Directives de la Commission des valeurs mobilières de l’Ontario concernant l’interruption du service postal

Master Credit Card Trust II

le 5 novembre 2019

Order

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR CEASE TO BE A REPORTING ISSUER APPLICATIONS AND IN THE MATTER OF MASTER CREDIT CARD TRUST II (the Filer)

ORDER
Background

The principal regulator in the Jurisdiction has received an application from the Filer for an order under the securities legislation of the Jurisdiction (the Legislation) that the Filer has ceased to be a reporting issuer in all the jurisdictions of Canada in which it is a reporting issuer (the Order Sought).

Under the Process for Cease to be a Reporting Issuer Applications (for a passport application):

(a) the Ontario Securities Commission (OSC) is the principal regulator for this application; and

(b) the Filer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador, and the Territories of Yukon, the Northwest Territories and Nunavut (collectively with Ontario, the Jurisdictions).

Interpretation

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

Representations

1. The Filer was originally established under a declaration of trust on September 28, 2012 (the Declaration of Trust). The Declaration of Trust is governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein. Computershare Trust Company of Canada is the trustee (in such capacity, the Issuer Trustee) of the Filer and is a trust company established under the laws of Canada and is licensed to carry on business as a trust company in each of the provinces and territories of Canada. The head and registered office of the Issuer Trustee is c/o Computershare Trust Company of Canada at 100 University Ave., 11th Floor, Toronto, Ontario, M5J 2Y1.

2. The Filer is a special purpose entity that purchases credit card receivables from Bank of Montreal (BMO) and issues credit card receivables-backed notes to fund such purchases.

3. The Filer is a reporting issuer in each of the Jurisdictions and is a "venture issuer" as defined in National Instrument 51-102 Continuous Disclosure Obligations.

4. The Filer filed a short form base shelf prospectus dated April 30, 2013 and a short form base shelf prospectus dated January 22, 2016 (each, a Base Shelf Prospectus, and collectively, the Base Shelf Prospectuses) pursuant to National Instrument 44-102 Shelf Distributions. No securities of the Filer that remain outstanding have been distributed by way of a public offering pursuant to the Base Shelf Prospectuses. Each Base Shelf Prospectus has now lapsed. The Filer does not intend to file a new short form base shelf prospectus nor does the Filer intend to distribute any securities of the Filer by way of a public offering.

5. The Filer is not in default of any of the requirements of the securities legislation in any of the Jurisdictions. The Filer filed its annual financial statements and MD&A for the fiscal year ended December 31, 2018 with the Canadian securities administrators in each of the Jurisdictions on April 30, 2019, and its quarterly financial statements and MD&A for the second quarter ended June 30, 2019 on August 29, 2019.

6. The Filer has no issued and outstanding common shares.

7. The Filer has the following issued and outstanding trust notes, in each case, issued on a private placement basis:

(a) on July 13, 2016, the Filer issued U.S.$1,000,000,000 Credit Card Receivables-Backed Floating Rate Class A Notes, Series 2016-3, CAD$27,524,000 2.364% Credit Card Receivables-Backed Class B Notes, Series 2016-3, and CAD$48,167,000 3.056% Credit Card Receivables-Backed Class C Notes, Series 2016-3 (collectively, the Series 2016-3 Notes), each with an expected final payment date of January 21, 2022;

(b) on January 31, 2017, the Filer issued U.S.$750,000,000 2.260% Credit Card Receivables-Backed Class A Notes, Series 2017-1, U.S.$15,873,000 2.560% Credit Card Receivables-Backed Class B Notes, Series 2017-1, and U.S.$27,778,000 3.060% Credit Card Receivables-Backed Class C Notes, Series 2017-1 (collectively, the Series 2017-1 Notes), each with an expected final payment date of January 21, 2020;

