Sollio Cooperative Group

Headnote

Application by Quebec-based agricultural cooperative for relief from the adviser registration requirements in the Commodity Futures Act (Ontario) and the Securities Act (Ontario) in respect of providing advisory services to cooperative members and to certain affiliated or associated entities as to the trading of commodity futures contracts and options and over-the-counter (OTC) derivatives in the ordinary course of the applicant's business as an agricultural cooperative, subject to a sunset clause and terms and conditions of relief based on the proposed derivatives business conduct and registration rules being developed by the Canadian Securities Administrators.

Applicable Legislative Provisions

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

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25(3) and 74.

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 1.1 ("Canadian custodian", "Canadian financial institution") and Part 13).

Proposed National Instrument 93-101 Derivatives: Business Conduct and Proposed National Instrument 93-102 Derivatives: Registration ("commercial hedger" and "eligible commercial hedger").

June 11, 2021

IN THE MATTER OF THE SECURITIES ACT, R.S.O. 1990, c. S.5 AS AMENDED (the OSA) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF THE COMMODITY FUTURES ACT, R.S.O. 1990, c. C.20, AS AMENDED (the CFA) AND IN THE MATTER OF SOLLIO COOPERATIVE GROUP

RULING (Subsection 74(1) of the OSA and Section 80 of the CFA)

Background

The Ontario Securities Commission (the Commission) has received an application (the Application) from Sollio Cooperative Group (the Applicant) for

(a) a ruling pursuant to subsection 74(1) of the OSA that the Applicant and any individuals acting on the Applicant's behalf be exempted from the adviser registration requirements in subsection 25(3) of the OSA (the Requested OSA Relief); and

(b) an order pursuant to section 80 of the CFA that the Applicant and any individuals acting on the Applicant's behalf be exempted from the adviser registration requirements in subsection 22(1)(b) of the CFA (the Requested CFA Relief, and collectively with the Requested OSA Relief, the Requested Relief);

in respect of providing Advisory Services (as defined below) to Present and Future Agro Clients (as defined below) as to the trading of Exchange-Traded Contracts (as defined below) and OTC Derivatives (as defined below), in the ordinary course of the Applicant's business as an agricultural cooperative, for the Interim Period (as defined below) and subject to the terms and conditions below.

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 Applicant has provided notice that, in connection with the Requested OSA Relief, section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in New Brunswick, Nova Scotia and Prince Edward Island (the Passport Jurisdictions and together with Ontario, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions or MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

In this decision, the following terms have the following meanings:

"Commercial hedger" means a person or company, other than an individual, that carries on a business and that transacts in an Exchange-Traded Contract and/or an OTC Derivative to hedge a risk in respect of that business associated with any of the following:

(a) an asset that the person or company owns, produces, manufactures, processes, or merchandises or reasonably anticipates owning, producing, manufacturing, processing, or merchandising;

(b) a liability that the person or company incurs or reasonably anticipates incurring; or

(c) a service which the person or company provides, purchases, or reasonably anticipates providing or purchasing;

"Cooperative member" means an organization that:

(a) is a cooperative for the purposes of applicable laws in Québec or otherwise permitted to be a member of the Applicant pursuant to An Act respecting the charter of the Coopérative fédérée de Québec,

(b) has been admitted to membership of the Applicant, and

(c) has had its name entered in the Applicant's register of members.

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

"OTC Derivative" has the meaning ascribed to that term in Appendix A to this decision;

"Underlying Interest" has the meaning ascribed to that term in Appendix A to this decision.

Representations

This decision is based on the following facts represented by the Applicant:

The Applicant

1. The Applicant is a corporation within the meaning of the Civil Code of Québec and a federation under the Cooperatives Act (Québec) created pursuant to a private law adopted by the Québec National Assembly entitled An Act respecting the charter of the Coopérative fédérée de Québec with approximately 50 member cooperatives located in Ontario, Québec, New Brunswick, Prince Edward Island, Nova Scotia.

2. The Applicant carries on agricultural, processing, manufacturing and other commercial activities in the sectors of building materials, hardware, manure and fertilizer, seeds, grains, oilseeds, feeds for farm animals, livestock, lumber, directly or indirectly through its member cooperatives, its subsidiaries and affiliates as defined in the OSA, and its Associated Corporations (as defined below).

