Accord, or that has adopted thebanking and supervisory rules set out in the Basel Accord, if the loancompany or trust company has a minimum paid up capital and surplus,as shown on its last audited balance sheet, in excess of $25 million or itsequivalent in another currency.

Insurance Companies

(g) An insurance company licensed to do business in Canada or a provinceor territory of Canada if the insurance company has a minimum paid upcapital and surplus, as shown on its last audited balance sheet, in excessof $25 million or its equivalent in another currency.

(h) An insurance company subject to the regulatory regime of a country thatis a member of the Basel Accord, or that has adopted the banking andsupervisory rules set out in the Basel Accord, if the insurance companyhas a minimum paid up capital and surplus, as shown on its last auditedbalance sheet, in excess of $25 million or its equivalent in anothercurrency.

Sophisticated Entities

(i) A person or company that

(i) has entered into one or more transactions involving OTCDerivatives with counterparties that are not its affiliates, if

(A) the transactions had a total gross dollar value of orequivalent to at least $1 billion in notional principal amount;and

(B) any of the contracts relating to one of these transactionswas outstanding on any day during the previous 15-monthperiod; or

(ii) had total gross marked-to-market positions of or equivalent to atleast $100 million aggregated across counterparties, withcounterparties that are not its affiliates in one or more transactionsinvolving OTC Derivatives on any day during the previous15-month period.

Individuals

(j) An individual who has a net worth of at least $5 million, or its equivalentin another currency, excluding the value of his or her principal residence.

Governments/Agencies

(k) Her Majesty in right of Canada or any province or territory of Canada andeach crown corporation, instrumentality and agency of a Canadianfederal, provincial or territorial government.

(l) A national government of a country that is a member of the Basel Accord,or that has adopted the banking and supervisory rules set out in theBasel Accord, and each instrumentality and agency of that governmentor corporation wholly-owned by that government.

Municipalities

(m) Any Canadian municipality with a population in excess of 50,000 and anyCanadian provincial or territorial capital city.

Corporations and other Entities

(n) A company, partnership, unincorporated association or organization ortrust, other than an entity referred to in paragraph (a), (b), (c), (d), (e), (f),(g) or (h), with total revenues, as shown on its last audited financialstatements, in excess of $25 million or its equivalent in another currency.

Pension Plan or Fund

(o) A pension fund that is regulated by either the Office of theSuperintendent of Financial Institutions (Canada) or a provincial pensioncommission, if the pension fund has total net assets, as shown on its lastaudited balance sheet, in excess of $25 million, provided that, indetermining net assets, the liability of a fund for future pension paymentsshall not be included.

Mutual Funds and Investment Funds

(p) A mutual fund or non-redeemable investment fund if each investor in thefund is a Qualified Party.

(q) A mutual fund that distributes its securities in Ontario, if the portfolioadviser of the fund is registered as an adviser, other than a securitiesadviser, under the Act or securities legislation elsewhere in Canada.

(r) A non-redeemable investment fund that distributes its securities inOntario, if the portfolio manager of the fund is registered as an adviser,other than a securities adviser, under the Act or securities legislationelsewhere in Canada.

Brokers/Investment Dealers

(s) A person or company registered under the Act or securities legislationelsewhere in Canada as a broker or an investment dealer or both.

(t) A person or company registered under the Act as an international dealerif the person or company has total assets, as shown on its last auditedbalance sheet, in excess of $25 million or its equivalent in anothercurrency.

Futures Commission Merchants

(u) A person or company registered under the Commodity Futures Act(Ontario) as a dealer in the category of futures commission merchant, orin an equivalent capacity elsewhere in Canada.

Charities

(v) A registered charity under the Income Tax Act (Canada) with assets notused directly in charitable activities or administration, as shown on its lastaudited balance sheet, of at least $5 million or its equivalent in anothercurrency.

Affiliates

(w) A wholly-owned subsidiary of any of the organizations described inparagraph (a), (b), (c), (d), (e), (f), (g), (h), (n), (o), (s), (t) or (u).

(x) A holding body corporate of which any of the organizations described inparagraph (w) is a wholly-owned subsidiary.

(y) A wholly-owned subsidiary of a holding body corporate described inparagraph (x).

(z) A firm, partnership, joint venture or other form of unincorporatedassociation in which one or more of the organizations described inparagraph (w), (x) or (y) have a direct or indirect controlling interest.

Guaranteed Party

(aa) A party whose obligations in respect of the OTC Derivatives transactionfor which the determination is made is fully guaranteed by anotherQualified Party.