(c) on January 25, 2018, the Filer issued U.S.$600,000,000 Credit Card Receivables-Backed Floating Rate Class A Notes, Series 2018-1, U.S.$12,698,000 3.245% Credit Card Receivables-Backed Class B Notes, Series 2018-1, and U.S.$22,222,000 3.737% Credit Card Receivables-Backed Class C Notes, Series 2018-1 (collectively, the Series 2018-1 Notes), each with an expected final payment date of January 23, 2023;

(d) on August 14, 2018, the Filer issued U.S.$475,000,000 Credit Card Receivables-Backed Floating Rate Class A Notes, Series 2018-3, U.S.$10,053,000 3.400% Credit Card Receivables-Backed Class B Notes, Series 2018-3, and U.S.$17,593,000 3.800% Credit Card Receivables-Backed Class C Notes, Series 2018-3 (collectively, the Series 2018-3 Notes), each with an expected final payment date of July 21, 2020;

(e) on October 22, 2018, the Filer issued CAD$1,323,000,000 2.946% Credit Card Receivables-Backed Class A Notes, Series 2018-4 (the Class A Series 2018-4 Notes), CAD$35,000,000 3.242% Credit Card Receivables-Backed Class B Notes, Series 2018-4 (the Class B Series 2018-4 Notes), and CAD$61,250,000 3.636% Credit Card Receivables-Backed Class C Notes, Series 2018-4 (the Class C Series 2018-4 Notes, and together with the Class A Series 2018-4 Notes and the Class B Series 2018-4 Notes, collectively, the Series 2018-4 Notes), each with an expected final payment date of December 21, 2020. BMO purchased all of the Class A Series 2018-4 Notes on the issuance date;

(f) on January 24, 2019, the Filer issued U.S.$450,000,000 Credit Card Receivables-Backed Floating Rate Class A Notes, Series 2019-1, U.S.$9,524,000 3.57% Credit Card Receivables-Backed Class B Notes, Series 2019-1, and U.S.$16,667,000 4.02% Credit Card Receivables-Backed Class C Notes, Series 2019-1 (collectively, the Series 2019-1 Notes), each with an expected final payment date of January 21, 2021; and

(g) on August 21, 2019, the Filer issued U.S.$500,000,000 Credit Card Receivables-Backed Floating Rate Class A Notes, Series 2019-2, U.S.$10,582,000 2.39% Credit Card Receivables-Backed Class B Notes, Series 2019-2, and U.S.$18,519,000 2.83% Credit Card Receivables-Backed Class C Notes, Series 2019-2 (collectively, the Series 2019-2 Notes and together with the Series 2016-3 Notes, the Series 2017-1 Notes, the Series 2018-1 Notes, the Series 2018-3 Notes, the Series 2018-4 Notes and the Series 2019-1 Notes, collectively, the Notes) each with an expected final payment date of July 21, 2021.

8. In addition, on September 28, 2012, pursuant to a third amended and restated note issuance agreement dated as of September 28, 2012, as amended (the Note Issuance Agreement) among BMO, the Issuer Trustee, as trustee of the Filer and BNY Trust Company of Canada, as indenture trustee, Master Credit Card Trust (MCCT) (a previous securitization trust administered by BMO, which trust has been terminated) issued to BMO a note (the Seller Note) representing a debt obligation that ranks pari passu with the Notes, and pursuant to an Assignment and Assumption Agreement dated as of September 28, 2012 between MCCT and the Filer, the Seller Note was assigned to the Filer and the Filer assumed all payment obligations of MCCT under the Seller Note that were outstanding on the date of assignment. The Seller Note is a debt obligation of the Filer, which represents the unpaid purchase price for the credit card receivables purchased by the Filer from BMO, and is and will at all times be held by BMO.

9. The Notes and the Seller Note were issued pursuant to the Note Issuance Agreement and, in the case of each series of Notes, a series supplement to the Note Issuance Agreement.

10. As of September 9, 2019, no other securities of the Filer other than the Notes and the Seller Note are issued and outstanding and the Filer has no publicly traded securities.

