TSX venture TSX VENTURE EXCHANGE RULE BOOK TABLE OF CONTENTS

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TSX venture TSX VENTURE EXCHANGE RULE BOOK TABLE OF CONTENTS Powered By Docstoc
					                                                                                                          TSX     venture
                                                                                                               EXCHANGE




                                          TSX VENTURE EXCHANGE RULE BOOK

                                                           TABLE OF CONTENTS
Rule A. 1.00 – Interpretation....................................................................................................................... 1
   A1.01 – Definitions .................................................................................................................................... 1
   A1.02 – Rules of Construction:................................................................................................................ 11
   A1.03 – Interpretation Not Affected by Division, Heading, etc: ............................................................... 11
Rule B.1.00 – Power to List and Delist.................................................................................................... 12
   B.1.01 ...................................................................................................................................................... 12
Rule B.2.00 – Sponsorship and Sponsor Report................................................................................... 14
   B.2.01 ...................................................................................................................................................... 14
   B.2.02 ...................................................................................................................................................... 14
   B.2.03 ...................................................................................................................................................... 14
   B.2.04 ...................................................................................................................................................... 14
Rule C.1.00 – Governance of Trading Session ...................................................................................... 15
   C.1.01 – Date and Time of Session ........................................................................................................ 15
   C.1.02 – Trades Outside of Hours for Session ....................................................................................... 15
   C.1.03 – Changes in Sessions and Trading Suspensions ...................................................................... 15
   C.1.04 – Halt Rescinded.......................................................................................................................... 15
   C.1.05 – Trading in the Book................................................................................................................... 15
   C.1.06 – Exercise of Exchange Powers .................................................................................................. 16
Rule C.2.00 – Trading Procedures and Practices .................................................................................. 17
   Priority...................................................................................................................................................... 17
      C.2.01 – Establishing Priority............................................................................................................... 17
      C.2.02 – Board Lot Priority .................................................................................................................. 17
      C.2.03 – Special Term Order Priority................................................................................................... 17
   Opening ................................................................................................................................................... 17
      C.2.04 – Execution of Trades at an Opening ...................................................................................... 17
      C.2.05 – Delayed Openings................................................................................................................. 18
      C.2.06 – Allocation of Trades .............................................................................................................. 18
      C.2.07 – Minimum Quotation Spread .................................................................................................. 18
      C.2.08 – Responsibility for Odd Lots ................................................................................................... 19
      C.2.09 – Odd Lot Premium and Discount ............................................................................................ 19
      C.2.10 – Stop Loss Orders .................................................................................................................. 19


Table of Contents                                                                                                                                         Page i
As at May 31, 2004
                                                    TSX Venture Exchange
                                                   Rules and Trading Policies

     C.2.11 – Breach of Exchange Requirement ........................................................................................ 19
     C.2.12 – Exchange Liability ................................................................................................................. 19
     C.2.13 – Transaction Prohibited .......................................................................................................... 19
     C.2.14 – Advantage Goes With Securities Sold .................................................................................. 19
     C.2.15 – Accrued Interest Goes to Seller ............................................................................................ 19
     C.2.16 – Ex-Dividend and Ex-Right Adjustment to Orders.................................................................. 20
     C.2.17 – Shares Selling Ex-Dividends and Ex-Rights ......................................................................... 20
     C.2.18 – Expiry Date............................................................................................................................ 20
     C.2.19 – Trades on a "When Issued" Basis......................................................................................... 20
     C.2.20 – When Issue Delisted or Suspended or No Fair Market......................................................... 20
  TSX Venture Exchange Approved Traders ............................................................................................. 20
     C.2.21 – Access to TSX Venture Exchange ........................................................................................ 20
     C.2.22 – Appointment .......................................................................................................................... 21
     C.2.23 – Approval by Exchange .......................................................................................................... 21
     C.2.24 – Designated Member.............................................................................................................. 21
     C.2.25 – Approved Trader - Qualifications for Application .................................................................. 21
     C.2.26 – Jurisdiction of the Exchange ................................................................................................. 21
     C.2.27 – Compliance with Exchange Requirements ........................................................................... 21
     C.2.28 – Continuance of Exchange Approval...................................................................................... 22
     C.2.29 – Supervision of Assistant Traders .......................................................................................... 22
     C.2.30 – Non-Client Account (Non Commission Account) .................................................................. 22
     C.2.31 – Suspension of Approved Trader ........................................................................................... 22
     C.2.32 – Revocation of Approved Trader's Authority .......................................................................... 22
     C.2.33 – Ceasing to be a Trader ......................................................................................................... 22
     C.2.34 – Report of Termination of Approved Trader ........................................................................... 22
     C.2.35 – Trading to be Executed on TSX Venture Exchange ............................................................. 23
     C.2.49 – Inquiries................................................................................................................................. 23
     C.2.50 – (Deleted)................................................................................................................................ 23
  Connection of Eligible Clients of Members.............................................................................................. 23
     C.2.51 - Designation of Eligible Clients ............................................................................................... 23
     C.2.52 - Conditions for Connections.................................................................................................... 25
     C.2.53 - Responsibility of Members..................................................................................................... 27
RULE C.3.00 – CLEARING AND SETTLEMENT OF TRADES OF LISTED SECURITIES ..................... 28
  C.3.01 – Definitions ................................................................................................................................. 28
  C.3.02 – Trades to be Cleared ................................................................................................................ 28
  C.3.03 – Trades to be Settled Through Clearing Corporation................................................................. 28


Table of Contents                                                                                                                               Page ii
As at May 31, 2004
                                                      TSX Venture Exchange
                                                     Rules and Trading Policies

   C.3.04 – Settlement of Cash Trades ....................................................................................................... 28
   C.3.05 – Buy-Ins...................................................................................................................................... 28
      (1)      Failed Trade............................................................................................................................... 28
      (2)      Security Loans ........................................................................................................................... 28
      (3)      Other Failed Positions ............................................................................................................... 28
      (4)      Costs.......................................................................................................................................... 29
      (5)      Notice......................................................................................................................................... 29
      (6)      Cancellation of Buy-in................................................................................................................ 29
      (7)      Time and Terms......................................................................................................................... 29
      (8)      Role of Market Official ............................................................................................................... 29
      (9)      Settlement.................................................................................................................................. 29
   C.3.06 – Special Provisions for Buy-Ins from Securities Loans and Other Failed Positions .................. 29
   C.3.07 – Failed Trade in Rights, Warrants and Installment Receipts ..................................................... 30
   C.3.08 – Restrictions On Members' Involvement In Buy-Ins................................................................... 30
   C.3.09 – When Issue Delisted or Suspended ......................................................................................... 30
   C.3.10 – Defaulters.................................................................................................................................. 31
   C.3.11 – Verified Statement of Outstanding Exchange Contracts .......................................................... 31
Rule D.1.00 – Membership........................................................................................................................ 32
   D.1.01 – (Deleted) ................................................................................................................................... 32
   D.1.02 – (Deleted) ................................................................................................................................... 32
   D.1.03 – Appointment of Designated Member ........................................................................................ 32
   D.1.04 – Designated Member Represents Member................................................................................ 32
   D.1.05 – Use of Facilities......................................................................................................................... 32
   D.1.06 – Deceased Member ................................................................................................................... 32
   D.1.07 – Register of Members ................................................................................................................ 33
   D.1.08 – Qualifications of Individuals as Members ................................................................................. 33
   D.1.09 – Qualification and Continuing Requirements of Individuals as Members .................................. 33
   D.1.10 – Member Corporation................................................................................................................. 33
   D.1.11 – Member Firms........................................................................................................................... 34
   INDUSTRY PARTICIPATION BY DIRECTORS AND PARTNERS ........................................................ 34
      D.1.12 – Industry Participation by Directors ........................................................................................ 34
      D.1.13 – Industry Participation by Partners ......................................................................................... 35
      D.1.14 – Directors ................................................................................................................................ 35
      D.1.15 – Partners................................................................................................................................. 36
      D.1.16 – Officers .................................................................................................................................. 37
   OWNERSHIP OF SECURITIES (OTHER THAN PUBLIC OWNERSHIP) ............................................. 37


Table of Contents                                                                                                                                    Page iii
As at May 31, 2004
                                                   TSX Venture Exchange
                                                  Rules and Trading Policies

     D.1.17 – Ordinary Debt ........................................................................................................................ 37
     D.1.18 – Approved Lenders................................................................................................................. 37
  CHANGES IN OWNERSHIP................................................................................................................... 38
     D.1.19 – Exchange Approval of Changes in Ownership ..................................................................... 38
  OTHER OWNERSHIP RESTRICTIONS................................................................................................. 38
     D.1.20 – Cross-Ownership .................................................................................................................. 38
     D.1.21 – Industry Investor.................................................................................................................... 38
  MONITORING AND APPROVAL OF OWNERSHIP OF MEMBERS ..................................................... 38
     D.1.22 – Shareholdings or Partnership Interest of 10 Percent or More .............................................. 38
     D.1.23 – Notice of Changes in a Member............................................................................................ 39
  ENFORCEMENT OF OWNERSHIP RESTRICTIONS ........................................................................... 39
     D.1.24 – Minimum Necessary Enforcement Provisions ...................................................................... 39
     D.1.25 – Application of Enforcement Provisions ................................................................................. 40
     D.1.26 – Surveillance Arrangements ................................................................................................... 40
     D.1.27 – Notification of Contravention ................................................................................................. 40
  DISTRIBUTION OF MEMBER SHARES ................................................................................................ 40
     D.1.28 – Techniques for Distribution ................................................................................................... 40
     D.1.29 – When Valuations Required ................................................................................................... 40
     D.1.30 – Private Sale ........................................................................................................................... 41
     D.1.31 – Other Distribution Procedures............................................................................................... 41
     D.1.32 – Distributions........................................................................................................................... 41
  MEMBERS AND THEIR HOLDING COMPANIES AND RELATED COMPANIES................................. 42
     D.1.33 – Exchange Approval ............................................................................................................... 42
     D.1.34 – Corporate Groups ................................................................................................................. 42
     D.1.35 – Audit Requirements............................................................................................................... 42
     D.1.36 – Protection of Members' Capital ............................................................................................. 42
     D.1.37 – Compliance with Exchange Requirements ........................................................................... 43
     D.1.38 – Audit Committee.................................................................................................................... 43
     D.1.39 – Securities Related Activities.................................................................................................. 43
     D.1.40 – Application to Holding Companies ........................................................................................ 44
     D.1.41 – Investments by Discretionary Accounts ................................................................................ 44
     D.1.42 – Solicitations by Issuer ........................................................................................................... 44
     D.1.43 – Research Reports and Opinion Letters................................................................................. 44
     D.1.44 – Rights and Obligations of Members ...................................................................................... 44
     D.1.45 – Amalgamation or Merger....................................................................................................... 44
     D.1.46 – Application for Membership................................................................................................... 44


Table of Contents                                                                                                                             Page iv
As at May 31, 2004
                                                     TSX Venture Exchange
                                                    Rules and Trading Policies

      D.1.47 – Voting of Members on Application ........................................................................................ 45
      D.1.47.1 – Voting Procedure ............................................................................................................... 45
      D.1.47.2 – Votes Required .................................................................................................................. 45
      D.1.48 – Waiting Period After Rejection .............................................................................................. 45
      D.1.49 – Payment of Fees ................................................................................................................... 45
      D.1.50 – Transfer of Membership ........................................................................................................ 46
      D.1.51 – (Deleted)................................................................................................................................ 46
      D.1.52 – Entry in Register and Rights ................................................................................................. 46
      D.1.53 – (Deleted)................................................................................................................................ 46
      D.1.54 – Certificate .............................................................................................................................. 46
      D.1.55 – (Deleted)................................................................................................................................ 46
      D.1.56 – (Deleted)................................................................................................................................ 46
      D.1.57 – (Deleted)................................................................................................................................ 46
      D.1.58 – Changes in Member.............................................................................................................. 46
      D.1.59 – (Deleted)................................................................................................................................ 47
      D.1.60 – Assessments, Fees, Fines and Charges .............................................................................. 47
      D.1.61 – Insolvency and Bankruptcy ................................................................................................... 47
      D.1.62 – Appointment of Receiver....................................................................................................... 47
      D.1.63 – Power of Receiver................................................................................................................. 47
      D.1.64 – Powers of Directors Partners and Officers............................................................................ 48
      D.1.65 – Non-Liability in Respect of Appointment of Receiver............................................................ 48
Rule D.2.00 – Participating Organizations.............................................................................................. 49
   D.2.01 – Qualification .............................................................................................................................. 49
   D.2.02 – Application ................................................................................................................................ 49
   D.2.03 – Participating Organization subject to Exchange Requirements ............................................... 49
   D.2.04 – Fee and Charges ...................................................................................................................... 49
   D.2.05 – Termination ............................................................................................................................... 49
Rule D.3.00 – Approval ............................................................................................................................. 51
   D.3.01 – Employment .............................................................................................................................. 51
   D.3.02 – Full-Time ................................................................................................................................... 51
   D.3.03 – Part-Time .................................................................................................................................. 51
   D.3.04 – Registered Representative (Restricted) ................................................................................... 52
   D.3.05 – Application ................................................................................................................................ 52
   D.3.06 – Withdrawal of Approval and Changes in Exchange Requirements.......................................... 52
   D.3.07 – Termination of Employment on Withdrawal of Approval .......................................................... 52
   D.3.08 – Power of Exchange to Refuse Exchange Approval.................................................................. 53


Table of Contents                                                                                                                                Page v
As at May 31, 2004
                                                     TSX Venture Exchange
                                                    Rules and Trading Policies

   D.3.09 – Withdrawal or Amendment ....................................................................................................... 53
   D.3.10 – Report ....................................................................................................................................... 53
   D.3.11 – Suspension Cancellation .......................................................................................................... 53
   D.3.12 – Change of Employment ............................................................................................................ 53
   D.3.13 – Termination of Employment...................................................................................................... 53
   D.3.14 – Branch Offices and Sub-Branch Offices................................................................................... 54
   D.3.15 – Registration and Licensing ....................................................................................................... 55
Rule D.4.00 – Limitation of Liability and Indemnification ..................................................................... 56
   D.4.01 – Definitions ................................................................................................................................. 56
   D.4.02 – Limitation of Liability of Protected Persons............................................................................... 56
   D.4.03 – Exchange Liability ..................................................................................................................... 57
   D.4.05 – Insurance .................................................................................................................................. 59
Rule E.1.00 – Discipline ............................................................................................................................ 60
   E.1.01 – Infractions.................................................................................................................................. 60
   E.1.02 – Complaints ................................................................................................................................ 60
   E.1.03 – Investigatory Powers................................................................................................................. 60
   E.1.04 – Audit and Investigation.............................................................................................................. 60
   E.1.05 – Refusing to Comply................................................................................................................... 60
   E.1.06 – Provision of Information to Other Canadian Exchanges........................................................... 60
   E.1.07 – Investigations ............................................................................................................................ 61
   E.1.08 – Resolution of Investigation in some other manner than by the institution of Disciplinary
   Proceedings............................................................................................................................................. 61
   E.1.09 – Interim Orders ........................................................................................................................... 61
   E.1.10 – Communication with Disciplinary Hearing Panel ...................................................................... 62
   E.1.11 – Choice of Disciplinary Proceedings .......................................................................................... 62
   E.1.12 – Settlement Process................................................................................................................... 62
   E.1.13 – Issuance of a Notice of Hearing................................................................................................ 63
   E.1.14 – Notice of Hearing ...................................................................................................................... 63
   E.1.15 – Service of Notice of Hearing, Appearance and Failure to Appear............................................ 63
   E.1.16 – Penalties ................................................................................................................................... 64
   E.1.17 – (Deleted) ................................................................................................................................... 64
   E.1.18 – Costs ......................................................................................................................................... 64
   E.1.19 – Method of Service ..................................................................................................................... 65
Rule E.2.00[A] – Hearings General .......................................................................................................... 66
   E.2.01[A] – Hearing and Review Chairperson Appointment Committee................................................. 66
   E.2.02[A] – Hearing and Review Chairperson Roster............................................................................. 66
   E.2.03[A] – Qualification in More Than One Designated Province ......................................................... 66

Table of Contents                                                                                                                                 Page vi
As at May 31, 2004
                                                   TSX Venture Exchange
                                                  Rules and Trading Policies

  E.2.04[A] – Hearing Officer...................................................................................................................... 66
Rule E.2.00[B] – Disciplinary Proceedings............................................................................................. 68
  E.2.05[B] – Disciplinary Hearing Panel Roster........................................................................................ 68
  E.2.06[B] – Disciplinary Hearing Panels - Disciplinary Proceedings....................................................... 68
  E.2.07[B] – Transitional ........................................................................................................................... 69
  E.2.08[B] – Pre-hearing Conferences ..................................................................................................... 69
  E.2.09[B] – Rules Applying at a Disciplinary Hearing ............................................................................. 69
  E.2.10[B] – Decision Following Disciplinary Hearing .............................................................................. 70
  E.2.11[B] – Form of Decision .................................................................................................................. 70
  E.2.12[B] – Decision of the Disciplinary Hearing Panel Final.................................................................. 70
  E.2.13[B] – Attornment To and Retention of Jurisdiction ........................................................................ 71
  E.2.14[B] – Acceptance of Jurisdiction as a Condition of Market Participation....................................... 71
Rule E.2.00[C] – Listed Company Reviews ............................................................................................ 72
  E.2.15[C] – Intentionally Left Blank ......................................................................................................... 72
  E.2.16[C] – Listed Company Review Panel Roster................................................................................. 72
  E.2.17[C] – Hearing Panels - Listed Company Reviews......................................................................... 72
  E.2.18[C] – Pre-hearing Conferences ..................................................................................................... 73
  E.2.19[C] – Rules Applying at a Listed Company Review ...................................................................... 73
  E.2.20[C] – Communication with Listed Company Review Panel........................................................... 74
  E.2.21[C] – Decision Following Listed Company Review ....................................................................... 74
  E.2.22[C] – Form of Decision .................................................................................................................. 74
  E.2.23[C] – Decision of the Listed Company Review Panel Final .......................................................... 74
Rule F.1.00 – Member, Approved Person and Employee Conduct ...................................................... 75
  F.1.01 – Supervision of Accounts............................................................................................................ 75
  F.1.02 – Application of Due Diligence to Accounts ................................................................................. 75
  F.1.03 – Vicarious Liability....................................................................................................................... 76
  F.1.04 – Nominee Accounts .................................................................................................................... 76
  F.1.05 – Client to Pay before Registration .............................................................................................. 76
  F.1.06 – Designation of Accounts and Prohibited Accounts ................................................................... 76
  F.1.07 – Alternative Dispute Resolution .................................................................................................. 77
Rule F.2.00 – Member Ethics and Affairs................................................................................................ 78
  F.2.01 – Business Practices .................................................................................................................... 78
  F.2.02 – Use of Offices............................................................................................................................ 78
  F.2.03 – Compliance by Employees........................................................................................................ 78
  F.2.04 – Conflict of Interest ..................................................................................................................... 78
  F.2.05 – Opposite Side of Market............................................................................................................ 78


Table of Contents                                                                                                                            Page vii
As at May 31, 2004
                                                    TSX Venture Exchange
                                                   Rules and Trading Policies

  F.2.06 – Payment Restricted................................................................................................................... 78
  F.2.07 – Dual Registration Prohibited ..................................................................................................... 78
  F.2.08 – Trading in Securities or Options for which the Rules do no Prescribe Standards or
  Requirements .......................................................................................................................................... 78
  F.2.09 – (Repealed)................................................................................................................................. 79
  F.2.10 – (Repealed)................................................................................................................................. 79
  F.2.11 – Market Corner ........................................................................................................................... 79
  F.2.12 – Remuneration............................................................................................................................ 79
  F.2.13 – Business Restricted .................................................................................................................. 80
  F.2.14 – Arrangements with Clients ........................................................................................................ 80
  F.2.15 – Regulation of Advertising .......................................................................................................... 80
  F.2.16 – The Conduct & Practices Handbook for Securities Industry Professionals .............................. 81
  F.2.17 – Directorship, etc. Prohibited ...................................................................................................... 81
  F.2.18 – Specific Infractions .................................................................................................................... 82
  F.2.19 – Property Interest Sale ............................................................................................................... 82
  F.2.20 – Property Interest Acquisition ..................................................................................................... 82
  F.2.21 – Responsibility of Members and Approved Persons .................................................................. 83
  F.2.22 – Responsibility of Supervisors .................................................................................................... 83
  F.2.23 – Assessments and Fines ............................................................................................................ 83
  F.2.24 – Service Fees ............................................................................................................................. 83
  F.2.25 – Commissions and Charges for Services................................................................................... 83
  F.2.26 – Dealings With Clients Located in the United Kingdom ............................................................. 83
  F.2.27 – Mutual Fund Incentives ............................................................................................................. 83
  F.2.28 – Client Priority During Distributions ............................................................................................ 84
  F.2.29 – Client Priority for Private Placements ....................................................................................... 84
  F.2.30 – Disclosure of Pro Group Holdings............................................................................................. 85
  F.2.31 – Pro Group Hold Period.............................................................................................................. 86
  F.2.32 – Restrictions on Pro Group Ownership ...................................................................................... 86
Rule F.3.00 – Specific Provisions Respecting Managed Accounts and Discretionary Accounts .... 87
  F.3.01 – Definitions.................................................................................................................................. 87
  F.3.02 – Discretionary Accounts ............................................................................................................. 87
  F.3.03 – Compliance ............................................................................................................................... 88
  F.3.04 – Managed Accounts ................................................................................................................... 88
  F.3.05 – Designation of a Supervised Authority...................................................................................... 88
  F.3.06 – Designation as a Portfolio Manager .......................................................................................... 88
  F.3.07 – Designation as Associate Portfolio Manager ............................................................................ 89
  F.3.08 – Portfolio Management Committee............................................................................................. 89

Table of Contents                                                                                                                              Page viii
As at May 31, 2004
                                                     TSX Venture Exchange
                                                    Rules and Trading Policies

   F.3.09 – Quarterly Review of the Managed Accounts............................................................................. 89
   F.3.10 – Investment Policies ................................................................................................................... 90
   F.3.11 – Fees Agreement........................................................................................................................ 90
   F.3.12 – Separate and Distinct Supervision for Each Managed Account ............................................... 90
   F.3.13 – Ethics......................................................................................................................................... 90
   F.3.14 – The Member or Affiliated Company's Mandate......................................................................... 90
Rule F.4.00 – Clients' Fully Paid Securities ............................................................................................ 91
   F.4.01 – Segregation Requirements ....................................................................................................... 91
   F.4.02 – Acceptable Depositories for Segregation of Securities - External Locations............................ 91
   F.4.03 – Acceptable Internal Locations for Segregation of Securities .................................................... 91
   F.4.04 – Non-Negotiable Securities ........................................................................................................ 92
   F.4.05 – Bulk Segregation Calculation .................................................................................................... 92
   F.4.06 – Calculation................................................................................................................................. 93
   F.4.07 – Frequency and Review of Calculation ...................................................................................... 93
   F.4.08 – General Restrictions.................................................................................................................. 93
   F.4.09 – Correction of Segregation Deficiencies..................................................................................... 94
Rule F.5.00 – Client Indebtedness........................................................................................................... 95
   F.5.01 – Member's Rights ....................................................................................................................... 95
   F.5.02 – Pledge Agreements................................................................................................................... 95
Rule F.6.00 Proxies ................................................................................................................................... 96
   F.6.01 – Restrictions................................................................................................................................ 96
   F.6.02 – Beneficial Ownership ................................................................................................................ 96
   F.6.03 – Written Instructions Required.................................................................................................... 96
   F.6.04 – Obligation to Provide Proxy....................................................................................................... 96
   F.6.05 – Exceptions................................................................................................................................. 96
Rule F.7.00 Cash Accounts ...................................................................................................................... 97
   F.7.01 – Regular Cash Accounts ............................................................................................................ 97
   F.7.02 – Delivery Against Payment (DAP) .............................................................................................. 97
   F.7.03 – Receipt Against Payment.......................................................................................................... 97
   F.7.04 – Payment .................................................................................................................................... 97
   F.7.05 – Isolated Transactions ................................................................................................................ 97
   F.7.06 – Account Restrictions ................................................................................................................. 97
   F.7.07 – Transfer to Margin Account....................................................................................................... 98
   F.7.08 – Acceptable Institutions and Others ........................................................................................... 98
Rule F.8.00 Margin Accounts ................................................................................................................... 99
   F.8.01 – Taking Over a Margin Account.................................................................................................. 99


Table of Contents                                                                                                                                 Page ix
As at May 31, 2004
                                                      TSX Venture Exchange
                                                     Rules and Trading Policies

   F.8.02 – Margin Agreement..................................................................................................................... 99
   F.8.03 – Margin Agreement to Define ..................................................................................................... 99
   F.8.04 – Margin Agreement Conflict........................................................................................................ 99
   F.8.05 – Margin Account Settlement ..................................................................................................... 100
   F.8.06 – Payment .................................................................................................................................. 100
   F.8.07 – Margin Account Restrictions ................................................................................................... 100
Rule F.9.00 Client Account Transfers ................................................................................................... 101
   F.9.01 – Definitions................................................................................................................................ 101
   F.9.02 – Account Transfers ................................................................................................................... 101
   F.9.03 – Authorization ........................................................................................................................... 101
   F.9.04 – Return Date Notification .......................................................................................................... 101
   F.9.05 – Failure to Transfer ................................................................................................................... 101
   F.9.06 – Settlement ............................................................................................................................... 102
   F.9.07 – Failure to Settle ....................................................................................................................... 102
   F.9.08 – Non-Certificated Mutual Funds ............................................................................................... 102
   F.9.09 – Miscellaneous Balances.......................................................................................................... 102
   F.9.10 – Capital Charges....................................................................................................................... 103
   F.9.11 – Fees and Charges................................................................................................................... 103
   F.9.12 – Exemptions.............................................................................................................................. 103
Rule F.10.00 – Relationship Between Introducing Brokers and Carrying Brokers .......................... 104
   F.10.01................................................................................................................................................... 104
   F.10.02................................................................................................................................................... 104
   F.10.03................................................................................................................................................... 104
   F.10.04................................................................................................................................................... 104
   F.10.05................................................................................................................................................... 104
   F.10.06................................................................................................................................................... 105
   F.10.07................................................................................................................................................... 105
   F.10.08 – Introducing Broker Type I Arrangement................................................................................ 105
   F.10.09 – Introducing Broker Type II Arrangement...............................................................................107
   F.10.10 – Introducing Broker Type III Arrangement..............................................................................109
   F.10.11 – Introducing Broker Type IV Arrangement ............................................................................. 110
   F.10.12 – Exemption for Arrangements Between a Member and a Foreign Affiliate............................ 112
Rule F.11.00 Uniform Settlement Rule .................................................................................................. 114
   F.11.01................................................................................................................................................... 114
      Notes and Understandings ................................................................................................................ 114
Rule F.12.00 – Display by Members of Participating Institutions of CIPF Coverage ....................... 115


Table of Contents                                                                                                                                     Page x
As at May 31, 2004
                                                        TSX Venture Exchange
                                                       Rules and Trading Policies

   F.12.01 – Definitions.............................................................................................................................. 115
   F.12.02 – Display at Premises .............................................................................................................. 115
   F.12.03 – Account Statements and Confirmations................................................................................ 115
   F.12.04 – CIPF Official Brochure .......................................................................................................... 115
   F.12.05 – Advertising............................................................................................................................. 115
   F.12.06 – Members of CIPF .................................................................................................................. 115
   F.12.07 – English/French Language ..................................................................................................... 116
   F.12.08 – Termination of Membership .................................................................................................. 116
   F.12.09 – Exemptions............................................................................................................................ 116
Rule G.1.00 – Capital, Margin and Examinations................................................................................. 117
   G.1.01 – Capital Formula Rules ............................................................................................................ 117
   G.1.02 – Risk Adjusted Capital Deficiency............................................................................................ 117
   G.1.03 – Filing Requirements................................................................................................................ 117
   G.1.04 – Special Deductions................................................................................................................. 117
   G.1.05 – Margin Requirements for Clients and Members..................................................................... 117
   G.1.06 – No Margin On Control Blocks ................................................................................................. 137
   G.1.07 – Short Position Offset............................................................................................................... 138
   G.1.08 – Margin Requirements for Underwriting Commitments ........................................................... 142
   G.1.09 – Margin - for Term Repurchase/Resale Agreements and Cash/Securities Loan Transactions
   ............................................................................................................................................................... 144
   G.1.10 – Standby Commitment - Rights Offerings................................................................................ 145
   G.1.11 – Subordination Agreement....................................................................................................... 145
   G.1.12 – Commodity Futures and Futures Contract Options................................................................ 145
   G.1.13 – Calculations - Commodity Futures and Options: Concentration ............................................ 147
   G.1.15 – Securities Called for Redemption or Subject to a Cash Purchase Offer................................ 149
   G.1.16 – Margin Requirements on Options........................................................................................... 150
   G.1.17 – Protection of Members' Capital - Guarantees ........................................................................ 150
   G.1.18 – Members of Multiple Self-Regulatory Organizations .............................................................. 150
   G.1.19 – Margin - Futures Contracts and Options ................................................................................150
   G.1.20 – Discretionary Policies - Trading, Settlement and Margin Requirements................................ 151
   G.1.21 – Margin Requirements for Installment Receipts ...................................................................... 151
Rule G.2.00 – Account Guarantees ....................................................................................................... 153
   G.2.01 – Account Guarantees............................................................................................................... 153
   G.2.02 – Audit Confirmation Requirements........................................................................................... 154
   G.2.03 – Form and Content of Guarantee and Hedge Agreements ..................................................... 154
   G.2.04 – Corporation Guarantee........................................................................................................... 155
   G.2.05 – Members Guarantees............................................................................................................. 155

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                                                    TSX Venture Exchange
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Rule G.3.00 – Records and Audit .......................................................................................................... 156
   G.3.01 – Records .................................................................................................................................. 156
      G.3.01.1 – Confirmation..................................................................................................................... 157
      G.3.01.2 – Electronic Confirmations .................................................................................................. 158
      Guide to interpretation of Rule G.3.01 ............................................................................................... 159
   G.3.02 – Auditors - Panel ...................................................................................................................... 159
   G.3.03 – Annual Audits and Periodic Questionnaires ........................................................................... 159
   G.3.04 – Special Examinations ............................................................................................................. 159
   G.3.05 – Access to Records.................................................................................................................. 160
   G.3.06 – Expenses of Panel Auditor ..................................................................................................... 160
   G.3.07 – Change of Accounting System, Business, Association, etc. .................................................. 160
   G.3.08 – Suspension if Audit or Report Unsatisfactory......................................................................... 160
   G.3.09 – Requirement to Provide Information....................................................................................... 160
   G.3.10 – Conduct of Audit ..................................................................................................................... 160
   G.3.11 – Scope...................................................................................................................................... 160
   G.3.12 – Additional Reporting Requirements........................................................................................ 163
   G.3.13 – Computer Control and Audit Guidelines................................................................................. 163
   G.3.14 – Retention of Audited Questionnaire and Working Papers...................................................... 164
   G.3.15 – Reporting Breaches of Exchange By-laws or Rules............................................................... 164
   G.3.16 – Monthly Margin Report ........................................................................................................... 164
   G.3.17 – Release of Information by the Exchange ............................................................................... 164
   G.3.18 – Member Application Audit Requirement................................................................................. 165
   G.3.19 – Late Filing Fees ...................................................................................................................... 165
   G.3.20 – Internal Controls ..................................................................................................................... 165
   G.3.21 – Affiliated Companies............................................................................................................... 165
Rule G.4.00 – Insurance.......................................................................................................................... 167
   G.4.01 – Mail Insurance ........................................................................................................................ 167
   G.4.02 – Financial Institution Bond ....................................................................................................... 167
      Clause A - Fidelity.............................................................................................................................. 167
      Clause B - On Premises .................................................................................................................... 167
      Clause C - In Transit .......................................................................................................................... 167
      Clause D - Forgery or Alterations ...................................................................................................... 167
      Clause E - Securities ......................................................................................................................... 167
   G.4.03 – Notice of Termination or Cancellation .................................................................................... 167
   G.4.04 – Amounts Required.................................................................................................................. 168
   G.4.05 – Provisos (Provisos with respect to Rules G.4.02, G.4.03 and G.4.04) .................................. 168


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  G.4.06 – Qualified Carriers.................................................................................................................... 169
  G.4.07 – Global Financial Institution Bonds .......................................................................................... 169
  G.4.08 – Notice...................................................................................................................................... 169
Rule G.5.00 – Concentration of Securities ........................................................................................... 170
  G.5.01 – Definitions ............................................................................................................................... 170
  G.5.02 – Calculation .............................................................................................................................. 170
  G.5.03 – Concentration - Capital Requirement ..................................................................................... 171
  G.5.04 – Concentration of Member's Own Securities ........................................................................... 171
  G.5.05 – Application of Concentration Charge...................................................................................... 171
  G.5.06 – Reporting ................................................................................................................................ 172
Rule G.6.00 – Cash and Securities Loan Agreements ........................................................................ 173
  G.6.01 – General ................................................................................................................................... 173
  G.6.02 – Buy-in (Liquidity Transactions) Procedures............................................................................ 173
  G.6.03 – Accounting System ................................................................................................................. 173
  G.6.04 – Rules for Cash and Securities Loan Transactions between Regulated Entities .................... 173
  G.6.05 – Rules for Cash and Securities Loan Transactions between Members and Acceptable
  Institutions or Acceptable Counterparties.............................................................................................. 174
  G.6.06 – Rules for Cash and Securities Loan Transactions between Members and all Other Lenders
  ............................................................................................................................................................... 174
  G.6.07 – Letters of Credit ...................................................................................................................... 175
Rule G.7.00 – Early Warning System .................................................................................................... 176
  G.7.01 – Designation............................................................................................................................. 176
  G.7.02 – Level 1 .................................................................................................................................... 176
     Liquidity .............................................................................................................................................. 176
     Capital ................................................................................................................................................ 176
     Profitability ......................................................................................................................................... 176
     Discretionary ...................................................................................................................................... 176
  G.7.03 – Level 1 Provisions................................................................................................................... 176
  G.7.04 – Level 2 .................................................................................................................................... 178
     Liquidity .............................................................................................................................................. 178
     Capital ................................................................................................................................................ 178
     Profitability ......................................................................................................................................... 178
     Frequency .......................................................................................................................................... 178
     Discretionary ...................................................................................................................................... 178
  G.7.05 – Level 2 Provisions................................................................................................................... 178
  G.7.06 – Discretion................................................................................................................................ 179
  G.7.07 – Notice...................................................................................................................................... 179


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   G.7.08 – Designation in Force............................................................................................................... 180
Rule G.8.00 – Disclosure to Clients of Members' Financial Condition.............................................. 181
   G.8.01 – Available to Clients ................................................................................................................. 181
   G.8.02 – Published Statements............................................................................................................. 181
   G.8.03 – Form and Content................................................................................................................... 181
   G.8.04 – Auditor's Report ...................................................................................................................... 181
   G.8.05 – Officers and Directors List ...................................................................................................... 182
   G.8.06 – Disclosure ............................................................................................................................... 182
   G.8.07 – Holding Companies, Related Companies & Affiliates ............................................................ 182
Rule G.9.00 – Clients' Free Credit Balances......................................................................................... 183
   G.9.01 – Definition................................................................................................................................. 183
   G.9.02 – Disclosure ............................................................................................................................... 183
   G.9.03 – Calculation .............................................................................................................................. 183
   G.9.04 – Compliance............................................................................................................................. 183
   G.9.05 – Rectification of Deficiency ...................................................................................................... 183
Rule H. – Left Intentionally Blank .......................................................................................................... 184
Rule I.1.00 – Options............................................................................................................................... 185
   I.1.01 – Definitions:................................................................................................................................ 185
   I.1.02 – Requirements for Trading or Dealing in CDCC Options .......................................................... 186
   I.1.03 – Required Courses .................................................................................................................... 187
   I.1.04 – Suspensions and Restrictions on Member............................................................................... 187
   I.1.05 – Position Limits .......................................................................................................................... 187
   I.1.06 – Reports Related to Position Limits ........................................................................................... 188
   I.1.07 – Liquidation of Positions in Excess of Limits ............................................................................. 188
   I.1.08 – Exercise Limits ......................................................................................................................... 189
   I.1.09 – Designated Registered Options Principal ................................................................................ 189
   I.1.10 – Discretionary Orders ................................................................................................................ 190
   I.1.11 – Options Trading Agreement or Letter Of Undertaking ............................................................. 190
   I.1.12 – Transfer of Accounts ................................................................................................................ 191
   I.1.13 – Rights and Obligations of Options Holders and Writers........................................................... 191
   I.1.14 – Allocation of Exercise Notices .................................................................................................. 191
   I.1.15 – Effect of Options and Options-related Positions on Member Firm Capital Calculations.......... 191
   I.1.16 – Reports to Exchange................................................................................................................ 193
   I.1.17 – Submission for Clearance ........................................................................................................ 193
   I.1.18...................................................................................................................................................... 194
   I.1.19...................................................................................................................................................... 194


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   I.1.20...................................................................................................................................................... 194
Rule I.2.00 – Trading in O.C.C. Option Contracts ................................................................................ 195
   I.2.01 – Definitions................................................................................................................................. 195
   I.2.02 – Trading in O.C.C. Options ........................................................................................................ 195
   I.2.03 – Requirements for Trading in O.C.C. Options ........................................................................... 196
   I.2.04 – Relations with Clients Trading in O.C.C. Options .................................................................... 196
   I.2.05 – Prohibition Against Discretionary Orders ................................................................................. 196
   I.2.06 – Reporting .................................................................................................................................. 197
   I.2.07 – Commissions ............................................................................................................................ 197
   I.2.08 – Options Trading Agreement ..................................................................................................... 197
   I.2.09 – Margin Requirements ............................................................................................................... 197
   I.2.10 – Capital Requirement with respect to O.C.C. Options and O.C.C. Option-related Positions .... 199
   I.2.11...................................................................................................................................................... 199
Rule J.1.00 – Commodity Futures Contracts and Options ................................................................. 201
   J.1.01 – Definitions ................................................................................................................................ 201
   J.1.02 – Approval................................................................................................................................... 201
   J.1.03 – Qualifications ........................................................................................................................... 203
   J.1.04 – Responsibilities of Designated Principals................................................................................ 203
   J.1.05 – Institutional Account Requirements ......................................................................................... 204
   J.1.06 – Reporting Requirements.......................................................................................................... 204
   J.1.07 – Non-Client Orders.................................................................................................................... 204
   J.1.08 – Account Trading Agreement.................................................................................................... 205
   J.1.09 – Letter of Undertaking ............................................................................................................... 206
   J.1.10 – Records ................................................................................................................................... 206
Rule J.2.00 – Industry Member .............................................................................................................. 207
   J.2.01 – Industry Member...................................................................................................................... 207
TSX Venture Exchange: TRADING POLICIES ...................................................................................... 208




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                                                                          TSX   venture
                                                                            EXCHANGE




RULE A. 1.00 – INTERPRETATION

A1.01 – Definitions
In these rules unless the context otherwise requires:
"Approved lender" means a chartered bank or other person approved by the Exchange. "Approved
Person" means:
        (a)   a Member;
        (b)   a Related Company in respect of a particular Member;
        (c)   an employee of the Member or Related Company to that extent that such employee has
              Exchange Approval or the approval of a recognized self-regulatory organization;
        (d)   partners, directors and officers of the Member or Related Company;
        (e)   a person holding a significant equity interest in the Member or Related Company; and
        (f)   such other person as may be designated from time to time by the Exchange.
"Approved Trader" means an individual who has Exchange Approval to enter orders into the trading
system and includes both Assistant Approved Traders and Full Approved Traders unless otherwise
indicated by the Exchange.
"Arbitrage" is the business of buying or selling securities in one market with the intention of immediately
reversing such transactions in another market in order to profit from price differences between such
markets if such business is not casual but contains the element of continuity.
"Assistant Approved Trader" means a trader whose trading must be supervised by an Approved Trader
as required in Rule C.2.29 and who may not operate or have any interest in a non-client or inventory
account.
"Associate" when used to indicate a relationship with a person or company, means:
        (a) an issuer of which the person or company beneficially owns or controls, directly or
            indirectly, voting securities entitling him to more than 10 percent of the voting rights attached
            to all outstanding voting securities of the issuer;
        (b) any partner of the person or company;
        (c) any trust or estate in which the person or company has a substantial beneficial interest or in
            respect of which the person or company serves as trustee or in a similar capacity;
            and
        (d) in the case of a person:
                 (i) that person's spouse or child, or
                 (ii)     any relative of that person or of his spouse who has the same residence as that
                          person; but
        (e) where the Exchange determines that two persons shall, or shall not, be deemed to be
            associates with respect to a Member firm, Member corporation or holding company of a
            Member corporation, then such determination shall be determinative of their relationships in
            the application of Rule D with respect to that Member firm, Member corporation or holding
            company.
"ATS" means an Alternative Trading System as defined in National Instruments 21-101 (Marketplace
Operation).