3. The Applicant has acquired a unique expertise in Canada in Exchange-Traded Contracts and OTC Derivatives in relation to the commodities covered by its activities and the activities of its Associated Corporations, and has created a highly specialised internal department dedicated to advising in respect of the trading of Exchange-Traded Contracts and OTC Derivatives, which department makes its services available to the Applicant's Agro Clients (as defined below) (the Advisory Services).

4. The Applicant, through its employees, provides Advisory Services to

(a) its cooperative members;

(b) its subsidiaries and affiliates as defined in the OSA; and

(c) other associated corporations which are not controlled by the Applicant but of which the Applicant holds voting securities carrying 50% of the votes for the election of directors (each, an Associated Corporation, and collectively with the Applicant's cooperative members, subsidiaries and affiliates, the Agro Clients).

5. The Applicant does not have an office in Ontario or any employees in Ontario that provide or are involved in the Advisory Services. Only employees in Québec of the Applicant provide Advisory Services.

6. The Advisory Services provided by the Applicant to the Agro Clients comprise various activities needed to carry on its operations, including investment advisory and portfolio management services (including advice as to transactions involving Exchange-Traded Contracts and OTC Derivatives) and information technology, human resources and other administrative services.

7. The Advisory Services are provided to the Agro Clients on a cost-sharing basis for the purpose of hedging commercial risk. It is not intended that the Applicant profit from the provision of such services. The Applicant does not and will not provide Advisory Services to any person or company other than the Agro Clients.

8. Each of the following Agro Client holds a license issued by the federal or provincial government (or an agency thereof) relating to agriculture or commodity production including licenses issued under The Grains Act (Ontario) as an Elevator Operator and/or a Dealer in Grain as issued by Agricorp, a provincial Crown corporation (or a successor organization): Lakeside Grain & Feed Limited, Alliance Agri-Turf Inc., Fingal Farm Supply Limited, Harvex Agromart Inc., Munro Agromart Ltd., Bluewater Agromart Limited, Oxford Agropro Ltd. and TCO Agromart Ltd.

9. Ontariograin.ag LP (Limited Partnership) (Ontario Grain) and certain other Associated Corporations are located in Ontario. The Applicant owns 77.5% of the limited partner units of Ontario Grain and of the shares of its managing partner, Ontariograin.ag Inc. The remaining 22.5% of the limited partner units of Ontario Grain and of the shares of its managing partner, Ontariograin.ag Inc are directly or indirectly held by employees or principals (or companies controlled by such employees or principals or their immediate family) of Ontario Grain. The Applicant owns voting securities carrying 100% of the votes for the election of directors of Agronomy Company of Canada Ltd. and Agrico Canada Ltd., either one of which owns voting securities carrying 50% of the votes for the election of directors of each Associated Corporation. The remaining 50% of the voting securities of each Associated Corporation are directly or indirectly held by employees or principals (or companies controlled by such employees or principals or their immediate family) of an Associated Corporation.

10. Ontario Grain acts as an intermediary for the sale and purchase of grains and oilseeds, notably corn, wheat, soy, canola seed, and oats. In its commercial activities, Ontario Grain becomes exposed from time to time to risks attendant upon fluctuations in the price of certain grains and oilseeds and offsets such risks through trading in Exchange-Traded Contracts for grains and oilseeds traded on the Chicago Board of Trade and through trading in Exchange-Traded Contracts for related currency, exposure through the Canadian dollars futures traded on the Chicago Mercantile Exchange, in each case solely for hedging purposes.

11. In addition, Ontario Grain also offsets that risk through trading in OTC Derivatives, namely Canadian dollar forwards and grain and oilseed forwards.

12. Except Ontario Grain, the Applicant advises the Agro Clients in respect of trading in OTC Derivatives only, namely hedging foreign currency exposure.

13. Other entities in Ontario that are or become cooperative members of the Applicant, are or become affiliates of the Applicant as defined in the OSA or are or become Associated Corporations may in the future become exposed to risks attendant upon fluctuations in the price of certain commodities and request Advisory Services (each, a New Ontario Agro Client and together with the Agro Clients, the Present and Future Agro Clients).

14. Ontario Grain has opened its own account with a dealer that is i) registered in Ontario as a dealer (futures commission merchant) (FCM) under the CFA, ii) registered as an investment dealer under the OSA, and iii) a member of the Investment Industry Regulatory Organization of Canada (IIROC). The Applicant has discretionary trading authority over this account.