11. The Notes and the Seller Note are not convertible or exchangeable into common shares. The Notes and the Seller Note have not been listed for trading on any stock exchange or marketplace. The DTC Notes (as defined below) were initially issued on a private placement basis in the United States pursuant to exemptions from the registration requirements of the United States Securities Act of 1933, as amended. The CDS Notes (as defined below) were sold in Canada on a private placement basis to "accredited investors" pursuant to applicable exemptions from applicable Canadian securities legislation. The BMO Notes (as defined below) and the Seller Note were issued pursuant to applicable prospectus exemptions under applicable Canadian securities legislation and continue to be held by BMO. The Notes and the Seller Note have not been listed for trading on any stock exchange or marketplace.

12. In accordance with industry practice and custom, the Filer has obtained from Broadridge Financial Solutions Inc. (Broadridge) a geographic survey of beneficial holders of Notes (other than the BMO Notes) (collectively, the Investor Notes) as of August 7, 2019 for all Investor Notes other than the Series 2019-2 Notes and as of August 28, 2019 for the Series 2019-2 Notes (the Geographic Reports), which provides information as to the number of noteholders and Investor Notes held in each jurisdiction of Canada and in the United States and other foreign jurisdictions. Broadridge advises that its reported information is based on securityholder addresses of record identified in the files provided to it by the financial intermediaries holding Investor Notes. The Geographic Reports do not cover the BMO Notes and does not cover any DTC Notes (as defined below) that are held by broker/dealers in inventory.

13. The Investor Notes are issued in book-entry form and are represented by global certificates registered in a nominee name of The Depositary Trust Company (DTC), in the case of Investor Notes issued in the United States (the DTC Notes) and in a nominee name of CDS Clearing and Depository Services Inc. (CDS), in the case of Investor Notes issued in Canada (the CDS Notes), with beneficial interests therein recorded in records maintained by DTC or CDS, as the case may be, and their respective participants as financial intermediaries that hold securities on behalf of their clients.

14. BMO currently holds the Class A Series 2018-4 Notes (the BMO Notes).

15. The Geographic Reports provided by Broadridge cover approximately 91.615% of the outstanding principal amount of the DTC Notes for a total of U.S.$3,606,451,000 and report a total of 401 beneficial holders residing in the United States holding U.S.$2,493,373,000 principal amount of the DTC Notes and 31 beneficial holders residing in jurisdictions other than the United States holding U.S.$1,113,078,000 principal amount of the DTC Notes. In addition, the Geographic Reports cover approximately 99.997% of the outstanding principal amount of the CDS Notes for a total of CAD$171,936,000 and report a total of 38 beneficial holders residing in Canada holding CAD$136,976,000 principal amount of the CDS Notes and 15 beneficial holders residing in the United States holding CAD$34,960,000 principal amount of the CDS Notes.

16. Broadridge has confirmed that its searches are unable to report on 100% of the geographic ownership of the Investor Notes. Further, there may be duplicative holders of each class and series of Investor Notes.

The Filer reasonably inquired with BNY Trust Company of Canada, as indenture trustee (the Indenture Trustee) as to the holders of the Notes that are not covered by the Geographic Reports, and was informed by the Indenture Trustee that the unreported noteholders and any noteholders where the jurisdictional information is not available are likely objecting beneficial holders who do not want their name, mailing address or amount of DTC Notes held by them disclosed.

17. Broadridge has subsequently confirmed to the Filer that all of the DTC Notes continue to be held under the Rule 144A CUSIP in DTC and Broadridge's records indicate that none of the DTC Notes are currently held under the Reg S CUSIP in DTC, and accordingly, the Filer believes it is reasonable to conclude that no transfers of DTC Notes have been made to any non-U.S. Person or person located outside of the United States (such persons being those who would need to hold such DTC Notes under a Reg S CUSIP). The Filer believes this provides further evidence that all of the DTC Notes remain held by "qualified institutional buyers" located in the United States.

