Barclays Capital Inc. -- s. 38 of the Act and 6.1 of the Rule 91-502

Headnote

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 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.

Statutes Cited

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.

Rules Cited

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

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

September 11, 2012

IN THE MATTER OF

THE COMMODITY FUTURES ACT,

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

(the Act)

AND

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S. 5, AS AMENDED

(the OSA)

AND

IN THE MATTER OF

BARCLAYS BANK PLC

AND

IN THE MATTER OF

BARCLAYS CAPITAL INC.

RULING & EXEMPTION

(Section 38 of the Act and Section 6.1 of Rule 91-502)

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

(a) a ruling of the Commission, pursuant to section 38 of the Act, that each Applicant be exempted from the dealer registration requirements in the Act (as defined below) and the trading restrictions in the Act (as defined below) in connection with trades (Futures Trades) in contracts (as defined below) on exchanges located outside Canada (Non-Canadian Exchanges) where the Applicant is acting as principal or agent in such trades to, from or on behalf of Permitted Clients (as defined below); and

(b) an exemption of the Director, pursuant to section 6.1 of OSC Rule 91-502 Trades in Recognized Options (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 Futures Trades;

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

(i) "BCCI" means Barclays Canada Capital Inc.;

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

"contract" means a commodity futures contract or a commodity futures option that trades on one or more organized exchanges located outside of Canada and cleared through one or more clearing corporations located outside of Canada;

"dealer registration requirements in the Act" means the provisions of section 22 of the Act that prohibit a person or company from trading in a contract unless the person or company satisfies the applicable provisions of section 22 of the Act;

"FINRA" means the Financial Industry Regulatory Authority in the United States;

"FSA" means the Financial Services Authority in the United Kingdom;

"NFA" means the National Futures Association in the United States;

"Permitted Client" means a client in Ontario that is a "permitted client" as that term is defined in section 1.1. of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations;

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

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

"trading restrictions in the Act" means the provisions of section 33 of the Act that prohibit a person or company from trading in a contract unless the person or company satisfies the applicable provisions of section 33 of the Act; and

(ii) terms used in the Decision that are defined in the OSA, and not otherwise defined in the Decision or in the Act, 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 Applicant having represented to the Commission and the Director as follows:

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

2. BB PLC is a reporting issuer in each of the provinces of Canada and is not in default of securities legislation in any province of Canada.

3. 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, with an extensive international presence in Europe, the Americas, Africa, the Middle East and Asia.

4. BB PLC engages in the securities and commodities trading activities described herein through its investment banking division Barclays Capital. BB PLC is a wholly owned subsidiary of Barclays PLC.

5. BB PLC is authorised by the FSA under the U.K. Financial Services and Markets Act 2000 to carry on a range of regulated activities within the UK and is subject to consolidated supervision by the FSA. BB PLC is also approved by the NFA as an exempt foreign firm. Pursuant to these authorizations and approvals, BB PLC may (inter alia) trade in securities and exchange contracts in the United Kingdom, and conduct brokerage activities for U.S. customers on non-U.S. futures exchanges without having to register with the CFTC as a futures commission merchant. BB PLC, as a BCD credit institution (as such term is defined in the FSA's rules), holds customer's monies as banker and not as trustee. As such, BB PLC is not obliged to segregate customer's monies from its own monies. All margin posted by customers in respect of Futures Contracts is transferred as an outright transfer of title. BB PLC's obligation to the customer is to return investments and/or other assets which are fungible with those provided by the customer, or the cash equivalent, subject to its rights to apply margin to meet the customer's obligations.

6. BCCI is an indirect wholly owned subsidiary of BB PLC. BCCI is registered under the OSA as a dealer in the category of investment dealer and is a dealer member of the Investment Industry Regulatory Organization of Canada (IIROC). BCCI is not registered as a dealer under the Act and does not act as a broker for Futures Trades.

7. BCI is incorporated under the laws of the State of Connecticut in the United States of America having its head office located at 745 7th Avenue, New York, New York, USA.

8. BCI is an indirect wholly owned subsidiary of BB PLC.

9. BCI is not a reporting issuer in any jurisdiction in Canada.

10. BCI is a broker-dealer registered with the SEC, a member of FINRA, a futures commission merchant with the CFTC and a member of the NFA. 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 United States. Rules of the CFTC and the 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 know-your-customer obligations, account opening, suitability, anti-money laundering checks, credit checks, delivery of confirmation statements, clearing deposits and initial and maintenance margins. These rules do not permit BCI to treat Permitted Clients materially differently from the BCI's US customers. 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 the securities and monies of BCI 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 U.S. Commodity Exchange Act and the rules promulgated by the CFTC thereunder (the BCI Approved Depositories). BCI is also required to obtain acknowledgements from any BCI Approved Depository holding customer funds or securities 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.

