Barclays Bank PLC and Barclays Capital Inc. – s. 38 of the CFA and s. 6.1 of OSC Rule 91-502 Trades in Recognized Options

Application to the Commission pursuant to section 38 of the Commodity Futures Act (Ontario) (CFA) for a ruling that the Applicants be exempted from the dealer registration requirement in paragraph 22(1)(a) and the prohibition against trading on non-recognized exchanges in section 33 of the CFA. Applicants will offer the ability to trade in commodity futures contracts and commodity futures options that trade on exchanges located outside Canada and cleared through clearing corporations located outside of Canada to certain of its clients in Ontario who meet the definition of “permitted client” in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.

Application to the Director for an exemption, pursuant to section 6.1 of OSC Rule 91-502 Trades in Recognized Options (Rule 91-502), exempting the Applicants and their Representatives from the proficiency requirements in section 3.1 of Rule 91-502 for trades in commodity futures options on exchanges located outside Canada.

Applicable Legislative Provisions

Commodity Futures Act, R.S.O. 1990, c. C.20, as am., ss. 22, 33, 38.
Securities Act, R.S.O. 1990, c. S.5, as am.

Rule Cited

Ontario Securities Commission Rule 91-502 Trades in Recognized Options, ss. 3.1, 6.1.

Instrument Cited

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 8.18

September 8, 2017

IN THE MATTER OF
THE COMMODITY FUTURES ACT,
R.S.O. 1990, c. C.20, AS AMENDED
(the CFA)

AND

IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, c. S.5, AS AMENDED
(the OSA)

AND

IN THE MATTER OF
ONTARIO SECURITIES COMMISSION RULE 91-502
TRADES IN RECOGNIZED OPTIONS
(Rule 91-502)

AND

IN THE MATTER OF
BARCLAYS BANK PLC AND
BARCLAYS CAPITAL INC.

RULING & EXEMPTION
(Section 38 of the CFA and Section 6.1 of Rule 91-502)

                UPON the application (the Application) of Barclays Bank PLC (BB PLC) and Barclays Capital Inc. (BCI) (collectively, the Applicants) to the Ontario Securities Commission (the Commission) for:

(a)           a ruling of the Commission, pursuant to section 38 of the CFA, that the Applicants are not subject to the dealer registration requirements in the CFA or the trading restrictions in the CFA in connection with trades in Exchange-Traded Futures (as defined below) on exchanges located outside Canada (Non-Canadian Exchanges) where the Applicants are acting as principal or agent in such trades to, from or on behalf of Permitted Clients (as defined below) (the Dealer Registration Relief);

(b)           a ruling of the Commission, pursuant to section 38 of the CFA, that a Permitted Client is not subject to the dealer registration requirements in the CFA or the trading restrictions in the CFA in connection with trades in Exchange-Traded Futures on Non-Canadian Exchanges, where an Applicant acts in respect of the trades in Exchange-Traded Futures on behalf of the Permitted Client pursuant to the above ruling (the Client Registration Relief); and

(c)           a decision of the Director, pursuant to section 6.1 of Rule 91-502, exempting the Applicants and their salespersons, directors, officers and employees (the Representatives) from section 3.1 of Rule 91-502 in connection with trades in Exchange-Traded Futures (collectively with the Dealer Registration Relief and the Client Registration Relief, the Requested Relief);

                AND WHEREAS for the purposes of this ruling and exemption (collectively, the Decision):

(i)            “BCCI” means Barclays Capital Canada Inc.;

“CEA” means the U.S. Commodity Exchange Act;

“CFTC” means the U.S. Commodity Futures Trading Commission;

“dealer registration requirements in the CFA” means the provisions of section 22 of the CFA that prohibit a person or company from trading in Exchange-Traded Futures unless the person or company satisfies the applicable provisions of section 22 of the CFA;

“EEA” means European Economic Area;

“EEA Member States” means Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the U.K.;

“Exchange Act” means the U.S. Securities Exchange Act of 1934;

“Exchange-Traded Futures” means a commodity futures contract or a commodity futures option that trades on one or more organized exchanges located outside of Canada and that is cleared through one or more clearing corporations located outside of Canada;

“FCA” means the Financial Conduct Authority in the U.K.;

