Russell Implementation Services Inc. -- s. 80 of the CFA

Headnote

Section 80 of the Commodity Futures Act (Ontario) -- International adviser exempted from the adviser registration requirement in section 22(1)(b) of the CFA where such adviser acts as an adviser in respect of commodity futures contracts or commodity futures options (commodities) for certain institutional investors in Ontario -- Commodities are primarily traded on commodity futures exchanges outside of Canada and primarily cleared outside of Canada.

Terms and conditions on exemption ruling correspond to the relevant terms and conditions on the comparable exemption from the adviser registration requirement available to international advisers in respect of securities set out in section 8.26 of NI 31-103 Registration Requirements and Exemptions -- Exemption also subject to a "sunset clause" condition.

May 6, 2011

IN THE MATTER OF

THE COMMODITY FUTURES ACT,

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

(the CFA)

AND

IN THE MATTER OF

RUSSELL IMPLEMENTATION SERVICES INC.

ORDER

(Section 80 of the CFA)

UPON the application (the Application) to the Ontario Securities Commission (the Commission) by Russell Implementation Services Inc. (the Filer) for an Order of the Commission, pursuant to section 80 of the CFA, that the Filer, and any individuals engaging in, or holding themselves out as engaging in, the business of advising others on the Filer's behalf, is exempt from the adviser registration requirement in the CFA (as defined below) in connection with the Filer acting as an adviser to Permitted Clients (as defined below) in Ontario, in respect of Contracts (as defined below) to the extent that it would be a Permitted Commodity Activity (as defined below) for the Filer;

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

AND WHEREAS for the purposes of this Order;

"adviser registration requirement in the CFA" means the requirement set out in paragraph 22(1)(b) of the CFA that prohibits a person or company from acting as an adviser, as defined in the CFA, unless the person or company satisfies the applicable provisions of subsection 22(1) of the CFA;

"adviser registration requirement in the OSA" means the requirement set out in subsection 25(3) of the OSA that prohibits a person or company from acting as an adviser, as defined in the OSA, unless the person or company satisfies the applicable provisions of subsection 25(3) of the OSA;

"CFMA" means The Commodities Futures Modernization Act of 2000 of the U.S.A.;

"CFTC" means the United States Commodity Futures Trading Commission;

"Contract" has the meaning ascribed to that term in subsection 1(1) of the CFA;

"Foreign Contract" means any Contract that is primarily traded on one or more organized exchanges that are located outside of Canada and primarily cleared through one or more clearing corporations that are located outside of Canada;

"NI 31-103" means National Instrument 31-103 Registration Requirements and Exemptions;

"OSA" means the Securities Act (Ontario);

"Permitted Client" has the meaning set forth in section 8.26 of NI 31-103;

"Permitted Commodity Activity" means providing advice with respect to Foreign Contracts on the same terms and conditions that the Filer is permitted to provide advice, pursuant to the exemption from the requirement to register under the CFMA as a commodity trading adviser upon which the Filer relies in the foreign jurisdiction where its head office is located, with respect to any commodity futures contract or any commodity futures option; and

"SEC" means the United States Securities and Exchange Commission.

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

AND UPON the Filer having represented to the Commission that:

1. The Filer is a corporation established under the laws of the State of Washington, U.S.A. and its principal place of business is Seattle, Washington, U.S.A.

2. The Filer is registered as an investment adviser under the U.S. Investment Advisers Act of 1940, as amended.

3. The Filer relies upon an exemption from the requirement to register under the CFMA as a commodity trading adviser. Pursuant to this exemption, the Filer is permitted to provide advice with respect to a commodity futures contract or a commodity futures option in the U.S.A. if the Filer (i) is registered as an investment adviser under the U.S. Investment Advisers Act of 1940, (ii) does not primarily act as a commodity trading adviser and (iii) does not act as a commodity trading adviser to any investment trust, syndicate or similar form of enterprise that is engaged primarily in trading in any commodity for future delivery or on or subject to the rules of any contract market or registered derivatives transaction facility.

