Scotia Capital Inc. and E*TRADE Canada Securities Corporation

le 21 janvier 2009

Decision Director's Decision

Decision pursuant to to section 3.1 of Rule 31-501 Registrant Relationships (the Rule) and subsection 127(2)(h) of the Regulation made under the Securities Act (Ontario) exempting salespersons of the applicants, which are affiliated companies, from certain of the dual registration restrictions out in the Rule, and exempting their salespersons from the provisions of subsection 127(1) of the Regulation, to the extent that those provisions would prohibit salespersons of one applicant from also being salespersons of the other applicant.

Statutes Cited

Regulation 1015 made under the Securities Act (Ontario), as am., ss.127(1), 127(2).

Rules Cited

Ontario Securities Commission Rule 31-501 Registrant Relationships, ss. 1(1), 3.1.

January 21, 2009

IN THE MATTER OF

THE SECURITIES ACT,

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

(the Act)

AND

IN THE MATTER OF

R.R.O. 1990, REGULATION 1015,

AS AMENDED

(the Regulation)

AND

IN THE MATTER OF

ONTARIO SECURITIES COMMISSION RULE 31-501

REGISTRANT RELATIONSHIPS

(the Rule)

AND

IN THE MATTER OF

SCOTIA CAPITAL INC. AND

E*TRADE CANADA SECURITIES CORPORATION

DECISION

(Section 127(2)(h) of the Regulation and

Section 3.1 of the Rule)

UPON the Director (as defined in the Act) having received an application (the Application) from Scotia Capital Inc. (Scotia) and E*TRADE Canada Securities Corporation (E*TRADE Canada) for a decision (or its equivalent) pursuant to section 3.1 of the Rule, exempting the current and future salespersons (the Salespersons) employed either by Scotia or by E*TRADE Canada (together, the Registrants) in the firm's electronic institutional Direct Market Access (DMA) business (the DMA Business) from the dual registration restrictions of subsection 1.1(1) of the Rule (the Dual Registration Relief) and that a determination be made under subsection 127(2)(h) of the Regulation that the Salespersons are carrying on activities which will not in the circumstances interfere with their duties and responsibilities as salespersons and that there are no conflicts of interest arising from the individuals' duties as salespersons and their outside activities so as to permit the registration of such Salespersons with both Registrants despite the fact that they are not employed full-time for either of the Registrants as required by subsection 127(1) of the Regulation (the Full-Time Salesperson Determination).

AND UPON considering the Application and the recommendation of staff of the Ontario Securities Commission (the Commission);

AND UPON the Registrants having represented to the Director that:

1. Scotia is a corporation incorporated under the laws of the Province of Ontario with its head office in the province of Ontario.

2. E*TRADE Canada is a corporation amalgamated under the laws of Nova Scotia with its head office in the province of Ontario.

3. Scotia acquired all of the issued and outstanding shares of the indirect parent of E*TRADE Canada in September 2008 and E*TRADE Canada is now an indirect wholly-owned subsidiary of Scotia. As such, the Registrants are related companies as defined by applicable securities legislation.

4. Scotia is registered as an investment dealer or its equivalent in each province and territory of Canada, is a member of the Investment Industry Regulatory Organization of Canada (IIROC), and is a participating organization of The Toronto Stock Exchange (TSX).

5. E*TRADE Canada is registered as an investment dealer or its equivalent in each province of Canada, and is a member of IIROC and a participating organization of the TSX.

6. As members of IIROC and related companies, each of the Registrants will comply with the requirements respecting cross-guarantees in accordance with IIROC Rule 6.6.

7. Each of the Salespersons employed by Scotia (the Scotia Salespersons) is currently employed by Scotia within Scotia's DMA Business, offering services to "eligible clients" of Scotia as defined by the rules of the TSX. Each of Scotia's Salespersons is duly registered as a firm representative in some or all of the provinces and territories of Canada.

8. Each of the Salespersons employed by E*TRADE Canada (the E*TRADE Canada Salespersons) is currently employed by E*TRADE Canada within E*TRADE Canada's DMA Business, offering services to "eligible clients" of E*TRADE Canada as defined by the rules of the TSX. Each of E*TRADE Canada's Salespersons is duly registered as a firm representative in some or all of the provinces of Canada.

9. It is Scotia's intention to amalgamate the Scotia DMA Business and the E*TRADE Canada DMA Business into a single business operation.

10. Pending the formal legal amalgamation of the businesses, Scotia has determined that during planning and transition, the DMA Businesses of the Registrants should be operated at one location and managed and supervised by coordinated teams of professionals employed by each of the Registrants. Scotia has also determined that, pending full integration of the businesses, it is essential to their effective management that the Salespersons be permitted to conduct their activities respecting the Scotia DMA Business while conducting equivalent activities respecting the E*TRADE Canada DMA Business. Engagement of the Salespersons in client and trade related activity on behalf of each of the Registrants would necessitate the dual registration of the Salespersons.

11. Scotia proposes to dually register certain Scotia Salespersons with E*TRADE Canada, and E*TRADE Canada proposes to dually register certain E*TRADE Canada Salespersons with Scotia, in each case to provide services and support to the respective Registrant's DMA Business clients.