18. The Filer believes it is reasonable to conclude, based on such discussions with the Indenture Trustee, Broadridge and the dealers involved in the related private placements, that the DTC Notes are generally held by residents of the United States or other jurisdictions outside of Canada with the exception of three resident Canadian beneficial holders placed in connection with the offering of the Series 2019-2 Notes.

19. The Filer is not eligible to surrender its status as a reporting issuer in British Columbia pursuant to British Columbia Instrument 11-502 Voluntary Surrender of Reporting Issuer Status because the Filer has more than 50 securityholders, being the holders of the Notes. Similarly, and because the Notes are beneficially owned, directly or indirectly, by more than 50 securityholders worldwide, the Filer is not eligible to file under the simplified procedure under National Policy 11-206 Process for Cease to be a Reporting Issuer Applications.

20. The only securities issued and outstanding of the Filer are the Notes and the Seller Note. The Notes and the Seller Note entitle the holders only to the payment of principal and in the case of the Notes, interest, and do not entitle the holders to receive or to convert into other common shares (or any other equity securities), or to otherwise participate in the distribution of the assets of the Filer upon a liquidation or winding up.

21. The Notes are rated by rating agencies based primarily on the credit underlying the credit card receivables which the Filer purchases from BMO, the level of enhancement provided by the reserve account established for each series of Notes and, in the case of the Class B Notes of any particular series, the subordination of the payments on the Class B Notes to the prior payment of amounts payable on the Class A Notes of the applicable series and in the case of the Class C Notes of any particular series, the subordination of the payments on the Class C Notes to the prior payment of amounts payable on the Class A Notes and the Class B Notes of the applicable series, rather than by any independent assessment of the condition and performance, financial or otherwise, of the Filer. The Filer has confirmed that the Notes will continue to be rated by at least one recognized rating agency upon the cessation by the Filer of its reporting under Canadian securities laws for the foreseeable future.

22. There is no obligation or covenant in the Note Issuance Agreement (including any series supplement to the Note Issuance Agreement), the Notes, the Seller Note or any offering memorandum or term sheet delivered in connection with the Notes and Seller Note (Offering Documents) for the Filer to maintain its status as a reporting issuer or the equivalent in any jurisdiction of Canada or to file financial statements or any other continuous disclosure documentation on SEDAR. No financial statements or any other continuous disclosure documentation was included or incorporated by reference in any Offering Document. The investors to whom the Notes were placed were sophisticated investors who had the opportunity to negotiate for such disclosure or filing obligations under any Offering Document as they saw fit. Such investors determined that they did not require the Filer to maintain reporting issuer status in Canada for the term of the Notes. No continuous disclosure of financial statements, management discussion and analysis or annual information forms is required under the United States securities laws under which the Notes issued in the United States were issued and no continuous disclosure of such materials would have been required in Canada in connection with securities issued under the prospectus exemptions under which the Notes issued in Canada were issued.

23. The Filer issued a news release on October 8, 2019 announcing that it has applied to the OSC, as principal regulator, for a decision that it has ceased to be a reporting issuer in all jurisdictions of Canada and, if that decision is granted, the Filer will no longer be a reporting issuer in any jurisdiction of Canada.

24. No securities of the Filer, including debt securities, are listed, traded or quoted in Canada or another country on a marketplace (as defined in National Instrument 21-101 Marketplace Operation) or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported. The Filer has no current intention to distribute any securities by way of a public offering of securities in Canada and does not intend to renew or file a new short form base shelf prospectus.

25. The Filer will continue to make investor monthly portfolio report summaries and credit card portfolio data available to investors.

26. Upon granting of the Order sought, the Filer will no longer be a reporting issuer in any jurisdiction in Canada.

Order

The principal regulator is satisfied that the order meets the test set out in the Legislation for the principal regulator to make the order.

The decision of the principal regulator under the Legislation is that the Order Sought is granted.

DATED at Toronto, Ontario on this 5th day of November, 2019.

"Garnet Fenn"

"Poonam Puri"

Commissioner

Commissioner

Ontario Securities Commission

Ontario Securities Commission