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                                        TSX Venture Exchange
                                       Rules and Trading Policies

“attributed order” means an order which is displayed in the Book with the Member’s trading number.
        Amended November 4, 2003
"better-priced limit order" means a limit order entered prior to the opening of trading of a listed security to
buy at a price that is higher than the opening price, or to sell at a price that is lower than the opening
price.
"Board" means the Board of Directors of the Exchange.
"board lot" has the same meaning as "Standard trading unit" as defined in the UMIR.
        Amended March 28, 2002
"Book" means the electronic file of committed orders for a listed security.
"Business Day" means any day from Monday to Friday inclusive, excluding Statutory Holidays.
"calculated opening price" or "COP" is the price of opening trades in a listed security calculated in the
manner prescribed by the Board.
"Chair" means the person elected by the Board as the Chair of the Board or, in his or her absence or
unwillingness to act, the Vice-Chair of the Board or the director who for the time being is exercising the
powers of the Chair of the Board.
"Chartered Bank" means any bank incorporated under the Bank Act (Canada).
"Clearing Corporation" means The Canadian Depository for Securities Limited and/or any other securities
clearing corporation to be designated by or acceptable to the Exchange for the purposes of
facilitating securities trade settlement.
"client order" means an order for the purchase or sale of a security received or originated by a Member
for the account of a client of the Member or a client of an affiliated entity of the Member, but does not
include an order entered for an account in which the Pro Group has any direct or indirect interest, other
than an interest in a commission charged, a principal order or a non-client order.
"commission split" includes any amount or amounts which are a portion of, calculated from or dependent
on the commission earned by a member or affiliated company.
"committed order" means an offer to buy or sell a specific number of shares of a listed security at a
specific price that is entered in the Book and that is open for acceptance by any other Member.
"Complaint" means any verbal or written communication to the Exchange from a member of the public or
a member or a director, or a member of the staff of the Exchange, concerning the administration, control
or management of the affairs of a member or other person under the jurisdiction of the Exchange, or
the business or the affairs of the Exchange or the business, affairs or conduct of a company whose
shares are listed on the Exchange.
"Corporations Act" means, as the subject matter or the context requires, the Alberta Business
Corporations Act S.A. 1981, c. B-15 as amended from time to time.
"Debt" is an investment which provides the holder with a legal right, in specified circumstances, to
demand payment of the amount owing, the term is used to include debtor-creditor relationships
whether or not represented by a written instrument or security.
"Delayed delivery" means delivery at the seller's option within the time specified in the contract.
"Designated Member" means a partner, officer, or director appointed by a Member as its member
pursuant to Rule D. 1.03.
"Direct or indirect financial benefit" shall include a "direct or indirect financial benefit", bonus or other
remuneration based on trading profit of any account or accounts.
"Distribution" has the meaning attributed to it in the applicable securities laws.
"Equity investment" is an investment the holder of which has no legal right to demand payment until the

Rule A – Interpretation                                                                                     Page 2
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                                      TSX Venture Exchange
                                     Rules and Trading Policies

issuing corporation or its board of directors has passed a resolution declaring a dividend or other
distribution, or winding-up of the issuing corporation.
"Exchange" means TSX Venture Exchange Inc., incorporated under the Corporations Act.
"Exchange Approval" means any approval given by the Exchange (including any Committee of the
Exchange so authorized) under any provision of the Exchange Requirements.
"Exchange auditor" means chartered accountants appointed at an annual meeting of the Exchange.
"Exchange Contract" means any contract:
        (a)   to buy and sell any listed security, if such contract is made through the facilities of the
              Exchange; or
        (b)   for delivery of and payment for any listed security (or security which was a listed security
              when the contract was made) arising from settlement through the Clearing Corporation.
"Exchange officer" means the President, any vice-president, or any other person appointed by the Board
or the President as an Exchange officer.
"Exchange Requirements" means and includes the Articles, by-laws, policies, circulars, rules (including
UMIR), guidelines, orders, notices, rulings, forms, decisions and regulations of the Exchange as from
time to time enacted, any instructions, decisions and directions of the Exchange (including those of
any committee of the Exchange as appointed from time to time), the Alberta Securities Act, S.A. 1981, c.
S-6.1 and rules and regulations thereunder as amended, the British Columbia Securities Act. R.S.B.C.
1996, c.418 and rules and regulations thereunder as amended, and any policies, rules, orders, rulings,
forms or regulations from time to time enacted by the Alberta Securities Commission or British
Columbia Securities Commission and all applicable provisions of the securities laws of any other
jurisdiction.
"Exercise of Exchange powers" means:
        (1)   Unless the subject matter or context requires otherwise, wherever the Exchange is
              specified as having any powers, rights, discretion or is entitled to take any action, then the
              same may be exercised or taken at any time and from time to time on behalf of the
              Exchange by the Board, the appropriate officers of the Exchange or any committee or
              person designated by the Board, the CEO or the President.
        (2)   Unless the subject matter or context requires otherwise, any exercise of any power,
              right or discretion or the taking of any action on behalf of the Exchange by any person or
              committee shall be subject to the overall authority of the Board.
"External distribution" means a distribution by a member or affiliated company, with the approval of the
Exchange, of a block of stock owned by such member or affiliated company where the securities are
qualified under a prospectus or Exchange offering prospectus.
"Fitness hearing" means a hearing, before a disciplinary hearing panel or listed company review panel, at
which a member seeks approval to employ an individual as an Approved Person by demonstrating that
such individual meets the requirements of the Exchange for approval. The provisions of Rule E shall
apply.
"Full Approved Trader" means an Approved Trader who has met the qualifications of the Exchange to
be designated as such.
"Guaranteeing" includes the becoming liable for, providing for or entering into an agreement (contingent
or otherwise) having the effect or result of so becoming liable for or providing security for a person,
including an agreement to purchase an investment, property or services, to supply funds, property or
services or to make an investment primarily for the purpose of directly or indirectly enabling such person
to perform its obligations in respect of such security or investment or assuring the investor of such
performance.
"Hereof”, "herein", "hereby" "hereunder" and similar expressions used in any section, subsection or

Rule A – Interpretation                                                                                Page 3
As at May 31, 2004
                                         TSX Venture Exchange
                                        Rules and Trading Policies

clause relate to the whole of the Exchange Requirements.
"Holding company" means a corporation which has not been exempted by the Exchange from the
requirements for a holding company that owns more than fifty per cent of each class or series of voting
securities and more than fifty per cent of each class or series of participating securities of another
corporation; where a corporation is a holding company of another corporation that is itself a holding
company of yet another corporation, the first mentioned corporation is also deemed a holding company
of the third-mentioned corporation. A person shall not be considered a holding company by reason of its
ownership of securities in the capacity of an industry investor.
"Independent director" means a person who, at that time of his or her appointment as a director of the
Exchange is, and for at least 12 months immediately preceding that appointment was, independent of
the Exchange and its shareholders and for this purpose a person is not independent who is:
          (a)   a person who is a director, officer, or employee of a member or Participating
                Organization;
          (b)   is a member of the immediate family of a person referred to in paragraph (a); or
          (c)    a person who beneficially owns 5% or more of the outstanding voting shares or
                partnership interest in a member or Participating Organization
and for the purposes of clause (b) the immediate family of a person referred to in clause (a) includes
that person's spouse, parent and child, and a relative of that person or that person's spouse who resides
with that person. For the purpose of this definition, (i) the Chief Executive Officer and the President of
the Exchange shall each be deemed to be independent and (ii) a person shall be independent if he or
she is determined to be independent by the board, unless determined otherwise by a regulatory
authority.
"Independent member" means a member that is not a related issuer in respect of the member that is
acting as an advisor, agent or underwriter or as a member of a selling group with respect to a distribution
of securities by an issuer.
"Industry investor" means, in respect of any member or holding company of a member, any of the
following who beneficially owns an interest in the member:
    (1)         the members' full-time officers and employees, or the full time officers and employees
                of a related company or affiliate of a member which carries on securities related
                activities provided that such officers and employees of the related company or
                affiliate devote their full time to the securities related activities;
    (2)         spouses of individuals referred to in subparagraph (1);
    (3)         an investment corporation, where:
                (a) a majority of each class of the voting securities thereof is beneficially owned by
                    individuals referred to in subparagraph (1); and
                (b) all interests in all other outstanding voting or outstanding participating securities of
                    the investment corporation are beneficially owned by individuals referred to in
                    subparagraphs (1) or (2) or by industry investors with respect to the particular member or
                    holding company;
    (4)         a family trust established and maintained for the benefit of the individuals referred to in
                subparagraphs (1) or (2) or their children where:
                (a) full direction and control of the family trust, including, without limitation, its investment
                    portfolio and the exercise of voting and other rights attached to the instruments and
                    securities contained in the investment portfolio, are maintained by individuals referred to
                    in subparagraphs (1) and (2); and
                (b) all the beneficiaries of the family trust are individuals referred to in
                    subparagraphs (1) or (2) or their children or are industry investors with respect to

Rule A – Interpretation                                                                                       Page 4
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                                      TSX Venture Exchange
                                     Rules and Trading Policies

                 the particular member or holding company;
    (5)      a registered retirement savings plan established under the Income Tax Act (Canada) by an
             individual referred to in subparagraphs (1) or (2) if control over the investment policy of
             the registered retirement savings plan is held by that individual and if no other person
             has any beneficial interest in the registered retirement savings plan;
    (6)      a pension fund established by a member for its officers and employees if the pension
             fund is organized so that full power over its investment portfolio and the exercise of voting
             and other rights attached to the instruments and securities contained in the
             investment portfolio is held by individuals referred to in subparagraph (1);
    (7)      the estate of an individual referred to in subparagraphs (1) or (2) for a period of one year
             after the death of such individual or such longer period as may be permitted by the
             Exchange;
    (8)      any investor referred to in subparagraphs (1), (2), (3), (4) or (5) for a period of 90 days or
             such longer period as the Exchange may permit after the individual who, in the case of
             subparagraph (1), is the investor or, in the case of subparagraphs (2), (3), (4) or (5) is the
             person through whom the industry investor qualifies as such, is no longer in the
             employment of the member or the related company or affiliate which carries on securities
             related activities of a member;
but any of the foregoing is an industry investor only if an approval for purposes of this definition has
been given, and not withdrawn, by the managing committee of the member, or the board of directors
of the member or holding company, as the case may be, and the Exchange.
“intentional cross” has the same meaning as defined in the UMIR.
          Added November 4, 2003
“internal cross” has the same meaning as defined in the UMIR.
          Added November 4, 2003
"Investment" means, in respect of any person, any security or debt obligation issued assumed or
guaranteed by the person, any loan to the person, and any right to share participate in the assets, profit
or income of the person.
"Jitney" is a member acting on behalf of another member or non-member in the execution of transactions
through the facilities of the Exchange.
"Limited participation securities" are preference shares or indebtedness which satisfy all the following
requirements:
    (1)      they carry the right to dividends or interest at a fixed rate, in the case of preference shares,
             the dividends should be cumulative and payable in priority to any dividends to the holders of
             common shares;
    (2)      in the case of indebtedness, they are repayable at any time, and in the case of preference
             shares, they are redeemable at any time by the issuing corporation at a redemption price
             which may include a premium provided that the amount of the premium is not determined by
             reference to earnings or retained earnings of the issuing corporation; and
    (3)      they carry a right of participation in earnings of the issuing corporation limited on an annual
             basis to not more than one-half of the fixed dividend or interest rate, although the
             participation may be cumulative;
and which have been approved by the Exchange with (a) subordination arrangements having been
made such that the return to the holder thereof on a bankruptcy would not be adversely affected by the
application of section 139 of the Bankruptcy Act (Canada), and (b) having terms such that the issuance of
such securities would be unlikely to lead to the development of a two-price system (i.e. a system whereby
the securities would sell to full-time employees at one price and to other purchasers at another price.



Rule A – Interpretation                                                                                Page 5
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                                      TSX Venture Exchange
                                     Rules and Trading Policies

"Listed issuer" means an issuer having any of its securities listed for trading on the Exchange.
"Listed security" means a security that is listed and posted for trading on the Exchange.
"Market Official" means the Person designated as such by the Exchange.
"Member" means a Person who has executed the Members' Agreement, as amended from time to time,
and is accepted as and becomes a member of the Exchange under the Exchange Requirements.
"Members' Agreement" means the members' agreement among the Exchange and each Person who,
from time to time, is accepted as and becomes a member of the Exchange.
"Membership" means membership in the Exchange.
"Nominee" means any director, officer or partner of a member approved by the Board.
"Non-member broker" means any person, other than a member or related company of a member, that
maintains an office and regularly conducts with the public anywhere in the world, the business of a
broker or dealer in securities.
"Non-participating securities" are those with a claim limited to interest or dividends at a fixed rate.
"Non-resident" means:
    (1)     a person who is not a Canadian citizen;
    (2)     a person who is not a resident of Canada;
    (3)     a corporation incorporated under the laws of a jurisdiction other than Canada or one of the
            provinces or territories thereof;
    (4)     a trust, partnership or other unincorporated association created by:
            (a)    a person referred to in subparagraph (1) or (2);
            (b)    a corporation referred to in subparagraph (3);
            (c)    a trust in which a person referred to in subparagraph (1) or (2) or a
                   corporation referred to in subparagraph (3) has a beneficial interest that exceeds
                   10% of the beneficial ownership of the trust; or
            (d)    a trust in which any combination of persons referred to in subparagraph (1) or (2)
                   and corporation referred to in subparagraph (3) has a beneficial interest of more than
                   25% of the beneficial ownership of the trust; or
    (5)     a corporation controlled, directly or indirectly, by a person referred to in
            subparagraph (1) or (2), by a corporation referred to in subparagraph (3) or by a trust,
            partnership or other unincorporated association referred to in subparagraph (4).
"Odd lot" means order volume which is less than the board lot size determined at the close of the
previous trading session.
"Odd Lot Member" means the Member assigned by the Exchange to maintain the odd lot market in one or
more Exchange-listed securities pursuant to Policy Statement CR11.
"Odd Lot Trader" means the Full Approved Trader assigned by an Odd Lot Member to fulfill its
responsibilities as the Odd Lot Member for an Exchange-listed security.
"Officer" means the chair or any vice-chair of the Board of Directors, the President and any vice-
president, the secretary, assistant secretary, treasurer, assistant treasurer, comptroller, or general
manager of a member or any other person approved by the Exchange as an officer of a member.
"Offer of Settlement" means a proposal in writing signed by a respondent, containing in reasonable detail:
    (1)     the nature of the alleged breaches of the Exchange requirements;
    (2)     a statement of findings of fact;

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    (3)      a penalty to be imposed; and
    (4)      a waiver of all rights of appeal if an offer of settlement is accepted.
"Opening time" means the time fixed by the Board for the opening of Sessions of trading in listed
securities.
"Order" means directions, decisions or orders of the Board or committee of the Board or the President,
made pursuant to Exchange Requirements.
“Order Execution Account” means the account of a client of a Member in respect of which the Member is
exempted, in whole or in part, from making a determination on the suitability of trades for the client in
accordance with the requirements of a securities regulatory authority or a recognized self-regulatory
organization.
          Added May 31, 2004
"Orders for the accounts of clients" means an order for the account of a client of a member or of a client
of any affiliated company of a member, but shall not include an order for an account in which a member
or approved person has an interest, direct or indirect, other than an interest in a commission charged, nor
an order arising from an arbitrage account.
"Ordinary course indebtedness" is all debt other than debt which is restrictive, subordinated or
participating.
"Parent" where used to indicate a relationship with another corporation, means a corporation that has the
other corporation as a "subsidiary" within the meaning of either of the Securities acts.
"Participant in a member" means a partner in a member or in a partnership which is an affiliated company
of a member and a director, officer or shareholder of a member or of a corporation which is an affiliated
company of a member.
"Participating organization" means a person whose application for access to the facilities of the
Exchange has been accepted by the Exchange, and does not include a member.
"Participating securities" of an organization, whether incorporated or unincorporated, are those of its
securities outstanding from time to time which entitle the holders thereof to participation, limited or
unlimited, in the earnings or profits of the issuing organization, either alone or in addition to a claim for
interest or dividends at a fixed rate, and include, except where the reference is to "outstanding"
participating securities, those securities which entitle the holders thereof, on conversion, exchange, the
exercise of rights under a warrant, or otherwise, to acquire participating securities.
"Person" means an individual, corporation, partnership, party, trust, fund, association and any other
organized group of persons and the personal or other legal representative of a person to whom the
context can apply according to law.
"Person under the jurisdiction of the Exchange" means an approved person, a member, an employee
of a member, a participating organization or any other person who is required to apply and has applied to
the Exchange to become an approved person, a member, or an employee of a member.
"Posted market" is created by entering the order into the trading system of the Exchange or as from time to
time may be prescribed by the Exchange.
"President" means the person appointed by the Board as the President of the Exchange.
"Principal account" means an account in which a Member, an affiliated or related company of the
Member or an Approved Person has a direct or indirect interest, other than an interest in the commission
charged on the transaction.
"principal order" means an order for the purchase or sale of a security received or originated by a
Member, an affiliated or related company of the Member or an Approved Person for a principal account.
"Private placement" means an issuance from treasury of securities for cash in reliance on one or more of
the exempting provisions from the prospectus requirements of the applicable securities laws as

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                                      TSX Venture Exchange
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amended, or equivalent legislation of another jurisdiction, including the issuance of shares, units, share
purchase warrants, convertible securities or debt, but not including a rights offering.
"Pro group" means:
    (1)     Subject to subparagraphs (2), (3) and (4), "Pro Group" shall include, either
            individually or as a group:
            (a)   the member;
            (b)   employees of the member;
            (c)   partners, officers and directors of the member;
            (d)   affiliates of the member; and
            (e)   associates of any parties referred to in subparagraphs (1) through (5).
    (2)     The Exchange may, in its discretion, include a person or party in the Pro Group for the
            purposes of a particular calculation where the Exchange determines that the person is not
            acting at arm's length of the member;
    (3)     The Exchange may, in its discretion, exclude a person from the Pro Group for the purposes
            of a particular calculation where the Exchange determines that the person is acting at
            arm's length of the member;
    (4)     The member may deem a person who would otherwise be included in the Pro Group
            pursuant to subparagraph (1) to be excluded from the Pro Group where the member
            determines that:
            (a)   the person is an affiliate or associate of the member acting at arm's length of the
                  member;
            (b)   the associate or affiliate has a separate corporate and reporting structure;
            (c)   there are sufficient controls on information flowing between the member and the
                  associate or affiliate; and
            (d)   the member maintains a list of such excluded persons.
"Public ownership of securities" means the ownership of securities (other than indebtedness described in
Rule D.1. 17) by any person other than an industry investor except that ownership by an approved
lender in accordance with Rule D.1. 18 does not, of itself, constitute public ownership of securities.
"QTRS" means a quotation and trade reporting service within the meaning of National Instrument
21-101 (Marketplace Operation).
"Qualified independent underwriter" means, in respect of the distribution of securities of a member, a
securities firm which is a member of the Exchange; and
    (1)     has engaged in the securities business for at least five years immediately preceding the filing
            of the prospectus;
    (2)     as of the date the distribution commences;
            (a)   if a corporation, at least 40 per cent of the members of its board of directors;
            (b)   if a partnership, at least 40 per cent of its general partners; have been engaged
                  in the securities business for the five-year period immediately preceding that date;
    (3)     has engaged in the underwriting of public offerings of securities for the five-year period
            immediately preceding the date the distribution commences; and;
    (4)     is not an associate or affiliate of the corporation whose securities it is underwriting.




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                                      TSX Venture Exchange
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"Recognized exchange" or "Recognized stock exchange" means a stock exchange or exchange
recognized by the Board, from time to time, for the purpose of privileges which may be given to such
exchange or its members.
"Registered representative" means a person who has been approved as such by a self regulatory
organization and includes a registered representative (restricted). The term "Registered
Representative" shall include any person who performs substantially the same functions as a registered
representative and who may not otherwise be under the jurisdiction of the Exchange. The term
"Registered Representative" also includes an individual who is approved as an Investment Adviser or
Investment Adviser Restricted by a self regulatory organization.
Regulation Services Provider has the meaning ascribed in National Instruments 21-101 (Marketplace
Operation).
"Related Company" means, in respect of a Member, a person:
      (a)   in which the Member or any partner, director, officer, employee or shareholder of the
            Member, individually or collectively, hold, directly or indirectly, at least a 20 per cent ownership
            interest; and
      (b)   which carries on business in Canada a substantial part of which is that of a broker, dealer
            or adviser in securities.
"Related issuer" shall have the same meaning as prescribed in the securities laws and if there is a
conflict between the provisions of such securities laws, in the Alberta Securities Act, S.A.1981,c.S.6.1.
"Respondent" means a person with respect to whom a complaint has been made to the Exchange and
who at the time of the actions alleged in the complaint was a member or approved person, or employee or
agent of a member.
"Restrictive securities" means securities of a member, or holding company of a member which, in the
opinion of the Exchange, entitle the holders thereof to rights which give them a more extensive or
substantial degree of influence over the issuer or the operations thereof than is usual for holders of the
same amount of securities of the same type.
"Salesman" or "salesperson" means a registered representative or investment adviser as applicable.
"Securities act" means the Alberta Securities Act, S.A. 1981, c.S.-6.1 as amended from time to time, the
British Columbia Securities Act, R.S. B.C. 1996, c.418, as amended from time to time, and any Act that
hereinafter may be substituted therefore as the same is amended from time to time, and any reference
herein to any section or subsection of such Acts shall be deemed to be a reference to the section or
subsection as at the time in question amended or supplemented or to the successor thereof if the same
has been repealed.
"Securities firm" means any firm or corporation operating in Canada and carrying on securities related
activities.
"Securities laws" means the applicable securities laws (including statutes, regulations, rules and
published notices and policies thereunder) of each of the provinces in which the Exchange is recognized,
as amended from time to time.
"Securities related activities" means acting as a dealer (principal) or broker (agent) in carrying out
transactions in securities on behalf of clients including, without limitation, acting as an underwriter or
adviser, and also includes acting in any of such capacities in transactions in commodity futures
contracts or commodity futures options as defined by the applicable legislation.
"Self-regulatory organization" means any of the Investment Dealers Association of Canada, the Montreal
Exchange, The Toronto Stock Exchange, the Exchange and any Regulation Services Provider that is
recognized as a self-regulatory organization and retained by the Exchange in accordance with National
Instrument 21-101 (Marketplace Operation).
        Amended March 28,2002


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"Session" means the time period during which the Exchange is open for trading.
"settlement day" means any trading day on which settlements in listed securities may occur through the
facilities of the Clearing Corporation.
"short sale" has the same meaning as defined in the UMIR.
        Amended March 28,2002
"Special Terms Order" means an order for the purchase or sale of a security:
      (a)   for less than a standard trading unit;
      (b)   the execution of which is subject to a condition other than as to price or date of
            settlement; or
      (c)   that on execution would be settled on a date other than:
            (i)    the third business day following the date of the trade, or
            (ii)   any settlement date specified in a special rule or direction issued by the Exchange.
"Statutory holiday" means such day or days as may be designated by the Board or established by law in
applicable jurisdictions.
"Subordinated debt" is debt the terms of which specify that its holders will not be entitled to receive
payment if payments to the holders of senior classes of debt are in default.
"Sub-branch office" means any office of a member or affiliated company having less than four (4)
registered representatives and supervised by a branch manager or a person normally present at head
office who is not normally present at such office.
"TradeCDNX" means the trading system in use immediately prior to the transition to the TSE trading
system.
"trade" means a contract for the purchase and sale of a security and, for greater certainty, includes a
purchase or acquisition of a security for valuable consideration in addition to any sale or disposition of a
security for valuable consideration.
"tradeable order" means a market order, a buy order with a limit price that is at or above the ask price at
the time the order is entered on the Exchange, and a sell order with a limit price that is at or below the bid
price at the time the order is entered on the Exchange.
"Trading Day" means a day upon which a Session is held.
"trading system" means the trading system used by the Exchange and includes all facilities and services
provided by the Exchange to facilitate trading, including, but not limited to: electronic systems for trading
listed securities; data entry services; any other computer-based trading systems and programs;
communications facilities between a system operated or maintained by the Exchange and a trading or
order routing system operation or maintained by a Member , another market or other person approved
by the Exchange; and price quotations and other market information provided by or through the Exchange.
"UMIR" means the Universal Market Integrity Rules adopted by the Exchange and as may be amended
from time to time and administered and enforced by the Exchange or any Regulation Service Provider
retained by the Exchange.
“unattributed order” means an order which is displayed in the Book without the Member’s trading number.
        Added November 4, 2003
"Unlisted security" means a security which is not a listed security.
"Vice-chair" means the person elected by the Board as the Vice-Chair of the Board.
"Voting securities" of a member or its holding company means all securities of that member or holding
company outstanding from time to time that carry the right to vote for the election of directors, and


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                                     TSX Venture Exchange
                                    Rules and Trading Policies

includes:
      (1)   except where the reference is to "outstanding" voting securities, those securities which entitle
            the holders thereof, on conversion, exchange, the exercise of rights under a warrant, or
            otherwise, to acquire voting securities; and
      (2)   preference shares which carry the right to vote for the election of directors only upon the
            occurrence of a specific event if such specific event has occurred.
        Rule A1.01 amended November 4, 2003

A1.02 – Rules of Construction:
Grammatical variations of the interpretations have similar meanings. Words importing the masculine
gender shall include the feminine and neuter genders and, where applicable, the provisions of the
relevant interpretation legislation shall apply.

A1.03 – Interpretation Not Affected by Division, Heading, etc:
"Interpretation not affected by division, heading, etc" means the division of the Exchange requirements
into separate parts, sections, subsection and clauses, the provision of a table of contents and index
thereto, and the insertion of headings, indented notes in italics and footnotes are for convenience of
reference only and shall not affect the construction or interpretation of the Exchange requirements.




Rule A – Interpretation                                                                            Page 11
As at May 31, 2004
                                                                      TSX   venture
                                                                         EXCHANGE




RULE B.1.00 – POWER TO LIST AND DELIST

B.1.01
(1)   Listing on the Exchange is a privilege, not a right. The decision as to whether an issuer shall have
      any of its securities listed on the Exchange is in the sole discretion of the Exchange. The Exchange
      may accept or refuse any application or may impose whatever conditions and restrictions on any
      Exchange Approval granted as the Exchange, in its sole discretion, considers necessary and
      advisable in the circumstances.
(2)   The Exchange shall examine all applications for listing and may list for trading such securities and
      on such tier, as the Exchange, in its sole discretion, may determine appropriate. Applications for
      listing shall be made in the form and accompanied by such documentation and supporting materials
      as are prescribed by the Exchange from time to time.
(3)   The fee for the listing of any securities shall be such sum or sums as are prescribed by the
      Exchange from time to time.
(4)   The Exchange shall have the power and discretion at any time to:
      (a)   suspend trading or delist securities from the Exchange or to revoke a suspension imposed on
            any security listed on the Exchange; and
      (b)   impose any conditions or restrictions on any decision made by the Exchange pursuant to
            section 4(a) above, as deemed necessary and advisable by the Exchange;
      where the Exchange, in its discretion, is satisfied that:
      (c)   there has been a failure to comply with any of the terms and conditions of listing, including
            the terms of the Listing Agreement;
      (d)   there has been a failure to comply with or the contravention of any Exchange Requirement;
      (e)   suspend trading or delist securities from the Exchange or to revoke a suspension imposed on
            any security listed on the Exchange; and
      (f)   trading in the issuer's securities has been halted or suspended for a period as specified in the
            Exchange Requirements; or
      (g)   such action is necessary in the public interest.
(5)   The Exchange shall have the power and discretion at any time to:
      (a)   decline the granting of Exchange Approval of any application by any issuer;
            revoke, amend or impose conditions on any Exchange Approval previously granted;
      (b)   designate or redesignate the tier upon which an issuer's securities shall trade and designate
            any issuer Inactive (as defined in Corporate Finance Policy 1.1) or revoke any Inactive
            designation;
      (c)   decline the acceptance of notice of any director, officer, insider, promoter, auditor, lawyer,
            employee, consultant or other agent relied on by an issuer, to the extent the holding of such
            position requires acceptance of notice by the Exchange; and
      (d)   revoke, amend or impose conditions on any previous acceptance of notice granted to any
            issuer, director, officer, insider, promoter, auditor, lawyer, employee, consultant or other
            agents relied on by an issuer to the extent such position requires acceptance of notice by the
            Exchange.


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(6)   Where the Exchange has made a decision that:
      (a)   an application by an issuer for a listing of securities on the Exchange is declined;
      (b)   any class of securities of a listed issuer shall be suspended or delisted;
      (c)   the tier upon which an issuer's securities shall trade shall be redesignated or that an issuer
            shall be designated Inactive (as defined in Corporate Finance Policy 1.1);
      (d)   an application by a listed issuer for acceptance of a Reverse Take-Over or a Qualifying
            Transaction (as such terms are defined in Corporate Finance Policy 1.1) is declined;
      (e)   one or more of the directors, officers, insiders, promoters, lawyers, employees, consultants or
            other agents relied on by the issuer are not acceptable to the Exchange or that continued
            acceptability is subject to conditions; or
      (f)   in respect of securities subject to an Exchange administered escrow agreement, acceptance
            of any application for cancellation, discretionary transfer or release of securities or consent to
            any amendment to the terms of any such escrow agreement is declined,
      then the issuer or the person found not to be acceptable to the Exchange or whose acceptability is
      subject to conditions, may apply for a review pursuant to Rule E.2.00[C].
(7)   An application for a review of an Exchange decision must be made in writing to the Hearing Officer
      (as defined in Rule E.2.04[A]) of the Exchange within 30 days from the date the decision was
      delivered to the applicant.
        Rule B.1.01 amended January 17, 2001




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                                     TSX Venture Exchange
                                    Rules and Trading Policies


RULE B.2.00 – SPONSORSHIP AND SPONSOR REPORT

B.2.01
Sponsorship is required in regard to every application for New Listing, and every application by a Tier 2
Issuer to conduct a Change of Business. Sponsorship may also be required by the Exchange in regard to
other significant transactions by Issuers where it is considered necessary or advisable by the Exchange.
In making a determination as to whether an Issuer meets Exchange Requirements and is suitable for
listing on the Exchange, the Exchange will rely heavily upon the fact that a Sponsor has agreed to
sponsor the Issuer and has agreed to prepare and submit a Sponsor Report to the Exchange.
Unless otherwise defined, capitalized terms used in this Rule B.2.00 and the accompanying Policy
Statements have the meanings set out in Policy 1.1 of the Corporate Finance Manual.

B.2.02
This Rule and Policy Statement CR13:
(1)   describe the required contents of the report (the "Sponsor Report") to be provided to the Exchange
      by the Sponsor;
(2)   set forth the minimum review procedures ("Review Procedures") required to be conducted in
      connection with preparation of a Sponsor Report; and
(3)   identify the criteria which must be met in order for a Member to qualify as a Sponsor.

B.2.03
The Exchange requires that the Sponsor Report:
(1)   confirm compliance by the Issuer with Corporate Finance Policy 2.1, Minimum Listing
      Requirements and sections 2, 5, 11, and 18 of Corporate Finance Policy 3.1, Directors, Officers
      and Corporate Governance and confirm internal procedures have been adopted to comply with
      sections 16 and 17 of Policy 3.1;
(2)   confirm that the Review Procedures (as defined in Sponsorship Policy Statement 3) have been
      conducted or, to the extent permitted, identify any Review Procedures not conducted and the
      reasons such Review Procedures were not conducted;
(3)   identify the significant Review Procedures conducted;
(4)   identify any information which the Sponsor is or has become aware of in the course of conducting
      its Review Procedures or its Due Diligence (as defined below) which may reasonably be expected
      to be of significance to the Exchange in determining the suitability of the listing of the Issuer; and
(5)   confirm that the Sponsor has favourably concluded upon the suitability for listing of the Issuer.

B.2.04
The Exchange expects that the Sponsor will conduct a duly diligent review ("Due Diligence"), appropriate
to the circumstances, in connection with the sponsorship of an applicant Issuer and that such Due
Diligence will be substantially similar to that which would be conducted by an underwriter in connection
with the underwriting of a public offering. However, this Rule is not in any way intended to set forth a
standard of appropriate Due Diligence. This Rule and Policy Statement CR13 only prescribe the minimum
Review Procedures to be conducted in connection with preparation of a Sponsor Report. The scope and
extent of appropriate Due Diligence by a Sponsor may be different from or may be considerably more
extensive than the Review Procedures required to prepare a Sponsor Report. Compliance with this Rule
and Policy Statement CR13 is no assurance of appropriate Due Diligence.




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As at May 31, 2004
                                                                         TSX   venture
                                                                           EXCHANGE




RULE C.1.00 – GOVERNANCE OF TRADING SESSION

C.1.01 – Date and Time of Session
(1)   The Exchange shall be open for a Session on each Business Day.
(2)   Unless otherwise changed by a resolution of the Board, the Session shall open at 9:30 a.m. E.T.
      and close at 4:00 p.m. E.T.

C.1.02 – Trades Outside of Hours for Session
Except as approved by a Market Official, no trade in a listed security shall be made on the Exchange at a
time prior to the dissemination by the Exchange on the trading system of a message opening the Session
or at a time after the dissemination by the Exchange on the trading system of a message closing the
Session.