15. Any New Ontario Agro Client would, in due time, similarly open its own account with a dealer registered in Ontario as an FCM and, if necessary, as an investment dealer and an IIROC member.

16. The arrangements under which the Advisory Services are provided to Ontario Grain and the other Agro Clients and would be provided to any New Ontario Agro Client are similar to the arrangements pursuant to which the Applicant provides Advisory Services to other Agro Clients located in other Canadian provinces (notably, they are provided on a cost-sharing basis).

17. There are no external stakeholders that have any direct interest in the performance of the Exchange-Traded Contracts or OTC Derivatives entered into by Ontario Grain, or that will be entered into by any Present or Future Agro Client in Ontario except, in the case of Ontario Grain and the other Associated Corporations, employees or principals (or companies controlled by such employees or principals or their immediate family) of Ontario Grain, in the case of that entity, and an Associated Corporation, in the case of those entities. Subject to the foregoing, there are no stakeholders in Ontario or elsewhere that will be directly affected by the results of the investment advice to be provided by the Applicant.

Regulatory status of the Applicant

18. The Applicant is not registered under the securities, commodity futures or derivatives legislation of any of the provinces or territories of Canada in any capacity.

19. The Applicant is exempt from registration as a derivatives adviser with the Québec Autorité des marchés financiers (the AMF) under the Derivatives Act (Québec) (QDA) pursuant to a discretionary exemption decision of the AMF dated July 25, 2016 (Decision No. 2016-SACD-1040761) under certain conditions, notably that the Applicant advises only cooperative members of the Applicant or affiliates of the Applicant that meet the definition of "hedgers" for the purposes of the definition of "accredited counterparties" in Section 3(12) of the QDA, in respect of the trading of Exchange-Traded Contracts and on a cost-sharing basis.

20. The Applicant has provided the Advisory Services to Ontario Grain since approximately November 2018 and to certain other Associated Corporations since at least 2017. The Applicant provided those services on the basis of a good faith belief that it was not providing advice to others with respect to investing in securities or buying or selling securities because it was providing such services only to companies affiliated or associated with it on a cost-sharing basis, and that its provision of such services did not constitute "engaging in the business" of an adviser under the OSA or the CFA. The Applicant subsequently determined that this belief may not be correct and now seeks to continue to provide such Advisory Services to Present and Future Agro Clients in Ontario on a basis that would not require registration under the OSA or the CFA.

21. Outside of Québec and Ontario, the Applicant relies upon exemptions from the adviser registration requirement as to the trading in OTC Derivatives with "Qualified Persons" set out in the following instruments:

New Brunswick	Local Rule 91-501 Derivatives
Nova Scotia	Blanket Order 91-501 Over the Counter Trades in Derivatives

However, the Applicant acknowledges that these instruments may not provide an exemption from the adviser registration requirement in relation Exchange-Traded Contracts and/or OTC Derivatives. Moreover, the Applicant understands that there is no corresponding instrument in Prince Edward Island.

22. The Applicant is not in default of securities, commodity futures or derivatives legislation in any jurisdiction in Canada, except in relation to the matters described above in paragraphs 20-21.

23. The Applicant is not registered or licensed or required to be registered or licensed as an extra-provincial cooperative with and is not subject to the direct oversight of the Financial Services Regulatory Authority of Ontario.

Development of a modernized framework for OTC Derivatives

24. On April 19, 2018, the Canadian Securities Administrators (the CSA) published a Notice and Request for Comment on Proposed National Instrument 93-102 Derivatives: Registration (Proposed NI 93-102), and on June 14, 2018, the CSA published a Notice and Second Request for Comment on the Proposed National Instrument 93-101 Derivatives: Business Conduct (Proposed NI 93-101), which, together, are intended to implement a comprehensive regime for the regulation of persons or companies that are in the business of trading or advising on derivatives.

25. In the present Application, the Applicant is seeking relief from the adviser registration requirements in the OSA and in the CFA on the basis, in part, on certain terms and conditions that are set forth in Proposed NI 93-101 and Proposed NI 93-102.

26. If the Requested Relief is granted, the Applicant will comply with the terms and conditions of the Requested Relief including the Business Conduct Terms and Conditions in Appendix B (collectively, the Terms and Conditions of the Relief).