“FINRA” means the Financial Industry Regulatory Authority in the U.S.;

“NI 31-103” means National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations;

“NFA” means the National Futures Association in the U.S.;

“Permitted Client” means a client in Ontario that is a “permitted client” as that term is defined in section 1.1 of NI 31-103;

“PRA” means the Prudential Regulation Authority in the U.K.;

“SEC” means the U.S. Securities and Exchange Commission;

“specified affiliate” has the meaning ascribed to that term in Form 33-109F6 to National Instrument 33-109 Registration Information;

“trading restrictions in the CFA” means the provisions of section 33 of the CFA that prohibit a person or company from trading in Exchange-Traded Futures unless the person or company satisfies the applicable provisions of section 33 of the CFA;

“U.K.” means the United Kingdom;

“U.S.” means the United States of America; and

(ii)           terms used in this Decision that are defined in the OSA, and not otherwise defined in this Decision or in the CFA, shall have the same meaning as in the OSA, unless the context otherwise requires;

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

                AND UPON the Applicants having represented to the Commission and the Director as follows:

1.             BB PLC is a public limited company registered in England and Wales. Its registered office is located at 1 Churchill Place, London, England E14 5HP.

2.             BB PLC is a reporting issuer in each of the provinces of Canada.

3.             BB PLC is a wholly owned subsidiary of Barclays PLC. BB PLC (together with its subsidiaries) is a major global financial services provider engaged in retail banking, credit cards, corporate banking, investment banking, wealth management and investment management services. BB PLC engages in the securities and commodities trading activities described herein through its investment banking division Barclays Capital.

4.             BB PLC is a member of major international securities and commodity futures exchanges and clearing houses, including but not limited to, EUREX AG and NYSE Euronext.

5.             BB PLC is authorized by the PRA under the U.K. Financial Services and Markets Act 2000 (as amended, including those amendments introduced by the Financial Services Act 2012) (the FSMA) to carry on a range of regulated activities within the U.K. and is subject to “dual regulation” by the FCA and the PRA. BB PLC is currently licensed in the U.K. to deal with eligible counterparties, professional clients and retail clients with respect to its permitted activities. BB PLC is currently authorized to carry on certain regulated activities in the U.K. in relation to certain specified investments, including the following: (a) arranging (bringing about) deals in futures; (b) dealing in futures as agent; (c) dealing in futures as principal; (d) making arrangements with a view to transactions in futures; (e) managing futures, (f) safeguarding and administration of assets in relation to futures (without arranging); and (g) arranging safeguarding and administration of assets in relation to futures. As is the case with all firms authorized in the U.K., BB PLC’s current U.K. regulatory status remains subject to variation and the possible imposition of regulatory limitations or requirements and is described as at the date of the Application.

6.             PLC has “passported” its U.K. registration into the EEA Member States. In relation to BB PLC’s futures services, BB PLC utilizes its EEA passport to the extent that it may provide commodity futures services into other EEA Member States, and currently conducts such commodity futures activities out of its head office in London.

7.             BB PLC is an Exempt Foreign Broker under CFTC rules (17 CFR 30) and is able to conduct brokerage activities for U.S. customers on non-U.S. exchanges without having to register with the CFTC as a futures commission merchant (FCM). As a result, BB PLC is a member of the NFA and is approved by the NFA as an exempt foreign firm under CFTC Regulation 30.10 under the CEA.

8.             BB PLC is relying on the international dealer exemption in section 8.18 of NI 31-103 (the IDE) in Alberta, British Columbia, Manitoba, Ontario and Québec. BB PLC is not registered pursuant to securities or commodity futures legislation in any jurisdiction of Canada.

9.             BCI is incorporated under the laws of the state of Connecticut in the U.S. Its head office is located at 745 7th Avenue, New York, New York, U.S.

10.          BCI is not a reporting issuer in any jurisdiction of Canada.

11.          BCI provides security brokerage services and is an indirect wholly-owned subsidiary of BB PLC.

12.          BCI is a member of major U.S. securities and commodity futures exchanges and clearing houses, including but not limited to the Chicago Board of Trade, Chicago Mercantile Exchange and the New York Mercantile Exchange.

13.          BCI is a broker-dealer registered with the SEC, a member of FINRA, a registered FCM with the CFTC and a member of the NFA.