C.1.03 – Changes in Sessions and Trading Suspensions
(1)   The Board, at any time by resolution, may:
      (a)   suspend all trading at any Session; or
      (b)   close any Session; or
      (c)   reduce, extend or otherwise alter the time of any Session.
(2)   The Chairman or, in the absence of the Chairman, a Vice-Chairman, or in the absence of a Vice-
      Chairman, the CEO or President may, at any time in the event of an emergency:
      (a)   suspend all trading at any Session; or
      (b)   reduce, extend or otherwise alter the time of any Session.
(3)   The CEO or President or, in the absence of the CEO or President, any Market Official may, at any
      time in the event of a technical problem with the trading system that is substantially impairing
      trading or will likely substantially impair trading if not resolved:
      (a)   suspend operation of any or all trading systems at any Session; or
      (b)   reduce, extend or otherwise alter the time of any Session.
        Amended March 28,2002

C.1.04 – Halt Rescinded
Where a halt in trading is rescinded during a trading session, notice of the rescission of the halt and the
time set for resumption of trading shall be disseminated by the Exchange.

C.1.05 – Trading in the Book
(1)   The Book shall contain and display all orders to buy or sell a listed security that are made on the
      Exchange, unless otherwise provided by the Exchange.
(2)   Only committed orders shall participate in trading, except for trading in the special terms market.
(3)   All trades in listed securities on the Exchange shall be executed in the Book, unless otherwise
      provided by the Exchange.




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C.1.06 – Exercise of Exchange Powers
(1)   Unless the subject matter or context requires otherwise, wherever the Exchange is specified as
      having any powers, rights, discretion or is entitled to take any action, then the same may be
      exercised or taken at any time and from time to time on behalf of the Exchange by the Board, the
      appropriate officers of the Exchange or any committee or person designated by the Board, the CEO
      or the President.
(2)   Unless the subject matter or context requires otherwise, any exercise of any power, right or
      discretion or the taking of any action on behalf of the Exchange by any person or committee shall
      be subject to the overall authority of the Board.




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                                        TSX Venture Exchange
                                       Rules and Trading Policies


RULE C.2.00 – TRADING PROCEDURES AND PRACTICES

Priority

C.2.01 – Establishing Priority
(1)   Subject to Rule C.2.06, an order at a particular price shall be executed prior to any orders at that
      price entered subsequently, and after all orders entered previously (“time priority”), except as may
      be provided otherwise.
(2)   An undisclosed portion of an order does not have time priority until it is disclosed, unless there is no
      other disclosed order at that price.
(3)   An order shall lose time priority if its disclosed volume is increased and shall rank behind all other
      disclosed orders at that price.
           Rule C.2.01 Amended November 4, 2003

C.2.02 – Board Lot Priority
An order for a board lot has priority over an order for an odd lot at the same price.

C.2.03 – Special Term Order Priority
(1)   Special terms orders have no standing in the regular market and may be traded through.
(2)   Special terms non-cross trades shall not be executed unless all orders in the regular market priced
      at or better have been filled in full or the persons with existing booked orders have been given an
      opportunity to participate in the trade and have declined.
(3)   Cash and delayed delivery trades can occur at or outside a security's current posted market in both
      the regular market and the special term market provided that:
      (a)    a cash market message has been broadcast on the Exchange,
      (b)    the Approved Trader requesting the broadcast message discloses the size of the order and
             identity of their Member firm, and
      (c)    after the broadcasting of the message, a minimum of five minutes has elapsed before the
             Approved Trader executes the buy, sell or cross on an equal allocation basis within the
             parameters of the now posted cash market.

Opening

C.2.04 – Execution of Trades at an Opening
(1)   Subject to Rule C.2.05, listed securities shall open for trading at the opening time and opening
      trades shall be at the Calculated Opening Price.
(2)   The following shall be completely filled at the opening:
      (a)    better-priced limit orders for client accounts;
      (b)    better-priced limit orders for non-client accounts that were entered prior to the two minutes
             immediately preceding the time of the opening; and
      (c)    better-priced limit orders for non-client accounts entered during the two minutes immediately
             preceding the time of the opening and that affected the Calculated Opening Price.
(3)   The following orders are eligible to participate during the opening in time priority sequence but are
      not guaranteed to be filled:


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                                      Rules and Trading Policies

      (a)   market orders;
      (b)   limit orders at the opening price;
      (c)   better-priced limit orders for non-client accounts that were entered during the two minutes
            immediately preceding the time of the opening and that did not affect the Calculated Opening
            Price.
(4)   Trades shall be allocated among orders at the Calculated Opening Price in the following manner
      and sequence:
      (a)   to orders guaranteed a fill pursuant to Rule 2.04(2); then
      (b)   all possible crosses shall be executed; then
      (c)   market orders; then
      (d)   limit orders at the opening price, and better-priced limit orders for non-client accounts that
            were entered during the two minutes immediately preceding the time of the opening and that
            did not affect the Calculated Opening Price, according to time priority.
        Rule C.2.04(4) Amended November 4, 2003
(5)   Where the opening is delayed and opens without a scheduled opening time, non-clients shall not
      attempt to affect the allocation of shares while not altering the Calculated Opening Price.
(6)   Orders at the opening price that are not completely filled at the opening shall remain in the Book, at
      the opening price.

C.2.05 – Delayed Openings
Trading at the opening in a particular security may be delayed if the Calculated Opening Price exceeds
price volatility parameters set by the Exchange.

C.2.06 – Allocation of Trades
(1)   An order that is entered for execution on the Exchange may execute without interference from any
      order in the Book if the order is:
      (a)   part of an internal cross; or
      (b)   an unattributed order that is part of an intentional cross.
(2)   Subject to subsection (1), an intentional cross is executed without interference from orders in the
      Book, other than attributed orders entered in the Book by the same Member according to time
      priority.
(3)   A tradeable order that is entered in the Book (an “incoming order”) shall be executed on allocation
      in the following sequence:
      (a)   to offsetting orders entered in the Book by the same Member that entered the incoming order
            according to the time priority of such offsetting orders in the Book, provided that neither the
            incoming order nor the offsetting order is an unattributed order; then
      (b)   to offsetting orders in the Book according to time priority.
        Rule C.2.06 Amended November 4, 2003

C.2.07 – Minimum Quotation Spread
Unless otherwise fixed by the Board, orders for listed securities shall only be entered on the Exchange at
the following price increments:




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                                  Increment
Selling under $0.50               $0.005
Selling at $0.50 and over         $0.010
        (Amended April 2, 2003)

C.2.08 – Responsibility for Odd Lots
Pursuant to Policy CR11, where the Exchange allocates listed securities to an Odd Lot Member, the Odd
Lot Member shall be responsible for guaranteeing odd lot bids or offers, through orders generated
automatically by the trading system, at no greater premium or discount from the board lot quotation set
out by the Exchange in Rule C.2.09.

C.2.09 – Odd Lot Premium and Discount
The schedule of maximum allowable odd-lot premiums or discounts shall be as follows:
All Securities                         Maximum Odd-Lot/Premium or Discount
Selling Under $.50                                                         $0.02
Selling at $.50 and Under $1.00                                            $0.03
Selling at $1.00 and Under $5.00                                           $0.05
Selling at $5.00 and over                                                  $0.10

C.2.10 – Stop Loss Orders
A stop loss order to buy a listed security becomes a limit order when at least a board lot is traded at or
above the stop loss price. A stop loss order to sell a listed security becomes a limit order when at least a
board lot is traded at or below the stop loss price.

C.2.11 – Breach of Exchange Requirement
Where an Approved Person or an Approved Trader has breached any Exchange Requirement, the
Exchange may prohibit that individual from trading on the Exchange on such terms and conditions as the
Exchange considers appropriate.

C.2.12 – Exchange Liability
If for any reason an Approved Person causes an order to be entered on the Exchange on behalf of a
Member, the Member shall take full responsibility for the proper execution of that order. The Exchange
shall not be responsible for any errors or omissions.

C.2.13 – Transaction Prohibited
No Member other than the Member employing an Approved Trader, shall make a transaction for or
maintain an account directly or indirectly for or on behalf of an individual employed as an Approved
Trader, without first obtaining written permission of a partner, director, or officer of the Member.

C.2.14 – Advantage Goes With Securities Sold
In all sales all advantage shall pass with the security and shall belong to the purchaser unless otherwise
determined by the Exchange.

C.2.15 – Accrued Interest Goes to Seller
All accrued interest on bonds and debentures listed for trading shall go to the seller unless otherwise
determined by the Exchange.


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C.2.16 – Ex-Dividend and Ex-Right Adjustment to Orders
Members are liable for equity orders subject to ex-dividend and ex-right adjustments. The Exchange shall
not take any responsibility for making the adjustment.

C.2.17 – Shares Selling Ex-Dividends and Ex-Rights
(1)   Trades in shares shall be ex-dividend, ex-rights or ex-subscription privileges, as the case may be,
      on the second trading day preceding the record date or the date of the closing of the transfer books
      therefore, except transactions therein made specifically for cash. Should such record date or such
      closing of transfer books occur upon a Statutory holiday, this section shall apply for the third
      preceding full trading day.
(2)   Trades in shares made specifically for cash shall be ex-dividend, ex-rights, or ex-subscription
      privileges as the case may be on the trading day following the record date or the date of the closing
      of the transfer books.
(3)   The Exchange may, in any particular case or cases, provide that trades shall be ex-dividend, ex-
      rights, or ex-subscription privileges at any other time.

C.2.18 – Expiry Date
Trading in rights and warrants shall be for cash for the three trading days preceding the expiry date and
also on expiry date. On the expiry date, trading shall cease at 12 o'clock noon E.T. and no transactions
shall take place thereafter except with permission of the Exchange.

C.2.19 – Trades on a "When Issued" Basis
(1)   The Exchange may post any security to trade on a when issued basis if such security is
      conditionally approved for listing on the Exchange.
(2)   Unless otherwise specified, trades on a when issued basis are subject to all applicable Exchange
      Requirements relating to trading in a listed security, notwithstanding that the security is not listed.
(3)   All trades on a when issued basis shall be canceled if the Exchange determines that the securities
      subject to such trades will not be issued.

C.2.20 – When Issue Delisted or Suspended or No Fair Market
(1)   The Exchange may postpone the time for delivery on Exchange Contracts if:
      (a)   the listed security is delisted;
      (b)   trading is suspended in the listed security; or
      (c)   the Exchange is of the opinion that there is not a fair market in the listed security.
(2)   If the Exchange is of the opinion that a fair market in the listed security is not likely to exist, the
      Exchange may provide that the Exchange Contracts be settled at a fair settlement price.
(3)   If the parties to the Exchange Contract cannot agree on the amount, the Exchange shall fix the fair
      settlement price after providing each party with an opportunity to be heard.

TSX Venture Exchange Approved Traders

C.2.21 – Access to TSX Venture Exchange
Approved Traders, subject to Exchange Requirements, shall have access to the Exchange to trade for
and on behalf of the Member they represent.




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C.2.22 – Appointment
Subject to the approval of the Exchange and Exchange Requirements, a Member may appoint traders to
trade for and on its behalf on the Exchange.

C.2.23 – Approval by Exchange
(1)   Except as permitted by the Exchange, no person shall enter orders or trade Exchange-listed
      securities for or on behalf of a Member (whether as principal or agent) on the Exchange by any
      means unless that person has been approved as an Approved Trader by the Exchange.
(2)   No Member shall permit access to the Exchange's trading system by any means to any person
      unless such person has been approved as an Approved Trader by the Exchange.

C.2.24 – Designated Member
A Designated Member may act as a trader without requiring the approval of the Exchange.

C.2.25 – Approved Trader - Qualifications for Application
An application for approval as an Approved Trader shall be submitted in the form required by the
Exchange and must be signed by both the applicant and the Member and must be accompanied by the
applicable fee and supporting documentation as from time to time required by the Exchange. Such
application shall be considered by the Exchange, which in its sole discretion, may grant or withhold
Exchange Approval and/or impose conditions on such approval as it considers necessary and
appropriate. No person shall act as a trader in any capacity whatsoever until Exchange Approval has
been granted.
No person shall be approved as an Approved Trader unless that person is a partner in or a director of a
Member, or a full time employee of a Member, is over the age of majority, and meets such qualifications
as to experience, formal education and knowledge of trading rules as may be established by the
Exchange.

C.2.26 – Jurisdiction of the Exchange
The Exchange shall have jurisdiction with respect to the conduct and discipline of all Approved Traders
including but not limited to:
(a)   approval of all Approved Traders, subject to verification by the Board or a committee of the Board;
(b)   approval of all Approved Traders to have and operate trading accounts (non-client accounts) and all
      requirements applicable to such accounts;
(c)   prescribing the obligations, responsibilities, and qualification requirements of all Approved Traders
      and all rules regarding trading on the Exchange and through the facilities of the Exchange;
(d)   prescribing standards regarding conduct and trading rules applicable to all Approved Traders and
      all trading conducted through the facilities of the Exchange;
(e)   implementing recommendations from the Trading Policy Committee regarding policies and
      additional responsibilities for all Approved Traders as will contribute to the orderly functioning of the
      market.

C.2.27 – Compliance with Exchange Requirements
All Approved Traders and Approved Persons must comply in full at all times with all Exchange
Requirements as prescribed from time to time by the Exchange, which shall include but shall not be
limited to, all rules governing trading on the Exchange and through the facilities of the Exchange.




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C.2.28 – Continuance of Exchange Approval
The continuance of Exchange approval of an Approved Trader shall be subject to his or her continued
good conduct and compliance with all Exchange Requirements. Without in any way limiting the powers of
the Board or any committee of the Board, a hearing panel, after conducting a hearing pursuant to
Exchange Requirements, may suspend approval of an Approved Trader, may reinstate him or her on
such terms (if any) as it sees fit and may impose any of the penalties or remedies in accordance with
Exchange Requirements. Any such decision shall be final, subject only to any rights of appeal as
provided in the Exchange Requirements or in the applicable securities legislation.

C.2.29 – Supervision of Assistant Traders
A Member is responsible for ensuring that Approved Traders with Assistant Approved Trader status are
supervised by an Approved Trader with Full Approved Trader status and who is acceptable to the
Exchange at all times during trading sessions.

C.2.30 – Non-Client Account (Non Commission Account)
Assistant Approved Traders are not permitted to operate or have any interest in a non-client or inventory
account.

C.2.31 – Suspension of Approved Trader
While Exchange Approval of an Approved Trader is suspended, he or she shall not have access to any
trading system utilized by the Exchange for trading purposes and the Member who employs such
Approved Trader shall ensure that he or she shall not have access to such trading system.

C.2.32 – Revocation of Approved Trader's Authority
(1)   The Exchange may, at any time, revoke the authority of any Approved Trader to trade.
(2)   A Member may, at any time, revoke the authority of any Approved Trader to trade on its behalf by
      giving notice thereof in writing to the Exchange. Upon receipt of such notice, the Exchange shall
      suspend Exchange Approval of that person.

C.2.33 – Ceasing to be a Trader
(1)   An individual who is an Approved Trader shall cease to be an Approved Trader when:
      (a)   the Exchange withdraws its approval of the individual;
      (b)   the Board orders that the Member whom the individual represents has ceased to be a Member
            of the Exchange;
      (c)   the Board orders that the Member whom the individual represents is a defaulter;
      (d)   the Member whom the individual represents ceases to be a Member;
      (e)   the Member the individual represents requests to remove his or her name from the list of
            Approved Traders;
(2)   When an Approved Trader ceases to be an Approved Trader, the Exchange shall remove the
      individual's name from the list of Approved Traders and shall revoke market access for trading
      purposes.

C.2.34 – Report of Termination of Approved Trader
Each Member shall, within five days of the occurrence of the event, give notice of the termination of the
employment of an Approved Trader including whether the Approved Trader was dismissed for cause and
a statement of the reasons for termination.



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C.2.35 – Trading to be Executed on TSX Venture Exchange
No Member or other approved person shall trade or participate in any trade in any listed security, whether
acting as principal or agent, unless:
      (a)   the trade is made on TSX Venture Exchange during a Session except as is otherwise
            permitted by the UMIR; and
      (b)   the trade is printed to the Book at the time it is executed.
        Amended March 28,2002

C.2.49 – Inquiries
The Exchange may, at any time, make such inquiries or requests for information as it deems appropriate
and necessary regarding the conduct of any Approved Trader in connection with trading conducted on
TSX Venture Exchange. Such inquiries and/or requests for information shall be promptly and fully
responded to by the Member and the Approved Trader, as the case may require.

C.2.50 – (Deleted)

Connection of Eligible Clients of Members

C.2.51 - Designation of Eligible Clients
(1)   The Exchange may from time to time prescribe classes of entities as eligible to transmit orders to
      the Exchange through a Member.
(2)   Prescribed Classes of Entities
      For the purposes of Rule C.2.51(1), the following classes of entities are prescribed as eligible to
      transmit orders to the Exchange through a Member:
      (a)   a client that falls within the definition of “acceptable counterparties” or “acceptable institutions”
            as defined in the General Notes and Definitions section of the Joint Regulatory Financial
            Questionnaire and Report;
      (b)   a client that is registered as an investment counsellor or portfolio manager under the
            Securities Act of one or more of the Provinces of Canada;
      (c)   a client that is a foreign broker or dealer (or the equivalent registration) registered with the
            appropriate regulatory body in the broker's or dealer's home jurisdiction and that is an affiliate
            of a Member acting for its own account, the accounts of other eligible clients or the accounts of
            its clients;
      (d)   a client that in the aggregate owns and invests on a discretionary basis at least $100 million in
            securities of issuers that are not affiliated with the client and falls into one of the following
            categories:
            (i)    an insurance company as defined in section 2(13) of the U.S. Securities Act of 1933,
            (ii)   an investment company registered under the U.S. Securities Act of 1933 or any business
                   development company as defined in section 2(a)(48) of that Act,
            (iii) a small business investment company licensed by the U.S. Small Business
                  Administration under section 301(c) or (d) of the U.S. Small Business Investment Act of
                  1958,
            (iv) a plan established and maintained by a U.S. state, its political subdivisions, or any
                 agency or instrumentality of a U.S. state or its political subdivisions, for the benefit of its
                 employees,



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            (v)    an employee benefit plan within the meaning of Title I of the U.S. Employee Retirement
                   Income Securities Act of 1974,
            (vi) a trust fund whose trustee is a bank or trust company and whose participants are
                 exclusively plans of the types identified in (iv) or (v) above, except trust funds that include
                 as participants individual retirement accounts or U.S. H.R. 10 plans,
            (vii) a business development company as defined in section 202(a)(22) of the U.S.
                  Investment Advisers Act of 1940,
            (viii) an organization described in section 501(c)(3) of the U.S. Internal Revenue Code,
                   corporation (other than a bank as defined in section 3(a)(2) of the U.S. Securities Act of
                   1933 or a savings and loan association or other institution referenced in section
                   3(a)(5)(A) of the U.S. Securities Act of 1933 or a foreign bank or savings and loan
                   association or equivalent institution), partnership or Massachusetts or similar business
                   trust, and
            (ix) an investment adviser registered under the U.S. Investment Advisers Act;
      (e)   a client that is a dealer registered pursuant to section 15 of the U.S. Securities Exchange Act
            of 1934, acting for its own account or the accounts of other eligible clients, that in the
            aggregate owns and invests on a discretionary basis at least $10 million of securities of
            issuers that are not affiliated with the dealer, provided that securities constituting the whole or
            a part of an unsold allotment to or subscription by a dealer as a participant in a public offering
            shall not be deemed to be owned by such dealer;
      (f)   a client that is an investment company registered under the U.S. Investment Company Act,
            acting for its own account or for the accounts of other qualified institutions, that is part of a
            family of investment companies which own in the aggregate at least $100 million in securities
            of issuers, other than issuers that are affiliated with the investment company or are part of
            such family of investment companies and, for these purposes, “family of investment
            companies” means any two or more investment companies registered under the U.S.
            Investment Company Act, except for a unit investment trust whose assets consist solely of
            shares of one or more registered investment companies, that have the same investment
            adviser (or, in the case of unit investment trusts, the same depositor), provided, for these
            purposes:
            (i)    each series of a series company (as defined in Rule 18f-2 under the U.S. Investment
                   Company Act) shall be deemed to be a separate investment company, and
            (ii)   investment companies shall be deemed to have the same adviser (or depositor) if their
                   advisers (or depositors) are majority-owned subsidiaries of the same parent, or if one
                   investment company’s adviser (or depositor) is a majority-owned subsidiary of the other
                   investment company’s adviser (or depositor);
      (g)   a client, all of the equity owners of which are qualified institutions, acting for its own account or
            the accounts of other qualified institutions;
      (h)   a client that is a bank as defined in section 3(a)(2) of the U.S. Securities Act of 1933, or any
            savings and loan institution or other institution as referenced in section 3(a)(5)(A) of the U.S.
            Securities Act of 1933, acting for its own account or the accounts of other qualified institutions,
            that in the aggregate owns and invests on a discretionary basis at least $100 million in
            securities of issuers that are not affiliated with it and that has an audited net worth of at least
            $25 million; and
      (i)   a client that enters an order through an Order Execution Account.
(3)   Interpretation
      For the purposes of Rule C.2.51(2):



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      (a) In determining the aggregate amount of securities owned by an entity and invested on a
          discretionary basis, securities owned by subsidiaries of the entity that are consolidated with
          the entity in its financial statements prepared in accordance with generally accepted
          accounting principles may be included if the investments of such subsidiaries are managed
          under the discretion of the entity, except that, unless the entity is a reporting company under
          section 13 or 15(d) of the U.S. Securities Exchange Act, securities owned by such subsidiaries
          may not be included if the entity itself is a majority-owned subsidiary that would be included in
          the consolidated financial statements of another enterprise.
      (b)   In determining the aggregate amount of securities owned and invested on a discretionary
            basis by an entity, the following instruments and interests shall be excluded: bank deposit
            notes and certificates of deposit; loan participations; repurchase agreements; securities owned
            but subject to a repurchase agreement; and currency, interest rate and commodity swaps.
      (c)   The aggregate value of securities owned and invested on a discretionary basis by an entity
            shall be the cost of such securities, except where the entity reports its securities holdings in its
            financial statements on the basis of their market value and no current information with respect
            to the cost of those securities has been published and in the latter event, the securities may be
            valued at market.
        Rule C.2.51 added May 31, 2004

C.2.52 - Conditions for Connections
(1)   A Member may transmit orders received electronically from an eligible client directly to the trading
      system provided that the Member has:
      (a)   obtained prior written approval of the Exchange that the system of the Member meets the
            prescribed conditions;
      (b)   obtained prior written approval of the Exchange for a standard form of agreement containing
            the prescribed conditions to be entered into between the Member and an eligible client and the
            Member has entered into an agreement in such form with the eligible client; and
      (c)   met such other requirements as prescribed in Rule C.2.52(4).
(2)   System Requirements
      For the purposes of Rule C.2.52(1)(a), the system of the Member is required to:
      (a)   support compliance with Exchange Requirements dealing with the entry and trading of orders
            by all eligible clients who will have direct access which includes, but is not limited to, the
            requirement to support all valid order information that may be required, including designation
            of short sales;
      (b)   ensure security of access to the system that will only enable persons at the eligible client
            authorized by the Member to have access to the system;
      (c)   comply with specific requirements prescribed pursuant to Rule C.2.52, including a facility to
            receive an immediate report of the entry or execution of orders;
      (d)   enable the Member to employ order parameters or filters that will route orders over a certain
            size or value to the Member’s trading desk (which parameters can be customized for each
            eligible client on the system); and
      (e)   enable the Member to transmit information concerning unattributed orders entered by eligible
            clients to the Member’s compliance staff on a real time basis.
(3)   Standard Form of Agreement
      For the purposes of Rule C.2.52(1)(b), the agreement between the Member and the client shall
      provide that:


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      (a)   the eligible client is authorized to connect to the Member’s order routing system;
      (b)   the eligible client shall enter orders in compliance with Exchange Requirements respecting the
            entry and trading of orders and other applicable regulatory requirements;
      (c)   specific parameters defining the orders that may be entered by the eligible client are stated,
            including restriction to specific securities or size of orders;
      (d)   the Member has the right to reject an order for any reason;
      (e)   the Member has the right to change or remove an order in the Book and has the right to
            cancel any trade made by the eligible client for any reason;
      (f)   the Member has the right to discontinue accepting orders from the eligible client at any time
            without notice;
      (g)   the Member agrees to train the eligible client in the Exchange Requirements dealing with the
            entry and trading of orders and other applicable Exchange Requirements; and
      (h)   the Member accepts the responsibility to ensure that revisions and updates to Exchange
            Requirements relating to the entry and trading of orders are promptly communicated to the
            eligible client.
(4)   Additional Requirements
      For the purposes of Rule C.2.52(1)(c), the following additional requirements shall apply:
      (a)   Any changes to the standard system interconnect agreement shall be approved by the
            Exchange in writing before becoming effective.
      (b)   If required by the terms of the agreement between the eligible client and the Member, the
            Member shall ensure that its eligible clients are trained in the appropriate Exchange trading
            rules, as well as the use of the terminal and system. Training materials regarding Exchange
            trading rules that the Member proposes to use must be reviewed by the Exchange prior to
            use.
      (c)   The Member shall have the ability to receive an immediate report of the entry and execution of
            orders. The Member shall have the capability of rejecting orders that do not fall within the
            designated parameters of authorized orders for a particular client.
      (d)   The Member shall designate a specific person as being responsible for the system
            interconnect. Orders executed through system interconnects shall be reviewed for compliance
            and credit purposes daily by such designated person of the Member.
      (e)   The Member shall have procedures in place to ensure that only eligible clients use system
            interconnects and that such eligible clients can comply with Exchange Requirements and
            other applicable regulatory requirements. The eligibility of eligible clients using system
            interconnects shall be reviewed at least annually by the Member.
      (f)   The Member shall make available for review by the Exchange, as required from time to time,
            copies of the system interconnect agreements between the Member and its eligible clients.
(5)   Order Execution Account Requirements
      If the agreement required by Rule C.2.52(1)(b) is between a Member and a client in respect of an
      Order Execution Account, the agreement:
      (a)   may be in written form or be in the form of a written or electronic notice acknowledged by the
            client prior to the entry of the initial order in respect of such Order Execution Account; and
      (b)   may omit provisions that would otherwise be required by Rule C.2.52(3)(c), (g) and (h) if the
            order routing system of the Member:
            (i)   enforces the Exchange Requirements relating to the entry of orders, or


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            (ii)   routes orders that do not comply with Exchange Requirements relating to the entry of
                   orders to an Approved Trader for review prior to entry to the trading system.
        Rule C.2.52 added May 31, 2004

C.2.53 - Responsibility of Members
A Member which enters into an agreement with a client to transmit orders received from the client in
accordance with Rule C.2.52 shall:
      (a)   be responsible for compliance with Exchange Requirements with respect to the entry and
            execution of orders transmitted by eligible customers through the Member; and
      (b)   provide the Exchange with prior written notification of the individual appointed to be
            responsible for such compliance.
        Rule C.2.53 added May 31, 2004




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RULE C.3.00 – CLEARING AND SETTLEMENT OF TRADES OF LISTED SECURITIES

C.3.01 – Definitions
In this part:
"Buy-In Notice" means the written notice in the form required by the Exchange to be delivered by a
Member which has failed to receive listed securities to which it is entitled from another Member.
"delivery" or "delivered" means the transfer of listed securities through physical transfer of certificates
evidencing the listed security, or by transfer of a book-based position in accordance with the rules of the
Clearing Corporation.

C.3.02 – Trades to be Cleared
Unless otherwise authorized by the Exchange, all trades made at Sessions of the Exchange shall be
reported to, cleared and settled through the Clearing Corporation.

C.3.03 – Trades to be Settled Through Clearing Corporation
On all trades in listed securities, except those specifically designated as cash trades, delivery and
payment shall be made through the Clearing Corporation unless authorized by the Exchange.

C.3.04 – Settlement of Cash Trades
A trade designated as a cash trade shall be for delivery no later than the next business day unless
otherwise arranged at the time of the transaction.

C.3.05 – Buy-Ins
In the event that a Member fails to:
       (a)      carry out an Exchange Contract within the time provided in the Exchange Requirements; or
       (b)      settle a loan of securities as provided in Rule C.3.05 (2); or
       (c)      deliver securities as provided in Rule C.3.05( 3);
such Member is in default of the Exchange Contract and the trade may be closed out through the buy-in
procedure set out in Rule C.3.00

(1)          Failed Trade
Pursuant to Rule C.3.02, the selling Member shall deliver listed securities to the Clearing Corporation for
trade settlement purposes.

(2)          Security Loans
In the absence of any agreement to the contrary, a loan of listed securities between Members may be
called through service of notice in writing of termination of the loan to the borrowing Member and the
borrowing Member shall return securities of the same class as those loaned in the specified quantity by
the close of business on the third Settlement Day following the date of receipt of such notice.

(3)          Other Failed Positions
In the absence of any agreement to the contrary, a Member shall deliver listed securities to another
Member pursuant to an obligation to deliver that results from a reorganization of the issuer, an allocation
of securities or any other obligation considered applicable by the Exchange.




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(4)         Costs
The Member in default shall be responsible for the costs incurred through failure to deliver, including any
lost benefit or entitlement to the purchaser.

(5)         Notice
A Buy-in Notice shall be delivered to the Exchange and to the Member in default before 12:00 noon E.T.
on the day that the trade is to be closed out and any Notice not delivered by such time shall be
considered to be effective at the opening of the next Trading Day. For the purposes of Rule C.3.05(1), the
notice will be delivered to both aforementioned parties by the Clearing Corporation only.

(6)         Cancellation of Buy-in
A buy-in may be cancelled by the Member that has issued the Buy-in Notice by delivering a notice of
cancellation in writing to the Exchange before 3:00 p.m. E.T. on the day the buy-in is to be executed.
Verbal notice will be accepted but must be promptly followed up in writing.

(7)         Time and Terms
If the buy-in is not cancelled, the Exchange shall execute the buy-in at 3:00 p.m. E.T. on the effective day
of the buy-in and for this purpose a portion of the buy-in may be executed.

(8)         Role of Market Official
In connection with a buy-in, a Market Official may:
      (a)   defer the buy-in if the Market Official is of the opinion that a fair market in which to close out
            the trade does not exist;
      (b)   allow such premium above the prevailing market price for the securities sought on the buy-in
            which, in the opinion of the Market Official, is required to execute the buy-in and is consistent
            with a fair market for the securities sought, provided that such premium is within the buy-in
            price guidelines established by the Exchange; and
      (c)   execute a buy-in at a premium that exceeds the buy-in price guidelines established by the
            Exchange, on a same day cash basis or on any other settlement basis as the Market Official
            considers appropriate in the circumstances.

(9)         Settlement
Unless otherwise required or agreed to by the Exchange, a buy-in shall be executed on a cash basis for
next day delivery.

C.3.06 – Special Provisions for Buy-Ins from Securities Loans and Other Failed Positions
In connection with a buy-in that is the result of a default pursuant to Rules C.3.05(2) or (3), the following
rules shall apply in addition to the provisions of Rule C. 3.05:
(1)   Where the Member in default delivers the listed securities subject to the Buy-In Notice prior to
      execution of the buy-in, the Member in default shall notify the Exchange and the buy-in will be
      cancelled upon confirmation by the Exchange of the delivery of the listed securities.
(2)   The Member which has issued a Buy-In Notice may extend the buy-in by delivering a notice of
      extension in writing to the Exchange before 3:00 p.m. E.T. on the day the buy-in is to be executed.
(3)   Failure to settle a trade that is the result of a buy-in that is the result of a default in accordance with
      the terms of the buy-in, if not resolved by the Members concerned, shall be resolved by cancellation
      of the buy- in contract and issuance of a further buy-in and, in such case, the Member selling to the
      original buy-in shall be liable for any loss or damage resulting from failure to deliver.



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(4)   Following execution of a buy-in, the Member that issued the Buy-In Notice shall notify the Member
      in default in writing of the amount of the difference between the amount to be paid on the Exchange
      Contract closed out, and the amount paid on the buy-in, if any, and such difference shall be paid to
      the Member entitled to receive the same within 24 hours of receipt of such notice.
(5)   Where more than one buy-in has been arranged in connection with the same listed securities, the
      Market Official may combine any number of the trades.

C.3.07 – Failed Trade in Rights, Warrants and Installment Receipts
(1)   Notwithstanding Rule C.3.05, should fail positions in rights, warrants or installment receipts exist on
      the expiry or payment date, purchasing Members have the option of demanding delivery of the
      securities into which the rights, warrants, or installment receipts are exercisable, any additional
      subscription privilege, and any subscription fee payable to a Member, that may be available, such
      demand shall be made before 4:00 p.m. E.T. on the expiry date.
(2)   Where a demand has been made in accordance with Rule C.3.07(1), payment by purchasing
      Members for:
      (a)   the rights, warrants or installment receipts shall be in accordance with normal settlement
            procedures, but delivery of the rights, warrants or installment receipts, as the case may be, is
            not required; and
      (b)   the securities into which the rights, warrants or installment receipts are exercisable and
            payment for any additional subscription privilege shall be made upon delivery of the securities.
(3)   Where a demand has not been made in accordance with Rule C.3.07 (1), settlement shall be in
      accordance with normal settlement procedures, but delivery of the rights, warrants or installment
      receipts, as the case may be, is not required.

C.3.08 – Restrictions On Members' Involvement In Buy-Ins
(1)   No Member shall knowingly permit any person on whose behalf a Buy-In Notice has been issued to
      fill all or any part of such order by selling the securities for the account of that person or an
      associated account and prior to selling to a buy-in, the Member, shall receive written or verbal
      confirmation that the order to sell is not being placed on behalf of the account of the person on
      whose behalf the Buy-In Notice was issued or an associated account.
(2)   A Member that issued a Buy-In Notice and the Member against whom a Buy- In Notice has been
      issued may supply all or a part of the listed securities provided that the principal supplying the listed
      securities is not:
      (a)   the Member;
      (b)   an Approved Person or employee of the Member; or
      (c)   an associate of any person described in Rules C.3.08(2)(a) or (b).
(3)   If listed securities are supplied by the Member that issued the Buy-In Notice, delivery shall be made
      in accordance with the terms of the contract thus created, and the Member shall not, by consent or
      otherwise, fail to make such delivery.

C.3.09 – When Issue Delisted or Suspended
An Exchange Contract which has not settled for a security which has been delisted or suspended may be
closed out in a transaction in the over-the-counter market with the consent of the Member in default
provided that if the Member in default does not so consent, the Member that wishes to close out in the
over-the-counter market may request the Exchange to make a decision permitting such transaction.




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C.3.10 – Defaulters
If a Member against which an Exchange Contract is closed out under this Part fails to make payment of
the money difference between the contract price and the buy-in price within the time specified, the
Member concerned shall become a defaulter, and notice of such default shall be provided by the
Exchange to each Member.
(1)   If a Member makes default in, or fails to meet, or admits or discloses an inability to meet, its
      liabilities or engagements to the Exchange or to the Clearing Corporation or to another Member or
      to the public, the Member concerned may be adjudged a defaulter by the Exchange and notice of
      such default shall be provided by the Exchange to each Member.
(2)   A Member failing to make delivery to the Clearing Corporation of securities and/or a certified
      cheque within the time limited by the rules governing the Clearing Corporation may be adjudged a
      defaulter by the Exchange.

C.3.11 – Verified Statement of Outstanding Exchange Contracts
Where in connection with an audit of a Member, another Member has verified in writing a statement of
outstanding Exchange Contracts with the Member, such verification shall be binding and any outstanding
Exchange Contracts not disclosed on such statement shall be unenforceable between the Members.




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                                                                        EXCHANGE




RULE D.1.00 – MEMBERSHIP

D.1.01 – (Deleted)
Rule D.1.01 deleted August 1,2001

D.1.02 – (Deleted)
Rule D.1.02 deleted August 1,2001

D.1.03 – Appointment of Designated Member
(1)   Each member shall appoint one of its partners, officers or directors as its designated member. Until
      such time as the member appoints a designated member the former member-shareholder shall be
      deemed to be the designated member;
(2)   Each designated member at the time of his appointment:
      (a)   shall be approved as such by the Exchange and the Board and shall be a resident of Canada,
      (b)   shall have had experience acceptable to the Exchange and the Board;
(3)   The appointment of a designated member shall be effective on approval being given by the
      Exchange and the Board. Appointments may be revoked or changed from time to time only with the
      approval of the Exchange and the Board but shall terminate automatically if the designated member
      ceases to be a partner or director (as the case may be) of the member, a resident of Canada or if
      the Exchange and the Board withdraw their approval of him. Any vacancy in an appointment shall
      be filled promptly. The term "designated member" also includes a member who is a natural person.
        Rule D.1.03 amended August 1,2001

D.1.04 – Designated Member Represents Member
The appointment of a designated member shall be in writing in the form from time to time prescribed by
the Exchange, filed with the Exchange and shall constitute each designated member the representative of
the member for all dealings with the Exchange with full authority to speak for and bind the member. It
shall be the duty of the designated member to ensure that the member, each related company of it and
the partners in and shareholders, directors, officers and employees of the member and each related
company, comply with Exchange Requirements. The designated member will be primarily responsible to
the Exchange for their conduct, but without in any way limiting the duties and liabilities of others under
Exchange Requirements.
        Rule D.1.04 amended August 1, 2001

D.1.05 – Use of Facilities
Each member of the Exchange, subject to Exchange Requirements, is by virtue of its membership
entitled to use the facilities of the Exchange, providing it is a member whose membership has not been
terminated or suspended.
        Rule D.1.05 amended August 1, 2001

D.1.06 – Deceased Member
In the case of the death of a member who is a natural person, his legal representative may exercise the
deceased member's rights and privileges provided that the legal representative shall only exercise the
rights and privileges of trading at sessions through attorneys whose names appear on the list of attorneys

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approved by the Exchange.
        Rule D.1.06 amended August 1,2001

D.1.07 – Register of Members
The Exchange shall maintain a register of members at its head office in which is entered the name and
business address of each member.