27. The Applicant acknowledges that the scope of the Requested Relief and the Terms and Conditions of the Relief may change as a result of developments in international and domestic capital markets or the Applicant's activities, or as a result of any changes to the laws in Canada affecting trading in derivatives, commodity futures contracts, commodity futures options or securities. In particular, the Applicant acknowledges that it may be required to comply with or seek relief from the adviser registration requirement in the CFA or OSA in relation to trading in Exchange-Traded Contracts or OTC Derivatives upon the coming into force of certain amendments to the Legislation and similar requirements in the legislation of the other Jurisdictions.

Books and Records

28. The Applicant acknowledges that it is or will become a "market participant" for the purposes of the OSA if the OSA Requested Relief is granted. For the purposes of the OSA, and as a market participant, the Applicant is required by subsection 19(1) of the OSA to: (i) keep such books, records and other documents as are necessary for the proper recording of its business transactions and financial affairs, and the transactions that it executes on behalf of others; and (ii) keep such books, records and documents as may otherwise be required under Ontario securities law.

29. Similarly, the Applicant acknowledges that it is or will become a "market participant" for the purposes of the CFA if the CFA Requested Relief is granted. For the purposes of the CFA, and as a market participant, the Applicant is required by section 14 of the CFA to: (i) keep such books, records and other documents (a) as are necessary for the proper recording of business transactions and financial affairs, and the transactions executed on behalf of others, (b) as may otherwise be required under Ontario commodity futures law, and (c) as may reasonably be required to demonstrate compliance with Ontario commodity futures laws, and to deliver such records to the Commission if required.

Decision

The Commission is satisfied that the decision meets the tests set out in the CFA and the OSA for the Commission to make the decision.

The decision of the Commission is that the Requested Relief is granted, provided that and for so long as:

1. the Applicant provides Advisory Services as to trading in Exchange-Traded Contracts and OTC Derivatives in the Jurisdictions only to Present and Future Agro Clients and only in circumstances where the Agro Client would reasonably be considered a commercial hedger for the purposes of the proposed trade;

2. the Applicant provides Advisory Services in compliance with the Business Conduct Terms and Conditions as set out in Appendix B;

3. the Applicant provides to each existing Agro Client in Ontario within 30 days of this decision,

(a) a copy of or a link to this Decision, and

(b) a copy of the Risk Disclosure Document (as defined in Appendix B);

and obtains a written or electronic acknowledgement from the Agro Client, confirming that the Agro Client has received, read and understood the Risk Disclosure Document;

4. prior to providing Advisory Services to a new Agro Client in Ontario, the Applicant provides to such new Agro Client in Ontario

(a) a copy of or a link to this Decision, and

(b) a copy of the Risk Disclosure Document (as defined in Appendix B);

and obtains a written or electronic acknowledgement from the Agro Client, confirming that the Agro Client has received, read and understood the Risk Disclosure Document;

5. the Applicant makes available to the Commission on request the name and principal occupation of its officers and directors, together with the personal information form and authorization of indirect collection, use and disclosure of personal information provided for in Form 33-109F4 of National Instrument 33-109 Registration Information;

6. the Applicant promptly informs the Commission in writing of any material change affecting the Applicant, being any change in the business, activities, operations or financial results or condition of the Applicant that may reasonably be perceived by an Agro Client to be material;

7. the Applicant promptly informs the Commission in writing if a self-regulatory organization or any other regulatory authority or organization initiates proceedings or renders a judgment related to disciplinary matters against the Applicant concerning the conduct of activities with respect to Exchange-Traded Contracts or OTC Derivatives;

8. the Requested Relief shall immediately expire upon the earliest of

(a) five years from the date that this Decision is issued;

(b) 90 days after the date of registration of the Applicant under securities, commodity futures or derivatives legislation in any jurisdiction in Canada;

(c) the issuance of an order or decision by a court, a Commission or other similar regulatory body in or outside of Canada, that suspends or terminates the ability of any of the Applicant, its subsidiaries or other affiliates or Associated Corporations to trade Exchange-Traded Contracts or OTC Derivatives; and

(d) the coming into force in Ontario of a rule regarding the trading of OTC derivatives (the Interim Period).

OSC File #: 2020/0093

Appendix A

Definitions

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

"Forward Contract" means an agreement, not entered into or traded on or through an organized market, stock exchange or futures exchange and cleared by a Clearing Corporation, to do one or more of the following on terms or at a price established by or determinable by reference to the agreement and at or by a 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.

