UBS AG

Headnote

Section 80 of the Commodity Futures Act -- relieffor Schedule III bank from requirement to register as an adviserwhere the performance of the service as an adviser is incidentalto its principal banking business.

Statutes Cited

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

IN THE MATTER OF

THE COMMODITY FUTURES ACT,

R.S.O. 1990, CHAPTER C. 20,AS AMENDED (the "Act")

AND

IN THE MATTER OF

UBS AG

RULING

UPON application (the "Application")by UBS AG ("UBS") to the Ontario SecuritiesCommission (the "Commission") for an orderpursuant to section 80 of the Act exempting UBS from the requirementto obtain registration as an adviser under paragraph 22(1)(b)of the Act in connection with the banking business to be carriedon by UBS in Ontario;

AND UPON considering the Applicationand the recommendation of the staff of the Commission;

AND UPON UBS having represented to theCommission that:

1. UBS is a corporation duly organized underthe laws of Switzerland. UBS was formed on June 29, 1998 bythe merger of Union Bank of Switzerland (founded in 1862)and Swiss Bank Corporation (founded in 1872). The principaloffices of UBS are located in Zurich and Basel, Switzerland.

2. UBS is one of the world's leading financialservices organizations and, together with its subsidiaries,provides a comprehensive range of financial services includingcommercial, retail and investment banking, lease and tradefinancing, wealth and asset management services, investmentmanagement services and trust services.

3. UBS is publicly listed, with its sharestrading on the New York, Swiss and Tokyo stock exchanges.No individual or entity owns more than 10% of UBS' shares.

4. UBS has approximately 327 branches in Switzerland.UBS also operates branches in over 50 countries outside Switzerland.

5. In Canada, UBS has a wholly-owned subsidiary,UBS Bank (Canada), which is a Schedule II chartered bank underthe Bank Act (Canada) (the "Bank Act").

6. As at December 31, 2002, UBS had totalassets of CHF 1,181,118 million (approximately Cdn.$1,194,346million, based on a conversion using the Bank of Canada'snoon spot rate on December 31, 2002).

7. UBS is not, and has no current intentionof becoming, a reporting issuer in any jurisdiction in Canada,nor are any of its securities listed on any stock exchangein Canada.

8. In June 1999, amendments to the Bank Actwere proclaimed that permit foreign banks to operate directlyin Canada through branches, rather than separate subsidiarySchedule II banks. Foreign banks permitted to carry on bankingactivities in Canada through branches will be designated inSchedule III to the Bank Act. The foreign bank branches willincrease competition in the Canadian financial services marketplace to the benefit of Canadian consumers.

9. On May 16, 2003, UBS received approvalfrom the Minister of Finance (Canada) to establish a fullservice foreign bank branch in Canada and, on May 30, 2003,received an order from the Office of the Superintendent ofFinancial Institutions approving the commencement and carryingon of business in Canada pursuant to sections 524 and 534of the Bank Act.

10. Upon receipt of all necessary regulatoryapprovals, UBS intends to establish and operate a ScheduleIII foreign bank branch under the Bank Act.

11. The operations of UBS' foreign bank branchwill primarily consist of commercial lending, originationof structured products, equity derivatives and fixed incomederivatives, and wealth management services and the offeringof UBS' products to private clients.

12. UBS will only accept deposits from thefollowing:

(a) Her Majesty in right of Canada or inright of a province, an agent of Her Majesty in either ofthose rights, including a municipal or public body empoweredto perform a function of government in Canada, or an entitycontrolled by Her Majesty in either of those rights;

(b) the government of a foreign countryor any political subdivision of that country, an agencyof the government of a foreign country or any politicalsubdivision of that country, or an entity that is controlledby the government of a foreign country or any politicalsubdivision of that country;

(c) an international agency of which Canadais a member, including the Inter-American Development Bank,the Asian Development Bank, the Caribbean Development Bank,the European Bank for Reconstruction and Development andany other international regional bank of which Canada isa member, and an international agency of which Canada isa member that is a member of the World Bank Group;

(d) a financial institution (that is, (i)a bank or an authorized foreign bank under the Bank Act,(ii) a body corporate to which the Trust and Loan CompaniesAct (Canada) applies, (iii) an association to whichthe Cooperative Credit Associations Act (Canada)applies or a central cooperative credit society for whichan order has been made under subsection 473(1) of that Act,(iv) an insurance company or a fraternal benefit societyincorporated or formed under the Insurance CompaniesAct (Canada), (v) a trust, loan or insurance corporationincorporated by or under an Act of the legislature of aprovince, (vi) a cooperative credit society incorporatedand regulated by or under an Act of the legislature of aprovince, (vii) an entity that is incorporated or formedby or under an Act of Parliament or of the legislature ofa province and that is primarily engaged in dealing in securities,including portfolio management and investment counselling,and is registered to act in such capacity under the applicableLegislation, and (viii) a foreign institution (that is (A)engaged in the business of banking, the trust, loan or insurancebusiness, the business of a cooperative credit society orthe business of dealing in securities or is otherwise engagedprimarily in the business of providing financial services,and (B) incorporated or formed otherwise than by or underan Act of Parliament or of the legislature of a province);

(e) a pension fund that is maintained inrespect of a pension plan registered for income tax purposesand that has total assets under administration of more than$100 million at the time the first deposit transaction ismade;

(f) a mutual fund that is regulated underan Act of the legislature of a province or under the lawsof a jurisdiction outside Canada and the assets of whichare managed by a person that has total assets under theirmanagement of more than $10 million at the time the firstdeposit transaction is made;

(g) an entity that, at the time the firstdeposit transaction is made, has for the fiscal year immediatelypreceding that deposit transaction, gross revenues of morethan $5 million;

(h) any other entity, where the depositfacilitates the provision of the following services by thebank to the entity, namely,

(i) lending money;

(ii) dealing in foreign exchange; or

(iii) dealing in securities, other thandebt obligations of the bank; or

(i) any other person if the deposit (asdefined in the Bank Act) is not less than $150,000,

as may be amended by the Bank Act from timeto time.

13. Banks chartered under Schedules I andII to the Bank Act are exempt from the registration requirementof paragraph 22(1)(b) of the Act. However, since UBS' foreignbank branch will not be chartered under Schedule I or II tothe Bank Act, the registration exemption under the Act isnot available to it.

14. In order to ensure that UBS, as an entitylisted on Schedule III to the Bank Act, will be able to providebanking services to businesses in Ontario, it requires theregistration exemption currently enjoyed by banking institutionsincorporated under the Bank Act to the extent that the registrationexemption applicable to such banking institutions under theAct is relevant to the banking business to be undertaken byUBS in Ontario.

AND UPON the Commission being satisfiedthat to do so would not be prejudicial to the public interest;

IT IS RULED pursuant to section 80 ofthe Act that, upon the establishment by UBS of a branch designatedon Schedule III to the Bank Act, UBS is exempt from the registrationrequirement of paragraph 22(1)(b) of the Act where the performanceof the service as an adviser is solely incidental to UBS's principalbanking business in Ontario.

October 10, 2003.