D.1.08 – Qualifications of Individuals as Members
Subject to Exchange Requirements, each individual, at the time of application for membership:
(1)   shall be at least twenty-one years of age;
(2)   shall have had experience acceptable to the Exchange and the Board;
(3)   shall have successfully completed a course or courses of studies that may from time to time be
      required by the Exchange;
(4)   shall not be a member whose membership has been suspended for a definite period of time which
      has not expired; and
(5)   shall not be an approved person whose approval has been suspended for a definite period of time
      which has not expired.
        Rule D.1.08 amended August 1,2001

D.1.09 – Qualification and Continuing Requirements of Individuals as Members
Each individual at the time of his admission to membership and throughout the term of his membership:
(1)   shall be a resident of Canada;
(2)   shall have as his principal business that of a broker or dealer in securities, shall be active in that
      business to an extent acceptable to the Exchange and devote a major portion of his time to it,
      except if he is in active government service or his health shall not permit;
(3)   shall not be a partner in a firm or a shareholder of a corporation having as its principal business that
      of a broker, dealer or advisor in securities except with the approval of the Exchange;
(4)   shall not be a partner in or a director, officer, shareholder or employee of any other member or a
      related company of any other member;
(5)   shall not be engaged in any business which has been disapproved by the Exchange;
(6)   shall not, without prior approval of the Exchange, change the name under which he carries on his
      business, liquidate the assets of the business, cease to carry on business or take any step with a
      view to any action of that nature;
(7)   shall not make an assignment under the Bankruptcy Act (Canada) and shall not have a receiving
      order made against him;
(8)   shall not, without the approval of the Exchange, borrow any funds or issue any bonds, debentures,
      notes or other instruments as evidence of indebtedness if the principal amount matures or is
      renewable or extendable at his option to a date more than twelve months after borrowing or issuing.

D.1.10 – Member Corporation
Where a member is a corporation throughout the term of membership of such member:
(1)   shall have as its principal business that of a broker or dealer in securities and it shall be active in
      that business to an extent acceptable to the Exchange;
(2)   shall not be engaged in any business which has been disapproved by the Exchange;

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(3)   shall not be a partner in a firm or a shareholder of a corporation having as its principal business that
      of a broker, dealer or adviser in securities, except as permitted under Rules D.1.20 or D.1.33, or
      otherwise with the approval of the Exchange;
(4)   shall be incorporated under the laws of Canada, one of the provinces thereof or another jurisdiction
      which has been approved by the Exchange;
(5)   shall not, without the prior approval of the Exchange, change its name, effect or permit any change
      in its constitution affecting voting rights, dissolve, wind up, surrender its charter, liquidate its assets
      or take any step authorizing or with a view to such action, or effect or permit any alteration in its
      capital structure, including the allotment, issue, re-purchase, redemption, cancellation, subdivision
      or consolidation of any shares in its capital stock;
(6)   shall not issue any share warrant evidencing any shares of its capital stock; and
(7)   shall not issue, incur or become obligated in respect of any option, warrant or agreement creating
      any obligation to allot, issue or transfer any share of its capital stock without the prior approval of
      the Exchange but agreements entered into by a member corporation to ensure transferability of its
      shares to a transferee for whom the approval of the Exchange is not required under this Rule D and
      whose ownership is permitted under this Rule D, do not require approval under this clause (7).

D.1.11 – Member Firms
Where a member is a partnership, throughout the term of membership of such member:
(1)   shall be formed under and its partnership agreement governed by the laws of one of the provinces
      of Canada or another jurisdiction which has been approved by the Exchange;
(2)   shall not dissolve, liquidate its assets or change its name, permit any partner to retire, or effect or
      permit any change in the partner's interests in the member firm without the prior approval of the
      Exchange;
(3)   shall have as its principal business that of a broker or dealer in securities and it shall be active in
      that business to an extent acceptable to the Exchange; and
(4)   shall not be a partner in a firm or a shareholder of a corporation having as its principal business that
      of a broker, dealer or adviser in securities, except as permitted under Rules D.1.20 or D.1.33, or
      otherwise with the approval of the Exchange.

INDUSTRY PARTICIPATION BY DIRECTORS AND PARTNERS

D.1.12 – Industry Participation by Directors
In the case of a member that is a corporation:
(1)   not less than 40 percent of the members of its Board of Directors shall:
      (a)   be approved by the Exchange,
      (b)   to an extent acceptable to the Exchange, be actively engaged in the business of the member
            and devote the major portion of their time thereto, except if on active government service or for
            health reasons,
      (c)   have had experience acceptable to the Exchange as brokers or dealers in securities or
            working in the office of a broker or dealer in securities, in each case for at least five years or
            such lesser period as may be accepted by the Exchange, and
      (d)   have successfully completed such course or courses of study as may be required by the
            Exchange; and
(2)   the remaining members of the Board of Directors shall:
      (a)   have the qualifications described in subclause (1)(a) above, or


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      (b)   be a person other than described in subclause (1)(a) above and be accepted as a director of
            the member by:
            (i)    the Board of Directors of the member, and
            (ii)   the Exchange.

D.1.13 – Industry Participation by Partners
In the case of a member that is a partnership:
(1)   Not less than 40 percent of the partners of a member, which 40 percent shall include:
      (a)   partners beneficially owning not less than 40 percent of equity interest in the member,
      (b)   partners beneficially owning shares representing not less than 40 percent of all voting
            securities, and all outstanding voting securities of the member, and
      (c)   the partner beneficially owning the largest equity interest and shares representing the largest
            number of votes in the member:
            shall:
            (i)    be approved by the Exchange,
            (ii)   to an extent acceptable to the Exchange, be actively engaged in the business of the
                   member and devote the major portion of their time thereto, except if on active
                   government service or for health reasons,
            (iii) have had experience acceptable to the Exchange as brokers or dealers in securities or
                  working in the office of a broker or dealer in securities, in each case for at least five years
                  or such lesser period as may be accepted by the Exchange, and
            (iv) have successfully completed such course or courses of study as may be required by the
                 Exchange.
(2)   The remaining partners must be accepted as a partner in such member by:
      (a)   the Partners of the member, and
      (b)   the Exchange
      and must have the qualifications described in subclauses (1) (c) and (g) above.

D.1.14 – Directors
Each director of a member that is a corporation at the time he first becomes a director of such member
and throughout his term of office:
(1)   shall have been approved as such by the Exchange;
(2)   shall not be a member, or a partner in or a director, officer, shareholder or employee of any other
      member or related company of any other member, unless:
      (a)   the other member is related to the member,
      (b)   where the relationship with the other member is as shareholder, the shares are publicly traded
            or the investment is otherwise permitted by this Rule D, or c. the Exchange approves the
            relationship;
(3)   shall not be a member of the Exchange whose membership has been suspended for a definite
      period of time which has not expired;
(4)   shall not be an approved person whose approval has been suspended for a definite period of time
      which has not expired;



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(5)   shall not make an assignment under the Bankruptcy Act (Canada) and shall not have a receiving
      order made against him;
(6)   shall not be engaged in any business which has been disapproved by the Exchange;
(7)   shall not carry on the business of a broker, dealer or adviser in securities and shall not be a partner
      in or a shareholder, director, officer or employee of a firm or a corporation having that business as
      its principal business, except in each case with the approval of the Exchange or unless one of the
      exemptions in clause (2) above is applicable;
(8)   shall not have authority or control, either directly or indirectly, over any account in securities,
      whether in his name or another name, unless either the account is maintained with his member or a
      copy of a consent to each account has been executed on behalf of his member by another partner
      and has been filed with the Exchange and he delivers to the other partner (unless waived by such
      other partner) statements at intervals of not more than a month showing each trade since the last
      such statement for each account, and for the purposes of this clause (8) the making of any trade
      pursuant to his authority or control shall be considered to be the having of an account;
(9)   shall not be a corporation, except with the approval of the Exchange;
(10) shall be the absolute beneficial owner of his entire interest as shown in the member's shareholder
     agreement, shall not permit or effect any change in the interest, and shall not sell, assign, transfer,
     mortgage, hypothecate, pledge, charge, deposit as collateral or in any way give any security with
     respect to his interest in the member or any interest therein, without in each case the prior approval
     of the Exchange; and
(11) shall have successfully completed such course or courses of studies as may from time to time be
     required by the Exchange.

D.1.15 – Partners
Each partner of a member that is a partnership at the time of his admission as a partner of such member
and so long as he continues to be a partner:
(1)   shall have been approved as such by the Exchange;
(2)   shall not be a member or a partner in or a director, officer, shareholder or employee of any other
      member or an affiliated company of any other member, unless:
      (a)   the other member is affiliated with the member,
      (b)   where the relationship with the other member is as shareholder, the shares are publicly traded
            or the investment is otherwise permitted by this Rule D, or
      (c)   the Exchange approves the relationship;
(3)   shall not be a member of the Exchange whose membership has been suspended for a definite
      period of time which has not expired;
(4)   shall not be an approved person whose approval has been suspended for a definite period of time
      which has not expired;
(5)   shall not make an assignment under the Bankruptcy Act (Canada) and shall not have a receiving
      order made against him;
(6)   shall not be engaged in any business which has been disapproved by the Exchange;
(7)   shall not carry on the business of a broker, dealer or adviser in securities and shall not be a partner
      in or a shareholder, director, officer or employee of a firm or a corporation having that business as
      its principal business, except in each case with the approval of the Exchange or unless one of the
      exemptions in clause (1) is applicable;
(8)   shall not have authority or control, either directly or indirectly, over any account in securities,
      whether in his name or another name, unless either the account is maintained with his member or a

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      copy of a consent to each account has been executed on behalf of his member by another partner
      and has been filed with the Exchange and he delivers to the other partner (unless waived by such
      other partner) statements at intervals of not more than a month showing each trade since the last
      such statement for each account, and for the purposes of this clause (7) the making of any trade
      pursuant to his authority or control shall be considered to be the having of an account;
(9)   shall not be a corporation, except with the approval of the Exchange;
(10) shall be the absolute beneficial owner of his entire interest as shown in the member's partnership
     agreement, shall not permit or effect any change in the interest, and shall not sell, assign, transfer,
     mortgage, hypothecate, pledge, charge, deposit as collateral or in any way give any security with
     respect to his interest in the member or any interest therein, without in each case the prior approval
     of the Exchange; and
(11) shall have successfully completed such course or courses of studies as may from time to time be
     required by the Exchange.

D.1.16 – Officers
Each officer of a member that is a corporation or a partnership at the time he first becomes an officer and
throughout his term of office shall comply with Rule D.1. 14 or D.1.15, as the case may be, and shall:
(1)   to an extent acceptable to the Exchange be actively engaged in the business of the member and
      devote the major portion of his time thereto, except if on active government service or for health
      reasons;
(2)   have had experience acceptable to the Exchange as a broker or dealer in securities or working in
      the office of a broker or dealer in securities, in each case for at least five years or such lesser
      period as may be accepted by the Exchange; and
(3)   have successfully completed such course or courses of study as may be required by the Exchange.

OWNERSHIP OF SECURITIES (OTHER THAN PUBLIC OWNERSHIP)

D.1.17 – Ordinary Debt
(1)   Subject to clause (2) below, there shall be no restriction on the ownership by any person of the debt
      of a member or the debt of a holding company of a member, provided such debt is neither
      subordinated nor restrictive.
(2)   Each member and holding company of a member shall give written notice to the Exchange prior to
      effecting any proposal to borrow money on terms whereby the principal amount matures or is
      renewable or extendable, at the option of the member, within a period exceeding twelve months
      from the date of the borrowing.

D.1.18 – Approved Lenders
Nothing in this Rule D limits the issue by a member or the holding company of a member to an approved
lender:
(1)   of indebtedness which is subordinated debt;
(2)   of a restrictive security, but a restrictive security shall be so issued only with the prior consent of the
      Exchange; or
(3)   of limited participation securities that are not restrictive securities, but if the limited participation
      securities carry voting rights, they shall be subject to the restrictions in Rule D.1. 19.




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CHANGES IN OWNERSHIP

D.1.19 – Exchange Approval of Changes in Ownership
(1)   Subject to clauses (2) and (3) below and Rule D.1.22, a member, with the prior approval of the
      Exchange, may permit public ownership of its securities.
(2)   Subject to clause (3) and Rule D.1.22, a member need not obtain the Exchange's approval when it
      issues and transfers its voting and participating securities to industry investors.
(3)   The prior approval of the Exchange is required pursuant to Rule D.1.58 where an issue or transfer
      of voting or participating securities would result in a change of effective control of the member
      which is likely to materially affect its operations.
(4)   The Exchange shall, in determining whether to give its consent under clauses (1) and (3), take into
      account whether the member and, if applicable, its holding company, is and will continue to be in
      compliance with this Rule D and in determining such compliance may consider:
      (a)   an opinion of legal counsel and such other evidence as it considers appropriate,
      (b)   arrangements, as described in Rule D.1.24, made by the member, to ensure continued
            compliance with the requirements of this Rule D.
(5)   In granting its consent under this section, the Exchange may impose such conditions, or require
      such undertakings as it may consider relevant with respect to the disclosure of the identities of
      proposed shareholders of the member or its holding company.

OTHER OWNERSHIP RESTRICTIONS

D.1.20 – Cross-Ownership
Subject to Rule D.1.17, no member or holding company of a member shall own any securities issued by
another member or holding company, except for:
(1)   the ownership of securities in connection with the ordinary course of the activities of the securities
      business, namely, market-making, underwriting, trading, options, error account and street name
      holdings for client accounts;
(2)   the ownership by a member of securities of another member, all of the equity participation in which
      is owned by the first mentioned member; or
(3)   the acquisition of 100 percent of a class of securities acquired pursuant to a take over bid for 100
      percent of such securities of a member corporation or, where a statutory right of acquisition (such
      as that provided by the Canada Business Exchanges Act) is applicable, the acquisition of 90
      percent of a class of securities pursuant to the take-over bid made with intent to exercise the
      statutory right of acquisition.

D.1.21 – Industry Investor
Subject to Rule D.1.17, no industry investor shall own securities issued by a member or its holding
company other than the member with which he is associated or its holding company, unless those
securities are of a class in which there is a public ownership.

MONITORING AND APPROVAL OF OWNERSHIP OF MEMBERS

D.1.22 – Shareholdings or Partnership Interest of 10 Percent or More
(1)   Subject to clause (3) below, no member without prior Exchange approval shall permit an investor,
      alone or together with associates and affiliates, to own a significant equity interest.
(2)   For the purposes of this section and Rule D.1.23, a significant equity interest is defined as the


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      holding of:
      (a)   voting securities carrying 10 percent or more of the votes carried by all voting securities of the
            member or holding company of a member, or
      (b)   10 percent or more of the outstanding participating securities of the member or holding
            company of a member, or
      (c)   an interest of 10 percent or more of the total equity in the member.
(3)   The legal representatives of a deceased person who had been approved by the Exchange as the
      owner of a significant equity interest may continue as such registered holder or to have such
      interest for such period as the Exchange may permit.
(4)   Every registered holder of a significant equity interest and every other person having any interest
      therein (except by way of security only):
      (a)   shall not be a corporation, except with the approval of the Exchange,
      (b)   shall, in the case where the interest is in a member that is a corporation or its holding
            company, comply with Rule D.1.14 except to the extent otherwise approved by the Exchange
            and, in the case where the interest is in a member that is a partnership, comply with Rule D.1.
            15 except to the extent otherwise approved by the Exchange, and
      (c)   shall have successfully completed such course or courses of studies as may from time to time
            be required by the Exchange.

D.1.23 – Notice of Changes in a Member
Each member shall give the Exchange prompt written notice of:
(1)   the death, winding up or dissolution of any holder of significant equity interest in the member or its
      holding company, or of any partners of the member;
(2)   the death, retirement, resignation or termination of employment or association for any other cause,
      of any of its partners, directors or officers (or any of the directors or officers of the holding company
      of the member) and where the notice relates to the termination of employment or association of any
      partner, director or officer, full reasons therefore shall be given;
(3)   any non-compliance with any of the provisions of clauses (1) and (2) of Rule D.1. 10 and clauses
      (5), (6), (7), (8), and (9) of Rule D.1. 14 as they apply to a member that is a corporation, its
      directors, shareholders, officers and persons having an interest in its shares, and any non-
      compliance with any of the provisions of clause (3) of Rule D.1.11 and clauses (4), (5), (6), (7), (9),
      and (10) of Rule D.1.15 with respect to a member that is a partnership and its partners;
(4)   any proposed change in or amendment to any document relating to the constitution, capital or
      shares of a member that is a corporation or its holding company or a member that is a partnership
      or the rights of their shareholders or partners which has been filed with the Exchange or which the
      Exchange requires to be filed with it.

ENFORCEMENT OF OWNERSHIP RESTRICTIONS

D.1.24 – Minimum Necessary Enforcement Provisions
The arrangements contemplated by Rule D.1. 19 where a member or its holding company wishes to
permit public ownership of its securities shall include, at the least, legally enforceable provisions to make
effective:
(1)   the refusal to issue or transfer securities to any person not permitted to own them;
(2)   the withdrawal of the voting rights attached to all securities owned by a person who holds securities
      in contravention of this Rule D; and


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(3)   the mandatory disposition, re-purchase or redemption of any securities owned by a person not
      permitted to own them, where the disposition, re-purchase or redemption is considered necessary
      or desirable by the issuing member corporation or holding company or by the Exchange, which
      provisions shall be reflected in the constating documents of the issuer and shall include a price or a
      method of price calculation for mandatory purchase or redemption that is designed to discourage
      the acquisition or holding of securities.

D.1.25 – Application of Enforcement Provisions
The provisions described in Rule D.1.24 shall be expressed to become operative in any particular
situation upon a decision of the member or its holding company, as the case may be. The member or its
holding company may make the decision of its own volition and shall make the decision upon demand by
the Exchange or by any provincial securities administrator having jurisdiction over the member.

D.1.26 – Surveillance Arrangements
Members shall establish procedures to ascertain when a contravention of the rules occurs, which
procedures shall include, at the least, legally effective requirements for the filing with the member at the
time of a new issue of securities or a request for transfer thereof, of a declaration in the form approved by
the Exchange as to the status of the transferee with respect to the rule in Rule D.1.22 and such other
rules as may appear relevant.

D.1.27 – Notification of Contravention
Any member or holding company of a member that becomes aware that any of its securities are or may
be held contrary to Rule D.1.22 or to other provisions of this Rule D shall promptly notify the Exchange.

DISTRIBUTION OF MEMBER SHARES

D.1.28 – Techniques for Distribution
A member or its holding company that intends to permit public ownership of its securities may effect the
distribution thereof:
(1)   through a qualified, independent underwriter on a firm underwriting basis in accordance with usual
      commercial practice, with a prospectus or equivalent document containing the information required
      by applicable securities laws, subject to the concluding portion of clause (2), the member may
      participate as a member of the selling group in a distribution under this clause (1);
(2)   through a qualified, independent underwriter on an agency or best efforts basis, or through the
      issuing corporation (or, where the issuing corporation is a holding company, through the member)
      effecting the distribution, with a prospectus or equivalent document containing the information
      required by provincial securities laws and with Rule D.1.29 being also applicable in the
      circumstances thereby contemplated. A corporation shall be deemed to be effecting the distribution
      of its own securities if more than 25 percent of the distribution is made by the corporation or its
      subsidiary member corporation to customers of the corporation or the subsidiary member
      corporation;
(3)   by private sale, but the provisions of Rule D.1 .30 shall apply in the circumstances thereby
      contemplated; or
(4)   by some other procedure permissible under Rule D.1.31.

D.1.29 – When Valuations Required
A corporation underwriting a public distribution of its own voting or participating securities pursuant to
clause (2) of Rule D.1.28, or effecting the distribution on an agency or best efforts basis through another
firm as underwriter, shall provide as part of the prospectus or equivalent document thereby required,
summaries of not less than two separate valuations of its securities prepared by independent


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underwriters or chartered accountants qualified to prepare the same (and participation in the distribution
shall not disqualify an underwriter from preparing a valuation), but this requirement shall not apply if
securities with identical attributes to those being distributed have been listed and posted for trading on the
Exchange, the Montreal Exchange or the Toronto Stock Exchange, for not less than six months prior to
the date the distribution commences.

D.1.30 – Private Sale
Where voting or participating securities are distributed by way of private sale as permitted by clause (3) of
Rule D.1.28 to investors whose ownership thereof is permissible only by reason of the provisions of this
Rule D concerning public ownership of securities, the distribution shall be permitted only if arrangements
satisfactory to the Exchange (which arrangements shall include the execution of an agreement by each
investor limiting his re-sale of the securities) are made to preclude the development of a public trading
market in the securities unless and until:
(1)   the issuing corporation has published information concerning its affairs that is at least equivalent to
      what would have been included in a prospectus under applicable securities laws, which information
      shall include valuations as described in Rule D.1.29 unless securities of the issuer, with identical
      attributes, have been listed and posted for trading on the Exchange or on the Montreal Exchange or
      the Toronto Stock Exchange, for not less than six months prior to the date of publication of the
      information;
(2)   from the date of publication of the information in clause (1) and until the date the public trading
      market develops, the issuer has complied with the timely disclosure requirements applicable to
      listed corporations; and
(3)   after the date the public trading market develops, the issuer is required by law to comply with the
      timely disclosure requirements applicable to listed corporations.

D.1.31 – Other Distribution Procedures
A member or its holding company may distribute its securities through a transaction such as a take-over
bid or an amalgamation that will create a public trading market in the securities, but only if:
(1)   the issuing corporation publishes information concerning its affairs that is at least equivalent to what
      would have been included in a prospectus under applicable securities laws, which information shall
      be published in accordance with arrangements satisfactory to the Exchange as to:
      (a)   the stage in the transaction at which prospectus-type information will be provided,
      (b)   the regulatory agency that will be responsible for reviewing and commenting on the
            information,
      (c)   the persons to whom the prospectus or similar document will be distributed,
      (d)   the rescission or withdrawal rights to be made available if the document contains a material
            inaccuracy; and
(2)   if the securities are participating or voting securities, the information referred to in clause (1) of this
      rule shall include valuations as described in Rule D.1.29 unless the Exchange concludes that the
      information is not necessary having regard to circumstances such as, for example, that the terms of
      the transaction were arrived at through arm's length negotiations, but the requirements of clauses
      (1) and (2) shall not apply if securities of the issuer, with identical attributes, have been listed and
      posted for trading on a stock exchange referred to in clause (1) of Rule D.1.30 for not less than six
      months prior to the date of the transaction.

D.1.32 – Distributions
The provisions of Rules D.1.28 to D.1.31 apply, with necessary changes, to a distribution of securities
issued by a member or its holding company if the securities are derived from a control position or the
distribution will result in the creation of a public trading market.

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MEMBERS AND THEIR HOLDING COMPANIES AND RELATED COMPANIES

D.1.33 – Exchange Approval
(1)   No member or partner in or director, officer, shareholder or employee of a member shall form,
      maintain or have any interest in a related company without the prior approval of the Exchange.
(2)   In this part, "related company" means a sole proprietorship, partnership or corporation:
      (a)   which is related to a member firm or member corporation in that either of them, together with
            the partners in and directors, officers, shareholders and employees of it, collectively have at
            least a 20 percent ownership interest in the other of them, including an interest as a partner or
            shareholder, directly or indirectly, and whether or not through holding companies;
      (b)   which carries on as a substantial part of its business in Canada that of a broker, dealer or
            adviser in securities; and
      (c)   which deals with or has obligations to any persons other than the member or those incurred
            through the member; and
      (d)   which is not a member of the Exchange;
(3)   provided that the Exchange may from time to time exclude any such sole proprietorship,
      partnership or corporation from such definition or include any other sole proprietorship, partnership
      or corporation within such definition and change those included and excluded.
      (a)   Notwithstanding the provisions of clauses (1) and (2), a member may, with the prior approval
            of the Exchange, have a wholly-owned subsidiary whose principal business is that of a broker
            or dealer in securities or an adviser respecting securities. Such a subsidiary may engage in
            business under a name which is not the same or is not substantially similar to the name of the
            member, provided that:
      (b)   the subsidiary's letterhead, confirmations, research publications and all other documents
            issued to the public clearly disclose its association with the member;
      (c)   each of the member and the subsidiary shall bear full responsibility for compliance by the
            subsidiary with all the Exchange's requirements; and
the member and the subsidiary shall be considered to be one securities firm for the purposes of
determination of capital and audit requirements.

D.1.34 – Corporate Groups
A holding company may not be the holding company of more than one member corporation, except that a
holding company may be the holding company of two member corporations if it owns all of the voting and
all of the participating securities of each of them.

D.1.35 – Audit Requirements
Each related company shall comply with the requirements of the Exchange as set from time to time
respecting the financial position of members as though it were a member except to the extent exempted
by the Exchange.

D.1.36 – Protection of Members' Capital
(1)   No member may give directly or indirectly by means of a loan, guarantee, the provision of security
      or of a covenant or otherwise any financial assistance to:
      (a)   a holding company of the member;
      (b)   any other associate or affiliate of the member, including a related company, unless the amount
            of the loan, guarantee, provision of security or of the covenant or any other financial


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            assistance is limited to a fixed or determinable amount and the amount is provided for in
            computing the risk adjusted capital of the member. The difference between the market value
            and the margin required on any collateral advanced by a party other than the member may be
            taken into account in determining the provision to be made, with respect to the loan,
            guarantee, the provision of security or of the covenant or any other financial assistance in
            computing risk adjusted capital.
(2)   Each member shall be responsible for and guarantee all the obligations incurred by each of its
      related companies and each related company shall guarantee and be responsible for all of the
      obligations of the member with which it is related and all the other related companies of the
      member. Such guarantee shall be:
      (a)   in the form prescribed from time to time by the Exchange and filed with the Exchange; and
      (b)   subject to Rule G. 1.03(2), limited to the percentage of the guarantor's regulatory capital
            employed that corresponds to the percentage capital investment that the guarantor, or a
            common shareholder of the guarantor and guaranteed corporation, has in the entity whose
            obligations are guaranteed.
(3)   For the purposes of subparagraph (2) of this rule only, related company means a member of a
      participating institution of the Canadian Investor Protection Fund. If the Exchange is satisfied that a
      member or any related company does not hold customers' cash, securities or other property, such
      member or other related company is not required to provide such guarantee. The Board may
      exempt any member or related company of a member from requirements of this Rule.

D.1.37 – Compliance with Exchange Requirements
(1)   Each related company shall comply with all the Exchange requirements as though it were a
      member and each partner in and owner, director, shareholder or employee of a related company
      shall comply with all the Exchange requirements as though the related company were a member,
      except in each case to the extent that non compliance with specified provisions may be approved
      from time to time by the Exchange, either generally, individually or by classes.
(2)   Notwithstanding the provisions of clause (1) of this rule, a salesman of a mutual fund dealer that is
      registered as such under provincial securities laws and is a related company of a member may sell
      insurance contracts of a life insurance company subject to such conditions as may be imposed
      under provincial securities laws.

D.1.38 – Audit Committee
Where a member or a holding company of a member has permitted public ownership of its securities, it
shall, regardless of the statute under which it is incorporated, appoint and maintain an audit committee in
accordance with the provisions of the Canada Business Corporations Act which relate to audit committee.
A member or holding company of a member may be exempted from the requirements of this rule by the
Exchange in its discretion and on such terms and conditions as the Exchange may determine.

D.1.39 – Securities Related Activities
(1)   No member shall, without the prior approval of the Exchange, carry on any business other than
      securities related activities but, subject to Rule D.1.33 and to compliance with capital requirements,
      a member may own an investment in a corporation that carries on activities that are not securities
      related.
(2)   In considering whether to approve an application by a member to carry on activities that are not
      securities related, the Exchange shall approve the application unless the activities are inconsistent
      with the intent of the provisions of the rules of the Exchange or would detract in some other respect
      from full compliance with all provisions, rules, requirements, directives or orders to which the
      member is subject or for the protection of investors.
(3)   An approval given by the Exchange pursuant to clause (2) above shall take effect on the date (the

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      "effective date") which is 14 days after written notice of the approval is given by the Exchange
      unless the Commission notifies the Exchange prior to the effective date either that he objects to the
      approval or that he has scheduled a hearing to decide on the objection. In the event that the
      Commission objects to the approval, either prior to the effective date or following a hearing on the
      objection, the approval shall not take effect, if at all, until the Commission terminates his objection.

D.1.40 – Application to Holding Companies
Except to the extent that exemptions may be granted by the Exchange, the provisions of Rule D.1.39
apply to holding companies of members.

D.1.41 – Investments by Discretionary Accounts
No member shall permit the acquisition, by any customer account over which the member has
discretionary authority, of securities issued by the member or the holding company of the member, except
as described in Rule D.1. 17. This prohibition applies notwithstanding any consent obtained from the
client and whether the securities are in the course of distribution or are being traded in the secondary
market.

D.1.42 – Solicitations by Issuer
Solicitations by a member as to transactions in securities issued by it or by its holding company:
(1)   are, subject to Rule D.1.41, permitted in the course of a distribution made with a prospectus or
      other document containing disclosure as required by provincial securities laws and these
      recommendations, and in making private sales that qualify as a private placement under securities
      laws; and
(2)   are prohibited in the course of a distribution not described in clause (1) of this rule and are
      prohibited as to secondary market trading but nothing herein prohibits a member from carrying out
      an unsolicited order for such securities and, for greater certainty, nothing herein prevents a member
      from accepting securities issued by it or its holding company as securities for a margin account.

D.1.43 – Research Reports and Opinion Letters
A member shall not issue research reports or opinion letters as to participating or voting securities issued
by it or its holding company.

D.1.44 – Rights and Obligations of Members
A membership in the Exchange carries with it the rights, privileges, duties and obligations as set forth in
the Exchange Requirements and imposes upon a member a duty to comply with them.
Rule D.1.44 amended August 1, 2001

D.1.45 – Amalgamation or Merger
An amalgamation or merger involving a member shall be deemed to involve a transfer of membership
and the provisions of Rule D.1.50 shall apply.

D.1.46 – Application for Membership
Persons applying for membership shall make application to the Board in the form and pay the fees
prescribed by the Board. The Board may in its discretion submit or decline to submit an application to the
Exchange. Approval by the Board is a condition precedent to the submission of an application for
membership or a transfer of a membership in the Exchange. Notwithstanding the foregoing, in the event
of a merger or amalgamation of a member with a member of another recognized stock exchange, the
Board may, at its discretion, determine that the application may be approved or rejected and, in the case
of a rejection, that the provisions of this rule do not apply.


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Rule D.1.46 amended August 1, 2001
D.1.47 – Voting of Members on Application
Upon approval of an application for membership in the Exchange by the Board, or its delegate, a poll of
the members (the "Poll") shall be conducted for the purpose of accepting or rejecting the application for
membership. The Poll shall be conducted in accordance with the following procedures:
(1)   All members, in good standing, shall be given written notice of the Poll which notice shall include a
      summary of the information about the applicant and the application, shall include a form of ballot for
      completion by each Member and shall specify the date on which such ballot must be returned to the
      Exchange provided that such date must not be less than five (5) business days after the notice has
      been deemed to be delivered to all Members under subsection (2).
(2)   The notice shall, if personally delivered, be deemed to have been received on the day of delivery,
      or if mailed, shall be deemed to have been received on the second business day following the day
      of mailing. If the notice is delivered by facsimile or any electronic method of reproducing words in
      visible form, the same shall be deemed to have been delivered on the day of the sending of the
      same by the Exchange.
        Rule D.1.47 amended August 1, 2001

D.1.47.1 – Voting Procedure
(1)   A member receiving the notice referred to in subsection 1.47(1) may vote on the matter by
      indicating its voting choice, executing the ballot provided and delivering the executed ballot to the
      Exchange in accordance with this Rule on or before the date for delivery specified in the notice. If
      the ballot is delivered by an electronic method, it shall be deemed to be executed if an authorized
      signature is presented in typed form on the ballot.
(2)   In addition to personal delivery, a member may deliver the executed ballot referred to in subsection
      (1) of this section to the Exchange by facsimile or any electronic method of reproducing words in
      visible form addressed to the Exchange.
(3)   A member who does not deliver an executed ballot to the Exchange within the said period and as
      provided above shall be deemed to have cast its vote thereon in favour of the matter in respect of
      which the Poll is being taken.
        Rule D.1.47.1 added May 24, 2000

D.1.47.2 – Votes Required
Approval by the members for admission to membership in the Exchange shall require that three-fourths of
the votes cast, or deemed to be cast, on the ballot be in favour of admission.
        Rule D.1.47.2 added May 24, 2000

D.1.48 – Waiting Period After Rejection
Where an application for membership is rejected either by the Board or by the members on ballot, at least
six months shall elapse before a new application can be submitted to the Board.

D.1.49 – Payment of Fees
An applicant for membership or the transferee of a membership shall, upon making application, pay to the
Exchange an amount of money determined by the Board together with any other fees and charges
prescribed by the Board.




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D.1.50 – Transfer of Membership
Subject to the requirements of Exchange Requirements, transfer of membership may only be granted
with the approval of the Exchange. A transfer shall be by an instrument in writing, in the form prescribed
and as required to be executed by the Board. Upon payment of the prescribed fee and compliance with
the requirements of the Board and Exchange, a transferee's name and address shall be entered in the
register of members.
        Rule D.1.50 amended August 1, 2001

D.1.51 – (Deleted)
        Rule D.1.51 deleted August 1,2001

D.1.52 – Entry in Register and Rights
Upon approval of an application for membership, the applicant's name shall be entered in the register of
members and the applicant shall, for all purposes, be a member. The proprietary right attaching to the
membership shall be free of all equities, rights and claims of others in respect of the membership. The
Exchange may regard a member as the absolute owner of the proprietary rights of the membership and
the Exchange shall not be affected by any notices to the contrary.

D.1.53 – (Deleted)
Rule D.1.53 deleted August 1,2001

D.1.54 – Certificate
The Exchange may issue a certificate of membership, under the seal of the Exchange, signed by the
Chairman and the President.

D.1.55 – (Deleted)
Rule D.1.55 deleted August 1,2001

D.1.56 – (Deleted)
Rule D.1.56 deleted August 1,2001

D.1.57 – (Deleted)
Rule D.1.57 deleted August 1,2001

D.1.58 – Changes in Member
Where an application is made to the Exchange for approval of any change or proposed change under this
Rule D, in holdings of or interests in shares or voting rights in a member that is a corporation or
partnership interests or voting rights in a member that is a partnership, the Board:
(1)   may direct that the changes or proposed changes be referred to the members for approval by ballot
      in accordance with Rule D.1.47; and
(2)   shall direct matters to the members for approval by ballot where in its opinion a change or proposed
      change, referred to in this section, together with other recent changes of the nature referred to in
      this section would result in a change of effective control of the member which is likely to materially
      affect its operations, but where a member or its holding company proposes to permit, or has
      permitted, public ownership of its securities in compliance with this Rule D, the Board shall not
      direct such a reference as to any change or proposed change of holdings or interests if the change
      or proposed change is a consequence of public ownership of the securities.
        Rule D.1.58 amended August 1, 2001

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D.1.59 – (Deleted)
Rule D.1.59 deleted August 1,2001

D.1.60 – Assessments, Fees, Fines and Charges
Each member shall pay those assessments, fees, fines and charges fixed by the Exchange or the Board
which become due and payable to the Exchange at the time or times and in the manner directed by the
Exchange.
A member shall pay the fees charged by Market Regulation Services Inc. in accordance with any fee
schedule adopted by Market Regulation Services Inc.
        Rule D.1.60 amended February 7, 2003

D.1.61 – Insolvency and Bankruptcy
(1)   If any member becomes insolvent or bankrupt as hereinafter defined the member concerned shall
      thereby automatically and without the necessity of any action by the Board, become suspended
      from the exercise of the privileges of membership and notice thereof shall be mailed or delivered to
      each member.
(2)   A member shall be deemed to be insolvent if:
      (a)   it is for any reason unable to meet its obligations as they generally become due,
      (b)   it has ceased paying its current obligations in the ordinary course of business as they
            generally become due, or
      (c)   the aggregate of its property is not, at a fair valuation, sufficient or, if disposed of at a fairly
            conducted sale under legal process, would not be sufficient to enable payment of all its
            obligations, due and accruing due.
(3)   A member shall be deemed to be bankrupt if it has committed an act of bankruptcy as set forth in
      the Bankruptcy Act of Canada.
        Rule D.1.61 amended August 1,2001

D.1.62 – Appointment of Receiver
At any time that the member is in default of the Exchange Requirements or the Exchange is of the opinion
that it is in the best interests of:
(1)   the Exchange,
(2)   the public,
(3)   persons, any of whose property is in the possession or under the control of the member,
(4)   the shareholders or partners of the member, or
(5)   the creditors of the member;
the Exchange may appoint by instrument in writing a receiver, receiver-manager or receiver and manager
(herein a "Receiver") of the member or of all or part of the member's property, assets and undertaking,
with or without bond, and may from time to time remove the Receiver and appoint another in his or her
stead, or institute proceedings in any court of competent jurisdiction for the appointment of a Receiver of
the member or of all or part of the member's property, assets and undertaking.