14.          BCI is relying on the IDE and the international adviser exemption in section 8.26 of NI 31-103 in Alberta, British Columbia, Manitoba, Ontario, Québec and Saskatchewan. BCI is not registered pursuant to securities or commodity futures legislation in any jurisdiction of Canada.

15.          The Applicants provide FCM services, which include commodity clearing and execution services, to various institutional customers.

16.          The Applicants are not in default of securities legislation in any jurisdiction in Canada or under the CFA, subject to the matter to which this Decision relates. The Applicants are in compliance in all material respects with U.S. and U.K. securities and commodity futures laws, as applicable.

17.          The Applicants rely on discretionary relief under the CFA and the OSA similar to the Requested Relief, which will expire on September 11, 2017.

18.          BCCI is an indirect wholly owned subsidiary of BB PLC. BCCI is registered as an investment dealer in Alberta, British Columbia, Manitoba, New Brunswick, Ontario, Québec and Saskatchewan and is a dealer member of the Investment Industry Regulatory Organization of Canada.

19.          Pursuant to its authorizations and approvals, BB PLC may trade in securities and Exchange-Traded Futures in the U.K. and in all EEA Member States, and conduct brokerage activities for U.S. customers on non-U.S. exchanges without having to register with the CFTC as a FCM. Rules of the FCA and the PRA, as applicable, require BB PLC to maintain adequate capital levels, make and keep specified types of records relating to customer accounts and transactions, and comply with other forms of customer protection rules, including rules respecting: know-your-customer obligations, client identification and account-opening requirements, suitability requirements, anti-money laundering checks, credit checks, delivery of confirmation statements, clearing deposits, dealing and handling customer order obligations including managing conflicts of interests and best execution rules. These rules require BB PLC to treat Permitted Clients materially the same as BB PLC’s U.K., EEA and U.S. customers with respect to transactions made on exchanges in the U.K. and the EEA Member States. In order to protect customers in the event of insolvency or financial instability of BB PLC, BB PLC is required to ensure that customer securities and monies be separately accounted for and segregated from the securities and monies of BB PLC. BB PLC is subject to the FCA’s Client Asset Rules, which impose a general duty to segregate client assets and require BB PLC to place client assets exclusively with counterparties selected and approved in compliance with the criteria set out in the FCA’s Client Asset Rules (the BB PLC Approved Depositories).

20.          Pursuant to its registrations and memberships, BCI is authorized to handle customer orders and receive and hold customer margin deposits, and otherwise act as a futures broker, in the U.S. Rules of the CFTC and NFA require BCI to maintain adequate capital levels, make and keep specified types of records relating to customer accounts and transactions, and comply with other forms of customer protection rules, including rules respecting: know-your-customer obligations, account-opening requirements, suitability requirements, anti-money laundering checks, credit checks, delivery of confirmation statements, clearing deposits and initial and maintenance margins. These rules require BCI to treat Permitted Clients materially the same as its U.S. customers with respect to transactions made on U.S. exchanges. With respect to transactions made on U.S. exchanges, in order to protect customers in the event of the insolvency or financial instability of BCI, BCI is required to ensure that customer securities and monies be separately accounted for, segregated at all times from their own securities and monies (including the securities and monies of their affiliates) and custodied exclusively with such banks, trust companies, clearing organizations or other licensed futures brokers and intermediaries as may be approved for such purposes under the CEA and the rules promulgated by the CFTC thereunder (collectively, the BCI Approved Depositories). BCI is further required to obtain acknowledgements from any BCI Approved Depository holding customer funds or securities related to U.S.-based transactions or accounts that such funds and securities are to be separately held on behalf of such customers, with no right of set-off against BCI’s obligations or debts.

21.          The Applicants propose to offer certain of their Permitted Clients in Ontario the ability to trade in Exchange-Traded Futures through the Applicants.

22.          BB PLC will execute and clear trades in Exchange-Traded Futures on behalf of Permitted Clients in Ontario in the same manner that it executes and clears trades on behalf of its U.K. clients, EEA clients and U.S. clients. BB PLC will follow the same know-your-customer and segregation of assets procedures that it follows in respect of its U.K. clients, EEA clients and U.S. clients. Permitted Clients will be afforded the benefits of compliance by BB PLC with the requirements of the FSMA and the statutory and other requirements of the U.K. regulators, recognized investment exchanges and applicable European law and regulations. Permitted Clients in Ontario will have the same contractual rights against BB PLC as U.K. clients of BB PLC.