Qualified Party for Specified Commodity Derivative Transaction

(4) A Commercial User is a Qualified Party with respect to any Specified CommodityDerivative Transaction.

Subsequent Failure to Qualify

(5) A party is a Qualified Party for the purpose of any OTC Derivatives transactionif it, he or she is a Qualified Party at the time it, he or she enters into thetransaction.

Appendix 2

Definitions

"Clearing Corporation" means an association or organization through whichOptions or futures contracts are cleared and settled.

"Commercial User" means a person or company that enters into a SpecifiedCommodity Derivative transaction, if

(a) the person or company deals in its business with a SpecifiedCommodity, and

(b) the transaction consists of a Specified Commodity Derivative ofwhich the Underlying Interest, or a material component of theUnderlying Interest, is

(i) a Specified Commodity referred to in paragraph (a),

(ii) a Related Specified Commodity to a Specified Commodityreferred to in paragraph (a), or

(iii) a Specified Commodity Derivative, the Underlying Interestof which is

(A) a Specified Commodity, or

(B) a Related Specified Commodity to a SpecifiedCommodity referred to in paragraph (a).

"Contract for Differences" means an agreement, other than an Option, aForward Contract, a spot currency contract or a conventional floating rate debtsecurity, that provides for

(a) an exchange of principal amounts; or

(b) the obligation or right to make or receive a cash payment based upon thevalue, level or price, or on relative changes or movements of the value,level or price of, an Underlying Interest.

"Forward Contract" means an agreement, not entered into or traded on orthrough an organized market, stock exchange or futures exchange and clearedby a Clearing Corporation, to do one or more of the following on terms or at aprice established by or determinable by reference to the agreement and at or bya time established by or determinable by reference to the agreement:

(a) make or take delivery of the Underlying Interest of the agreement; or

(b) settle in cash instead of delivery.

"Freely Tradeable" means, in respect of securities, that:

(a) the securities are not non-transferable;

(b) the securities are not subject to any escrow requirements;

(c) the securities do not form part of the holdings of any person or companyor combination of person or companies referred to in paragraph (c) of thedefinition of "distribution" in the Act;

(d) the securities are not subject to any cease trade order imposed by aCanadian securities regulatory authority;

(e) all hold periods imposed by Canadian securities legislation before thesecurities can be traded without a prospectus or in reliance on aprospectus exemption have expired; and

(f) any period of time for which the issuer has to have been a reportingissuer before the securities can be traded without a prospectus or inreliance on a prospectus exemption has passed.

"Option" means an agreement that provides the holder with the right, but not theobligation, to do one or more of the following on terms or at a price determinableby reference to the agreement at or by a time established by the agreement:

(a) receive an amount of cash determinable by reference to a specifiedquantity of the Underlying Interest of the Option.

(b) purchase a specified quantity of the Underlying Interest of the Option.

(c) sell a specified quantity of the Underlying Interest of the Option.

"OTC Derivative" means an Option, a Forward Contract, or a Contract forDifferences of a type commonly considered to be a derivative, in which

(a) the agreement relating to the Option, Forward Contract or Contract forDifferences is not part of a fungible class of agreements that arestandardized as to their material economic terms;

(b) the creditworthiness of a party having an obligation under the agreementwould be a material consideration in entering into or determining theterms of the agreement; and

(c) the agreement is not entered into or traded on or through an organizedmarket, stock exchange or futures exchange and cleared by a ClearingCorporation.

"Related Specified Commodity" means a Specified Commodity that is part or allof an Underlying Interest of a Specified Commodity Derivative that is used bya Commercial User to hedge its exposure to a risk resulting from its use ofanother Specified Commodity in its business.

"Specified Commodity" means

(a) whether in the original or a processed state, an agriculturalproduct, forest product, product of the sea, mineral, metal,hydrocarbon fuel product or precious stone or other gem,

(b) a pollutant emission level,

(c) electricity,

(d) a liability from an insurance contract, and

(e) a matter designated by the Commission as a SpecifiedCommodity, if that designation has not been revoked.

"Specified Commodity Derivative" means an OTC Derivative of which anUnderlying Interest is:

(a) a Specified Commodity, or

(b) another OTC Derivative of which the Underlying Interest is aSpecified Commodity.

"Underlying Interest" means, for a derivative, the security, commodity, financialinstrument, currency, interest rate, foreign exchange rate, economic indicator,index, basket, agreement or reit, and, if applicable, the relationship between anyof the foregoing, from or on which the market price, value or payment obligationsof the derivative are derived or based.