D.1.63 – Power of Receiver
A Receiver appointed under Rule D.1.62 shall have the following powers, subject to any limitations set
out in the written instrument of the Exchange or the court order under which the Receiver is appointed:



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(1)   to enter upon, occupy and use any and all premises of the member, with power to exclude the
      member, its agents and its servants therefrom;
(2)   to take possession of and use all books, accounts and records of the member;
(3)   to carry on or concur in carrying on the business of the member, and for such purpose from time to
      time to borrow money either secured on assets of the member or unsecured;
(4)   to sell, lease or otherwise dispose of all or any part of the business, property and assets of the
      member, whether by public or private sale or lease or otherwise, in such manner, at such price as
      can be reasonably obtained therefore and on such terms as to credit and with such conditions of
      sale and stipulations as to title or conveyance or evidence of title or otherwise as to the Receiver
      may seem reasonable;
(5)   to make any arrangements or compromises which the Receiver considers expedient;
(6)   to institute and prosecute any and all suits, proceedings and actions which the Receiver considers
      necessary for the proper protection of the business and assets of the member, to defend all suits,
      proceedings and actions against the member or the Receiver, to appear in and conduct the
      prosecution and defence of any suit, proceeding or action then pending or thereafter instituted and
      to appeal any suit, proceeding or action; and
(7)   to take steps to liquidate the member or, if the member is insolvent, to have the member make an
      assignment in bankruptcy or take such other proceedings as may be available to the member under
      legislation for the benefit of insolvent persons; and
(8)   any additional powers as may be specified in the written instrument of the Exchange or the court
      order under which the Receiver is appointed.

D.1.64 – Powers of Directors Partners and Officers
Upon the appointment of a Receiver under Rule D.1.62, all powers, functions, rights and privileges of the
directors, officers or partners, as the case may be, of the member with respect to the property, assets and
undertaking of the member in respect of which the Receiver has been appointed, shall cease unless
specifically continued by the written consent of the Receiver.

D.1.65 – Non-Liability in Respect of Appointment of Receiver
(1)   Any Receiver appointed by the Exchange under Rule D.1.62 shall, in respect of responsibility for its
      acts, be deemed the agent of the member and not of the Exchange. The member shall be solely
      responsible for the Receiver's acts or defaults and for payment of the Receiver's remuneration,
      costs, charges and expenses.
(2)   Notwithstanding any federal or provincial law the Exchange is not liable for any claim of any nature
      and a member is deemed to release and discharge the Exchange and the Receiver from every
      claim of every nature, including any claim for negligence on the part of the Exchange or the
      Receiver, arising from or in connection with the appointment of the Receiver appointed under Rule
      D.1 .62 or any act or omission of the Receiver.




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RULE D.2.00 – PARTICIPATING ORGANIZATIONS

D.2.01 – Qualification
An applicant for acceptance as a Participating Organization shall, prior to being accepted as a
Participating Organization, and at all times thereafter, be a member in good standing of a recognized
Canadian self-regulatory organization and a recognized Canadian stock exchange.

D.2.02 – Application
Application for acceptance as a Participating Organization shall be made in such form and contain such
information as the Exchange may from time to time prescribe.

D.2.03 – Participating Organization subject to Exchange Requirements
(1)   Subject to subsection (2), a Participating organization shall be subject to and bound by Exchange
      Requirements, including the limitation of liability and indemnification provisions of Rule D.4.00, as if
      it were a member and Exchange Requirements shall be construed accordingly.
(2)   A reference in Exchange Requirements:
      (a)   to a member, or to a member corporation or member firm, shall be deemed to be also a
            reference to a Participating Organization, or to a Participating Organization that is a
            corporation or a partnership as the case may be, or
      (b)   to membership shall be deemed to be also a reference to the status of Participating
            Organization
except for Exchange Requirements relating to (i) the corporate and other internal governance of the
Exchange, and (ii) the sponsorship of any issuer for listing on the Exchange, all of which shall not apply to
a Participating Organization.
        Rule D.2.03 amended August 1,2001

D.2.04 – Fee and Charges
Each Participating Organization shall pay such fees and charges as shall be fixed by the Exchange,
which shall become due and payable to the Exchange at such time or times and in such manner as the
Exchange shall direct.
A Participating Organization shall pay the fees charged by Market Regulation Services Inc. in accordance
with any fee schedule adopted by Market Regulation Services Inc.
        Rule D.2.04 amended February 7, 2003

D.2.05 – Termination
(1)   A Participating Organization may terminate its status as such by giving not less than 3 months'
      written notice to the Exchange.
(2)   The Exchange may postpone the effective date of termination until it is satisfied that the
      Participating Organization has:
      (a)   complied with Exchange Requirements, and
      (b)   obtained the necessary consents from the recognized self-regulatory organization of which it is
            a member
(3)   If a disciplinary hearing panel determines, after a hearing conducted according to the rules
      established under Rule E.2.00 that a Participating Organization has:
      (a)   contravened or is not in compliance with an Exchange Requirement, or

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      (b)   engaged in conduct, business or affairs that is unbecoming, inconsistent with just and
            equitable principles of trade or detrimental to the interests of the Exchange or the public,
(4)   The Exchange may terminate the Participating Organization's status as a Participating
      Organization.




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RULE D.3.00 – APPROVAL

D.3.01 – Employment
No member shall employ any person who:
(1)   receives a commission split as all or any part of their remuneration, or
(2)   has any dealings with any client or prospective client of a member in obtaining, taking or soliciting
      orders for or advising on transaction in securities unless the person is a partner or director of the
      member or registered representative, or
(3)   at any time during the individual's employment with the member holds a current licence or
      registration under any securities or any other legislation of any province of Canada, except as
      specifically permitted under the relevant securities laws, or unless such person is a partner of the
      member, a director of the member or a registered representative.

D.3.02 – Full-Time
Subject to Rule D.3.03,
(1)   An approved person shall devote their full time during normal working hours to the securities or
      futures business of the member employing them and shall not engage in any business, profession
      or employment other than the securities business of the member employing the approved person
      except to the extent from time to time approved either generally or in any particular case by the
      member and the Exchange
(2)   An approved person shall not engage in any business, profession, position or employment other
      than the securities business of the member employing such approved person without the prior
      written approval of the member and the Exchange.
(3)   The Exchange may impose such conditions on an approved person or the member employing such
      approved person or both as may be considered necessary or appropriate by the Exchange when
      considering a request for approval of any outside business, profession, or employment.

D.3.03 – Part-Time
(1)   Subject to subsection (2), an approved person may have, and continue to have, other gainful
      employment provided that:
      (a)   Either:
            (i)    the other gainful employment of the approved person is in a remote geographical area
                   where there is no office of a broker or dealer in securities and the activities, as such, of
                   the approved person, are limited to the remote geographical area and the area in which
                   they reside, or
            (ii)   the securities commission in the jurisdiction in which the approved person acts, or
                   proposes to act, as an approved person, or securities laws or policies administered by
                   such securities commission, specifically permit them to devote less than their full time to
                   the securities business of the member employing them; and
      (b)   the member employing the approved person acknowledges in writing to the Exchange its
            responsibility for the supervision of such approved person; and
      (c)   the member establishes and maintains procedures approved by the Exchange, which ensure
            continuous service to clients and which address potential conflict of interest problems.
(2)   Any other gainful employment of the approved person shall not be:
      (a)   such that could bring the reputation of the Exchange, the public, or the securities industry into


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            disrepute, or
      (b)   with either another registrant of a securities commission or with another member of a
            recognized self-regulatory organization.

D.3.04 – Registered Representative (Restricted)
From time to time the Exchange may approve as "registered representative (restricted)" any person who
in its opinion is not fully qualified as a registered representative or not engaged primarily in dealing with
clients. The term "registered representative" shall include registered representatives (restricted) unless
there is something in the subject matter or context inconsistent therewith.
(1)   Limitations: While approved as a registered representative (restricted) no person shall
      (a)   solicit orders for or advise on trades in securities; or
      (b)   receive a commission split as all or any part of their remuneration; or
      (c)   be employed in any capacity or on any terms or perform any functions or services that the
            Exchange may prohibit, either for all registered representatives (restricted) or for one or more
            of them or for one or more classes of them; or
(2)   Persons applying for the status of registered representative (restricted), except if the applicant is a
      trader approved by the Exchange, must also obtain the designation of "non-trading" employee
      referred to in the applicable legislation.

D.3.05 – Application
(1)   An application for approval as an approved person shall be submitted in the form and be
      accompanied by such documentation as may be prescribed from time to time by the Exchange and
      shall be signed by both the applicant and the member.
(2)   Each approved person shall have successfully completed such course or courses of studies as may
      from time to time be required by the Exchange either as a condition precedent or subsequent to
      Exchange approval. Failure to do so may result in the automatic suspension of approval and
      approval will be reinstated only at such time as the individual has successfully completed such
      course or courses of studies as required by the Exchange.

D.3.06 – Withdrawal of Approval and Changes in Exchange Requirements
Any Exchange Approval given and any Exchange Requirement made may at any time thereafter be
changed, suspended, withdrawn or revoked by the Exchange with or without notice or cause and
notwithstanding any action taken or position changed in the meantime by anyone, including the
Exchange, any member and any approved person. Each member and approved person will comply with
such change, suspension, withdrawal or revocation and any decisions, instructions and directions made
by the Exchange.

D.3.07 – Termination of Employment on Withdrawal of Approval
In the event of any suspension, withdrawal or revocation of Exchange approval of any approved person
and unless otherwise ordered by the Exchange, he and his member shall immediately terminate his
employment by, and any office he may hold in, the member and thereafter he shall not be employed in
any capacity by any member without the approval of the Exchange. In the event of any withdrawal or
revocation of Exchange approval of any partner in, or director or shareholder of, a member, the member
and partner, director or shareholder shall immediately take all steps necessary to terminate his
partnership interest, directorship, and shareholdings in the member, except to the extent permitted by the
Exchange. In the event of any suspension of Exchange approval of a partner in, or director or shareholder
of, a member, the partner, director or shareholder shall not take any part in the affairs of the member
during the period of suspension, except to the extent permitted by the Exchange.



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D.3.08 – Power of Exchange to Refuse Exchange Approval
The Exchange shall have the power to withhold Exchange approval or refuse to approve any application
for Exchange Approval, if, in the opinion of the Exchange, having regard to such factors as it may
consider appropriate and relevant, including, without limitation, the past or present conduct, business or
condition or the applicant:
(1)   it is not satisfied that any Exchange Requirement will be complied with by the applicant;
(2)   the applicant is not qualified by reason of integrity, insolvency, training or experience; or
(3)   such approval is otherwise not in the public interest.

D.3.09 – Withdrawal or Amendment
The Exchange may permit withdrawal or amendment of an application for permission to employ an
individual as an approved person or the transfer of an approved person on such terms as it may
prescribe.

D.3.10 – Report
Each member shall give the following information to the Exchange within five business days of the
occurrence of the event:
(1)   written notice of the termination of the employment of any approved person employed by the
      member in the form prescribed from time to time by the Exchange and, if the approved person was
      dismissed for cause or resigned, full particulars of the reasons for such termination or resignation;
      and
(2)   to the extent that the member is aware or has knowledge of any such matters, written notice and
      full particulars regarding:
      (a)   any action, investigation or proceeding by any securities regulatory authority against,
            concerning or involving any approved person employed by the member;
      (b)   any civil proceedings regarding or in connection with the business conduct of any approved
            person employed by the member;
      (c)   any judgments, garnishments or other collection proceedings against any approved person
            employed by the member; and
      (d)   any criminal, bankruptcy or receivership proceedings against any approved person employed
            by the member.

D.3.11 – Suspension Cancellation
Where the registration of an approved person as a salesman under the applicable securities laws is
suspended or cancelled by operation of that legislation, the approval of the approved person will be
suspended or cancelled until the suspension has been revoked or a new registration issued under the
applicable securities laws.

D.3.12 – Change of Employment
No member shall employ as an approved person any person formerly employed as an approved person
by any other member until such proposed employment is approved by the Exchange.

D.3.13 – Termination of Employment
Where the employment of an approved person has been terminated for any reason whatsoever, their
approval as an approved person shall terminate unless otherwise provided in the applicable securities
laws.



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D.3.14 – Branch Offices and Sub-Branch Offices
(1)   No member shall commence the operation of a branch office without prior Exchange approval.
      Every member that has an approved branch office:
      (a)   shall designate a branch manager for the branch office; and
      (b)   where necessary to ensure continuous supervision at the branch office, may designate one or
            more assistant branch managers or co-branch managers, who must be approved by the
            Exchange and must normally be present at the branch office. In the absence or incapacity of
            the branch manager, their authority and responsibility shall be assumed by an assistant
            branch manager or a co-branch manager (if any).
(2)   No member shall commence the operation of a sub-branch office without prior Exchange approval.
      Where a member has an approved sub-branch office, the business of that office (including the entry
      of orders) shall be conducted through the head office or through the branch office designated as
      having supervisory responsibility for the sub-branch offices.
(3)   Where a member's sub-branch office has more than three approved persons normally present
      thereat, the member shall designate a supervisor who must be approved by the Exchange and
      must normally be present at the sub-branch office.
(4)   No approved person of a member shall:
      (a)   carry on business from their residence, or
      (b)   advertise their residence address or telephone number for the purpose of carrying on business
            from their residence, without prior Exchange approval. Where an approved person of a
            member has been approved to carry on business from their residence, such residence shall
            be deemed to be a sub- branch office of the member.
(5)   An applicant for approval as:
      (a)   a branch manager, assistant branch manager or co-branch manager, or
      (b)   a supervisor of a sub-branch office:
            (i) must have a level of applicable securities industry and/or supervisory experience working
                in the offices of a broker or investment dealer which is acceptable to the Exchange. At a
                minimum such experience must be for a period of no less than two consecutive and
                continuous years.
(6)   An applicant for approval as:
      (a)   a branch manager, assistant branch manager or co-branch manager, or
      (b)   a supervisor of a sub-branch office:
            (i) must have successfully completed such course or examination as may be prescribed by
                the Exchange.
(7)   An approval granted pursuant to clauses (1), (2) or (3) above may:
      (a)   be withdrawn at any time, or
      (b)   be subject to such terms and conditions as the Exchange may impose; whereupon the
            member shall discontinue the operation of the branch or sub-branch office or comply with the
            imposed terms and conditions, as the case may be, within such period as may be prescribed
            by the Exchange.
(8)   Where:
      (a)   the incumbent Branch Manager at a member's branch office is absent or incapacitated, either
            permanently or for an extended period of time, and
      (b)   the member is unable to designate a fully qualified individual to take charge of that office as a

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           Branch Manager,
           (i) the member may request Exchange approval for the designation of an interim Branch
               Manager, for such period of time and pursuant to such directions or instructions as may be
               prescribed by the Exchange.
(9)   In order for a Branch Manager to supervise options accounts, the Branch Manager must be
      approved by the Exchange and must have successfully completed such course or examination as
      the Exchange may require.
(10) In order for a Branch Manager to supervise accounts trading in futures contracts or futures contract
     options, the Branch Manager must be approved by the Exchange and must have successfully
     completed such course or examination as the Exchange may require.

D.3.15 – Registration and Licensing
Each approved person shall at all times be registered or licensed as required by any provision applicable
to them of any securities laws of any Province of Canada.




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RULE D.4.00 – LIMITATION OF LIABILITY AND INDEMNIFICATION

D.4.01 – Definitions
For the purposes of this section 1 only:
"Committee member" shall mean a member of a committee, standing committee or ad hoc committee
advisory body duly appointed by the board of directors of the Exchange or, as the context requires, by the
board of directors of a subsidiary of the Exchange;
"Designated Markets" shall mean the Exchange, any and all subsidiaries of the Exchange, and any
trading system operated by the Exchange or of which the Exchange is a member or participant; and in
subsection 1.3 shall include all directors, officers, employees, committee members, and advisory board
members of the Designated Markets;
"Employee" shall for greater certainty not include independent contractors;
"Exchange terminal" means a trading terminal provided to a Member by the Exchange, but does not
include any other terminal that provides access to the trading system;
"Independent contractor" shall mean an independent contractor, self employed person or contractor
retained by the Exchange or its subsidiaries to provide goods, services or advice, including but not limited
to consultants, tradesmen and trade contractors;
"Indemnitee" shall mean every current or former Protected Party and his heirs, executors, and
administrators, legal representatives and estate and effects;
"Protected Party" shall mean: (a) every director, officer, employee, authorized person, committee member
or advisory board member of the Exchange and any of its subsidiaries or affiliates; and (b) every director,
officer, employee, authorized person, committee member or advisory board member of Market Regulation
Services Inc. and any of its subsidiaries or affiliates in its capacity as the regulation services provider for
the Exchange;
        Amended February 7, 2003
"Subsidiaries" shall include any subsidiary within the meaning of the Securities Act (Alberta) as amended
from time to time and any other Person designated by the board in which the Exchange has a significant
equity interest, directly or indirectly; and
"Trading system" includes all facilities and services provided by the Designated Markets to facilitate
trading, including, but not limited to, electronic, remote or computer-based systems for trading, trade
reporting or trade monitoring of listed securities, and over-the-counter securities; data entry, display and
printing services; any other computer-based trading, monitoring and control systems and programs;
communications facilities operated or maintained by the Designated Markets; trading or order routing
systems operated or maintained by a Member or another market in conjunction with or integrated through
facilities or systems operated or maintained by the Exchange; and price quotations and other market
information provided by or through any of the Designated Markets.

D.4.02 – Limitation of Liability of Protected Persons
Each Member and Participating Organization acknowledges and agrees that no Protected Party shall be
liable:
(1)   For the acts, defaults of omissions of any other Protected Party;
(2)   by reason of him or her having joined in any receipt for money not received by him personally;
(3)   for any loss on account of defect of title to any property acquired by the Exchange;
(4)   on account of the insufficiency of any security in or upon which any moneys of the Exchange may
      be invested, provided that such investment is within the guidelines established by the board;


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(5)   for any loss or damage arising from the bankruptcy, insolvency or tortious act of any person with
      whom any of the moneys, securities or other property of the Exchange may be deposited;
(6)   for any loss incurred through any bank, broker or other agent;
(7)   for any loss occasioned by any error of judgment or oversight on his or her part;
(8)   for any consequences to the Exchange, a member, a Participating Organization, or a third party of
      a decision made in good faith by the Protected Party; or
(9)   for any loss, damage or misfortune whatever which shall happen in the execution of his duties or in
      relation thereto, including in the execution of duties, whether in an official capacity or not, for or on
      behalf of or in relation to the Exchange or any of its subsidiaries or any body corporate or entity
      which he or she serves or provides services to at the request of or on behalf of the Exchange or
      any of its subsidiaries, unless the same is occasioned by his or her own bad faith, willful neglect or
      fraud.

D.4.03 – Exchange Liability
Each Member and Participating Organization acknowledges and agrees that:
(1)   the Exchange shall not be liable for any loss, damage, cost, expense, or other liability or claim
      (including loss of profit) suffered or incurred by or made against any Member or Participating
      Organization as a result of the use by such Member or Participating Organization of trading
      systems. By making use of trading systems, Members and Participating Organizations expressly
      agree to accept all liability arising from the use of such systems.
(2)   the Exchange shall not be liable to a Member or a Participating Organization for any loss, damage,
      cost, expense, or other liability or claim (including loss of profit) arising from any failure of trading
      systems, howsoever caused.
(3)   the Exchange shall not be liable to a Member or a Participating Organization for any loss, damage,
      costs, expense, or other liability or claim arising from any negligent, reckless or willful act or
      omission of the Designated Markets, of a Protected Party or of an independent contractor.
(4)   In the event that any legal proceeding is brought or threatened against the Exchange, any of the
      Designated Markets, a Protected Party or an independent contractor to impose liability on the
      Exchange, the Designated Markets, a Protected Party or an independent contractor, which arises
      directly or indirectly from the use by a Member or a Participating Organization of the trading
      systems, the Member or Participating Organization shall reimburse the Exchange for:
      (a)   all cost, charges, expenses and legal and professional fees (on a solicitor and his own client
            basis) incurred by the Exchange in connection with the proceeding, including costs incurred to
            indemnify a Protected Party or an independent contractor;
      (b)   any recovery adjudged against the Exchange or a Protected Party in the event that the
            Exchange or a Protected Party or an independent contractor is found to be liable; and
      (c)   any payment made by the Exchange with the consent of the Member or Participating
            Organization in settlement of such proceeding.
(5)   the Exchange shall not be liable to a Member or a Participating Organization for any loss, damage,
      costs, expense, or other liability arising from any act or omission of any clearing agency, including
      without limitation the Canadian Depository for Securities Limited and the Canadian Derivatives
      Clearing Corporation.
D.4.04 – Indemnification
Each Member and Participating Organization acknowledges and agrees that:
(1)   to the extent permitted by law, every Indemnitee shall from time to time, and at all times, be
      indemnified and saved harmless out of the funds of the Exchange form and against:


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      (a)   all costs, charges and expenses (which in this section 1 includes an amount paid to settle an
            action or satisfy a judgment and including legal and professional fees (on a solicitor and his
            own client basis) and out of pocket expenses of attending trials, hearing and meetings),
            whatsoever that such Indemnitee sustains or incurs in or about any action, suit or proceeding,
            whether civil, criminal or administrative, and including any investigation, inquiry or hearing, or
            any appeal therefrom, that is threatened, brought, commenced or prosecuted against him, or
            in respect of which the Indemnitee is compelled or requested by the Exchange to participate,
            for or in respect of any act, deed, matter or thing whatsoever made, done, permitted or omitted
            by the Indemnitee in or about the execution of the duties of his or her office as they relate to
            the Exchange or any of its subsidiaries, including those duties executed, whether in an official
            capacity or not, for or on behalf of or in relation to any body corporate or entity which the
            Indemnitee serves or served at the request of or on behalf of the Exchange or any of its
            subsidiaries; and
      (b)   all other costs, charges and expenses that the Indemnitee sustains or incurs in relation to the
            affairs of the Exchange and its subsidiaries or any body corporate or entity which the
            Indemnitee serves or served, whether in an official capacity or not, at the request of or on
            behalf of the Exchange or any of its subsidiaries;
      except such costs, charges or expenses as are occasioned by the Indemnitee's own willful neglect
      or default;
(2)   any Indemnification under section 1.4(a) (unless otherwise ordered by a court) shall be made by the
      Exchange unless a determination is reasonably and promptly made by the board of directors based
      on a written opinion by independent legal counsel, that, based upon the facts known to the board or
      counsel at the time such determination is made, such Indemnitee is not entitled to indemnification
      by reason of his or her own bad faith, willful neglect or fraud;
(3)   for greater certainty, it is confirmed that to the extent permitted by law, the Exchange shall
      indemnify all costs and expenses incurred in connection with any action, suit or proceeding
      contemplated in section 1.4(a), regardless of whether the Indemnitee has been successful or
      substantially successful on the merits, and without limiting the generality of the foregoing, such
      Indemnitee shall be indemnified against all expenses in connection with the dismissal of such
      action or issue without prejudice or in connection with the settlement of such action or issue without
      admission of liability;
(4)   to the extent permitted by law, and subject to section 1.4(e), all costs, charges and expenses
      indemnified actually incurred by the Indemnitee shall be paid by the Exchange in advance of the
      final disposition of the matter, provided that the Indemnitee shall undertake to repay such amount in
      the event that it is ultimately determined, either pursuant to section 1.4(b) or by a court of
      competent jurisdiction, that such Indemnitee is not entitled to indemnification;
(5)   any costs, charges or expenses (including legal and professional fees (on a solicitor and his own
      client basis) and out of pocket expenses of attending trials, hearings and meetings) incurred or to
      be incurred in any action, suit or proceedings, whether civil, criminal or administrative, including any
      investigation, inquiry or hearing, or any appeal therefore, shall be paid by the Exchange promptly,
      and in any event, within 90 days after receiving the written request of the Indemnitee, unless a
      determination is reasonably and promptly made by the board of directors under section 1.4(b) that
      such Indemnitee is not entitled to indemnification or to an advancement of expenses;
(6)   any person entitled to indemnification pursuant to section 1 or otherwise shall promptly give notice
      to the Exchange, where practical, of any action, suit or proceeding which may give rise to a demand
      for indemnification;
(7)   any person entitled to and demanding indemnification, pursuant to section 1 or otherwise, shall co-
      operate with the Exchange throughout the course of any action, suits or proceeding, whether civil,
      criminal or administrative, including any investigation, inquiry or hearing, to the fullest extent
      possible, including but not limited to, providing the Exchange with the consent and authority, to be
      exercised at the sole option of the Exchange, to take carriage of such person's defence;

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(8)   the foregoing rights of indemnification and advancement of expenses shall not affect any other
      rights to indemnification or be exclusive of any other rights to which any person may be entitled by
      law or otherwise.

D.4.05 – Insurance
Each Member and Participating Organization acknowledges and agrees that subject to the Act, the
Exchange may purchase and maintain insurance at the Exchange's expense, on behalf of itself and any
Indemnitee, against such liabilities and in such amounts as the board may from time to time determine
and as are permitted by the Act.




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RULE E.1.00 – DISCIPLINE

E.1.01 – Infractions
"Infraction" means:
(1)   a contravention of any Exchange Requirements; or
(2)   any conduct, proceeding or method of business whether or not expressly provided for in the
      Exchange Requirements which is unbecoming or inconsistent with just and equitable principles of
      trade or detrimental to the interests of the Exchange or the public.

E.1.02 – Complaints
A complaint or other communication in the nature of a complaint relating to the business or affairs of the
Exchange or the conduct, business or affairs of any person under the jurisdiction of the Exchange must, if
required by the Exchange, be in writing and signed by the person making the complaint or communication
in the nature of a complaint.

E.1.03 – Investigatory Powers
(1)   A person under the jurisdiction of the Exchange shall submit to any investigation, examination or
      audit conducted by or on behalf of the Exchange and shall give or cause to be given to the
      Exchange all information, including books and records, at the person's expense and in a form and
      manner, including electronically, that may be required for the purposes of an investigation,
      examination or audit of any person under the jurisdiction of the Exchange.
(2)   Exchange staff may require that any statement given by any person or interview conducted during
      the course of an investigation be recorded by means of an electronic recording device or otherwise
      and may require that any statement be given under oath.

E.1.04 – Audit and Investigation
The Exchange may, at any time, investigate, examine or audit or cause to be investigated, examined or
audited the affairs, business and conduct of a person under the jurisdiction of the Exchange. The
investigation, examination or audit may be carried out at any time without prior notice to the person and
the investigatory powers of this Rule E apply.

E.1.05 – Refusing to Comply
A person under the jurisdiction of the Exchange who refuses or fails to comply with the provisions of this
Rule or has destroyed any books or records or refuses to appear and testify at any hearing, investigation,
examination or audit conducted pursuant to this rule may be suspended by the Exchange until they have
complied with the requirements of this Rule E.

E.1.06 – Provision of Information to Other Canadian Exchanges
Upon request of the Montreal Exchange or The Toronto Stock Exchange to provide information in
connection with an investigation of trading in exchange contracts or a security listed on the exchange
making the request, a person under the jurisdiction of the Exchange shall forthwith submit the requested
information directly to the exchange making the request in such manner and form, including electronically,
as prescribed under Rule E.




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E.1.07 – Investigations
Whether or not prompted by the receipt of a complaint, Exchange staff may cause an examination or
investigation to be conducted of any person under the jurisdiction of the Exchange.
Rule E.1.07 amended January 17, 2001
E.1.08 – Resolution of Investigation in some other manner than by the institution of Disciplinary
Proceedings
(1)   Where Exchange staff consider it appropriate to resolve a matter which is the subject of an
      investigation in some other manner than by the institution of disciplinary proceedings and Exchange
      staff and the person who is the subject of the investigation consent to the resolution proposed by
      Exchange staff, then, on condition that the person abides by such resolution, no further action may
      be taken against them under this Rule in respect of the matter. If that person does not consent to or
      abide by the proposed resolution then the matter may be further considered by Exchange staff.
(2)   The method of resolution of a matter pursuant to this Rule may be any remedy determined by the
      Exchange to be appropriate under the circumstances.
            Rule E.1.08 amended January 17, 2001

E.1.09 – Interim Orders
(1)   If, on application by the Exchange, a Disciplinary Hearing Panel reasonably believes that:
      (a)    a person under the jurisdiction of the Exchange has engaged in or may engage in any course
             of conduct that is detrimental to the interests of the Exchange or the public; and
      (b)    the delay necessary for a hearing would be detrimental to the interests of the Exchange or to
             the public interest,
      a Disciplinary Hearing Panel may, on an exparte basis and without notice, impose against the
      person one or more of the interim orders described in clause (2) below.
(2)   The interim orders that may be imposed pursuant to clause (1) above are:
      (a)    the suspension as a Member, or of any of the rights and privileges of a Member for the period
             and upon the terms and conditions, if any, determined by the Disciplinary Hearing Panel;
      (b)    the suspension or amendment of the terms and conditions of a previously granted Exchange
             Approval;
      (c)    the imposition of any terms and conditions determined by the Disciplinary Hearing Panel that
             must be satisfied by a person in order to continue as a Member;
      (d)    the imposition of any terms and conditions on other persons under the jurisdiction of the
             Exchange relating to the continuance of any business relationships by them with the person
             against whom the interim order is made; or
      (e)    the imposition of any other terms, conditions or directions that the Disciplinary Hearing Panel
             determines to be appropriate under the circumstances.
(3)   Upon the imposition of an interim order by a Disciplinary Hearing Panel pursuant to clause (1)
      above, the Exchange shall issue a Notice of Hearing.
(4)   An interim order issued by a Disciplinary Hearing Panel pursuant to clause (1) above expires fifteen
      days after the date on which the interim order was made unless:
      (a)    the person against whom the interim order is made consents to an extension of the interim
             order until a hearing of the matter is held and a decision is made; or
      (b)    the Disciplinary Hearing Panel decides it is necessary to extend the interim order, in which case
             the interim order may be extended until a hearing of the matter is held and a decision is made.


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(5)   The Exchange must send written notice of any interim order or extension of an interim order to any
      person that is directly affected by the interim order or extension of the interim order and the notice
      must be accompanied by a Notice of Hearing.
(6)   For the purposes of Rule E. 1.09, and without limiting its generality, where any person under the
      jurisdiction of the Exchange:
      (a)    is convicted of a crime in connection with trading in securities or of an offence against any
             statute applicable to trading in securities or where any such person has their registration or
             license, under any statute applicable to trading in securities, suspended or revoked or where
             such a person is convicted of any indictable offense involving dishonesty; or
      (b)    is suspended, expelled or has their approval suspended, withdrawn or revoked by another
             stock exchange or the Investment Dealers Association of Canada
      the occurrence of such an event shall be prima facie evidence that the delay necessary for a hearing
      would be detrimental to the interests of the Exchange or to the public.
            Rule E.1.09 amended January 17, 2001

E.1.10 – Communication with Disciplinary Hearing Panel
No person who is the subject of an investigation or who has requested a hearing, nor any person acting
on their behalf, after they are aware that an investigation has been undertaken by the Exchange and prior
to the resolution of disciplinary proceedings, shall enter into any communication regarding the
investigation with any member of a Disciplinary Hearing Panel appointed pursuant to Rule E.

E.1.11 – Choice of Disciplinary Proceedings
(1)   Where Exchange staff believe that there is sufficient evidence of an Infraction to justify a hearing,
      Exchange staff shall cause a Notice of Hearing to be issued unless Exchange staff conclude that it is
      appropriate to delay the issuance of a Notice of Hearing while pursuing the settlement process.
(2)   Exchange staff need not hold a hearing before making any decision or coming to any conclusion
      contemplated by Rule E.
            Rule E.1. 11 amended January 17, 2001

E.1.12 – Settlement Process
(1)   Exchange staff and any person who is the subject of an investigation or their agent, whether or not a
      Notice of Hearing has been issued may negotiate the terms of a proposed Settlement Agreement.
(2)   The person who is the subject of the investigation may submit written material to the Exchange with
      reference to any facts or alleged breaches on a without prejudice basis.
(3)   Where a person who is the subject of an investigation submits a proposed Settlement Agreement
      which Exchange staff are prepared to recommend approval of, then provided the proposed
      Settlement Agreement is in an appropriate form it may be submitted to a disciplinary hearing panel
      for approval. A proposed Settlement Agreement which is to be submitted to a disciplinary hearing
      panel must:
      (a)    be in writing;
      (b)    be signed by both the person who is the subject of the investigation or by an individual
             authorized to sign on behalf of such person, and by individuals authorized to sign on behalf of
             the Exchange; and
      (c)    contain
             (i) the provisions of the Exchange Requirements alleged by Exchange staff to have been
                 contravened or not complied with;


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           (ii) a statement of the facts agreed upon by the Exchange and the person;
           (iii) the agreed disposition of the matter, including any agreed penalty;
           (iv) a waiver by the person of all rights under the Rules to a hearing if the offer of settlement is
                accepted; and
           (v) any stipulations as to how and when the payment of any fine and costs shall be made.
(4)   A Disciplinary Hearing Panel which receives a proposed Settlement Agreement shall determine
      whether the proposed Settlement Agreement is reasonable or not. If it is reasonable then the
      Disciplinary Hearing Panel shall approve the proposed Settlement Agreement, which then becomes
      a binding Settlement Agreement.
(5)   All negotiations pertaining to a Settlement Agreement are without prejudice to the Exchange and all
      other persons involved in the negotiations and the negotiations may not be used as evidence or
      referred to in any disciplinary proceeding.
(6)   In the event an offer of settlement is accepted by Exchange staff and a Settlement Agreement is fully
      executed and approved, the matter becomes final unless the person who made the offer fails to
      comply with any of the agreed terms of the settlement. In the event of such non-compliance, the
      person may be suspended by the Exchange without a hearing until they comply with the Settlement
      Agreement.
(7)   The disposition of the matter agreed upon as set forth in the Settlement Agreement is to be included
      in the permanent record of the Exchange in respect of the person who is the subject of the
      Settlement Agreement.
(8)   The Exchange shall cause any Settlement Agreement to be published.
         Rule E.1. 12 amended January 17, 2001

E.1.13 – Issuance of a Notice of Hearing
Where:
(1)   Exchange staff determine that a hearing should be held,
(2)   a person who is the subject of an investigation requests a hearing; or
(3)   where an Interim Order has been issued pursuant to Rule E. 1.09, Exchange staff shall cause a
      Notice of Hearing to be issued.

E.1.14 – Notice of Hearing
The Notice of Hearing shall contain the following information:
(1)   a statement setting out with particularity the alleged Infractions;
(2)   the date, time and place of the hearing;
(3)   notice to the Respondent that, subject to the right of hearing and review and appeal provided by
      applicable securities legislation, the Respondent's appearance before the Disciplinary Hearing Panel
      will be the only opportunity to present evidence and call witnesses; and
(4)   notice to the Respondent that the Respondent is entitled to be represented by counsel.
         Rule E.1.14 amended January 17, 2001

E.1.15 – Service of Notice of Hearing, Appearance and Failure to Appear
(1)   The copy of the Notice of Hearing, together with any demand for information shall be served on the
      Respondent in accordance with the provisions of Rule E.
(2)   The Respondent shall serve the Exchange in accordance with the provisions of Rule E with written

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      notice within five business days after being served with the Notice of Hearing that they intend to
      appear and be heard at the hearing.
(3)   In the event that the Respondent fails to appear at a hearing, the Disciplinary Hearing Panel may
      proceed with the hearing of the matter on the date and at the time and place set out in the Notice of
      Hearing without further notice to and in the absence of the Respondent and may find the alleged
      Infractions proven by the Exchange and may impose any penalties described in Rule E. 1.16.
            Rule E.1. 15 amended January 17, 2001

E.1.16 – Penalties
(1)   Where a person under the jurisdiction of the Exchange has committed an Infraction, any one or more
      of the following penalties may be imposed:
      (a)    a reprimand;
      (b)    for each violation a fine not to exceed the greater of:
             (i) $1,000,000; and
             (ii) an amount equal to three times the pecuniary benefit which accrued to the person as a
                  result of committing the violation;
      (c)    suspension of membership with or without conditions;
      (d)    suspension, withdrawal or revocation of any Exchange Approval, with or without conditions,
             including a requirement for a Fitness Hearing prior to reinstatement;
      (e)    expulsion from Membership;
      (f)    initiation of the appointment of a receiver or a receiver-manager of a Member;
      (g)    any other penalty or remedy determined to be appropriate under the circumstances.
(2)   For greater certainty, and without limiting the generality of the foregoing, upon hearing a disciplinary
      proceeding commenced pursuant to this Rule, a Disciplinary Hearing Panel may impose one or
      more of the following orders against the person in respect of which a hearing was held:
      (a)    that such person not be permitted to become a Member;
      (b)    that such person not be granted an Exchange Approval;
      (c)    that such person not become subject to the jurisdiction of the Exchange for a specified period
             of time or until specified terms and conditions have been complied with by the person, or both.
(3)   In the event a fine, condition, or other penalty imposed by a Disciplinary Hearing Panel or agreed
      upon pursuant to a Settlement Agreement entered into under Rule E, is not paid or complied with
      within the time period prescribed, the Exchange may, without further notice to the Respondent
      concerned, suspend Exchange Approval of such Respondent until such fine is paid, condition is
      fulfilled, or the Respondent has complied with any other penalty imposed.
            Rule E.1.16 amended August 1,2001

E.1.17 – (Deleted)
Rule E.1.17 deleted August 1,2001

E.1.18 – Costs
(1)   At the conclusion of an examination, investigation, audit or hearing, the Respondent or the person
      who was the subject of the investigation may be assessed the costs of the examination,
      investigation, audit or hearing which shall include but not be limited to:
      (a)    recording and transcription fees;

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      (b)   witness fees at the rate of $25.00 per witness, per day, plus reasonable expenses;
      (c)   costs of preparing transcripts;
      (d)   advertising;
      (e)   legal costs incurred by the Exchange;
      (f)   accounting costs;
      (g)   disbursements.
(2)   Where the Exchange conducts an investigation of a complaint or other communication in the nature
      of a complaint that was made by a person under the jurisdiction of the Exchange and determines
      that the complaint or other communication in the nature of a complaint was frivolous, the Exchange
      may assess the costs of the investigation against that person.