23.          BB PLC is required under U.K. securities laws to categorize its clients using three categories (who are afforded a descending level of regulatory protection): (1) retail clients; (2) professional clients; and (3) eligible counterparties. Permitted Clients would generally fall into the categories of “professional clients” and “eligible counterparties”. The levels of regulatory protection afforded to these categories of clients are substantially similar to those afforded to Permitted Clients.

24.          BCI will execute and clear trades in Exchange-Traded Futures on behalf of Permitted Clients in Ontario in the same manner that it executes and clears trades on behalf of its U.S. clients, all of which are “Eligible Contract Participants” as defined in the CEA. BCI will follow the same know-your-customer and segregation of assets procedures that it follows in respect of its U.S. clients. Permitted Clients will be afforded the benefits of compliance by BCI with the requirements of the CEA and the regulations thereunder, and the Exchange Act and the regulations thereunder. Permitted Clients in Ontario will have the same contractual rights against BCI as U.S. clients of BCI.

25.          The Applicants will not maintain an office, sales force or physical place of business in Ontario.

26.          The Applicants will solicit trades in Exchange-Traded Futures in Ontario only from persons who qualify as Permitted Clients.

27.          Permitted Clients of the Applicants will only be offered the ability to effect trades in Exchange-Traded Futures on Non-Canadian Exchanges.

28.          The Exchange-Traded Futures to be traded by Permitted Clients will include, but will not be limited to, Exchange-Traded Futures for equity index, interest rate, foreign exchange, bond, energy, agricultural and other commodity products.

29.          Permitted Clients of the Applicants will be able to execute Exchange-Traded Futures orders through the Applicants by contacting their global execution desks. Permitted Clients may also be able to self-execute Exchange-Traded Futures orders electronically via an independent service vendor and/or other electronic trading routing. Permitted Clients may also be able to execute Exchange-Traded Futures orders through third party brokers and then “give up” the transaction for clearance through the Applicants.

30.          The Applicants may execute a Permitted Client’s order on the relevant Non-Canadian Exchange in accordance with the rules and customary practices of the exchange, or engage another broker to assist in the execution of orders. The Applicants will remain responsible for all executions when the Applicants are listed as the executing broker of record on the relevant Non-Canadian Exchange.

31.          The Applicants may perform both execution and clearing functions for trades in Exchange-Traded Futures or may direct that a trade executed by them be cleared through a carrying broker if the Applicants are not clearing members of the Non-Canadian Exchange on which the trade is executed and cleared. Alternatively, the Permitted Client of the Applicants will be able to direct that trades executed by the Applicants be cleared through clearing brokers not affiliated with the Applicants in any way (each a Non-Barclays Clearing Broker).

32.          If the Applicants perform only the execution of a Permitted Client’s Exchange-Traded Futures order and “give-up” the transaction for clearance to a Non-Barclays Clearing Broker, such clearing broker will also be required to comply with the rules of the exchanges of which it is a member and any relevant regulatory requirements, including requirements under the CFA as applicable. Each such Non-Barclays Clearing Broker will represent to the Applicants in an industry-standard give-up agreement, that it will perform its obligations in accordance with applicable laws, governmental, regulatory, self-regulatory, exchange and clearing house rules and the customs and usages of the exchange or clearing house on which the relevant Permitted Client’s Exchange-Traded Futures order will be executed and cleared. The Applicants will not enter into a give-up agreement with any Non-Barclays Clearing Broker located in (i) the U.S. unless such clearing broker is registered with the CFTC and/or the SEC, as applicable, or (ii) the U.K. unless such clearing broker is authorized by the PRA or FCA, as required.

33.          As is customary for all trades in Exchange-Traded Futures, a clearing corporation appointed by the exchange or clearing division of the exchange is substituted as a universal counterparty on all trades in Exchange-Traded Futures and Permitted Client orders that are submitted to the exchange in the name of the Non-Barclays Clearing Broker or the Applicants or, on exchanges where the Applicants are not members, in the name of another carrying broker. The Permitted Client of an Applicant is responsible to that Applicant for payment of daily mark-to-market variation margin and/or proper margin to carry open positions and the Applicant, the carrying broker or the Non-Barclays Clearing Broker is in turn responsible to the clearing corporation/division for payment.

