Morgan Stanley Hedge Fund Partners LP, Traxis Partners LLC et al. - s. 80 of the CFA

Headnote

Section 80 of the Commodity Futures Act (Ontario) -- Renewal of previous order (granted June 10, 2003) providing an exemption from the adviser registration requirements of subsection 22(1)(b) of the CFA in respect of advising certain mutual funds, non-redeemable investment funds and similar investment vehicles established outside of Canada in respect of trades in commodity futures contracts and commodity futures options traded on commodity futures exchanges primarily outside of Canada and cleared through clearing corporations primarily outside of Canada, subject to certain terms and conditions.

Fees waived as application only required because amendments to or a rule under the CFA that would have a similar effect as section 7.10 of Rule 35-502 have not yet been adopted.

Statutes Cited

Commodity Futures Act, R.S.O. 1990, c. C.20, as am., ss. 22(1)(b), 80.

Securities Act, R.S.O. 1990, c. S.5, as am. -- Rule 35-502 -- Non Resident Advisers.

IN THE MATTER OF

THE COMMODITY FUTURES ACT,

R.S.O. 1990, CHAPTER C. 20, AS AMENDED

(the CFA)

AND

IN THE MATTER OF

MORGAN STANLEY HEDGE FUND

PARTNERS LP, TRAXIS PARTNERS LLC,

MORGAN STANLEY HEDGE FUND

PARTNERS CAYMAN LTD.

AND

MORGAN STANLEY HEDGE FUND

PARTNERS GP LP

ORDER

(SECTION 80 OF THE CFA)

UPON the application (the Application) of Morgan Stanley Hedge Fund Partners LP, Traxis Partners LLC, Morgan Stanley Hedge Fund Partners Cayman Ltd. and Morgan Stanley Hedge Fund Partners GP LP (the Applicants, as more fully defined below) to the Ontario Securities Commission (the Commission) for an order, pursuant to section 80 of the CFA, renewing the exemption order granted by the Commission on June 10, 2003, that each of the Applicants and their respective directors, partners, officers, and employees, are exempt, for a period of three years, from the requirements of paragraph 22(1)(b) of the CFA in respect of advising the Master Fund (as defined below), the Feeder Funds (as defined below) and other mutual funds, non-redeemable investment funds and similar investment vehicles (collectively, the Funds), established outside of Canada in respect of trades in commodity futures contracts and commodity futures options principally traded on commodity futures exchanges outside Canada and cleared through clearing corporations outside Canada;

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

AND UPON the Applicants having represented to the Commission that:

1. The Applicants include Morgan Stanley Hedge Fund Partners LP, Traxis Partners LLC, Morgan Stanley Hedge Fund Partners Cayman Ltd. and Morgan Stanley Hedge Fund Partners GP LP. Each of Morgan Stanley Hedge Fund Partners GP LP and Morgan Stanley Hedge Fund Partners LP is a limited liability partnership organized under the laws of the State of Delaware. Morgan Stanley Hedge Fund Partners Cayman Ltd. is an exempted company incorporated with limited liability under the laws of the Cayman Islands. Traxis Partners LLC is a limited company organized under the laws of the State of Delaware. The Applicants may also include affiliates of, or entities organized by, the Applicants which may subsequently execute and submit to the Commission a verification certificate referencing this Application and confirming the truth and accuracy of the information set out in this Application with respect to that particular Applicant.

2. None of the Applicants are registered in any capacity under the CFA or the Securities Act (Ontario) (the OSA).

3. The Funds are, or will be, organized in a "master-feeder" structure. Traxis Fund Onshore LP, a Delaware limited partnership, Traxis Fund Offshore LP, a Cayman Islands exempted limited partnership along with Traxis Fund Offshore II LP, a Cayman Islands exempted limited partnership and any other feeder funds (the Feeder Funds) will co-invest exclusively in a "master" fund, Traxis Fund LP (the Master Fund). The Master Fund will serve as a master fund in said master-funder structure, in which substantially all of the assets of the Feeder Funds will be invested in return for limited partnership interests in the Master Fund. The Master Fund and the Feeder Funds will have identical investment programs and objectives and the performance of the Feeder Funds will be entirely dependent on the performance of the Master Fund.

4. Securities of Traxis Fund Onshore LP, Traxis Fund Offshore LP, Traxis Fund Offshore II LP and any other Feeder Funds will be offered to a small number of Ontario residents who are institutional investors or high net worth individuals.

5. The Funds invest in commodity futures contracts and commodity futures options principally traded on commodity futures exchanges outside Canada and cleared through clearing corporations outside Canada.

6. The Applicants may provide advice with respect to commodity futures and options contracts to the Funds.

7. Any of the Funds advised by the Applicants are, or will be, established outside of Canada.

8. By advising the Funds directly on investing in commodity futures contracts and commodity futures options, the Applicants will be providing advice to the Funds with respect to commodity futures contracts and commodity futures options.