E.1.19 – Method of Service
(1)   For the purposes of Rule E, service of documents:
      (a)   on the Exchange shall be effected by either personal delivery of any required document or
            notice to the Hearing Officer for the Exchange or by sending a copy by mail, courier or facsimile
            to the attention of the Hearing Officer;
      (b)   on any person other than the Exchange may be effected by:
            (i) personal service on that person;
            (ii) delivering or leaving a copy of the document at the person's last known business or
                 residential address as it appears in the records of the Exchange;
            (iii) where a solicitor agrees to accept service of documents on behalf of a person, then by
                  leaving a copy of such document at the office of that solicitor or by transmitting it by
                  telephone to the solicitor's facsimile number; or
            (iv) where a document cannot be served as provided in subclauses (i), (ii) and (iii) above, then
                 by ordinary mail to that person's last known address as it appears in the records of the
                 Exchange, and the document shall be deemed to have been served seven days following
                 the date on which it was mailed.
(2)   A statutory declaration of an employee or agent of the Exchange attesting that subclause (1)(b) has
      been complied with is sufficient proof of service.




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RULE E.2.00[A] – HEARINGS GENERAL

E.2.01[A] – Hearing and Review Chairperson Appointment Committee
(1)   The Exchange shall establish a Hearing and Review Chairperson Appointment Committee which
      shall be comprised of two individuals that are currently or retired as members in good standing of the
      Law Society of a Province designated by the Exchange ("Designated Province") and one
      Independent Director of the Exchange.
(2)   The Hearing and Review Chairperson Appointment Committee shall be responsible for:
      (a)    appointing at least three qualified individuals to the Hearing and Review Chairperson Roster for
             each Designated Province; and
      (b)    meeting as required.
(3)   The chair of the Hearing and Review Person Chairperson Appointment Committee shall be the
      Independent Director.
            Rule E.2.01[A] amended May 4, 2001

E.2.02[A] – Hearing and Review Chairperson Roster
(1)   For each Designated Province the Exchange shall maintain a Hearing and Review Chairperson
      Roster.
(2)   Each person who is appointed to the Hearing and Review Chairperson Roster for a Designated
      Province shall:
      (a)    have been appointed by the Hearing and Review Chairperson Appointment Committee;
      (b)    be a member who is a member in good standing of the Law Society of the Designated Province
             or retired from such membership in good standing; and
      (c)    sit as the Chair of any Disciplinary Hearing Panel or Listed Company Review Panel constituted
             by the Exchange in the Designated Province to consider Disciplinary Hearings or Listed
             Company Reviews.
(3)   Subject to earlier resignation, each person appointed to a Hearing and Review Chairperson Roster
      shall serve a term which shall continue until the later of three years after the date of appointment or
      the resolution of any proceedings for which that person has been appointed as the Chair of a
      Disciplinary Hearing Panel or Listed Company Review Panel constituted by the Exchange.
(4)   On a transitional basis, appointments to each Hearing and Review Chairperson Roster may be for a
      period of less than three years.
(5)   Each person appointed to a Hearing and Review Chairperson Roster is eligible to be nominated and
      appointed for further terms.
            Rule E.2.02[A] amended May 4, 2001

E.2.03[A] – Qualification in More Than One Designated Province
Directors and individuals may, where otherwise qualified, be appointed to the Hearing and Review
Chairperson Appointment Committee, Hearing and Review Chairperson Roster or Disciplinary Hearing
Panel Roster or Listed Company Review Panel Roster for more than one Designated Province.

E.2.04[A] – Hearing Officer
The Exchange shall designate an officer of the Exchange to be responsible for the co-ordination and
administration of Disciplinary Hearings or Listed Company Reviews, referred to for the purposes of this
Rule as the "Hearing Officer". The Hearing Officer shall have all of the powers needed to administer the

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processes contemplated by Rule E. The Exchange may also designate Deputy Hearing Officers, who,
under the general direction of the Hearing Officer, shall assist the Hearing Officer and shall have the
same power as the Hearing Officer.




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RULE E.2.00[B] – DISCIPLINARY PROCEEDINGS

E.2.05[B] – Disciplinary Hearing Panel Roster
(1)   The Exchange shall maintain a Disciplinary Hearing Panel Roster for each Designated Province.
(2)   Unless it is agreed otherwise from time to time between the Exchange and a Member, each Member
      is required to nominate two or more of its current or retired industry directors, officers or employees
      for appointment to the Disciplinary Hearing Panel Roster in each Designated Province where the
      Member operates or conducts business. Any such nominee shall be, or have retired from the
      industry, in good standing.
(3)   Each nomination for appointment to the Disciplinary Hearing Panel Roster for a Designated Province
      shall be reviewed by the Nominating Committee. The Nominating Committee shall appoint to the
      Disciplinary Hearing Panel Roster those nominees which it considers to be suitable having regard to
      such matters as industry experience (including retail, supervisory/compliance and corporate
      finance), regulatory background, level of commitment and good reputation.
(4)   Each Member shall act diligently to nominate a new individual for appointment to the Disciplinary
      Hearing Panel Roster for a Designated Province if the Member's nominee (i) is rejected by the
      Nominating Committee, (ii) resigns as an appointee from a Disciplinary Hearing Panel Roster, or (iii)
      has completed the term of his/her appointment.
(5)   Subject to earlier resignation, persons appointed to a Disciplinary Hearing Panel Roster shall serve a
      term which shall continue until the later of three years after the date of their appointment or the
      resolution of any proceedings in respect of which they have been appointed to serve on a
      Disciplinary Hearing Panel constituted by the Exchange. Present or past appointees to a Disciplinary
      Hearing Panel Roster may be nominated and appointed for further terms.

E.2.06[B] – Disciplinary Hearing Panels - Disciplinary Proceedings
(1)   Upon being informed that a Notice of Hearing has been or is about to be issued or that a Disciplinary
      Hearing Panel may be required in order to receive a proposed Settlement Agreement which has
      been recommended by Exchange staff, the Hearing Officer shall appoint a Disciplinary Hearing
      Panel consisting of two appointees from the Disciplinary Hearing Panel Roster and one member of
      the Hearing and Review Chairperson Roster for the Designated Province.
(2)   When appointing a Disciplinary Hearing Panel, the Hearing Officer shall:
      (a)    unless there is a practical reason to do otherwise, request the participation of appointees to the
             Disciplinary Hearing Panel Roster and the Hearing and Review Chairperson Roster in a
             sequence which will over time give appointees an approximately equal number of opportunities
             to serve on Disciplinary Hearing Panels;
      (b)    provide prospective appointees to a Disciplinary Hearing Panel with such information about the
             parties and matters in issue regarding the existing or proposed Notice of Hearing as will likely
             be needed to identify potential conflicts; and
      (c)    appoint to the Disciplinary Hearing Panel only those individuals who appear to have no conflicts
             of interest.
(3)   Persons appointed from the Hearing and Review Chairperson Roster shall act as the chair of each
      Disciplinary Hearing Panel to which they are appointed and may receive remuneration for time spent
      acting in this capacity.
(4)   Where it will not create unfairness, appointees to a Disciplinary Hearing Panel may be replaced by
      new appointees.
            Rule E.2.06[B] amended January 17, 2001



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E.2.07[B] – Transitional
(1)   The Exchange has jurisdiction:
      (a)    to conduct investigations, hold hearings and make determinations for conduct which occurred
             prior to the effective date of a Members' Agreement with the Exchange and which the
             Exchange considers to have been an infraction as defined in the by-laws, rules and regulations,
             in effect at the time of conduct, of the Vancouver Stock Exchange or The Alberta Stock
             Exchange, whichever the Member was a member of at the time, and
      (b)    to impose penalties and costs if it is found that an infraction occurred.
(2)   Disciplinary proceedings commenced under the by-laws, rules and regulations of either the
      Vancouver Stock Exchange or The Alberta Stock Exchange may be continued under the Exchange
      Requirements using either a Hearing Panel previously appointed for such purpose or another
      Disciplinary Hearing Panel appointed pursuant to Rule E.
(3)   The Exchange may enforce and collect upon all monetary or non- monetary orders, penalties and
      decisions previously imposed by the Vancouver Stock Exchange or The Alberta Stock Exchange.
            Rule E.2.07[B] amended January 17, 2001

E.2.08[B] – Pre-hearing Conferences
(1)   A pre-hearing conference may be scheduled at any time by the chair of a Disciplinary Hearing Panel
      upon the Chair's own motion or upon a request made by the Exchange, the Respondent or the
      Hearing Officer.
(2)   At a pre-hearing conference, a Disciplinary Hearing Panel may make any procedural order which it
      deems appropriate, including without limiting the generality of the above an order:
      (a)    setting deadlines for any procedural steps;
      (b)    requiring the Exchange or a Respondent to produce documents or give particulars;
      (c)    granting adjournments in whole or in part.
(3)   A Disciplinary Hearing Panel may impose conditions on any order made and, without limiting the
      generality of the above, upon granting an adjournment at the request of a Respondent a Disciplinary
      Hearing Panel may impose the condition that the Respondent withdraw from the securities industry
      until the completion of the hearing process.

E.2.09[B] – Rules Applying at a Disciplinary Hearing
At a hearing before a Disciplinary Hearing Panel, the following Rules shall apply:
(1)   The Respondent or its representatives may be required to give evidence in person, under oath or
      affirmation, or by affidavit.
(2)   The Disciplinary Hearing Panel may require any person under the jurisdiction of the Exchange who
      may have evidence relating to the matters raised in the Notice of Hearing to attend at the hearing
      and testify.
(3)   The Disciplinary Hearing Panel may order that the hearing be adjourned to a later date or a different
      location and may impose such terms or conditions with respect to such order as it deems fit.
(4)   Subject to Rule E.2.09(5) below, any hearing shall be open to the public.
(5)   The Disciplinary Hearing Panel may order that the public be excluded for all or part of the hearing.
(6)   The proceedings of the hearing shall be recorded on an electrical device or in another appropriate
      manner. Such record of the proceedings shall be preserved until the time for hearing and review and
      appeal provided for by any applicable securities legislation has expired. The record of the
      proceedings shall include oral and documentary evidence admitted by the Disciplinary Hearing


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      Panel and oral and written submissions delivered by all parties. The failure to keep an appropriate
      record shall not affect the validity of any proceedings.
(7)   The Respondent shall be entitled to be represented by counsel or an agent and may remain in
      attendance throughout the hearing.
(8)   The Exchange shall be entitled to be represented by counsel or an agent.
(9)   The Disciplinary Hearing Panel shall hear such evidence relating to the allegations that it deems
      relevant.
(10) The Disciplinary Hearing Panel may direct that submissions of the Exchange or the Respondent, be
     made to the Disciplinary Hearing Panel either orally or in writing, or both.
(11) Except to the extent limited in clause (12) of Rule E.2.09[B], the Respondent (directly or through
     counsel) or the Exchange, as the case may be, shall have the right to cross-examine all witnesses
     adducing evidence.
(12) Where the Disciplinary Hearing Panel determines that it will not cause unfairness by unduly
     restricting the ability of the Respondent or the Exchange to cross examine a witness, the Exchange
     or the Respondent may introduce the evidence of witnesses by telephone or video conference
     facility and such witnesses may give an oath or affirmation in the same fashion.
(13) Without limiting what other evidence may be introduced, the Exchange may introduce a record of
     whatever statements, interviews or responses are given by the Respondent or its representatives.
(14) The Disciplinary Hearing Panel is not bound by the legal or technical rules of evidence.
(15) The Disciplinary Hearing Panel may hear evidence of the previous conduct of the Respondent prior
     to the imposition of any penalty.
(16) Where a Disciplinary Hearing Panel has been appointed to consider a proposed Settlement
     Agreement, the Disciplinary Hearing Panel may proceed in a summary fashion and may rely upon
     the submissions of counsel. After making a decision with respect to a draft Settlement Agreement, a
     Disciplinary Hearing Panel is only required to give reasons when it determines that the draft
     Settlement Agreement is unreasonable.
         Rule E.2.09[B] amended January 17, 2001

E.2.10[B] – Decision Following Disciplinary Hearing
The Disciplinary Hearing Panel shall, following a hearing, make a decision to:
(1)   dismiss the allegations contained in a Notice of Hearing; or
(2)   find them proven, in part or in whole, in which case the Disciplinary Hearing Panel shall then impose
      a penalty or penalties as provided for in Rule E.1. 16.

E.2.11[B] – Form of Decision
At the conclusion of any hearing, the Disciplinary Hearing Panel shall issue a decision in written form
which shall contain the substance of its decision relating to the allegations in the Notice of Hearing and
the reasons for its decision.

E.2.12[B] – Decision of the Disciplinary Hearing Panel Final
(1)   Subject to Rule E.2.12[B](2) below, the decision of the Disciplinary Hearing Panel shall be final,
      subject to the right of hearing and review and appeal provided for by any applicable securities
      legislation.
(2)   The Disciplinary Hearing Panel may revoke in whole or in part or vary any decision made by them.
         Rule E.2.12[B] amended January 17, 2001


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E.2.13[B] – Attornment To and Retention of Jurisdiction
(1)   The Exchange continues to retain jurisdiction under these Rules over any person that has ceased to
      be under the jurisdiction of the Exchange and the Exchange may investigate such person and may,
      subject to subsection (2),commence disciplinary proceedings against that person.
(2)   The Exchange may not commence disciplinary proceedings pursuant to subsection (1) against a
      person unless the Exchange has served on the person a Notice of Hearing pursuant to this Rule E
      within five years from the date upon which the person would otherwise have ceased to be under the
      jurisdiction of the Exchange.

E.2.14[B] – Acceptance of Jurisdiction as a Condition of Market Participation
If any person under the jurisdiction of the Exchange does not accept that the Exchange has disciplinary
jurisdiction over that person, and particularly if that person alleges that the Exchange does not have
disciplinary jurisdiction over that person for conduct which occurred while that person was a person under
the jurisdiction of the Exchange or a person approved by the Vancouver Stock Exchange or The Alberta
Stock Exchange, then:
      (a)   the Exchange may revoke whatever Exchange Approval has been granted to the person; and
      (b)   if the person is employed by a person under the jurisdiction of the Exchange, the Exchange
            may require the employer to terminate the employment of the person.




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RULE E.2.00[C] – LISTED COMPANY REVIEWS

E.2.15[C] – Intentionally Left Blank

E.2.16[C] – Listed Company Review Panel Roster
(1)   For each Designated Province the Exchange shall maintain a Listed Company Review Panel Roster.
(2)   Unless it is agreed otherwise from time to time between the Exchange and a Member, each Member
      is required to nominate two or more of its current or retired industry directors, officers or employees
      for appointment to the Listed Company Review Panel Roster in each Designated Province where the
      Member operates or conducts business. Any such nominee shall be, or have retired from the
      industry, in good standing. Each nomination for appointment to the Listed Company Review Panel
      Roster shall be reviewed by the Nominating Committee. The Nominating Committee shall appoint to
      the Listed Company Review Panel Roster those nominees which it considers to be suitable having
      regard to such matters as industry experience (including retail, corporate finance and
      supervisory/compliance) regulatory background, level of commitment and good reputation.
(3)   Each Member shall act diligently to nominate a new individual for appointment to Listed Company
      Review Panel Roster for a Designated Province if the nominee of such Member is:
      (a)   rejected by the Nominating Committee;
      (b)   resigns as an appointee from a Listed Company Review Panel Roster; or
      (c)   has completed the term of his/her appointment.
(4)   Subject to earlier resignation, each appointee to a Listed Company Review Panel Roster shall serve
      a term which shall continue until the later of three years after the date of appointment or the
      resolution of any proceedings for which the appointee has been appointed to serve on a Listed
      Company Review Panel. Present or past members of a Listed Company Review Panel Roster may
      be nominated and appointed for further terms.

E.2.17[C] – Hearing Panels - Listed Company Reviews
(1)   Upon receiving an application for a review pursuant to Rule B. 1.00, the Hearing Officer shall appoint
      a Listed Company Review Panel consisting of two appointees from the Listed Company Review
      Panel Roster and one member of the Hearing and Review Chairperson Roster.
(2)   When appointing a Listed Company Review Panel, the Hearing Officer shall:
      (a)   unless there is a practical reason to do otherwise, request the participation of appointees to the
            Listed Company Review Panel Roster and the Hearing and Review Chairperson Roster in a
            sequence which will over time give appointees an approximately equal number of opportunities
            to serve on Listed Company Review Panels;
      (b)   provide prospective appointees to a Listed Company Review Panel with such information about
            the parties and matters in issue regarding an existing or proposed application for a review
            pursuant to Rule B. 1.00 as will likely be needed by that member to identify potential conflicts;
            and
      (c)   appoint to the Listed Company Review Panel only those individuals who appear to have no
            conflicts of interest.
(3)   Persons appointed from the Hearing and Review Chairperson Roster shall act as the chair of each
      Listed Company Review Panel to which they are appointed and may receive remuneration for time
      spent acting in this capacity.
(4)   Where it will not create unfairness, appointees to a Listed Company Review Panel may be replaced
      by new appointees.


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E.2.18[C] – Pre-hearing Conferences
(1)   A pre-hearing conference may be scheduled at any time by the chair of a Listed Company Review
      Panel upon the Chair's own motion or upon a request made by the Exchange, the person applying
      for a review pursuant to Rule B.1.00 (the "Applicant") or the Hearing Officer.
(2)   At a pre-hearing conference, a Listed Company Review Panel may make any procedural order
      which it deems appropriate, including without limiting the generality of the above an order:
      (a)    setting deadlines for any procedural steps;
      (b)    requiring the Exchange or an Applicant to produce documents or give particulars;
      (c)    granting adjournments in whole or in part;
      (d)    staying a decision of the Exchange that was made under Rule B. 1.00 and in respect of which a
             review application has been brought.
(3)   A Listed Company Review Panel may impose conditions on any order made and, without limiting the
      generality of the above, upon granting an adjournment at the request of an Applicant, a Listed
      Company Review Panel may impose the condition that:
      (a)    where the Applicant is a listed company, the trading of the Applicant's securities be suspended
             until the completion of the hearing process; and
      (b)    where the Applicant is an individual, the Applicant withdraw from its association with any
             Exchange listed company until the completion of the hearing process.
            Rule E.2.18[C] amended January 17, 2001

E.2.19[C] – Rules Applying at a Listed Company Review
At a hearing before the Listed Company Review Panel, the following Rules shall apply:
(1)   The hearing of an application for a review pursuant to Rule B. 1.00 shall, unless otherwise ordered
      by the Listed Company Review Panel, take the form of an appeal on the record from the decision of
      the Exchange.
(2)   Where the Listed Company Review Panel is of the opinion that the record of the decision of the
      Exchange which is the subject of the review is incomplete, the Listed Company Review Panel may
      require the Applicant or any other person who is under the jurisdiction of the Exchange or who may
      have evidence relating to the matters raised in the decision which is the subject of the application for
      a review pursuant to Rule B. 1.00 to attend at the hearing and testify.
(3)   The Listed Company Review Panel may order that the hearing be adjourned to a later date or a
      different location and may impose such terms or conditions with respect to the order as it deems fit.
(4)   The Applicant shall be entitled to be represented by counsel or an agent and may remain in
      attendance throughout the hearing.
(5)   The Exchange shall be entitled to be represented by counsel or an agent.
(6)   The Listed Company Review Panel may direct that submissions of the Exchange or the Applicant be
      made to the Listed Company Review Panel either orally or in writing, or both.
(7)   Except to the extent limited in clause (8) of Rule E.2.19[C], if the Listed Company Review Panel
      orders that oral evidence may be introduced, the Applicant or the Exchange, as the case may be,
      shall have the right to cross-examine all witnesses adducing evidence.
(8)   Where the Listed Company Review Panel determines that it will not cause unfairness by unduly
      restricting the ability of the Applicant or the Exchange to cross examine a witness, the Exchange or
      the Applicant may introduce the evidence of witnesses by telephone or video conference facility and
      such witnesses may give an oath or affirmation in the same fashion.
(9)   Without limiting what other evidence may be introduced, the Exchange may introduce a record of

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      whatever statements, interviews or responses have been given by the Applicant or its
      representatives.
(10) The Listed Company Review Panel will generally confirm the decision of the Exchange unless:
      (a)    the Exchange has proceeded on some incorrect principle;
      (b)    the Exchange has erred in law;
      (c)    the Exchange has overlooked some material evidence, or
      (d)    new and compelling evidence is presented to the Listed Company Review Panel that was not
             present to the Exchange. If one of these conditions is established, the Listed Company Review
             Panel will make a decision on the merits of the case or refer the matter back to the Exchange.
(11) The Listed Company Review Panel is not bound by the legal or technical rules of evidence.
(12) The proceedings of the hearing shall be recorded on an electrical device or in another appropriate
     manner. Such record of the proceedings shall be preserved until the time for hearing and review and
     appeal provided for by any applicable securities legislation has expired. The record of the
     proceeding shall include oral and documentary evidence admitted by the Listed Company Review
     Panel and oral and written submissions delivered by all parties. The failure to keep an appropriate
     record shall not affect the validity of any proceedings.
(13) Subject to Rule E.2.20[C](14) below, any hearing in respect of an application for review pursuant to
     Rule B.1.00 shall be open to the public.
(14) The Listed Company Review Panel may order that the public be excluded for all or part of the
     hearing.
            Rule E.2.19[C] amended January 17, 2001

E.2.20[C] – Communication with Listed Company Review Panel
No person who has made application for a review pursuant to Rule B.1.00, nor any person acting on the
Applicant's behalf, after an application has been made and prior to the resolution of the proceedings
which are the subject of the application, shall enter into any communication regarding the application with
any member of a Listed Company Review Panel appointed pursuant to Rule E.

E.2.21[C] – Decision Following Listed Company Review
The Listed Company Review Panel shall, following a hearing, make a decision to confirm, vary, or set
aside a decision that is the subject of the application for a review pursuant to Rule B. 1.00.
            Rule E.2.21[C] amended January 17, 2001

E.2.22[C] – Form of Decision
At the conclusion of any hearing, the Listed Company Review Panel shall issue a decision in written form
which shall contain the substance of its decision relating to the decision which is the subject of the
application for a review pursuant to Rule B.1.00 and the reasons for its decision.

E.2.23[C] – Decision of the Listed Company Review Panel Final
(1)   Subject to Rule E.2.23 [C](2) below, the decision of the Listed Company Review Panel shall be final,
      subject to the right of hearing and review and appeal provided by any applicable securities
      legislation.
(2)   The Listed Company Review Panel may revoke in whole or in part or vary any decision made by
      them.
            Rule E.2.23[C] amended January 17, 2001



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RULE F.1.00 – MEMBER, APPROVED PERSON AND EMPLOYEE CONDUCT

F.1.01 – Supervision of Accounts
(1)   Each member and approved person shall use due diligence:
      (a)   to learn the essential facts relative to every client, every order, or account accepted;
      (b)   to ensure that the acceptance of any order for any account is within the bounds of good
            business practice; and
      (c)   to ensure that recommendations made for any account are appropriate for the client and in
            keeping with the client's investment objectives.
      All the provisions of subclauses (a), (b), and (c) shall apply to a related company or companies of a
      member.
(2)   Each member shall designate a director, partner, officer or, in the case of a branch office, a branch
      manager reporting directly to the designated director, partner or officer who shall be responsible for
      the opening of new accounts and the supervision of account activity. Each such designated person
      shall be approved by the Exchange and, where necessary to ensure continuous supervision, the
      member may appoint one or more alternates to such designated persons who shall be so approved.
      The director, partner, officer or branch manager, as the case may be, shall be responsible for
      establishing and maintaining procedures for account supervision and shall ensure that the handling
      of client business is within the bounds of ethical conduct consistent with just and equitable principles
      of trade and not detrimental to the interests of the securities industry.
(3)   As part of this supervision each new account shall be opened pursuant to a new account form and
      the designated person (other than a branch manager in the case of discretionary or managed
      accounts) shall, prior to or promptly after the completion of any transaction, specifically approve the
      opening of such account in writing upon the said form.
(4)   In the absence or incapacity of the designated director, partner or officer or when the trading activity
      of the member requires additional qualified person in connection with the supervision of the
      member's business, an alternate, if any, shall assume the authority and responsibility of such
      designated persons.
(5)   Every member shall ensure continuous supervision of account activity in accordance with the
      provisions of the Exchange requirements.

F.1.02 – Application of Due Diligence to Accounts
(1)   No member or approved person shall accept an order from a client or make a recommendation to a
      client without:
      (a)   learning the essential facts relative to that client including the identity and, where applicable,
            credit worthiness of the client and the reputation of the client if information known to the
            approved person or the member causes doubt as to whether the client is of good business or
            financial reputation;
      (b)   determining the general investment needs and objectives of the client, the appropriateness of a
            recommendation made to that client and the suitability of a proposed purchase or sale for that
            client.
(2)   Where a member or an approved person considers that a proposed purchase or sale is not suitable
      for the investment needs and objectives of a client, the approved person shall make every
      reasonable effort to so advise the client before executing the proposed transaction.

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(3)   Every member and approved person shall, prior to entering into transactions for an account for a
      corporation, have on file a resolution of the directors of the corporation empowering specific directors
      and officers to trade in securities in an account on behalf of the corporation and to execute all
      documentation necessary to effect transfers and assignments in connection with trading in the
      corporation's account. Where a resolution of the directors cannot be obtained, the member or
      director, officer or partner of the member carrying the account should prepare and sign a
      memorandum for the member's files indicating the basis upon which he believes the corporation can
      properly engage in transactions and that the persons acting for the corporation have been duly
      authorized to trade on its behalf.
(4)   Every member and approved person shall, prior to accepting orders from a third party for the
      account for any client other than a client referred to in clause (1) above have on file a trading
      authorization signed by the client empowering the third party to enter orders for the account.

F.1.03 – Vicarious Liability
(1)   A Member may be found liable for the conduct, business or affairs of an approved person or an
      employee of the Member and therefore subject to any penalties as if it had engaged in that conduct,
      business or affairs.
(2)   Notwithstanding subclause (1.) above, the imposition of any penalty against a Member does not
      prevent the imposition of any penalty against the approved person or employee of the Member.
(3)   Any partner, director or officer of a Member may be found liable for the conduct, business or affairs
      of the Member if he had responsibility for same and therefore subject to any penalties as if he had
      engaged in that conduct, business or affairs.
(4)   Notwithstanding subclause (3.), the imposition of any penalty against any partner, director or officer
      of a Member does not prevent the imposition of any penalties against the Member.
(5)   An approved person or employee of a Member who has authority over, supervises or is responsible
      to the Member for any approved person or employee of the Member, may be found liable for the
      conduct, business or affairs of the supervised, approved person or employee and therefore subject
      to any penalties as if he had engaged in that conduct, business or affairs.
(6)   Notwithstanding subclause (5.) above, the imposition of any penalty against a supervising approved
      person or employee of a Member does not prevent the imposition by the Board of any penalties
      against the supervised, approved person or employee.

F.1.04 – Nominee Accounts
Where an agency account is carried by a member its files should contain the name of the principal for
whom the agent is acting and written evidence of the agent's authority to trade. Where estate and trustee
accounts are involved or where a husband is acting as agent for his wife, or a wife is acting for her
husband, a member should obtain advice from legal counsel as to the documents that should be obtained
before opening the account.

F.1.05 – Client to Pay before Registration
No security, with the exception of a new issue at take-down date, shall be registered in the name of the
client or his nominee prior to the receipt of payment therefore.

F.1.06 – Designation of Accounts and Prohibited Accounts
No member or approved person shall carry an account:
(1)   in the name of a person other than that of the client except that an account may be designated by a
      number, nominee name or other symbol provided the member maintains at his head office sufficient
      identification in writing to establish the beneficial owner of the account or the party or parties
      financially responsible for the account. This information shall be available at all times upon request


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      by the Exchange; or
(2)   for a partner, director, officer, shareholder or employee of another member either alone or jointly
      without the prior written consent of a partner, director or officer of the other member. Duplicate
      reports or monthly statements shall be sent to the most senior partner, director of the other member
      other than the partner, director for whom the account is maintained.; or
(3)   No employee of a member (other than an attorney or director of the member) shall have authority or
      control, either directly or indirectly, over an account in securities, whether in his name or another
      name, unless either such account is maintained with his member, or a copy of his member's consent
      to each such account has been filed with the Exchange and he delivers to his member statements at
      intervals of not more than a month showing each trade since the last such statement for any such
      account; and for these purposes the making of any trade pursuant to his authority or control shall be
      considered to be the having of such an account.
(4)   A member shall not transact any business over which another member or an approved person or
      employee of another member has authority or control in his own name or any other name, without
      the member's prior written consent.
(5)   No approved person or employee of a member shall open an account in his or any other name, or
      exercise trading authorization over any account at another member without the prior written consent
      of both his own member and the other member with whom he wishes to transact business.

F.1.07 – Alternative Dispute Resolution
Every member shall participate in or become a member of such arbitration program, project or
organization as may be established for or by the securities industry from time to time for the resolution of
disputes between members and their clients and which has been approved by the Board, and shall
comply with the rules and procedures of such program, project or organization.
Every member shall provide the prescribed written material detailing such approved program or
organization to all new clients and all clients who make written complaints to the member.




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RULE F.2.00 – MEMBER ETHICS AND AFFAIRS

F.2.01 – Business Practices
Every member and approved person:
(1)   shall observe high standards of ethics and conduct in the transaction of their business; and
(2)   shall not engage in any conduct, business, affairs or activity that is unbecoming, inconsistent with
      just and equitable principles of trade or detrimental to the public interest.

F.2.02 – Use of Offices
No member shall allow clients and others who are not employees of the member or of an approved
affiliate of the member to use the facilities or operate out of the business premises of the member or an
approved affiliate of the member without the prior approval of the Exchange. Approval shall not be given
where the Exchange is of the opinion that any application therefore is being made on behalf of a promoter
in securities or for the purpose of facilitating the promotion of securities.

F.2.03 – Compliance by Employees
All approved persons and employees of members shall comply with the Exchange requirements. For
greater certainty, all Exchange requirements which apply to members, shall also apply to all approved
persons and employees of the member. Each member shall ensure that all its employees, directors and
officers and all the partners in the member comply with Exchange requirements.

F.2.04 – Conflict of Interest
(1)   No member or approved person acting as an agent for a client to buy or sell securities shall be the
      buyer or seller for their own account or otherwise act in such manner as to create a conflict between
      their own interests and those of their clients or the member.
(2)   No member or approved person shall engage in any activities, either in the context of or outside his
      employment with the member, which create or may be seen to create a conflict of their own interests
      and the interests of their clients or the member.

F.2.05 – Opposite Side of Market
No member or approved person shall, directly or indirectly, make a practice of taking the side of the
market opposite to the side taken by clients.

F.2.06 – Payment Restricted
No member or approved person shall pay or agree to pay any person other than an approved person or
employee of the member an amount related to the earnings of the member or the approved person's
business.

F.2.07 – Dual Registration Prohibited
No member shall permit an individual to work in any capacity which requires registration, during any time
when the individual in addition to being an registered representative holds current registration under the
applicable securities laws as a broker, broker-dealer, investment counsel, securities adviser, investment
dealer or director of a security issuer.

F.2.08 – Trading in Securities or Options for which the Rules do no Prescribe Standards or
Requirements
(1)   A member engaged in trading in any securities or commodity futures contracts or options listed on or
      issued by a recognized stock exchange, clearing or service corporation, or other listing or issuing

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      organization, in respect of which Exchange Requirements do not prescribe specific standards or
      requirements, shall comply with the provisions of the relevant by-laws and regulations of such stock
      exchange, clearing or service corporation, or other listing or issuing organization in effect from time
      to time to the extent not inconsistent with Exchange Requirements.
(2)   For the purposes of this Rule, recognized stock exchanges, clearing or services corporations, or
      other listing or issuing organizations are as follows:
      (a)   Self Regulatory Organizations which are participants of the Canadian Investor Protection Fund;
      (b)   The Toronto Futures Exchange; and
      (c)   National securities exchanges registered with the U.S. Securities and Exchange Commission
            (excluding the NASD)
      or such other exchange, corporation or organization as may be approved by the Exchange.

F.2.09 – (Repealed)

F.2.10 – (Repealed)

F.2.11 – Market Corner
(1)   No member, approved person or person associated with or employed by a member shall effect,
      cause to be effected, or assist in effecting or causing to effect, a market corner.
(2)   For the purposes of this Rule, the term "market corner" shall mean:
      (a)   any arrangement involving the purchasing, selling or other dealing in any securities, including
            shares, rights and warrants, which are listed on the Exchange; and
      (b)   by which any person, or group of persons acting in concert by virtue of an agreement,
            arrangement, commitment or understanding; and
      (c)   acquires direct or indirect beneficial ownership of, or exercises control or direction over, any or
            all of the particular securities referred to in this Rule ; and
(3)   where the effect of the arrangement is, or will likely be, that the trading price, as reflected through
      the facilities of the Exchange, of the particular securities referred to in this Rule , or will likely be,
      abnormally influenced or arbitrarily dictated by the person or group of persons referred to in this, and
      is, or will likely be, distorted or artificial in that the said trading price deviates, or will likely deviate,
      notably from that equilibrium trading price which would otherwise reflect only the basic forces of the
      supply of, and the demand for, the aforesaid securities
(4)   Any member, partner, officer, director or approved person of a member which or who has, or ought
      reasonably to have had, knowledge of the arrangement referred to this Rule and who has
      authorized, permitted or acquiesced in the said arrangement shall be deemed, for the purpose of this
      Rule above, to have assisted in effecting the market corner.
(5)   For the purpose of this Rule above, the term "control or direction" shall include but not be limited to
      refusing to execute sell orders, the use of discretionary accounts respecting and taking options on
      any of the particular securities referred to in this Rule.

F.2.12 – Remuneration
(1)   The remuneration of an approved person excluding an investment representative may include a
      portion of the commission earned and shall be at the discretion of the member, provided all
      remuneration paid is recorded through the books of the member.
(2)   No approved person or employee of the member shall accept or permit any associate to accept,
      directly or indirectly, any remuneration, gratuity, advantage, benefit or any other consideration from
      any person other than the member or its affiliates or its related companies in respect of the activities


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      carried out by such approved person or employee on behalf of the member or its affiliates or its
      related companies and in connection with the sale or placement of securities on behalf of any of
      them.

F.2.13 – Business Restricted
A registered representative may only transact trades in securities for the member by whom he is
employed.

F.2.14 – Arrangements with Clients
(1)   Approved persons shall not:
      (a)   give any form of guarantee to a client in connection with the account of the client;
      (b)   lead any client to believe that he will not suffer loss as a result of opening an account or as a
            result of any dealings in connection with the account;
      (c)   make any loans to a company which is listed on the Exchange or has applied for listing on the
            Exchange without first advising the member by whom they are employed; or
      (d)   accept a share in the profits of the account of any client or have any arrangement with any
            person whatsoever involving an allocation of profits or losses accruing to any account including
            the opening of any account in which an approved person has any direct or indirect interest.
(2)   Registered representatives shall not:
      (a)   subject to Rule F.3.00, handle a discretionary order or exercise any discretion in the handling of
            an account of a client of a member; or
      (b)   make any loans to clients for the purposes of making securities investments.
(3)   Partners, directors and officers of a member shall not:
      (a)   open joint accounts with clients except if the member firm by which they are employed has
            been advised prior to the arrangement;
      (b)   make loans to clients without advising the member firm by which they are employed and
            advising the Exchange of any such arrangements.
(NB: It should be noted that it is a requirement of all listed companies who have received loans from
registrants, that these be publicly disclosed)

F.2.15 – Regulation of Advertising
(1)   Interpretation: For the purpose of this Section,
      (a)   "advertisement" or "advertising" includes any promotional material used in any television and
            radio commercials or commentaries, video, telephone or cassette recording, motion picture,
            slide presentation, newspaper or magazine advertisements or commentaries, sign or billboard
            and any material promoting the services or business of the member, affiliated corporation, or
            approved person, and any other sales literature disseminated through the communications
            media;
      (b)   "sales literature" includes record, videotapes and similar material, market letters, research
            reports and all other material, except preliminary prospectuses, designed for, or used in a
            presentation to a client, or a prospective client, whether such material is given or shown to him
            and includes a recommendation in respect of a security;
      (c)   "security" includes the definition of security as defined in the applicable securities laws and
            amendments thereto and the definition of commodity futures contract or commodity futures
            option as defined in Rule J.