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

(a) receive an amount of cash determinable by reference to a specified quantity 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 one or more of, or any combination of, an Option, a Forward Contract, or any instrument of a type commonly considered to be a derivative, in which:

(a) the agreement relating to, and the material economic terms of, the Option, Forward Contract, swap or other instrument have been customized to the purposes of the parties to the agreement and the agreement is not part of a fungible class of agreements that are standardized as to their material economic terms;

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

(c) the agreement is not entered into or traded on or through an organized market, stock exchange or futures exchange.

"Underlying Interest" means, for a derivative, the commodity, interest rate, actual or anticipated commercial or financial foreign currency asset or liability, foreign exchange rate, security, economic indicator, index, basket, benchmark or other variable, or another derivative, and, if applicable, any relationship between, or combination of, any of the foregoing, from or on which the market price, value or payment obligations of the derivative are derived or based.

Appendix B

Business Conduct Terms and Conditions

Risk Disclosure

1. The Applicant will, prior to providing Advisory Services to an Agro Client in a Jurisdiction, provide or have previously provided the Agro Client with a separate risk disclosure document that clearly explains, in plain language, the nature of the Advisory Services and the risks associated with transactions in Exchange-Traded Contracts and OTC Derivatives (collectively the Risk Disclosure Document). The Risk Disclosure Document will include a plain language description of the structure, feature and risks of trading Exchange-Traded Contracts and OTC Derivatives.

2. The Risk Disclosure Document will clearly explain, in plain language, that the Applicant is not registered under the securities, commodity futures or derivatives laws of any jurisdiction of Canada and that client assets are not protected under the Canadian Investor Protection Fund (CIPF), the U.S. Securities Investor Protection Corporation, or equivalent protections. The Risk Disclosure Statement will include a reference to and a copy of or link to this decision.

3. Prior to providing Advisory Services to an Agro Client in a Jurisdiction, the Applicant will obtain or have previously obtained a written or electronic acknowledgement from the Agro Client confirming that the Agro Client has received, read and understood the Risk Disclosure Document. Such acknowledgment will be separate from and prominent among other acknowledgements provided by the Agro Client as part of the account-opening process.

Acting fairly, honestly and in good faith

4. The Applicant shall act and shall take reasonable steps to cause each individual acting on its behalf to act fairly, honestly and in good faith with Agro Clients.

Conflicts of interest

5. The Applicant will establish, maintain and apply reasonable policies and procedures to identify existing material conflicts of interest, and material conflicts of interest that the Applicant in its reasonable opinion would expect to arise, between Applicant, including each individual acting on behalf of the Applicant, and an Agro Client.

6. The Applicant will respond to an existing or potential conflict of interest identified under the preceding paragraph. If an Agro Client, acting reasonably, would expect to be informed of a conflict of interest identified under the preceding paragraph, the Applicant will disclose, in a timely manner, the nature and extent of the conflict of interest to the client whose interest conflicts with the interest identified.

7. On and after July 1, 2021, the Applicant will comply, and will take reasonable steps to cause each individual acting on its behalf to act to comply, with the enhanced conflicts of interest provisions in section 13.4 and 13.4.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) as if the Applicant were a "registered firm" and individuals acting on behalf of Applicant were "registered individuals".

Gatekeeper know-your-client (KYC) obligations

8. The Applicant will establish, maintain and apply reasonable policies and procedures to

(a) obtain facts necessary to comply with applicable legislation, including anti-money laundering (AML) legislation, relating to the verification of a client's identity,

(b) establish the identity of a client and, if the Applicant has cause for concern, make reasonable inquiries as to the reputation of the client,

(c) if the Applicant will, as a result of its relationship with a client have any credit risk in relation to the client, establish the creditworthiness of the client.

9. For the purpose of establishing the identity of a client that is a corporation, partnership or trust, the Applicant will establish the following:

(a) the nature of the client's business;

(b) the identity of any individual who meets either of the following:

(i) in the case of a corporation, is a beneficial owner of, or exercises direct or indirect control or direction over, more than 25% of the voting rights attached to the outstanding voting securities of the corporation;

(ii) in the case of a partnership or trust, exercises control over the affairs of the partnership or trust.