34.          Permitted Clients that direct the Applicants to give up transactions in Exchange-Traded Futures for clearance and settlement by Non-Barclays Clearing Brokers will execute the give-up agreements described above.

35.          Permitted Clients will pay commissions for trades to the Applicants. In the event that the Applicants need to utilize a Non-Barclays Clearing Broker for clearing or execution services in relation to such trades, the Applicants will generally pay commissions to the Non-Barclays Clearing Broker.

36.          The trading restrictions in the CFA apply unless, among other things, an Exchange-Traded Future is traded on a recognized or registered commodity futures exchange and the form of the contract is approved by the Director. To date, no Non-Canadian Exchanges have been recognized or registered under the CFA.

37.          If the Applicants were registered under the CFA as “futures commission merchants”, they could rely upon certain exemptions from the trading restrictions in the CFA to effect trades in Exchange-Traded Futures to be entered into on certain Non-Canadian Exchanges.

38.          Section 3.1 of Rule 91-502 provides that no person shall trade as agent in, or give advice in respect of, a recognized option, as defined in section 1.1 of Rule 91-502, unless he or she has successfully completed the Canadian Options Course (which has been replaced by the Derivatives Fundamentals Course and the Options Licensing Course).

39.          All Representatives of BB PLC who trade futures and options in the U.K. need to have attained and maintain a level of skills, knowledge and expertise to discharge their responsibilities in accordance with the FCA’s Training and Competency Handbook. Ordinarily, Representatives who trade futures and options will have passed examinations in U.K. Financial Regulation and Securities and/or Derivatives administered by the Chartered Institute for Securities & Investment (CISI) under its Capital Markets Programme.

40.          Under the U.K. Senior Managers & Certification Regime, these Representatives will be classified by BB PLC as certified individuals. Although these Representatives will not be subject to direct approval by the FCA or the PRA, BB PLC must take reasonable care to ensure that a Representative does not perform a certification function without having first been certified as fit and proper to do so. This certification must be renewed on an annual basis.

41.          All Representatives of BCI who trade options in the U.S. have passed the National Commodity Futures Examination (Series 3), being the relevant futures and options proficiency examination administered by FINRA.

                AND UPON the Commission and Director being satisfied that it would not be prejudicial to the public interest to grant the exemptions requested;

                IT IS RULED, pursuant to section 38 of the CFA, that the Applicants are not subject to the dealer registration requirement set out in the CFA or the trading restrictions in the CFA in connection with trades in Exchange-Traded Futures where the Applicants are acting as principal or agent in such trades to, from or on behalf of Permitted Clients provided that:

(a)           each client effecting trades in Exchange-Traded Futures is a Permitted Client;

(b)           any Non-Barclays Clearing Broker has represented and covenanted to the applicable Applicant that it is appropriately registered or exempt from registration under the CFA;

(c)           the Applicants only execute and clear trades in Exchange-Traded Futures for Permitted Clients on Non-Canadian Exchanges;

(d)           at the time trading activity is engaged in, the applicable Applicant:

(i)            in the case of BB PLC,

(1)           has its head office or principal place of business in the U.K.;

(2)           is authorized by the PRA and is regulated by the FCA and the PRA;

(3)           is a member firm of the NFA and is approved by the NFA as an exempt foreign firm;

(4)           engages in the business of an authorized firm in Exchange-Traded Futures in the U.K.; and

(ii)           in the case of BCI,

(1)           has its head office or principal place of business in the U.S.;

(2)           is registered as a FCM with the CFTC;

(3)           is a member firm of the NFA; and

(4)           engages in the business of a FCM in Exchange-Traded Futures in the U.S.;

(e)           the applicable Applicant has provided to the Permitted Client the following disclosure in writing:

(i)            a statement that the Applicant is not registered in Ontario to trade in Exchange-Traded Futures as principal or agent;

(ii)           a statement that the Applicant’s head office or principal place of business is located in London, England, in the case of BB PLC, or New York, New York, U.S., in the case of BCI;