9. There is presently no rule under the CFA that provides an exemption from the adviser registration requirement in paragraph 22(1)(b) of the CFA for a person or company acting as an adviser in respect of commodity futures options and commodity futures contracts that is similar to the exemption from the adviser registration requirement in section 25(1)(c) of the OSA for acting as an adviser (as defined in the OSA) in respect of securities that is provided under section 7.10 (Privately Placed Funds Offered Primarily Abroad) of OSC Rule 35-502 Non Resident Advisers (Rule 35-502).

10. As would be required under section 7.10 of Rule 35-502, the securities of the Funds will be:

(a) primarily offered outside of Canada;

(b) only distributed in Ontario through one or more registrants under the OSA; and

(c) distributed in Ontario in reliance upon an exemption from the prospectus requirements under the OSA.

11. Each of the Applicants, where required, is or will be registered or licensed or is or will be entitled to rely on appropriate exemptions from such registrations or licences to provide advice to the Funds pursuant to the applicable legislation of its principal jurisdiction. In particular:

(i) Morgan Stanley Hedge Fund Partners GP LP is registered with the U.S. Securities U.S. Investments Advisers Act of 1940 (Advisers Act) and as a commodity and Exchange Commission as an investment adviser under the pool operator and a commodity trading advisor with the U.S. Commodity Futures Trading Commission (the CFTC) and the National Futures Association (the NFA).

(ii) Morgan Stanley Hedge Fund Partners LP is registered as an investment adviser under the Advisers Act and as a commodity trading advisor and a commodity pool operator with the CFTC and the NFA.

(iii) Morgan Stanley Hedge Fund Partners Cayman Ltd. is registered as a commodity pool operator with the CFTC and the NFA.

(iv) Traxis Partners LLC is registered as an investment adviser under the Advisers Act and as commodity trading advisor with the CFTC and the NFA.

12. All of the Funds issue securities which are offered primarily abroad. None of the Funds is, and none has any current intention of becoming a reporting issuer in Ontario or in any other Canadian jurisdiction.

13. Prospective investors who are Ontario residents will receive disclosure that includes:

(i) a statement that there may be difficulty in enforcing any legal rights against the applicable Funds or any of the Applicants advising the relevant Funds, because such entities are resident outside of Canada and all or substantially all of their assets are situated outside of Canada; and

(ii) a statement that the Applicant advising the applicable Funds is not, or will not be, registered with or licensed by any securities regulatory authority in Canada and, accordingly, the protections available to clients of a registered adviser will not be available to purchasers of securities of a Funds.

AND UPON being satisfied that it would not be prejudicial to the public interest for the Commission to grant the exemption requested on the basis of the terms and conditions proposed;

IT IS ORDERED pursuant to section 80 of the CFA that each of the Applicants and their respective directors, partners, officers and employees responsible for advising the Funds are not subject to the requirements of paragraph 22(1)(b) of the CFA in respect of their advisory activities in connection with the Funds, for a further period of three years, provided that at the time that such activities are engaged in:

(a) the Applicants, where required, are or will be registered or licensed, or are or will be entitled to rely on appropriate exemptions from such registrations or licences, to provide advice to the Funds pursuant to the applicable legislation of its principal jurisdiction;

(b) the Funds invests in commodity futures contracts and commodity futures options principally traded on organized exchanges outside Canada and cleared through clearing corporations located outside of Canada;

(c) securities of the Funds will be:

(i) primarily offered outside of Canada;

(ii) only distributed in Ontario through one or more registrants under the OSA; and

(iii) distributed in Ontario, in reliance on an exemption from the prospectus requirements of the OSA and upon an exemption from the adviser registration requirement of the OSA under Section 7.10 of Rule 35-502;

(d) prospective investors in the Funds who are Ontario residents will receive disclosure that includes:

(i) a statement that there may be difficulty in enforcing any legal rights against the applicable Funds or any of the Applicants advising the relevant Funds, because such entities are resident outside of Canada and all or substantially all of their assets are situated outside of Canada; and

(ii) a statement that the Applicant advising the applicable Funds is not, or will not be, registered with or licensed by any securities regulatory authority in Canada and, accordingly, the protections available to clients of a registered adviser will not be available to purchasers of securities of a Funds; and

(e) any Applicant whose name does not specifically appear in this Order and who proposes to rely on the exemption granted under this Order, shall, as a condition to relying on such exemption, have executed and filed with the Commission a verification certificate referencing this Order and confirming the truth and accuracy of the Application with respect to that particular Applicant.

May 19, 2006

"Paul M. Moore"

"Wendell S. Wigle"