10. The Applicant will take reasonable steps to keep the information required under the preceding two paragraphs current. The requirement in the preceding two paragraphs does not apply if the client is a registered firm or a Canadian financial institution.

Handling Complaints

11. The Applicant will document and, in a manner that a reasonable person would consider fair and effective, promptly respond to each complaint made to the Applicant about any product or service offered by the Applicant or an individual acting on behalf of the Applicant.

12. The Applicant will include in the Risk Disclosure Document disclosure that clearly explains, in plain language, that the Applicant is not a registered adviser or dealer in any jurisdiction in Canada and as such is not required to make available to clients the services of an independent dispute resolution or mediation service such as the Ombudsman for Banking Services and Investments (OBSI).

Restriction on lending

13. The Applicant will not lend money, extend credit or provide margin to an Agro Client.

Restriction on advising or managed accounts

14. The Applicant is not registered to provide advice in relation to investments involving securities or derivatives. Accordingly, except as described in this Decision, the Applicant will not advise a client or prospective client about the merits of an investment in securities or derivatives or recommend or represent that an investment in securities or derivatives is a suitable investment for the client.

Restriction on contracts linked to novel or emerging asset classes

15. The Applicant will not provide Advisory Services in relation to Exchange-Traded Contracts or OTC Derivatives linked to bitcoin, ether, cryptocurrencies or other novel or emerging asset classes, or options or other derivatives thereon, without the prior written consent of the Commission.

Client accounts

Relationship disclosure information

16. For the purposes of a requirement in this decision to deliver a document or provide disclosure to a client, including client relationship disclosure and account statements, the Applicant may deliver the document or provide the disclosure to the client in electronic form if the client has previously provided written consent to receive such documents in electronic form.

17. The Applicant will, prior to providing Advisory Services to an Agro Client in a Jurisdiction, provide or have previously provided the Agro Client with all information that a reasonable person would consider important about the Agro Client's relationship with the Applicant and each individual acting on behalf of the Applicant. Without limiting the foregoing, the information delivered to an Agro Client must include all of the following:

(a) a description of the nature or type of the Agro Client's account;

(b) a description of any conflicts of interest that the Applicant is required to disclose to a client under this decision;

(c) disclosure of the fees or other charges the Agro Client might be required to pay related to the client's account;

(d) a general description of the types of transaction fees or other charges the client might be required to pay in relation the client's account;

(e) a general description of any compensation paid to the Applicant by any other party in relation to an Agro Client's transactions in Exchange-Traded Contracts or OTC Derivatives;

(f) disclosure of the Applicant's obligations under this decision if a client has a complaint;

(h) a statement that the Applicant is not registered to provide advice in relation to investments involving securities or derivatives; and

(i) the information the Applicant must collect about the client under this decision, including the Applicant's obligations to collect Gatekeeper know-your-client (KYC) information.

18. The Applicant must deliver the information in the preceding section to the client in writing before the Applicant trades an Exchange-Traded Contract or transacts in an OTC Derivative with, for or on behalf of the client. If there is a significant change in respect of the information delivered to a client in the preceding section, the Applicant must take reasonable steps to notify the client of the change in a timely manner and, if possible, before the Applicant next transacts in an OTC Derivative with, for or on behalf of the client.

Content and delivery of transaction information

19. If the Applicant transacts with, for or on behalf of an Agro Client, the Applicant will promptly deliver a written confirmation of the transaction to the Agro Client.

20. The written confirmation required under the preceding section must include all of the following, if applicable:

(a) a description of the transaction;

(b) a description of the agreement that governs the transaction;

(c) the notional amount, quantity or volume of the underlying asset of the transaction;

(d) the number of units of the transaction (if applicable);

(e) the total price paid for the transaction and the per unit price of the transaction;

(f) the commission, sales charge, service charge and any other amount charged in respect of the transaction;

(g) the particular entity that transacted with the client and whether such entity acted as principal or agent in relation to the transaction;

(h) the date and the name of the trading facility on which the transaction took place;

(j) the date of the transaction;

Client statements

21. The Applicant must deliver a statement to an Agro Client, at the end of each quarterly period, if either of the following applies:

(a) within the quarterly period the Applicant transacted in an OTC Derivative with, for or on behalf of the Agro Client;

(b) the client has an outstanding position resulting from a transaction where the Applicant transacted in an OTC Derivative with, for or on behalf of the Agro Client.