(iii)          a statement that all or substantially all of the Applicant’s assets may be situated outside of Canada;

(iv)          a statement that there may be difficulty enforcing legal rights against the Applicant because of the above; and

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

(f)            each of the Applicants has submitted to the Commission a completed Submission to Jurisdiction and Appointment of Agent for Service in the form attached as Appendix “A” hereto;

(g)           BB PLC notifies the Commission of any regulatory action initiated after the date of this ruling in respect of BB PLC, or any predecessors or specified affiliates of BB PLC, by completing and filing with the Commission Appendix “B” hereto within ten days of the commencement of such action; provided that BB PLC may also satisfy this condition by filing with the Commission within ten days of the date of this Decision a notice making reference to and incorporating by reference the disclosure made relating to BB PLC pursuant to U.S. federal securities laws, and any updates to such disclosure that may be made from time to time, and by providing a copy, in a manner reasonably acceptable to the Director, of any Form BD “Regulatory Action Disclosure Reporting Page” relating to BB PLC;

(h)           BCI notifies the Commission of any regulatory action initiated after the date of this ruling in respect of BCI, or any predecessors or specified affiliates of BCI, by completing and filing with the Commission Appendix “B” hereto within ten days of the commencement of such action; provided that BCI may also satisfy this condition by filing with the Commission within ten days of the date of this Decision a notice making reference to and incorporating by reference the disclosure made by BCI pursuant to U.S. federal securities laws that is identified in the FINRA Broker Check system, and any updates to such disclosure as may be made from time to time, and by providing notification, in a manner reasonably acceptable to the Director, of any filing of a Form BD “Regulatory Action Disclosure Reporting Page”;

(i)            if the Applicants do not rely on the IDE by December 31st of each year, each of the Applicants pays a participation fee based on its specified Ontario revenues for its previous financial year in compliance with the requirements of Part 3 and section 6.4 of OSC Rule 13-502 Fees as if the Applicants relied on the IDE;

(j)            by December 1st of each year, each Applicant notifies the Commission of its continued reliance on the exemption from the dealer registration requirement granted pursuant to this Decision by filing Form 13-502F4 Capital Markets Participation Fee Calculation; and

(k)           this Decision will terminate on the earliest of:

(i)            the expiry of any transition period as may be provided by law, after the effective date of the repeal of the CFA;

(ii)           six months, or such other transition period as may be provided by law, after the coming into force of any amendment to Ontario commodity futures law (as defined in the CFA) or Ontario securities law (as defined in the OSA) that affects the dealer registration requirements in the CFA or the trading restrictions in the CFA; and

(iii)          five years after the date of this Decision.

                AND IT IS FURTHER RULED, pursuant to section 38 of the CFA, that a Permitted Client is not subject to the dealer registration requirement in the CFA or the trading restrictions in the CFA in connection with trades in Exchange-Traded Futures on Non-Canadian Exchanges where the Applicants act in connection with trades in Exchange-Traded Futures on behalf of the Permitted Clients pursuant to the above ruling.

“Grant Vingoe”
Vice Chair
Ontario Securities Commission

“Philip Anisman”
Commissioner
Ontario Securities Commission

                IT IS THE DECISION of the Director, pursuant to section 6.1 of Rule 91-502, that section 3.1 of Rule 91-502 does not apply to the Applicants or their Representatives in respect of trades in Exchange-Traded Futures, provided that:

(a)           in the case of BB PLC, BB PLC and its Representatives maintain their respective authorizations and memberships with the FCA, the PRA and the NFA which permit them to trade and clear commodity futures options in the U.K. and all EEA Member States, and remain subject to regulation by the FCA and the PRA; and

(b)           in the case of BCI, BCI and its Representatives maintain their respective registrations and memberships with the CFTC and NFA which permit them to trade and clear commodity futures options in the U.S.; and

(c)           this Decision will terminate on the earliest of:

(i)            the expiry of any transition period as may be provided by law, after the effective date of the repeal of the CFA;

(ii)           six months, or such other transition period as may be provided by law, after the coming into force of any amendments to Ontario commodity futures law (as defined in the CFA) or Ontario securities law (as defined in the OSA) that affects the dealer registration requirements in the CFA or the trading restrictions in the CFA; and

(iii)          five years after the date of this Decision.