11. BCI is exempt from registration as a dealer under the OSA pursuant to the international dealer exemption in section 8.18 of NI 31-103.

12. The Applicants propose to offer certain of its Permitted Clients in Ontario the ability to trade in contracts through the Applicants.

13. Each Applicant will not maintain an office, sales force or physical place of business in Ontario.

14. The Applicants will solicit business in Ontario only from persons who qualify as Permitted Clients.

15. Permitted Clients of the Applicants will only be offered the ability to effect Futures Trades on Non-Canadian Exchanges.

16. The contracts to be traded by Permitted Clients will include, but will not be limited to, contracts for equity index, interest rate, energy, currency, bond, agricultural and other commodity products.

17. Permitted Clients in Ontario will be able to execute Futures Trades through the Applicants by contacting the particular Applicant's exchange floor staff or global execution desk. Permitted Clients may also be able to self-execute Futures Trades electronically via an independent service vendor and/or other electronic trading routing.

18. The Applicants may execute a 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 the execution of each such trade.

19. The Applicants may perform both execution and clearing functions for Futures Trades in contracts or may direct that a trade executed by the Applicants be cleared through a carrying broker if the particular Applicant is not a member of the Non-Canadian Exchange or clearing house on which the trade is executed and cleared. Alternatively, the Permitted Client will be able to direct that Futures Trades executed by an Applicant be cleared through clearing brokers not affiliated with the Applicants (each, a Non-Barclays Clearing Broker). In addition, each of the Applicants may, from time to time, act as a clearing broker under give-up arrangements entered into with futures brokers not affiliated with the Applicants that will execute Futures Trades for an Applicant's client on a Non-Canadian Exchange.

20. If an Applicant performs only the execution of a Permitted Client's contract order and "gives-up" the transaction for clearance to a Non-Barclays Clearing Broker, such broker will also be required to comply with the rules of the exchanges and clearing houses of which it is a member and any relevant regulatory requirements, including requirements under any applicable legislation. 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 contract orders will be executed and cleared. The Applicants will not enter into a give-up agreement with any Non-Barclays Clearing Broker located in the United States unless such broker is registered with the CFTC and/or SEC, as applicable.

21. As is customary for all Futures Trades, a clearing corporation appointed by the exchange or clearing division of the exchange is substituted as a universal counterparty on all Futures Trades and Permitted Client orders are submitted to the exchange in the name of the Non-Barclays Clearing Broker or the Applicant or, on exchanges where the Applicant is not a member, in the name of another carrying broker. The Permitted Client is responsible to the Applicant for payment of daily mark-to-market variation margin/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.

22. Permitted Clients that direct an Applicant to give-up transactions in contracts for clearance and settlement by Non-Barclays Clearing Brokers will execute give-up agreements described above.

23. Permitted Clients will pay commissions for trades to the Applicants or the Non-Barclays Clearing Broker or such commissions may be shared by the Applicants with the Non-Barclays Clearing Broker.

24. The trading restrictions in the Act apply unless, among other things, a contract is traded on a recognized or registered commodity futures exchange and the form of the contract is approved by the Director. To date, no foreign commodity futures exchanges have been recognized or registered under the Act.

25. If the Applicants are exempted from the dealer registration requirements in the Act, the Applicants will be precluded from relying upon the statutory exemptions from the trading restrictions in the Act that the Commission has granted to date.

26. The Applicants will offer the ability to trade in contracts exclusively to Permitted Clients, all of whom are institutional entities comprised of sophisticated investors with investment expertise.

27. In addition to the sophistication of the Permitted Clients, the Applicants are sophisticated and experienced in this type of trading, and regulated rigorously by securities regulators, self-regulatory organizations and exchanges located in the United States (U.S. Securities Regulators) or the United Kingdom.

28. Each Applicant will execute and clear Futures Trades on behalf of clients in Ontario in the same manner that it executes and clears trades on behalf of their U.S. and U.K. clients, as applicable. Each of the Applicants will follow the same know-your-customer and client classification procedures that it follows in respect of its U.S. and U.K. clients, as applicable. Clients will be afforded the benefits of compliance by the Applicants with the statutory and other requirements of the U.S. Securities Regulators and the U.K. FSA.

29. Clients in Ontario of BB PLC will have the same contractual rights against BB PLC as U.K. clients of BB PLC. Clients of BCI in Ontario will have the same contractual rights against BCI as U.S. clients of BCI.

30. Section 3.1 of Rule 91-502 states that any person who trades as agent in, or gives advice in respect of, a recognized option is required to successfully complete the Canadian Options Course (which has been replaced by the Derivatives Fundamentals Course and the Options Licensing Course).