22. A statement delivered under this section must include all of the following information for each transaction made with, for or on behalf of the client during the period covered by the statement, if applicable:

(a) the date of the transaction;

(b) a description of the transaction, including notional amount, the number of units of the transaction, the per unit price and the total price;

(c) information sufficient to identify the agreement that governs the transaction.

23. A statement delivered under this section must include all of the following information as at the date of the statement, if applicable:

(a) a description of each outstanding OTC Derivative;

(b) the valuation, as at the statement date, of each outstanding OTC Derivative referred to in paragraph (a);

(c) the final valuation, as at the expiry or termination date, of each OTC Derivative that expired or terminated during the period covered by the statement;

(d) a description of all client assets held or received by the Applicant as collateral, and the name of the entity holding such collateral;

(e) any cash balance in the client's account;

(f) a description of any other client asset held or received by the Applicant;

(g) the total market value of all cash, OTC Derivatives and other assets in the client's account, other than assets held or received as collateral.

Custody of client assets

24. The Applicant will hold assets of an Agro Client

(a) separate and apart from the Agro Client's own property,

(b) in trust for the Agro Client,

(c) in the case of cash, in a designated trust account at a Canadian custodian (as defined in NI 31-103) or a Canadian financial institution.

Compliance and record-keeping

25. The Applicant will establish, maintain and apply policies, procedures, controls and supervision sufficient to provide reasonable assurance that all of the following are satisfied:

(a) the Applicant and each individual acting on its behalf in relation to transacting in, or providing advice in relation to, a derivative, comply with securities legislation relating to trading and advising in derivatives;

(b) each individual who performs an activity on behalf of the Applicant relating to transacting in, or providing advice in relation to, a derivative, prior to commencing the activity and on an ongoing basis,

(i) has the experience, education and training that a reasonable person would consider necessary to perform the activity competently,

(ii) without limiting subparagraph (i), has the understanding of the structure, features and risks of each derivative that the individual transacts in or advises in relation to, and

(iii) conducts themselves with integrity.

Business continuity and disaster recovery

26. The Applicant will establish, maintain and apply a written business continuity and disaster recovery plan that is reasonably designed to allow the Applicant to minimize disruption and allow the Applicant to continue its business operations.

27. The business continuity and disaster recovery plan must outline the procedures to be followed in the event of an emergency or other disruption of the Applicant's normal business activities.

Records

28. The Applicant will keep records of its transactions, including all of the following, as applicable:

(a) records containing a general description of its Exchange-Traded Contracts and OTC Derivatives business and activities conducted with clients, and compliance with applicable provisions of securities legislation, including

(i) records of client assets, and

(ii) records documenting the firm's compliance with internal policies and procedures;

(b) for each OTC Derivatives transaction, records demonstrating the existence and nature of the OTC Derivatives transaction, including

(i) records of communications with the client relating to the OTC Derivatives transaction,

(ii) documents provided to the client to confirm the transaction, the terms of the OTC Derivatives and each transaction relating to the OTC Derivatives,

(iii) correspondence relating to the OTC Derivatives and each transaction relating to the OTC Derivatives, and

(iv) records made by staff relating to the OTC Derivatives and each transaction relating to the OTC Derivatives, including notes, memos or journals;

(c) for each OTC Derivatives transaction, records that provide for a complete and accurate understanding of the OTC Derivatives transaction and all transactions relating to the OTC Derivatives transaction, including

(i) records relating to pre-execution activity for each transaction including all communications relating to quotes, solicitations, instructions, transactions and prices however they may be communicated,

(ii) reliable timing data for the execution of each transaction relating to the OTC Derivatives, and

(iii) records relating to the execution of the transaction, including

(A) fees or commissions charged,

(B) any other information relevant to the transaction, and

(C) information used in calculating the OTC Derivatives valuation;

(d) an itemized record of post-transaction processing and events, including a record in relation to the calculation of margin and exchange of collateral;

(e) the price and valuation of the OTC Derivatives transaction.

Form, accessibility and retention of records

29. The records required to be maintained in this Instrument must be kept in a safe location, readily accessible and in a durable form for a period of 8 years following the date on which the derivative expires or is terminated, and

30. A record required to be provided to the regulator or the securities regulatory authority must be provided in a format that is capable of being read by the regulator or the securities regulatory authority.