12. During transition and pending the formal legal amalgamation of the businesses, the legal separation of the Registrants will be maintained.

13. The dual registration of the Salespersons will not be a source of any client confusion, and it is the opinion of the Registrants that no conflicts of interest will arise as a result of the dual registration of the Salespersons, because:

(a) prior to conducting dealing activities on behalf of clients of the DMA Businesses, the Salespersons will notify such clients that E*TRADE Canada is an indirect wholly-owned subsidiary of Scotia that will be integrated with Scotia's operations, and will inform such clients of the dual registration of the Salespersons and their co-location at a single office location;

(b) appropriate policies and procedures of the Registrants relating to their operations are currently in place and will continue in effect, with changes made to the extent required to address any potential conflicts of interest that may arise;

(c) because the DMA Businesses involve routing and execution electronically, in a wholly automated manner, of self-directed orders initiated by sophisticated institutional clients, the Salespersons do not and will not trade directly with clients;

(d) the Salespersons do not, and will not, give advice and all orders from DMA Business clients and received by the Salespersons will be unsolicited;

(e) the Salespersons do not, and will not, trade on a proprietary basis for their respective firms;

(f) the Salespersons do not, and will not be authorized to, accept trade instructions from a retail customer;

(g) if any conflicts of interest for the Registrants were to arise, such conflicts will be promptly assessed by compliance and legal staff and would be addressed through disclosure and, where appropriate, consent;

(h) the Registrants will continue to engage their own management teams and supervisory personnel until the formal and legal integration of the businesses has been completed;

(i) pending the formal and legal integration of the businesses, the legal separation of the Registrants will be maintained, with separate broker numbers, account documentation, books and records, trading and monitoring terminals, phone lines, fax lines, email addresses, and compliance and supervisory personnel;

(j) the Salespersons have met and will maintain all the proficiency requirements that apply to their roles in the businesses;

(k) the Scotia Salespersons will remain under the supervision of Scotia's supervisory personnel in respect of their activities on behalf of Scotia, and will be under the supervision of E*TRADE Canada's supervisory personnel in respect of their activities on behalf of E*TRADE Canada;

(l) the E*TRADE Canada Salespersons will remain under the supervision of E*TRADE Canada's supervisory personnel in respect of their activities on behalf of E*TRADE Canada, and will be under the supervision of Scotia's supervisory personnel in respect of their activities on behalf of Scotia;

(m) the Salespersons will be subject to Scotia's policies and procedures in respect of activity on behalf of Scotia and E*TRADE Canada's policies and procedures in respect of activity on behalf of E*TRADE Canada;

(n) the dual registration of the Salespersons will not hinder the Registrants in complying with the conditions of registration applicable to them;

(o) the dual registration of the Salespersons will not interfere with the Salespersons' duties and responsibilities;

(p) the Salespersons who act on behalf of clients of the DMA Businesses in respect of trades will comply with all requirements of applicable securities laws; and

(q) the Salespersons shall act in the best interest of both their clients of Scotia and their clients of E*TRADE Canada and will deal fairly, honestly and in good faith.

14. Section 127(1) of the Regulation provides that (subject to subsection (2) of such section) no individual may be registered as a salesperson unless he or she is employed full-time as a salesperson. Although not explicit, it may be implicit that such subsection is intended to require such full-time employment with one registrant.

15. Section 127(2) of the Regulation permits the Director to exempt a person from the full-time requirement under subsection 127(1) of the Regulation where the other activities of the subject salesperson will not interfere with his or her duties and responsibilities as a salesperson and there is no conflict of interest arising from his or her duties as a salesperson and his or her outside activity.

16. Section 1(1) of the Rule provides that no person registered as a salesperson of a registrant may act or be registered as a director, partner or officer of the registrant or as a salesperson, officer, partner or director of another registrant.

17. Section 3.1 of the Rule provides that the Director may grant an exemption from the Rule, in whole or in part.

18. Section 1.2 of the Companion Policy provides that the Director will not provide an exemption from the restrictions in section 2.1 of the Rule unless the Director is satisfied that the applicant or registrant has adopted or proposes to adopt policies and procedures to minimize the potential for conflicts of interest.

19. The IIROC Rules permit dual employment of registered representatives (being salespersons for purposes of the Act, the Regulation and the Rule) and trading officers of related registrants, provided that any potential conflicts of interest are addressed and the related registrants comply with the requirements respecting cross-guarantees in accordance with IIROC Rule 6.6.

AND UPON the Director being satisfied, based upon the representations set forth above, that registration of individuals as salespersons of both Registrants would not result in interference with their duties and responsibilities as salespersons to either Registrant and that there is no conflict of interest which would arise as a result of their dual registration;

AND UPON the Director being satisfied that to do so would not be prejudicial to the public interest;

IT IS THE DECISION of the Director pursuant to section 3.1 of Rule 31-501 and section 127(1)(h) of the Regulation that, for a period of twenty-one months, effective the date of the Decision:

(a) the Dual Registration Relief is granted, and

(b) the Full-Time Salesperson Determination is granted,

provided the Registrants comply with all requirements of IIROC from time to time for permitting such dual registration.

"Susan Silma"

Director, Compliance and Registrant Regulation

Ontario Securities Commission