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(2)   Guidelines: No member, affiliated corporation or approved person shall issue, participate in or allow
      his name to be used in connection with any advertisement or sales literature regarding any security
      which:
      (a)   contains an untrue statement, or is otherwise false or misleading;
      (b)   omits any material fact or assumption and fails to state how information more fully describing
            these facts or assumptions may be obtained;
      (c)   contains an unjustified promise of specific results;
      (d)   uses unrepresentative or misleading statistics;
      (e)   contains any opinion or forecast of future events which is not clearly labeled as such;
      (f)   fails to fairly present the potential risks to the client and fails to state how information is more
            fully describing such risks may be obtained; or
      (g)   is detrimental to the interests of the public, the Exchange or its members.
(3)   Prior Approval: All advertisements or sales literature issued by a member, affiliated corporation or
      approved person shall receive prior approval from a designated partner, director, branch manager,
      or officer so authorized by the member or related company.
(4)   Retention for Records: A copy of all advertisements or sales literature shall be retained for record
      purposes by the member, affiliated corporation or approved person for two years from the date of
      publication and shall contain the names of the persons preparing the material and approving its
      publication.
(5)   Submission of Advertisements: Where the Exchange has adjudged that a member, affiliated
      corporation or approved person has contravened subsection (2) hereof, the Exchange may, after
      giving member, affiliated corporation or approved person an opportunity to be heard, order that the
      member, affiliated corporation or approved person shall deliver to the Exchange at least seven days
      before it is used, copies of all advertisements or sales literature which the member, affiliated
      corporation or approved person proposes to use in connection with trading in securities.
(6)   Prohibition of Advertising: Where the Exchange has issued an order pursuant to subsection (6), the
      Exchange may prohibit the use of the advertisement or sales literature so delivered or may require
      that deletions or changes be made prior to its use.
(7)   Rescission or Variation of Order: Where an order has been made pursuant to subsection (6), the
      Exchange, on application of the member, affiliated corporation or approved person at any time after
      the date thereof, may rescind or vary the order where in its opinion it is not contrary to the interest of
      the public, the Exchange or its members to do so.

F.2.16 – The Conduct & Practices Handbook for Securities Industry Professionals
Registered representatives and other employees of a member authorized by law to trade in securities
with the public are required to have in their possession an up-to-date copy of The Conduct and Practices
Handbook.

F.2.17 – Directorship, etc. Prohibited
(1)   No approved person, employee of a member or any person who is required to apply and has applied
      to the Exchange to become an approved person or an employee of a member except a director,
      officer or partner of a member without the prior approval of the Exchange may be a director of any
      company listed on the Exchange, without the prior approval of the Exchange;
(2)   For the purposes only of this Rule, and/or Rules F.2.19 and F.2.20, the word "member" shall be
      deemed to include an individual, corporation or partnership who or which, performs the same
      functions as a member but who is not a person under the jurisdiction of the Exchange.



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F.2.18 – Specific Infractions
Without in any way limiting the generality of the foregoing, the following acts or omissions are infractions:
(1)   Making a fictitious transaction;
(2)   Giving or accepting an order which a person knows or ought to know does not involve a change of
      ownership of the shares or securities in question;
(3)   Misleading or attempting to mislead the Board or the Exchange, any committee of the Exchange or
      the Board, or any Exchange officer, Exchange employee or person appointed by the Exchange or
      Board;
(4)   Either:
      (a)    purchasing, selling, or offering to purchase or sell securities where the person knows or ought
             to know that the effect of such a purchase or sale would be to unduly disturb the normal
             position of the market or to create an abnormal market condition in which market prices do not
             fairly reflect current market values; or
      (b)    being a party to any plan or scheme to commit the infraction set out in subclause (a) above;
(5)   Confirming a transaction when no trade has been executed;
(6)   Indiscriminate or improper solicitation of orders either by telephone or otherwise;
(7)   High pressure or other trading tactics of a character considered undesirable;
(8)   Using or participating in the use of any manipulative or deceptive method of trading where the
      person knows or ought to know the nature of the method;
(9)   Violation of any statute applicable to trading in securities;
(10) Placing an order with another Member to buy or sell a security from or to the person placing the
     order or accepting such an order where the person accepting it knows or ought to know the nature of
     it.

F.2.19 – Property Interest Sale
No approved person, an employee of a member or any person who is required to apply and has applied
to the Exchange to become an approved person or an employee of a member shall be permitted to sell,
transfer or assign, or be part of a group selling, transferring or assigning any property interest, or other
asset which, pursuant to a Listing Agreement or Exchange Requirements, would require prior approval of
the Exchange, to any company listed on the Exchange, or be permitted to receive, directly or indirectly,
any compensation whatsoever (including a finders fee or commission) in respect of any such sale,
transfer or assignment, without the prior approval of the Exchange.
            Rule F.2.19 amended August 1, 2001

F.2.20 – Property Interest Acquisition
No approved person, employee of a member or any person who is required to apply and has applied to
the Exchange to become an approved person or an employee of a member shall be permitted to acquire,
directly or indirectly, any property interest or other asset from any company listed on the Exchange or be
permitted to receive, directly or indirectly, any compensation whatsoever (including a finders fee or
commission) in respect of such disposition, or hold, directly or indirectly, any interest in any property or
other asset acquired or held by any company listed on the Exchange, without the prior approval of the
Exchange.
            Rule F.2.20 amended May 4, 2001




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F.2.21 – Responsibility of Members and Approved Persons
Notwithstanding the provisions of Rule F.2.03, a member and any approved person of a member may be
held, by a Hearing Committee, to be fully responsible for the acts and omissions as a member or
approved person of a member and if any act or omission be held to be one which if done or omitted by
the member would subject him to any of the penalties provided for in Rule E. 1.20 then the member and
any approved person of the member may be penalized as if the act or omission had been done or omitted
by him directly.

F.2.22 – Responsibility of Supervisors
Each member, approved person or employee of a member or affiliated company who is a supervisor or
who has authority or supervision over or responsibility to the member for any employee of the member, or
an affiliated company of the member, shall fully and properly supervise such employee as may be
necessary to ensure their compliance with the Exchange Requirements.

F.2.23 – Assessments and Fines
(1)   A member shall, within 30 business days of the date set for payment, pay to the Exchange all
      subscriptions, assessments dues, fines and penalties imposed or charged in accordance with
      Exchange Requirements, unless the time for payment is extended by the Exchange.
(2)   The Board shall have the power to make an assessment in any fiscal year upon each trading
      member for those assessments, general or specific, applied by the Canadian Investor Protection
      Fund to the Exchange.
         Rule F.2.23 amended August 1, 2001

F.2.24 – Service Fees
No member shall impose on any client or deduct from the account of any client any service fee or service
charge relating to services provided by the member for the administration of that client's account unless
prior written notice is given on the opening of such account or such notice is given not less than sixty
days prior to the imposition or revision of such charge. Interest charged on the operation of client
accounts and commissions charged for execution of trades are excluded from regulation under this Rule.
Special services requested by a client, for which a charge is agreed to, are also exempt under this Rule.

F.2.25 – Commissions and Charges for Services
All commissions and charges for services are negotiable.

F.2.26 – Dealings With Clients Located in the United Kingdom
A member, before accepting an order for the purchase or sale of a security classified as a venture listing
by the Exchange on behalf of a client located in the United Kingdom, shall advise his client that the
security is classified as a venture listing by the Exchange and thereby carries a high degree of risk. The
Exchange may identify classes of clients for whom this requirement does not exist.

F.2.27 – Mutual Fund Incentives
(1)   No member, affiliate or related person in respect of a member, or partner, director, officer, registered
      representative or employee of such member, affiliate or related person, shall accept from any person
      or entity, directly or indirectly, any non-cash sales incentive in connection with the sale or distribution
      of mutual fund products.
(2)   No member, affiliate or related person in respect of a member, shall pay to any partner, director,
      officer, registered representative or employee of such member, affiliate or related person any non-
      cash sales incentive in connection with the sale or distribution of mutual fund products.
(3)   Nothing in this Rule shall prohibit a member, affiliate or related person in respect of a member or any


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      partner, director, officer, registered representative or employee of such member, affiliate or related
      person from accepting or paying, as the case may be:
      (a)   non-cash sales incentives earned or awarded for the internal incentive programs of such
            member for which eligibility is determined with respect to all services and products offered by
            the member;
      (b)   commissions or fees payable in cash and calculated with reference only to particular sales or
            volumes of sales of mutual fund securities;
      (c)   service fees or trailing commissions;
      (d)   marketing materials; or
      (e)   reasonable business promotion activities that are undertaken in the normal course and take
            place in the locale where the recipient is employed or resides.
(4)   For the purposes of this section, the term "non-cash sales incentive" shall include, without limitation,
      domestic or foreign trips, goods, services, gratuities, advantages, benefits or any other non-cash
      consideration.
(5)   The provision of this section shall not apply to an affiliate of a member, or a Partner, Director,
      Officer, Registered representative or employee of an affiliate, where the affiliate has been excluded
      as a related company of the member or exempted from compliance as a related company with all or
      any of the rules.

F.2.28 – Client Priority During Distributions
During any distribution offered for sale to the public, a member shall give priority to orders for the
securities from clients of the member or for the accounts of such clients. For the purposes of this Rule,
the term "client" shall not include accounts of any member, approved person, employee of a member or
any of their respective associates.
During such distribution a member shall make a bona fide offering of the total amount of such
participation to public investors. The term "public investors" does not include any officer or employee of a
bank, insurance company, trust company, investment fund, pension fund or similar institutional body or
the immediate families of any such officer or employee of any such institution regularly engaged in the
purchase or sale of securities for such institution, unless such sales are demonstratively for bona fide
personal investment in accordance with the person's normal investment practice.

F.2.29 – Client Priority for Private Placements
(1)   Clients' orders shall have priority over Pro Group orders for a private placement (as defined in
      section 1.01) if:
      (a)   the member has entered into any agreement, commitment, arrangement or understanding with
            the issuer to act as advisor, agent or underwriter or member of a selling group in respect of the
            private placement or subsequent offering of securities; or
      (b)   ownership by the Pro Group exceeds 20% of the total issued and outstanding securities of the
            issuer; and
(2)   Where client priority applies pursuant to subsection (1), the Pro Group shall not be entitled to
      purchase any part of a private placement unless reasonable efforts have been made to offer the
      securities to eligible clients of the member where such an investment would be suitable for such
      clients.
(3)   For the purposes of subsection (1), a client order is valid if received from an existing client and the
      client qualifies to purchase the securities based on a prospectus exemption under the applicable
      securities laws.
(4)   Where subsection (1) is applicable, each member shall have in place internal policies and


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      procedures to fulfill the requirement in subparagraph (1)(b). Such policies and procedures shall
      include:
      (a)   where permitted by applicable securities laws, the issuance of a press release by the issuer
            announcing the private placement, the member's name and the price at which the private
            placement may be made, in advance of the Pro Group purchasing any part of the private
            placement;
      (b)   setting a suitable time period, taking into account the type of issue and the size of the client list,
            between the announcement of a private placement and the time at which it becomes available
            for purchase by the Pro Group;
      (c)   requiring that employees of members make reasonable efforts to inform eligible clients of the
            private placement by mail, telephone, electronically or any other reasonable and practical
            means and that the member document the efforts used and retain such documentation for a
            period of two years after completion of the private placement.
(5)   When determining which clients will be eligible for a private placement, consideration shall be given
      to:
      (a)   the investment objectives of the client;
      (b)   the risk inherent in the securities;
      (c)   the investment sophistication of the client;
      (d)   the client's resources relative to the required investment;
      (e)   applicable law relating to marketing and distribution of the private placement;
      (f)   the extent of due diligence undertaken by the member with respect to the private placement;
            and
      (g)   the client's eligibility under securities laws to utilize the exemption(s) under which the private
            placement is being made.

F.2.30 – Disclosure of Pro Group Holdings
(1)   Subject to subsection (2), members shall report the aggregate holdings of the Pro Group in each
      security listed on the Exchange, The Toronto Stock Exchange, the Montreal Exchange, The
      Winnipeg Stock Exchange and the Canadian Dealing Network in such form and at such intervals as
      may from time to time be prescribed by the Exchange.
(2)   All holdings of the Pro Group must be reported with the exception of holdings of individuals outside
      their respective member firms that are (in the aggregate) both less than 10,000 shares and have a
      market value of less than $25,000.
(3)   Members shall disclose the holdings of the Pro Group of the member of every class of an issuer's
      voting or equity securities which in the aggregate exceed 10% of the issued and outstanding
      securities of that class as calculated by the Exchange:
      (a)   to clients of the member when making recommendations or giving advice (on solicited trades)
            relating to securities of the issuer;
      (b)   in the member's research reports relating to the issuer; and
      (c)   on all trade confirmations relating to transactions in the securities of the issuer.
(4)   The report of aggregate holdings of the Pro Group as required by subsection (1) shall be filed no
      later than ten days after the date as of which the member is required to calculate such holdings.




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F.2.31 – Pro Group Hold Period
(1)   The holdings of the Pro Group that were issued subject to a statutory hold period:
      (a)   cannot be qualified for resale by way of prospectus unless the securities were issued pursuant
            to a private placement and the issuance of the private placement was accepted by an
            exchange and the price at which the securities were sold is greater than 80% of the public
            offering price;
      (b)   cannot be qualified for resale by way of prospectus unless the Pro Group holdings are less than
            20% of any class of voting or equity securities, after taking into account the issuance of the
            private placement securities; and
      (c)   may be disposed of, subject to applicable securities laws, pursuant to an arm's length merger
            or take-over bid subject to the consent of the exchange upon which the issuer's securities are
            listed.

F.2.32 – Restrictions on Pro Group Ownership
(1)   The Pro Group shall be deemed to be in a position of influence in respect of an issuer or any of its
      affiliates within the meaning of the applicable securities laws if:
      (a)   the Pro Group exercises influence over the issuer or its management;
      (b)   the issuer or its management exercises influence over the Pro Group;
      (c)   both the Pro Group and the issuer or its management exercise influence over the same third
            person or company;
      (d)   the same third person or company exercises influence over both the Pro Group and the issuer
            or its management.
(2)   For the purposes of this section, the Pro Group, whether alone or in combination with one or more
      other persons or companies or through direct or indirect beneficial ownership of or the exercise of
      control or direction over voting securities, is deemed to exercise influence over an issuer if:
      (a)   the Pro Group exercises directly or indirectly any material or controlling influence over the
            management, policies, business operations or affairs of the issuer; or
      (b)   members of the Pro Group constitute 20% or more of the Board of Directors of the issuer or
            related issuer;
      (c)   the Pro Group is entitled to nominate 20% or more of the Board of Directors of the issuer or
            related issuer; or
      (d)   the Pro Group, directly or indirectly, whether alone or in combination with one or more persons
            or companies, beneficially owns or exercises direction or control over:
      (e)   a sufficient number of securities so as to effect materially the control of that issuer, or
      (f)   more than 20% of any class or series of voting securities of an issuer except where there is
            evidence showing that the holding of those securities does not affect materially the control of
            that other person or that issuer.
(3)   A member shall not act as an advisor, agent, underwriter or as a member of a selling group with
      respect to a distribution of securities of an issuer where the holdings of the Pro Group are such that
      the member would otherwise be deemed to be in a position of influence in respect of such issuer
      unless:
      (a)   a portion of the distribution is underwritten by at least one or more independent member(s); and
      (b)   the portion to be underwritten by one or more independent member(s) is at least equal to the
            amount of the distribution that is underwritten by the member and any related issuer of the
            member.


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RULE F.3.00 – SPECIFIC PROVISIONS RESPECTING MANAGED ACCOUNTS AND DISCRETIONARY
ACCOUNTS

F.3.01 – Definitions
"Co-mingled Funds Investment Portfolio" means investment portfolio of a bank, trust company, loan
company, insurance company, mutual fund or pension plan, including a profit or other retirement savings
or similar plan but excluding a self-administered retirement savings plan.
"Discretionary Account" means an account in which the client gives a partner, director or officer of a
member or registered representative of a member (subject to the provisions of Rule F.3.02 and Rule
F.3.04) discretion which may be complete or within specific limits as to the purchase and sale of securities
including selection, timing and price to be paid or received.
"Managed Accounts" means an investment portfolio of a client managed by a member or an affiliated
company through discretionary authority granted by the client on a continuing basis, whether in
consideration of fees or otherwise, where:
      (a)   the investment portfolio is a co-mingled funds investment portfolio; or
      (b)   the management of the investment portfolio by a member or affiliated company arises because
            a member or affiliated company has held itself out or has described itself as having special
            skills or ability regarding the management of investment portfolios,
but shall not include either:
      (a)   the management of an investment portfolio on a temporary basis at the written request of a
            client because of the inability of a client to communicate instructions by reason of absence,
            illness or other reasonable cause, or
      (b)   the management of an investment portfolio on a continuing basis by a partner, director or
            officer of a member on the basis of a personal relationship between the partner, director or
            officer and a client, where the management was in effect at the time this subclause came into
            effect.
"Portfolio Manager" means any partner, director, officer or approved person of a member or affiliated
company approved by the Exchange to manage managed accounts.
"Responsible Person" means the member, any affiliated company, and every individual who is a partner,
director, officer or approved person of any member or affiliated company of the member or such affiliated
company or such approved person or individual who participates in the formulation of, or has access prior
to implementation of, investment decisions made on behalf of or advice given to the managed account.
"Associate Portfolio Manager" means any partner, director, officer or employee of a member or affiliated
company designated and approved by the Exchange to manage managed accounts under the
supervision of an approved portfolio manager.

F.3.02 – Discretionary Accounts
(1)   No registered representative or employee of a member other than a member or a director or officer
      or partner of a member shall be permitted to accept authorization for a discretionary account from a
      client of a member.
(2)   No member or a director or officer or partner of a member or registered representative of a member
      shall exercise any discretionary power with respect to a client's account unless the client has given
      prior written authorization and the account has been accepted in writing by the member or by a
      partner or director or officer designated under Rule F.1.00.
      (a)   Acceptance of a discretionary account must be evidenced by a document in writing which shall
            be available for examination and signed on behalf of a member by a partner, director, or officer
            of a member.

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      (b)   The authorization given to the member shall specify the investment objectives of the client with
            respect to the particular managed/discretionary account. Each authorization or acceptance may
            be terminated by notice in writing by the member or the client, as the case may be. Notice of
            termination of acceptance by a member shall be effective on date specified therein and which
            date shall not be earlier than thirty days from the mailing of the written notice to the client.
(3)   Any order relating to a discretionary account shall be approved by the member or by a partner or
      director or officer of a member before entry. Every discretionary order must be identified as
      discretionary at the time of entry.

F.3.03 – Compliance
Each member that manages a managed/discretionary account shall comply with the provisions of Rule
F.3.00.

F.3.04 – Managed Accounts
No member, or any person acting on its behalf, shall exercise any discretionary authority with respect to a
managed account unless:
(1)   the individual who is responsible for the management of the account has been designated as a
      portfolio manager or associate portfolio manager;
(2)   the client has given prior written authorization to the member to manage the account. The
      authorization given to the member shall specify the investment objectives of the client with respect to
      the particular managed account. Each authorization or acceptance may be terminated by notice in
      writing by the member or the client, as the case may be. Notice of termination of acceptance by a
      member shall be effective on date specified therein and which date shall not be earlier than thirty
      days from the mailing of the written notice to the client; and
(3)   the member, as the case may be, has accepted the managed account. Acceptance of a managed
      account must be evidenced by a document in writing which shall be available for examination and
      signed on behalf of a member by a partner or director or officer of a member, as the case may be.

F.3.05 – Designation of a Supervised Authority
A member shall designate in writing one or more partners, directors or officers who shall assume
supervisory responsibility for each managed/discretionary account and the client shall be advised in
writing as to which of those individuals supervise a particular managed/discretionary account. The failure
to advise the client in writing of the name of the individual supervising his managed/discretionary account
shall not vitiate the authority of a member to manage the client's account.

F.3.06 – Designation as a Portfolio Manager
Application for designation and approval as a portfolio manager shall be made to the Exchange and may
be granted where the applicant:
(1)   is a partner, director, officer or employee of a member; and
(2)   makes application therefore in such form as the Exchange may from time to time prescribe; and
(3)   has successfully completed either the Canadian Investment Management course, Parts I and II, or
      all levels of the Chartered Financial Analysts course by the Association for Investment Management
      and Research; and
(4)   is registered and approved as a salesperson (Registered representative):
      (a)   has had three or more years experience as an associate portfolio manager; or
      (b)   has had three or more years experience as a registered salesperson (Registered
            representative) and two years experience as an associate portfolio manager; or


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      (c)   has had three or more years experience as a research analyst for a member firm of a self-
            regulatory organization and two or more years experience as an associate portfolio manager;
            or
      (d)   has been granted registration by a provincial securities administrator as a portfolio manager,
            investment counsel or any equivalent registration category, provided that applicants requesting
            approval under this subsection (4)(d) have met the standard minimum provincial proficiency
            requirements; and
(5)   has, at the time of application, and has had for a period of not less than one year prior to such
      application, assets having an aggregate value of not less than $5,000,000.00 under his or her direct
      administration on a discretionary basis; and
(6)   has obtained from the member employing the applicant, a letter of recommendation signed by the
      chief executive officer and the partner, director or officer responsible for the portfolio management
      activities of the member firm.

F.3.07 – Designation as Associate Portfolio Manager
Application for designation and approval as an associate portfolio manager shall be made to the
Exchange and may be granted where the applicant:
(1)   is a partner, officer, director or employee of a member or affiliated company; and
(2)   makes application therefore in such form as the Exchange may from time to time prescribe; and
(3)   has successfully completed either the Canadian Investment Management course, Parts I and II, or
      all levels of the Chartered Financial Analysts course administered by the Association for Investment
      Management and Research; and
(4)   is registered and approved as a salesperson and
      (a)   has had a minimum of two years experience as a registered and practicing registered
            representative; or
      (b)   has had a minimum of two years experience as a research analyst for a member firm of a self-
            regulatory organization; and
(5)   has obtained from the member employing the applicant, a letter of undertaking that the associate
      portfolio manager will be under the direct supervision of a qualified portfolio manager while
      exercising discretionary authority with respect to any managed account. Such letter must be signed
      by the partner, director or officer responsible for the portfolio management activities of the member
      firm.

F.3.08 – Portfolio Management Committee
Each member or affiliated company that has managed accounts shall form a Portfolio Management
Committee to be composed of two or more individuals who shall be partners, directors or officers of a
member and at least one of whom shall not be a portfolio manager of the member or affiliated company,
as the case may be. The Portfolio Management Committee shall review, not less than once in each
quarter of any twelve month period, the investment policies of the member or affiliated company in
respect of its managed accounts and record the results of each review in writing.

F.3.09 – Quarterly Review of the Managed Accounts
Each managed account shall be reviewed, at least four times in each twelve month period, by a
responsible person of the member or affiliated company to ensure that the investment objectives of the
client are diligently pursued and that the managed account is being conducted in accordance with the
rules of the Exchange.




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F.3.10 – Investment Policies
The member or affiliated company shall maintain standards directed to ensuring fairness of the allocation
of investment opportunities amongst its managed accounts and a copy of the policies established shall be
furnished to each client and to the Exchange upon demand.

F.3.11 – Fees Agreement
A member or affiliated company may charge each client directly for services rendered to a managed or
discretionary account but the charge shall not be computed in terms of the value or volume of the
transactions or contingent upon profits or performance.

F.3.12 – Separate and Distinct Supervision for Each Managed Account
A member or affiliated company shall ensure that each managed account is supervised separate and
distinct from other managed accounts provided that, subject to compliance with respect to the
commission rate structure, an order placed on behalf of one managed account may be pooled with that of
another managed account.

F.3.13 – Ethics
The member or affiliated company shall obtain an undertaking from each responsible person not to trade
for his or its own account, as the case may be, or knowingly to permit or arrange for any associate to
trade in reliance upon information as to trades made or to be made for any managed account. The
member or affiliated company shall establish and maintain procedures satisfactory to the Exchange,
designed to disclose when a responsible person or an associate of a responsible person has contravened
an undertaking.

F.3.14 – The Member or Affiliated Company's Mandate
A member or affiliated company shall not, without the written consent of the client, knowingly cause any
managed account to:
(1)   invest in a company in which a responsible person or an associate of a responsible person is an
      officer or director, and no investment of that nature shall be made even with the written consent of
      the client unless the office or directorship shall have been disclosed to the client;
(2)   purchase or sell securities of any company from or to the account of a responsible person, or from or
      to the account of an associate of a responsible person; or
(3)   make a loan to a responsible person or to an associate of a responsible person.




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RULE F.4.00 – CLIENTS' FULLY PAID SECURITIES

F.4.01 – Segregation Requirements
(1)   Subject to any special agreement with a client, all fully paid or excess margin securities held by a
      member for a client shall be segregated and identified as being held in trust for such client in
      accordance with Rule F.4.00 and shall at all times be kept available for such client on demand. For
      the purposes of this Rule in respect thereto, a client means any person who maintains an account
      with a member.
(2)   The securities of all clients of a member held in accordance with this Rule may be segregated in bulk
      for all such clients, other than those clients whose securities are held apart from all other securities
      pursuant to a written safekeeping agreement.
(3)   The Exchange may prescribe the manner in which securities owned or held by a member for the
      account of a client are to be segregated and held including, without limitation:
      (a)   the manner in which the amount or value of securities to be segregated shall be calculated; and
      (b)   the locations in which securities may be held including, without limitation, depositories or other
            financial institutions.

F.4.02 – Acceptable Depositories for Segregation of Securities - External Locations
For the purposes of Rule F.4.01(1) and Rule F.4.01(2), securities held beyond the physical possession of
the member may be segregated and held in trust for clients of a member or segregated and held for a
member, as the case may be, in acceptable securities locations (Form 1) provided that the written terms
upon which such securities are deposited and held beyond the physical possession of the member
include provisions to the effect that:
(1)   no use or disposition of the securities shall be made without the prior written consent of the member;
(2)   certificates representing the securities can be delivered to the member promptly on demand or,
      where certificates are not available and the securities are represented by book entry at the location,
      the securities can be transferred either from the location or to another person at the location
      promptly on demand; and
(3)   the securities are held in segregation for the member or its clients free and clear of any charge, lien,
      claim or encumbrance of any kind in favour of the depository or institution holding such securities.

F.4.03 – Acceptable Internal Locations for Segregation of Securities
For the purposes of Rule F.4.00, the securities held within the physical possession or control of the
member may be segregated and held in trust for clients of the member or segregated and held for the
member, as the case may be, in the following prescribed locations:
(1)   Internal Storage
      (a)   All internal storage locations designated in the member's ledger of accounts for which adequate
            internal accounting controls and systems for safeguarding of securities held for clients are
            maintained and which reflect unencumbered security positions in the possession and control of
            the member;
      (b)   All securities in transit between internal storage locations, for which adequate internal controls
            are maintained, provided that securities in transit for more than five business days may not be
            considered as being in the possession and control of a member for purposes of segregation.
(2)   Transfer Locations
      (a)   All securities which are in the process of being transferred by a registered or recognized
            transfer agent provided that:


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      (b)   if such securities are with transfer agents in Canada and have not been received within twenty
            business days of delivery, the member shall obtain a confirmation of the position receivable
            from the transfer agent; or.
      (c)   if such position remains unconfirmed after forty-five business days of delivery, the member
            must transfer the position to its difference account;
      (d)   if such securities are with transfer agents in the United States, the member must confirm the
            receivable after forty-five business days of delivery and transfer the position to its difference
            account after seventy business days of delivery if the position has not been confirmed;
      (e)   if such securities are with transfer agents outside Canada and the United States, the member
            must confirm the position receivable after seventy business days of delivery and transfer the
            position to its difference account after one hundred business days of delivery if the position has
            not been confirmed;
      (f)   if the positions represented by such securities are required to be transferred to the member's
            difference account, such securities shall not be considered to be in the possession and control
            of the member for the purposes of segregation.

F.4.04 – Non-Negotiable Securities
Securities which are restricted or which are non-negotiable or which cannot be made fully negotiable
solely by signature or guarantee of the member shall be deemed not to be segregated unless such
securities are registered in the name of the client (or the name of a person requested by the client) on
whose behalf they are being held in an acceptable segregation location.

F.4.05 – Bulk Segregation Calculation
A member which holds securities of clients in bulk segregation in accordance with Rule F.4.01 shall
determine, for all accounts of each client, the following amounts:
(1)   the quantity of all securities held for such accounts which are part of a qualifying hedge position;
(2)   the net loan value of all securities held for such accounts less (or plus in the case of a credit) the
      aggregate debit cash balance in the accounts; and
(3)   the market value of all securities, other than securities referred to in (1) above, not eligible for margin
      under Rule G minus the aggregate amount, if any, by which such accounts are under-margined as
      calculated in (2) above,
which amounts shall represent the amounts of securities with loan value or market value, as the case
may be, of securities required to be segregated by the member in respect of such client's accounts
provided, however, that the amount of securities required to be segregated by a member in respect of the
accounts of a client shall not be greater than the market value of the securities held for such accounts.
(4)   For the purposes of this Rule F.4.05, net loan value of a security shall mean in respect of:
      (a)   long positions - the market value of the security less any margin required;
      (b)   short positions - the market value of the security plus any margin required expressed as a
            negative number; and
      (c)   short security option positions - any margin required expressed as a negative number.
(5)   For the purposes of this Rule F.4.05, a "qualifying hedge position" for all accounts of each client,
      shall mean in respect of:
      (a)   a long position in a security; or
      (b)   a short position in a security issued or guaranteed by the same issuer of the security referred to
            above; where
            (i)   the long position is convertible or exchangeable to the securities of the same class and

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                   number of the securities held in the short position; and
            (ii)   the member is using the long position as collateral to cover the short position.

F.4.06 – Calculation
A member may satisfy its obligations to segregate client securities under Rule F.4.01 by segregating in
bulk, for all clients, the number of securities determined as follows:
(1)   Equity Securities
      (a)   The aggregate loan value and market value of each class or series of security required to be
            segregated for each client as determined under Rule F.4.05 divided by the loan or market
            value, as the case may be, of one unit of the security, shall be the number of such securities
            required to be segregated.
(2)   Debt Securities
      (a)   The aggregate loan value and market value of each class or series of security required to be
            segregated or each client as determined under Rule F.4.05 divided by the loan or market value,
            as the case may be, or each $100 of the principal amount of the security, multiplied by 100 and
            rounded to the lowest issuable denomination, shall be the principal amount of such securities
            required to be segregated.
      (b)   In determining which securities shall be used to satisfy the segregation requirements in respect
            of each such client's positions, the member may select among all of the securities carried for
            the client's accounts, subject to the restrictions of any applicable securities laws including,
            without limitation, a requirement that fully-paid securities in a cash account be segregated
            before unpaid securities.
      (c)   Securities which are required to be segregated but which have been sold by the member on
            behalf of a client shall remain segregated until one business day prior to settlement or value
            date. Securities which are required to be segregated for a client shall not be removed from
            segregation as a result of the purchase of any securities by such client until settlement or value
            date.

F.4.07 – Frequency and Review of Calculation
(1)   A member shall determine at least twice weekly the securities required to be segregated according
      to the calculations set out in Rule F.4.05 and F.4.06.
(2)   Each member shall review, on a daily basis, compliance with segregation requirements for its clients'
      securities according to the latest determination of such securities pursuant to this Rule with the view
      of identifying any deficiency in securities required to be segregated and correcting any such
      deficiency.

F.4.08 – General Restrictions
In complying with its obligation to segregate client securities in accordance with Rule F.4.01, each
member shall ensure that:
(1)   a segregation deficiency is not knowingly created or increased;
(2)   no securities held by the member are delivered against payment for the account of any client if such
      securities are required to satisfy the segregation requirements of the member in respect of any
      client; and
(3)   all free securities (i.e. fully paid and unencumbered securities which have not been sold or are not
      required for margin) received by the member shall be segregated.




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F.4.09 – Correction of Segregation Deficiencies
In the event that a segregation deficiency exists, including (without limitation) deficiencies arising in the
circumstances listed below, the member will take the most appropriate action required to settle the
segregation deficiency in the shortest time possible:
(1)   Call Loans: The member shall take action to recall such securities within the business day following
      the determination of the deficiency.
(2)   Securities Loans: The member shall call for the return of such securities from the borrower within the
      business day following the determination of the deficiency or shall borrow securities of the same
      issue to cover the deficiency and should such securities not have been received by the member
      within five business days following the determination of the deficiency, the member shall undertake
      to buy- in the borrower.
(3)   Inventory or Trading Account Short Positions: The member shall borrow securities of the same issue
      to cover the deficiency within the business day following the determination of the deficiency or shall
      undertake to purchase the securities immediately.
(4)   Client Declared Short Sales: The member shall borrow securities of the same issue to cover the
      deficiency within the business day following the determination of the deficiency or shall undertake to
      buy-in the securities within five business days.
(5)   Fails - Clients, members or Acceptable Institutions or Acceptable Counterparties: If such securities
      have not been received by the member within fifteen business days of the settlement date, the
      member shall borrow securities of the same issue to cover the deficiency or shall undertake to buy-in
      the securities.
(6)   Stock Dividends Receivable and Stock Splits: If such securities have not been collected within forty-
      five business days of the date receivable, the member shall obtain a written confirmation of the
      position receivable. If such position remains unconfirmed after the aforementioned forty-five
      business days, the member must transfer the position to its difference account.
(7)   Difference Accounts: Each member shall maintain a difference or suspense account in which shall
      be recorded all securities which have not been received by reason of irreconcilable differences or
      errors in any accounts. If securities recorded in a difference account have not been obtained by the
      member within thirty business days of the deficiency being recorded, the member shall borrow
      securities of the same class or series to cover the deficiency or shall undertake to purchase the
      securities immediately.




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RULE F.5.00 – CLIENT INDEBTEDNESS

F.5.01 – Member's Rights
Where a client is indebted to a member, all securities and other assets held by a member for an account
of a client shall be collateral security for the payment of the indebtedness as the same may exist from
time to time and a member shall have the right from time to time in his discretion, to raise money and/or
carry the securities in his general loans and subject to the provisions of Rule F.5.02 and Rule F.4.01 to
pledge and repledge and/or to loan the securities either separately or together with any security or
securities held by a member for an account of one or more other clients, or otherwise in a manner and in
an amount and for the purpose as it may deem advisable; and if a member shall deem it necessary for his
protection, he shall have the right in his discretion, to buy in any or all of the securities of which a client's
account may be short and/or, as the case may be, to sell out any or all of the securities held by him for an
account of a client, and, without in any way restricting the foregoing, a member shall also have the right in
every case to recover from a client the amount of his indebtedness to the member or part thereof
remaining unpaid, either with or without realization of the whole or any part of the securities held by a
member for an account of a client.
Nothing in this paragraph shall prejudicially affect the rights of members under any established usage,
custom or course of dealing in securities.

F.5.02 – Pledge Agreements
An agreement between a member and a client authorizing the pledging of shares, bonds or other
securities, does not justify the member in pledging more of the shares, bonds or other securities than is
fair and reasonable in view of the indebtedness of the client.




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RULE F.6.00 PROXIES

F.6.01 – Restrictions
No shares registered in the name of a member or his nominee, but not beneficially owned by the
member, shall be voted or a proxy to vote the shares given, unless the member forthwith sends or
delivers to the beneficial owner, at no expense to the beneficial owner:
(1)   a copy of the notice of the meeting, financial statements, all information circulars and any
      documents, other than the forms of proxy sent to shareholders for use in connection with the
      meeting; and
(2)   a written request for voting instructions from the beneficial owner stating that if voting instructions are
      not received at least 24 hours, excluding Saturday and holidays, before the expiry of the time within
      which proxies may be delivered to the company or its agent as specified in the notice calling the
      meeting, the member may, in his discretion, vote the shares, or appoint a proxy holder to vote the
      shares, at the meeting.

F.6.02 – Beneficial Ownership
No member shall vote or appoint a proxy holder to vote shares registered in his name or in the name of
his nominee if he does not know the beneficial owner of the shares.

F.6.03 – Written Instructions Required
The member shall vote, or appoint a proxy holder to vote, any shares referred to in Rule F.6.01 in
accordance with written instructions received from the beneficial owner.

F.6.04 – Obligation to Provide Proxy
A member shall, if requested by a beneficial owner, give to the beneficial owner or his nominee a proxy
enabling the beneficial owner or his nominee to vote any shares referred to in Rule F.6.01.

F.6.05 – Exceptions
This Rule does not apply to a member who is a trustee with respect to shares held under a trust
instrument which regulates the manner in which those shares are to be voted.