31. All Representatives who trade in options in the United States have passed the futures and options proficiency examination (i.e., the National Commodity Futures Examination (Series 3)) administered by FINRA. All Representatives who trade options in the United Kingdom have passed the requisite FSA qualifications and proficiency standard (i.e., the Fit and Proper test) and are registered in the capacity of an FSA Approved Person (Customer Function 30 Status).

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

IT IS ORDERED pursuant to section 38 of the Act that each Applicant be exempted from the dealer registration requirements set out in the Act and the trading restrictions set out in the Act in connection with Futures Trades where an Applicant is acting as principal or agent in such trades to, from or on behalf of Permitted Clients, provided that:

(a) each client effecting Futures Trades is a Permitted Client and, if using a Non-Barclays Clearing Broker, has represented and covenanted that the broker is or will be appropriately registered or exempt from registration under the Act;

(b) the Applicants only execute Futures Trades for Permitted Clients on exchanges located outside Canada;

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

(i) in the case of BCI,

(1) has its head office or principal place of business in the United States;

(2) is registered as a futures commission merchant with the CFTC in good standing;

(3) is a member in good standing with the NFA; and

(4) engages in the business of a futures commission merchant in contracts in the United States; and

(ii) in the case of BB PLC,

(1) has its head office or principal place of business in the United Kingdom;

(2) is authorized by the FSA to trade in securities and exchange contracts;

(3) is approved by the NFA as an exempt foreign firm in good standing; and

(4) engages in the business of trading securities and exchange contracts in the United Kingdom.

(d) 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 contracts 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, United States of America, 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;

(e) the applicable Applicant has submitted to the Commission a completed Submission to Jurisdiction and Appointment of Agent for Service in the form attached as Appendix A;

(f) each Applicant notifies the Commission of any regulatory action after the date of this order in respect of the Applicant, or any predecessors or specified affiliates of the Applicant, by completing and filing Appendix B hereto with the Commission within 10 days of the commencement of such action; provided that this condition shall not be required to be satisfied for so long as BCCI remains an investment dealer in good standing under Ontario securities law;

(g) by December 1 of each year, the Applicant notifies the Commission of its continued reliance on the exemption from registration granted pursuant to the Order; and

(h) this Order shall expire five years after the date hereof.

September 11, 2012

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 and their Representatives in respect of Futures Trades, provided that:

(a) in the case of BCI, BCI and its Representatives maintain their respective registrations with the CFTC and NFA which permit BCI to trade commodity futures options in the United States;

(b) in the case of BB PLC, BB PLC and its Representatives maintain their respective registrations with the FSA to trade commodity futures options in the United Kingdom; and

(c) this Decision shall expire five years after the date hereof.

September 11, 2012

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)

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 is to be submitted to the following address:

Ontario Securities Commission

Suite 1903, Box 55

20 Queen Street West

Toronto, ON M5H 3S8

Attention: Senior Registration Supervisor, Dealer Team

Telephone: (416) 593-8263

email: [email protected]

APPENDIX "B"

NOTICE OF REGULATORY ACTION

1. Has the firm, or any predecessors or specified affiliates{1} 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:

Name of entity

Regulator/organization

Date of settlement (yyyy/mm/dd)

Details of settlement

Jurisdiction

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

	Yes	No
(a) Determined that the firm, or any predecessors or specified affiliates of the firm violated any securities regulations or any rules of a securities or derivatives exchange, SRO or similar organization?	________	________
(b) Determined that the firm, or any predecessors or specified affiliates of the firm made a false statement or omission?	________	________
(c) Issued a warning or requested an undertaking by the firm, or any predecessors or specified affiliates of the firm?	________	________
(d) Suspended or terminated any registration, licensing or membership of the firm, or any predecessors or specified affiliates of the firm?	________	________
(e) Imposed terms or conditions on any registration or membership of the firm, or predecessors or specified affiliates of the firm?	________	________
(f) Conducted a proceeding or investigation involving the firm, or any predecessors or specified affiliates of the firm?	________	________
(g) Issued an order (other than en exemption order) or a sanction to the firm, or any predecessors or specified affiliates of the firm for securities or derivatives-related activity (e.g. cease trade order)?	________	________

If yes, provide the following information for each action:

Name of Entity
Type of Action
Regulator/organization
Date of action (yyy/mm/dd)	Reason for action
Jurisdiction

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

Yes _____ No _____

If yes, provide the following information for each investigation:

Name of entity

Reason or purpose of investigation

Regulator/organization

Date investigation commenced (yyyy/mm/dd)

Jurisdiction

Name of firm

Name of firm's authorized signing officer or partner

Title of firm's authorized signing officer or partner

Signature

Date (yyyy/mm/dd)

Witness

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

Name of witness

Title of witness

Signature

Date (yyyy/mm/dd)

This form is to be submitted to the following address:

{1} In this Appendix, the term "specified affiliate" has the meaning ascribed to that term in Form 33-109F6 to National Instrument 33-109 Registration Information.