4. The Filer engages in the business of an adviser with respect to securities and with respect to Contracts in Washington, U.S.A.

5. The Filer advises Ontario clients that are Permitted Clients with respect to securities in reliance on the exemption in section 8.26 of NI 31-103 from the adviser registration requirement in the OSA. The Filer also acts as a sub-adviser in reliance on the exemption in section 7.3 of Ontario Securities Commission Rule 35-502 in respect of mutual funds established under the laws of Ontario and advised by its affiliate, Russell Investments Canada Limited.

6. The Filer has already filed Form 31-103F2 Submission to Jurisdiction and Appointment of Agent for Service with the Commission in order to rely on the exemption in section 8.26 of NI 31-103.

7. The Filer has provided and will provide to each Ontario client the notice required by section 8.26 of NI 31-103.

8. In addition to providing advice in respect of securities as described in paragraph 5 above, the Filer proposes to act also as an adviser to Permitted Clients in Ontario in respect of Foreign Contracts, provided that the advice is limited to Permitted Commodity Activity.

9. The Filer is not, and will not be, registered as an adviser under the CFA or the OSA.

10. Paragraph 22(1)(b) of the CFA prohibits a person or company from acting as an adviser unless the person or company is registered as an adviser under the CFA, or is registered as a representative or as a partner or an officer of a registered adviser and is acting on behalf of such registered adviser, and otherwise satisfies the applicable requirements specified in subsection 22(1) of the CFA.

11. There is currently no comparable rule or regulation under the CFA that provides an exemption from the adviser registration requirement in the CFA for a person or company acting as an adviser, in respect of Foreign Contracts, that corresponds to the exemption from the adviser registration requirement of the OSA contained in section 8.26 of NI 31-103.

12. But for the exemption, the Filer would not be entitled to provide advice that is limited to Permitted Commodity Activity to Permitted Clients in Ontario.

AND UPON the Commission being of the opinion that to do so would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to section 80 of the CFA, that the Filer, and any individuals engaging in, or holding themselves out as engaging in, the business of advising others on the Filer's behalf, is exempted from the adviser registration requirement in the CFA, for a period of five years, in connection with the Filer acting as an adviser to Permitted Clients in respect of Foreign Contracts provided that:

(a) the Filer limits its activities as an adviser in respect of Foreign Contracts to Permitted Commodity Activity;

(b) the Filer does not advise in Canada as to trading in Contracts that are not Foreign Contracts, unless providing such advice is incidental to its providing advice on Foreign Contracts;

(c) the Filer's head office or principal place of business is in the United States;

(d) the Filer is registered, operates under an exemption from registration or is otherwise legally permitted, under the CFMA, to carry on the activities in the U.S.A. that registration as an adviser, as defined in the CFA, would permit it to carry on in Ontario;

(e) the Filer engages in the business of an adviser, as defined in the CFA, in the foreign jurisdiction in which its head office or principal place of business is located;

(f) as at the end of the Filer's most recently completed financial year, not more than 10% of the aggregate consolidated gross revenue of the Filer, its affiliates and its affiliated partnerships is derived from the portfolio management activities of the Filer, its affiliates and its affiliated partnerships in Canada;

(g) before advising a Permitted Client, the Filer notifies the Permitted Client of all of the following:

(i) the Filer is not registered in the local jurisdiction to provide the advice described under paragraph (b) of this Order;

(ii) the foreign jurisdiction in which the Filer's head office or principal place of business is located;

(iii) all or substantially all of the Filer's assets may be situated outside of Canada;

(iv) there may be difficulty enforcing legal rights against the Filer because of the above;

(v) the name and address of the Filer's agent for service of process in Ontario;

(h) the Filer has submitted to the Commission a completed Form 31-103F2 Submission to Jurisdiction and Appointment of Agent for Service;

(i) the Permitted Client is a resident of Canada; and

(j) the Filer complies with the filing and fee payment requirements applicable to an unregistered exempt international firm under Ontario Securities Commission Rule 13-502 Fees.