“Elizabeth King”
Deputy Director
Ontario Securities Commission

APPENDIX “A”

SUBMISSION TO JURISDICTION AND APPOINTMENT OF AGENT FOR SERVICE

INTERNATIONAL DEALER OR INTERNATIONAL ADVISER EXEMPTED FROM REGISTRATION UNDER THE COMMODITY FUTURES ACT, ONTARIO

1.             Name of person or company ("International Firm"):

2.             If the International Firm was previously assigned an NRD number as a registered firm or an unregistered exempt international firm, provide the NRD number of the firm:

3.             Jurisdiction of incorporation of the International Firm:

4.             Head office address of the International Firm:

5.             The name, e-mail address, phone number and fax number of the International Firm's individual(s) responsible for the supervisory procedure of the International Firm, its chief compliance officer, or equivalent.

Name:
E-mail address:
Phone:
Fax:

6.             The International Firm is relying on an exemption order under section 38 or section 80 of the Commodity Futures Act (Ontario) that is similar to the following exemption in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (the "Relief Order"):

  Section 8.18 [international dealer]

  Section 8.26 [international adviser]

  Other [specify]:

7.             Name of agent for service of process (the "Agent for Service"):

8.             Address for service of process on the Agent for Service:

9.             The International Firm designates and appoints the Agent for Service at the address stated above as its agent upon whom may be served a notice, pleading, subpoena, summons or other process in any action, investigation or administrative, criminal, quasi-criminal or other proceeding (a "Proceeding") arising out of or relating to or concerning the International Firm's activities in the local jurisdiction and irrevocably waives any right to raise as a defence in any such proceeding any alleged lack of jurisdiction to bring such Proceeding.

10.          The International Firm irrevocably and unconditionally submits to the non-exclusive jurisdiction of the judicial, quasi-judicial and administrative tribunals of the local jurisdiction in any Proceeding arising out of or related to or concerning the International Firm's activities in the local jurisdiction.

11.          Until 6 years after the International Firm ceases to rely on the Relief Order, the International Firm must submit to the regulator

a.             a new Submission to Jurisdiction and Appointment of Agent for Service in this form no later than the 30th day before the date this Submission to Jurisdiction and Appointment of Agent for Service is terminated;

b.             an amended Submission to Jurisdiction and Appointment of Agent for Service no later than the 30th day before any change in the name or above address of the Agent for Service;

c.             a notice detailing a change to any information submitted in this form, other than the name or above address of the Agent for Service, no later than the 30th day after the change.

12.          This Submission to Jurisdiction and Appointment of Agent for Service is governed by and construed in accordance with the laws of the local jurisdiction.

Dated: _______________

________________________________________________
(Signature of the International Firm or authorized signatory)

________________________________________________
(Name of signatory)

________________________________________________
(Title of signatory)

Acceptance

The undersigned accepts the appointment as Agent for Service of _______________ [Insert name of International Firm] under the terms and conditions of the foregoing Submission to Jurisdiction and Appointment of Agent for Service.

Dated: ____________________

________________________________________________
(Signature of the Agent for Service or authorized signatory)

________________________________________________
(Name of signatory)

________________________________________________
(Title of signatory)

This form, and notice of a change to any information submitted in this form, is to be submitted through the Ontario Securities Commission’s Electronic Filing Portal:

https://www.osc.gov.on.ca/filings

APPENDIX “B”

NOTICE OF REGULATORY ACTION

1.             Has the firm, or any predecessors or specified affiliates of the firm entered into a settlement agreement with any financial services regulator, securities or derivatives exchange, SRO or similar agreement with any financial services regulator, securities or derivatives exchange, SRO or similar organization?

Yes _____ No _____

If yes, provide the following information for each settlement agreement:

2.             Has any financial services regulator, securities or derivatives exchange, SRO or similar organization:

If yes, provide the following information for each action:

3.             Is the firm aware of any ongoing investigation of which the firm or any of its specified affiliates is the subject?

Yes _____ No _____

If yes, provide the following information for each investigation:

Witness

The witness must be a lawyer, notary public or commissioner of oaths.

This form is to be submitted through the Ontario Securities Commission’s Electronic Filing Portal:

https://www.osc.gov.on.ca/filings