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RULE F.7.00 CASH ACCOUNTS

F.7.01 – Regular Cash Accounts
Settlement of each transaction in a regular cash account (other than DAP or RAP transactions referred to
in Rules F.7.02 and F.7.03) of a client shall be made by payment or delivery on the settlement date.

F.7.02 – Delivery Against Payment (DAP)
Settlement of a purchase transaction in an account for which the client has made arrangements with the
member on or before settlement date for delivery by the member against payment in full by the client shall
be settled on the later of:
(1)   settlement date or
(2)   the date on which the member gives notice to the client that the securities purchased are available
      for delivery.

F.7.03 – Receipt Against Payment
Settlement of a sale transaction in an account for which the client has made arrangements with the
member on or before settlement date for receipt of securities by the member against payment to the client
shall be settled on the settlement date.

F.7.04 – Payment
Payment by a client in respect of any cash account transaction may be by:
(1)   cash or other immediately available funds;
(2)   the application of the proceeds of the sale of the same or other securities held long in any cash
      account of the client with the member provided that the equity (excluding all unsettled transactions)
      in such account exceeds the amount of the transaction;
(3)   the transfer of funds from a margin account of the client with the member provided adequate margin
      is maintained in such account immediately before and after the transfer.

F.7.05 – Isolated Transactions
A client shall be permitted in an isolated instance to:
(1)   settle, when the equity (excluding all unsettled transactions) in such account does not exceed the
      amount of the transaction, a regular or DAP cash account transaction by the sale of the same
      security in any cash account of the client with the member;
(2)   transfer a transaction in a cash account to a margin account prior to payment in full; or
(3)   transfer a transaction in a DAP account to a margin account within 10 business days after settlement
      date.

F.7.06 – Account Restrictions
(1)   Regular cash accounts. When any portion of the money balance for a regular cash account of a
      client is outstanding twenty business days or more after settlement date, the client shall be restricted
      from entering into any other transactions (other than liquidating transactions) in any account of the
      client with the member, unless and until
      (a)   payment of any such money balance outstanding for twenty business days or more shall have
            been made,
      (b)   all open and unsettled transactions in any cash account of the client with the member have


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            been transferred in accordance with Rule F.7.07, or
      (c)   the client has executed a liquidating transaction in the account with the effect that no portion of
            the money balance in the account is outstanding twenty business days or more after settlement
            date.
(2)   Delivery Against Payment (DAP) Accounts. When any portion of the money balance for a DAP
      account transaction of a client is outstanding five business days or more (or, in the case of
      transactions of clients situate other than in continental North America, 15 business days) from the
      date on which the transaction is required to be settled in accordance with Rule F.7.02, the client
      shall be restricted from entering into any other transactions (other than liquidating transactions) in
      any other account of the client with the member, unless and until:
      (a)   such transaction has been settled in full or
      (b)   all open and unsettled transactions in any cash account of the client with the member have
            been transferred in accordance with Rule F.7.07.

F.7.07 – Transfer to Margin Account
The account restrictions in Rule F.7.06 shall not apply to the accounts of a client who:
(1)   immediately before the time the accounts would otherwise become restricted in accordance with that
      Rule does not have a margin account with the member, and
(2)   on or after the accounts becoming so restricted, transfers all open and unsettled transactions in any
      cash account of the client with the member to one or more newly established margin accounts of the
      client with the member, provided such margin accounts have been properly established by the
      completion of all necessary documentation and action and adequate margin is maintained in such
      account(s) immediately after such transfer.

F.7.08 – Acceptable Institutions and Others
Rule F.7.06 does not apply to the accounts of acceptable institutions, acceptable counterparties, non-
member brokers, approved affiliates or regulated entities.




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RULE F.8.00 MARGIN ACCOUNTS

F.8.01 – Taking Over a Margin Account
A member shall not accept the transfer from another member of a margin account which is not margined
in accordance with the Exchange requirements unless, at the time of the transfer, the receiving member
has in its possession sufficient collateral or cash of the client available to cover the deficiency in the
account.

F.8.02 – Margin Agreement
Each member shall have and maintain with each client having a margin account with him, a margin
agreement in writing defining the rights and obligations between them on such subjects as may be
determined from time to time by the Exchange and which if the Exchange requires, shall be in a form
satisfactory to it. Promptly after execution of each such margin agreement, the member shall send a copy
thereof to the client.

F.8.03 – Margin Agreement to Define
Every margin agreement between a member and a client shall define:
(1)   the obligation of the client in respect of the payment of his indebtedness to the member and the
      maintenance of adequate margin and security;
(2)   the obligation of the client in respect of the payment of commissions on securities bought and sold
      for his account;
(3)   the obligation of the client in respect of the payment of interest on debit balances in his account;
(4)   the extent of the right of the member to make use of free credit balances in the client's account;
(5)   the rights of the member in respect of raising money on and pledging securities and other assets
      held in the client's account;
(6)   the rights of the member in respect of the realization of securities and other assets held in the client's
      account and in respect of purchases to cover short sales, and whether any prior notice is required,
      and if notice be required, the nature and extent of it and the obligations of the client in respect of any
      deficiency;
(7)   the extent of the right of the member to utilize a security in the client's account for the purpose of
      making a delivery on account of a short sale;
(8)   the extent of the right of the member to use a security in the client's account for delivery on a sale by
      the member for his or its own account or for any account in which the member or a partner, director
      or officer of the member is directly or indirectly interested;
(9)   the extent of the right of the member to otherwise deal with securities and other assets in the client's
      account and to hold the same as collateral security for the client's indebtedness;
and shall provide that all trades entered into on behalf of the client shall be subject to the Exchange
Requirements and customs of the Exchange and the Clearing Corporation.
The term "member" where used in this section means and includes an affiliated company.

F.8.04 – Margin Agreement Conflict
No margin agreement shall contain any provision which conflicts with Exchange Requirements.
No margin agreement shall contain provisions that such agreement is governed by the laws of a
jurisdiction other than the jurisdiction where the member maintains the client's account to which such
agreement is applicable.


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         Rule F.8.04 amended August 1,2001

F.8.05 – Margin Account Settlement
Settlement of each transaction in a margin account of a client shall be made on or before the settlement
date by payment of the amount required under Rule F.8.06 to complete the transaction or by delivery of
the required securities, as the case may be.

F.8.06 – Payment
Payment by a client in respect of any margin account transaction may be by:
(1)   cash or other immediately available funds;
(2)   applying the loan value of securities to be deposited; or
(3)   applying the excess loan value of the account or in a guarantor's account.

F.8.07 – Margin Account Restrictions
Each margin account of a client which has become undermargined shall, after twenty business days of
the account becoming undermargined, be restricted only to trades which reduce the margin deficiency in
the account. Such restriction shall apply until the account is fully margined. Advancing funds or delivering
securities from the account of a client shall not be permitted as long as the account is undermargined or if
such advance or delivery would cause the account to become undermargined.




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RULE F.9.00 CLIENT ACCOUNT TRANSFERS

F.9.01 – Definitions
In this Rule, the expression:
"account transfer" means the transfer in its entirety of an account of a client with a member to another
member at the request or with the authority of the client;
"delivering member" means, in respect of account transfer, the member from which the account of the
client is to be transferred;
"receiving member" means, in respect of an account transfer, the member to which the account of the
client is to be transferred;
"partial account" means, in respect of an account transfer, any assets and balances in the account of a
client to be transferred from a delivering member to a receiving member which comprise less than the
total assets and balances held by the delivering member for that account; and
"recognized depository" means an approved clearing corporation or depository which has been
recognized by the Exchange.

F.9.02 – Account Transfers
Each account transfer shall be effected wherever possible through the facilities or services of a clearing
corporation or depository which has been recognized by the Exchange. The procedures to be followed for
such account transfers shall be as set out in Rule F.9.00. The transfers of partial accounts shall be
effected promptly by agreement between the receiving member and the delivering member on such
reasonable terms as may be settled between them.

F.9.03 – Authorization
(1)   Each receiving member which receives a request from a client to accept an account shall provide
      the client with an authorization to transfer account letter in a form approved by the Exchange.
(2)   On return of the authorization to transfer account letter, duly executed by the client, to the office
      designated by the receiving member, the receiving member shall promptly deliver such letter to the
      office designated by the delivering member together with a return date notification in a form
      approved by the Exchange.
(3)   In addition, the receiving member shall ensure that such additional forms or documents as may be
      required in order to transfer accounts held by trustees, provincial stock savings plan accounts or
      additional accounts which cannot be transferred without such additional forms or documents, are
      duly completed and accompany the delivery of the authorization to transfer account letter and the
      return date notification to the delivering member.

F.9.04 – Return Date Notification
On receipt of an authorization to transfer account letter and return date notification properly completed
pursuant to Rule F.9.03, the delivering member shall duly complete the return date notification, prepare
and attach a listing of the assets to be transferred and return a copy of the return date notification and
listing to the receiving member by the return date deadline specified in the return date notification, which
date shall be no later than two clearing days after the date of receipt of the return date notification.

F.9.05 – Failure to Transfer
(1)   If, for any reason, an impediment exists which prevents the requested transfer of an asset for an
      account from the delivering member to the receiving member, the delivering member shall forthwith
      notify the receiving member and the client in writing, identifying such asset(s), the reason for the


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      inability to deliver, and requesting that written instructions or directions be forwarded by the client
      through the receiving member to the delivering member with regards to that asset.
(2)   Transfer of the balance of assets belonging to the client shall be completed in accordance with Rule
      F.9.00.

F.9.06 – Settlement
(1)   Within five clearing days after the date of receipt of the return date notification, the delivering
      member shall input for affirmation through the recognized depository, all assets which can be
      affirmed through such depository. Each asset shall be input for normal settlement or such other
      settlement date prescribed, or a pending new issue or pending delayed settlement trade, and shall
      be affirmed by the receiving member through the recognized depository prior to settlement date.
(2)   No member shall affirm transfer of an account from another member which is not margined in
      accordance with regulatory requirements unless, at the time of the transfer affirmation, the receiving
      member has in its possession, sufficient available funds or collateral for the credit of the client to
      cover the deficiency in the account.
(3)   Once the account transfer is affirmed, both the delivering member and the receiving member are
      bound to complete the affirmed transfers unless otherwise mutually agreed.
(4)   Assets affirmed through a recognized depository shall be settled through that depository, if eligible.
(5)   Any assets which cannot be transferred through recognized depositories shall be settled promptly
      over the counter or by such other appropriate means as may be agreed between the receiving
      member and the delivering member within the same time limits specified above for assets which can
      be affirmed through a depository.

F.9.07 – Failure to Settle
If the delivering member fails to settle the transfer of any assets in the account of a client within ten
clearing days after the later of settlement date or the date of affirmation of the relevant trade by the
receiving member, the receiving member may complete the account transfer at its option by:
(1)   buying in the unsettled position in accordance with the applicable rules and regulations of the
      recognized depository;
(2)   establishing a loan of the assets from the receiving member to the delivering member through a
      recognized depository, which loan shall be marked to market and the relevant assets shall be
      deemed to have been delivered to the receiving member for the purpose of settling the account
      transfer; or
(3)   making such other mutually agreed arrangements with the delivering member such that the account
      transfer can be deemed to have been completed for the client.

F.9.08 – Non-Certificated Mutual Funds
Assets in an account to be transferred in the form of non-certificated mutual fund securities shall be
deemed transferred upon delivery by the delivering member to the receiving member of a duly completed
"broker to broker mutual fund transfer" form as approved by the Exchange and a properly completed and
endorsed power of attorney or by entry of transfer instructions in the electronic account transfer facility of
Mutual Funds Clearing and Settlement Services Inc.

F.9.09 – Miscellaneous Balances
Balances comprising of interest or dividend receipts shall be settled promptly between a delivering
member and a receiving member and the failure to settle such balances for any reason shall not
constitute grounds for not complying with the account transfer procedures contained in Rule F.9.00.



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F.9.10 – Capital Charges
Delivering members shall not be subject to capital or margin charges in respect of affirmed assets which
are in the process of being transferred in accordance with Rule F.9.00. The receiving member shall be
required to margin all affirmed assets or balances which are in the process of being transferred in
accordance with Rule F.9.00.

F.9.11 – Fees and Charges
The delivering member shall be entitled to deduct any fees or charges on accounts to be transferred prior
to or at the time of transfer in accordance with that member's current published schedule for such fees
and charges.

F.9.12 – Exemptions
The Exchange may exempt a member from the requirements of Rule F.9.00 where it is satisfied that to do
so would not be prejudicial to the interests of the member, its clients or the public and, in granting such
exemption, the Exchange may impose such terms and conditions, if any, as it may consider necessary.




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RULE F.10.00 – RELATIONSHIP BETWEEN INTRODUCING BROKERS AND CARRYING BROKERS

F.10.01
For the purposes of this Rule, the following terms shall have the meaning set out below:
"Canadian financial institution" means a Schedule I or Schedule II bank pursuant to the Bank Act
(Canada), an insurance company governed by federal or provincial insurance legislation or a loan and
trust company governed by federal or provincial loan and trust company legislation;
"carrying broker" means the member or member of a self-regulatory organization that is a participating
institution in the Canadian Investor Protection Fund that carries client accounts, which at a the minimum
includes the clearing and settlement of trades, the maintenance of books and records of client
transactions and the custody of some or all client funds and securities; and
"introducing broker" means the member or member of a self-regulatory
organization that is a participating institution in the Canadian Investor Protection Fund who introduces
client accounts to the carrying broker.

F.10.02
A member may, with the approval of the Exchange and if otherwise in compliance with the terms of this
Rule and any requirements of the regulatory authority in the jurisdiction of the introducing broker, carry
accounts of clients introduced to it by:
(1)   another member; or
(2)   a member of a self-regulatory organization that is a participating institution in the Canadian Investor
      Protection Fund.

F.10.03
A member shall not introduce accounts to anyone other than:
(1)   another member; or
(2)   a member of a self-regulatory organization that is a participating institution in the Canadian Investor
      Protection Fund.

F.10.04
For the purposes of this Rule F.10.00, arrangements whereby employees of a member's affiliated
Canadian financial institution handle securities clearance and settlement, maintain records and perform
operational functions on behalf of the member shall not be considered to be introducing/carrying
arrangements for the purposes of this Rule F.1 0.00, provided that pursuant to the agreement, the
employees of the member's Canadian financial institution affiliate handle custodial functions on a
segregated basis in accordance with Rule F.4.00.

F.10.05
(1)   Except as otherwise provided, an introducing broker may introduce clients to one carrying broker. An
      introducing broker that introduces clients to a carrying broker shall enter into a written contract with
      the carrying broker to define, to an extent determined from time to time by the Exchange, the rights
      and obligations between them.
(2)   Each such contract shall be in form satisfactory to the Exchange and shall be filed with the
      Exchange, and shall be effective only after the Exchange has given written confirmation that the
      contract is acceptable.
(3)   Notwithstanding subparagraph (a), a member may enter into an introducing/carrying broker

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      agreement with an additional broker exclusively for trading in futures contracts and options.

F.10.06
Each introducing or carrying broker that is a party to an introducing and carrying broker relationship as
described in Rule F.10.05 above and that is not a member shall comply with all Exchange Requirements
and its partners, directors, officers, shareholders and employees shall comply with all Exchange
Requirements.

F.10.07
Each introducing/carrying broker arrangement must be classified as an Introducing Broker Arrangement
Type I, Type II, Type III or Type IV and must meet the requirements for such arrangements as set out in
this Rule F. 10.00.

F.10.08 – Introducing Broker Type I Arrangement
The parties shall execute an agreement in the form prescribed and approved by the Exchange and the
arrangement shall meet the following criteria:
(1)   Minimum Capital Requirement: An introducing broker that is a party to an Introducing Type I
      Arrangement must maintain at all times minimum capital of $75,000 for the purposes of calculating
      its Risk Adjusted Capital.
(2)   Margin Arising from Principal and Agency Business
      (a)   The carrying broker shall calculate and maintain the margin for any agency business that it
            carries on behalf of the introducing broker in accordance with the relevant margin provisions of
            Rule G.1.00.
      (b)   The introducing broker shall calculate and maintain the margin for any principal business
            carried on its behalf by the carrying broker in accordance with the relevant margin requirements
            of Rule G.1.00. The carrying broker shall provide for margin for any principal business which it
            carries on behalf of the introducing broker to the extent of any equity deficiency in the
            introducing broker's trading account.
(3)   Margin Offsets Permitted: The carrying broker shall be permitted to offset any margin required to be
      maintained as determined in subparagraph (2) against the loan value of any deposits made by the
      introducing broker to the extent of the excess Risk Adjusted Capital of the introducing broker. The
      carrying broker shall notify the introducing broker of all such offsets at the time of such offset. Upon
      receiving notification of such offset, the introducing broker shall re-classify that portion of the deposit
      which relates to the margin offset as a non-allowable asset on its Joint Regulatory Financial
      Questionnaire & Report (Form 1) or Monthly Financial Report.
(4)   Reporting of Client Business: In calculating the Risk Adjusted Capital required under Rule G.1.00,
      the carrying broker shall, and the introducing broker shall not, report all accounts of the clients
      introduced to the carrying broker by the introducing broker on the carrying broker's Joint Regulatory
      Financial Questionnaire & Report (Form 1) or Monthly Financial Report.
(5)   Net Client Balances/Funding Deployment: In relation to the accounts of clients introduced to the
      carrying broker by the introducing broker, the carrying broker shall be responsible for meeting any
      financing requirements of such client accounts.
(6)   Deposit:
      (a)   Any deposit provided to the carrying broker by the introducing broker pursuant to the terms of
            the agreement between them shall be segregated by the carrying broker and, in the case of a
            cash deposit, such deposit shall be held by the carrying broker in a separate bank account in
            trust for the introducing broker.
      (b)   The deposit provided by the introducing broker to the carrying broker shall be reported by the


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            introducing broker as an allowable asset on its Joint Regulatory Financial Questionnaire &
            Report (Form 1) or Monthly Financial Report. However, any portion of the deposit that may be
            impaired in value due to the carrying broker carrying client accounts with unsecured debit
            balances on behalf of the introducing broker shall be re-classified as a non- allowable asset on
            the Joint Regulatory Financial Questionnaire & Report (Form 1) or Monthly Financial Report of
            the introducing broker.
(7)   Concentration Calculation: For the purposes of the concentration calculations required in Schedules
      9 and 12 of the Joint Regulatory Financial Questionnaire & Report (Form 1), the carrying broker shall
      include, and the introducing broker shall not include, all client positions which the carrying broker
      maintains on behalf of the introducing broker in the carrying broker's calculation.
(8)   Segregation of Client Securities: The carrying broker shall be responsible for segregating all
      securities which it holds for clients introduced to it by the introducing broker in accordance with the
      segregation requirements of Rule F.4.00.
(9)   Free Credit Segregation: The carrying broker shall be responsible for complying with the free credit
      segregation requirements of Rule G in relation to accounts of clients introduced to it by the
      introducing broker.
(10) Insurance:
      (a)   The introducing broker shall maintain minimum insurance protection of $200,000 as required by
            Exchange requirements.
      (b)   The introducing broker and the carrying broker each shall be responsible for providing Financial
            Institution Bond Clause (A) coverage for fidelity insurance as required under Rule G.4.00.
      (c)   The carrying broker shall include all accounts introduced to it by the introducing broker in its
            calculation of the asset measurement for minimum Financial Institution Bond coverage for
            Clauses (A) through (E) as required under Rule G.4.00.
      (d)   Both the introducing broker and the carrying broker shall maintain adequate insurance for
            registered mail as required under Rule GAOL
(11) Required Disclosure on the Opening of Client Accounts: At the time of opening each client account,
     the introducing broker shall obtain from the person opening the account an acknowledgement, in a
     form satisfactory to the Exchange, that the introducing broker has advised the client of the
     introducing broker's relationship to the carrying broker and of the relationship between the client and
     the carrying broker.
(12) Contracts, Statements and Correspondence: The name and role of each of the introducing broker
     and the carrying broker shall be shown on all contracts, statements, correspondence and other
     documentation.
(13) Clients Introduced to the Carrying Broker: Each client introduced to the carrying broker by the
     introducing broker shall be considered a client of the carrying broker for the purposes of complying
     with Exchange Requirements.
(14) Responsibility for Compliance with all Non-Financial Exchange Requirements: Unless otherwise
     specified in this Rule F.10.08, the introducing broker and the carrying broker shall be jointly and
     severally responsible for the compliance with all non-financial Exchange Requirements for each
     account introduced to the carrying broker by the introducing broker.
(15) Cash Transactions: The introducing broker may facilitate cash transactions on behalf of clients
     carried by the carrying broker only with the approval of the carrying broker through the use of an
     account in the name of the carrying broker.
(16) Reporting of Principal Positions: The introducing broker shall report all of its principal positions
     carried by the carrying broker as inventory on its Joint Regulatory Financial Questionnaire & Report
     (Form 1) or Monthly Financial Report. The carrying broker shall report the principal positions of the
     introducing broker carried by it as a client account on its Joint Regulatory Financial Questionnaire &

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      Report (Form 1) or Monthly Financial Report.

F.10.09 – Introducing Broker Type II Arrangement
The parties shall execute an agreement in the form prescribed and approved by the Exchange and the
arrangement shall meet the following criteria:
(1)   Minimum Capital Requirement: An introducing broker that is a party an Introducing Type II
      Arrangement must maintain at all times minimum capital of $250,000 for the purposes of calculating
      its Risk Adjusted Capital.
(2)   Margin Arising from Principal and Agency Business:
      (a)   The carrying broker shall calculate and maintain the margin for any agency business that it
            carries on behalf of the introducing broker in accordance with the relevant margin requirements
            of Rule G.1.00.
      (b)   The introducing broker shall calculate and maintain the margin for any principal business
            carried on its behalf by the carrying broker in accordance with the relevant margin requirements
            of Rule G.1.00. The carrying broker shall provide for margin for any principal business which it
            carries on behalf of the introducing broker to the extent of any equity deficiency in the
            introducing broker's trading account.
(3)   Margin Offsets Permitted: The carrying broker shall be permitted to offset any margin required to be
      maintained as determined in subparagraph (2) against the loan value of any deposits made by the
      introducing broker to the extent of the excess Risk Adjusted Capital of the introducing broker. The
      carrying broker shall notify the introducing broker of all such offsets at the tine if such offset. Upon
      receiving notification of such offset, the introducing broker shall re-classify that portion of the deposit
      which relates to the margin offset as a non-allowable asset on its Joint Regulatory Financial
      Questionnaire & Report (Form 1) or Monthly Financial Report.
(4)   Reporting of Client Balances: In calculating the Risk Adjusted Capital required under Rule G.1.00,
      the carrying broker shall, and the introducing broker shall not, report all accounts of the clients
      introduced to the carrying broker by the introducing broker on the carrying broker's Joint Regulatory
      Financial Questionnaire & Report (Form 1) or Monthly Financial Report.
(5)   Net Client Balances/Funding Development: In relation to the accounts of clients introduced to the
      carrying broker by the introducing broker, the carrying broker shall be responsible for meeting any
      financing requirements of such client accounts.
(6)   Deposit:
      (a)   Any deposit provided to the carrying broker by the introducing broker pursuant to the terms of
            the agreement between them shall be segregated by the carrying broker and, in the case of a
            cash deposit, such deposit shall be held by the carrying broker in a separate bank account in
            trust for the introducing broker.
      (b)   The deposit provided by the introducing broker to the carrying broker shall be reported by the
            introducing broker as an allowable asset on its Joint Regulatory Financial Questionnaire &
            Report (Form 1) or Monthly Financial Report. However, any portion of the deposit that may be
            impaired in value due to the carrying broker carrying client accounts with unsecured debit
            balances on behalf of the introducing broker shall be re-classified as a non- allowable asset on
            the Joint Regulatory Financial Questionnaire & Report (Form 1) or Monthly Financial Report of
            the introducing broker.
(7)   Concentration Calculation: For the purposes of the concentration calculations required on Schedules
      9 and 12 of the Joint Regulatory Financial Questionnaire & Report (Form 1), the carrying broker shall
      include, and the introducing broker shall not include, all client positions which the carrying broker
      maintains on behalf of the introducing broker in the carrying broker's calculation.
(8)   Segregation of Client Securities: The carrying broker shall be responsible for segregating all


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      securities which it holds for clients introduced to it by the introducing broker in accordance with the
      segregation requirements of Rule F.4.00.
(9)   Free Credit Segregation: The carrying broker shall be responsible for complying with the free credit
      segregation requirements of Rule G in relation to accounts of clients introduced to it by the
      introducing broker.
(10) Insurance:
      (a)   The introducing broker shall maintain minimum insurance protection of $500,000 as required by
            Exchange requirements.
      (b)   The introducing broker and the carrying broker each shall be responsible for providing Financial
            Institution Bond Clause (A) coverage for fidelity insurance as required under Rule G.4.00.
      (c)   The carrying broker shall include all accounts introduced to it by the introducing broker in its
            calculation of the asset measurement for minimum Financial Institution Bond coverage for
            Clauses (A) through (E) as required under Rule G.4.00.
      (d)   Both the introducing broker and the carrying broker shall maintain adequate insurance for
            registered mail as required under by the Rule G.4.01.
(11) Required Disclosure on the Opening of Client Accounts: At the time of opening each client account,
     the introducing broker shall obtain from the person opening the account an acknowledgement, in a
     form satisfactory to the Exchange, that the introducing broker has advised the client of the
     introducing broker's relationship to the carrying broker and of the relationship between the client and
     the carrying broker.
(12) Contracts, Statements and Correspondence: At the option of the introducing broker and the carrying
     broker, as they may agree, the name and role of each of the introducing broker and the carrying
     broker may be shown on all contracts, statements, correspondence and other documentation,
     otherwise the name of the introducing broker shall be shown. Notwithstanding the foregoing, all
     margin agreements and guarantee documentation shall be in the name of both the introducing
     broker and the carrying broker.
(13) Required Annual Disclosure: At least annually, the introducing broker shall provide written
     disclosure, in the form satisfactory to the Exchange, to each of its clients whose accounts are being
     carried by the carrying broker, outlining the relationship between the introducing broker and the
     carrying broker and the relationship between such client and the carrying broker. Notwithstanding
     the foregoing, if the name and role of each of the introducing broker and the carrying broker is
     shown on all contracts, statements, correspondence and other documentation in accordance with
     subparagraph (12) above, the introducing broker need not provide annual disclosure as required by
     this subparagraph (13).
(14) Clients Introduced to the Carrying Broker: Each client introduced to the carrying broker by the
     introducing broker shall be considered a client of the carrying broker for the purposes of complying
     with Exchange Requirements.
(15) Responsibility for Compliance with all Non-Financial Exchange Requirements: Unless otherwise
     specified in this Rule F, the introducing broker shall be responsible for the compliance with all non-
     financial Exchange Requirements for each account introduced to the carrying broker by the
     introducing broker.
(16) Cash Transactions: The introducing broker may facilitate cash transactions on behalf of clients
     carried by the carrying broker through the use of an account in the name of either the carrying broker
     or the introducing broker.
(17) Reporting of Principal Positions: The introducing broker shall report all of its principal positions
     carried by the carrying broker as inventory on its Joint Regulatory Financial Questionnaire & Report
     (Form 1) or Monthly Financial Report. The carrying broker shall report the principal positions of the
     introducing broker carried by it as a client account on its Joint Regulatory Financial Questionnaire &


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      Report (Form 1) or Monthly Financial Report.

F.10.10 – Introducing Broker Type III Arrangement
The parties shall execute an agreement in the form prescribed and approved by the Exchange and the
arrangement shall meet the following criteria:
(1)   Minimum Capital Requirement: An introducing broker that is a party to an Introducing Type III
      Arrangement must maintain at all times minimum capital of $250,000 for the purposes of calculating
      its Risk Adjusted Capital.
(2)   Margin Arising from Principal and Agency Business: The carrying broker shall calculate the margin
      for any principal and agency business that it carries on behalf of the introducing broker in
      accordance with the relevant margin requirements of Rule G. 1.00 and the introducing broker shall
      maintain the required margin.
(3)   Margin Offsets Permitted: The carrying broker shall be permitted to offset any margin required to be
      maintained as determined in subparagraph 2 against the loan value of any deposits made by the
      introducing broker with the carrying broker.
(4)   Reporting of Client Balances: In calculating the Risk Adjusted Capital required under Rule G.1.00,
      the introducing broker shall, and the carrying broker shall not, report all accounts of the clients
      introduced to the carrying broker by the introducing broker on the introducing broker's Joint
      Regulatory Financial Questionnaire & Report (Form 1) or Monthly Financial Report. Notwithstanding
      the foregoing, the carrying broker shall be required to report one balance owing to or from the
      introducing broker in relation to the accounts of clients which it carries on behalf of the introducing
      broker on its Joint Regulatory Financial Questionnaire & Report (Form 1) or Monthly Financial
      Report. Such reporting of one balance shall not release, discharge, limit or otherwise affect the
      carrying broker's obligations and liabilities to each individual client whose account it carries on behalf
      of the introducing broker.
(5)   Net Client Balances/Funding Deployment: In relation to the accounts of clients introduced to the
      carrying broker by the introducing broker, the carrying broker shall be responsible for meeting any
      financing requirements of such client accounts.
(6)   Deposit: Any deposit provided to the carrying broker by the introducing broker pursuant to the terms
      of the agreement between them shall be segregated by the carrying broker and, in the case of a
      cash deposit, such deposit shall be held by the carrying broker in a separate bank account in trust
      for the introducing broker.
(7)   Concentration Calculation: For the purposes of the concentration calculations required in Schedules
      9 and 12 of the Joint Regulatory Financial Questionnaire & Report (Form 1), the introducing broker
      shall include, and the carrying broker shall not include, all client positions which the carrying broker
      maintains on behalf of the introducing broker in the introducing broker's calculation.
(8)   Segregation of Client Securities: The carrying broker shall be responsible for segregating all
      securities which it holds for clients introduced to it by the introducing broker in accordance with the
      segregation requirements of Rule F.4.00.
(9)   Free Credit Segregation: The carrying broker shall be responsible for complying with the free credit
      segregation requirements of Rule G.9.00 in relation to accounts of clients introduced to it by the
      introducing broker.
(10) Insurance:
      (a)   The introducing broker shall maintain minimum insurance protection of $500,000 as required by
            Exchange requirements.
      (b)   The introducing broker and the carrying broker each shall be responsible for providing Financial
            Institution Bond Clause (A) coverage for fidelity insurance as required under Rule G.4.00.
      (c)   The carrying broker and the introducing broker shall include all accounts introduced to the

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            carrying broker by the introducing broker in each of their calculations of the asset measurement
            for minimum Financial Institution Bond coverage for Clauses (A) through (E) as required under
            Rule G.4.00.
      (d)   Both the introducing and the carrying broker shall maintain adequate insurance for registered
            mail as required under Rule GAOL
(11) Required Disclosure on the Opening of Client Accounts: At the time of opening each client account,
     the introducing broker shall obtain from the person opening the account an acknowledgment, in a
     form satisfactory to the Exchange, that the introducing broker has advised the client of the
     introducing broker's relationship to the carrying broker and of the relationship between client and the
     carrying broker.
(12) Contracts, Statements and Correspondence: At the option of the introducing broker and the carrying
     broker, as they may agree, the name and role of each of the introducing broker and the carrying
     broker may be shown on all contracts, statements, correspondence and other documentation,
     otherwise the name of the introducing broker shall be shown. Notwithstanding the foregoing, all
     margin agreements and guarantee documentation shall be in the name of both the introducing
     broker and the carrying broker.
(13) Required Annual Disclosure: At least annually, the introducing broker shall provide written
     disclosure, in a form satisfactory to the Exchange, to each of its clients whose accounts are being
     carried by the carrying broker, outlining the relationship between the introducing broker and the
     carrying broker and the relationship between such client and the carrying broker. Notwithstanding
     the foregoing, if the name and role of each of the introducing broker and the carrying broker is
     shown on all contracts, statements, correspondence and other documentation in accordance with
     subparagraph (12)above, the introducing broker need not provide annual disclosure as required by
     this subparagraph (13).
(14) Clients Introduced to the Carrying Broker: Each client introduced to the carrying broker by the
     introducing broker shall be considered to be a client of the carrying broker for the purposes of
     complying with Exchange requirements.
(15) Responsibility for Compliance with all Non-Financial Exchange Requirements: Unless otherwise
     specified in this Rule F.10.10, the introducing broker shall be responsible for the compliance with all
     non-financial Exchange Requirements for each account introduced to the carrying broker by the
     introducing broker.
(16) Cash Transactions: The introducing broker may facilitate cash transactions on behalf of clients
     carried through the carrying broker through the use of an account in the name of either the carrying
     broker or the introducing broker.
(17) Reporting of Principal Positions: The introducing broker shall report all of its principal positions
     carried by the carrying broker as inventory on its Joint Regulatory Financial Questionnaire & Report
     (Form 1) or Monthly Financial Report. The carrying broker shall report all principal positions
     introduced to it by the introducing broker as a client account on its Joint Regulatory Financial
     Questionnaire & Report (Form 1) or Monthly Financial Report.

F.10.11 – Introducing Broker Type IV Arrangement
The parties shall execute an agreement in the form prescribed and approved by the Exchange and the
arrangement shall meet the following criteria:
(1)   Minimum Capital Requirement: An introducing broker that is a party to an Introducing Type IV
      Arrangement must maintain at all times minimum capital of $250,000 for the purposes of calculating
      its Risk Adjusted Capital.
(2)   Margin Arising from Principal and Agency Business: The carrying broker shall calculate the margin
      for any principal and agency business that the carrying broker carries on behalf of the introducing
      broker in accordance with the relevant margin requirements of Rule G.1.00 and the introducing


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      broker shall maintain the required margin.
(3)   Margin Offsets Permitted: The carrying broker shall be permitted to offset any margin required to be
      maintained as determined in subparagraph (2) against the loan value of any deposits made with the
      carrying broker.
(4)   Reporting of Client Balances: In calculating the Risk Adjusted Capital required under Rule G.1.00,
      the introducing broker shall, and the carrying broker shall not, report all accounts of the clients
      introduced to the carrying broker by the introducing broker on the introducing broker's Joint
      Regulatory Financial Questionnaire & Report (Form 1) or Monthly Financial Report. Notwithstanding
      the foregoing, the carrying broker shall be required to report one balance owing to or from the
      introducing broker in relation to the accounts of clients which it carries on behalf of the introducing
      broker on its Joint Regulatory Financial Questionnaire & Report (Form 1) or Monthly Financial
      Report. Such reporting of one balance shall not release, discharge, limit or otherwise affect the
      carrying broker's obligations and liabilities to each individual client whose account it carries on behalf
      of the introducing broker.
(5)   Net Client Balances/Funding Deployment: In relation to the accounts of clients introduced to the
      carrying broker by the introducing broker, the introducing broker shall be responsible for meeting any
      financing requirements of such client accounts.
(6)   Deposit: Any deposit provided to the carrying broker by the introducing broker pursuant to the terms
      of the agreement between them shall be segregated by the carrying broker and, in the case of a
      cash deposit, such deposit shall be held by the carrying broker in a separate bank account in trust
      for the introducing broker.
(7)   Concentration Calculation: For the purposes of the concentration calculations required in Schedules
      9 and 12 of the Joint Regulatory Financial Questionnaire & Report (Form 1), the introducing broker
      shall include, and the carrying broker shall not include, all client positions which the carrying broker
      maintains on behalf of the introducing broker in the introducing broker's calculation.
(8)   Segregation of Client Securities: The carrying broker shall be responsible for segregating all
      securities which it holds for clients introduced to it by the introducing broker in accordance with the
      segregation requirements of Rule F.4.00.
(9)   Free Credit Segregation: The introducing broker shall be responsible for complying with the free
      credit segregation requirements of Rule G.9.00 in relation to accounts of clients introduced to the
      carrying broker by the introducing broker.
(10) Insurance:
      (a)   The introducing broker shall maintain minimum insurance protection of $500,000 as required by
            Exchange requirements.
      (b)   The introducing broker and the carrying broker each shall be responsible for providing Financial
            Institution Bond Clause (A) coverage for fidelity insurance as required under Rule G.4.00.
      (c)   The carrying broker and the introducing broker shall include all accounts introduced to the
            carrying broker by the introducing broker in each of their calculations of the asset measurement
            for minimum Financial Institution Bond coverage for Clauses (A) through (E) as required under
            Rule G.4.00.
      (d)   Both the introducing and the carrying broker shall maintain adequate insurance for registered
            mail as required under Rule GAOL
(11) Required Disclosure on the Opening of Client Accounts: At the time of opening each client account,
     the introducing broker shall obtain from the person opening the account an acknowledgment, in a
     form satisfactory to the Exchange, that the introducing broker has advised the client of the
     introducing broker's relationship to the carrying broker and of the relationship between the client and
     the carrying broker.



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(12) Contracts, Statements and Correspondence: At the option of the introducing broker and the carrying
     broker, as they may agree, the name and role of each of the introducing broker and the carrying
     broker may be shown on all contracts, statements, correspondence and other documentation,
     otherwise the name of the introducing broker shall be shown. If any guarantee or margin agreement
     are solely between the client and the introducing broker, the agreement between the introducing
     broker and the carrying broker shall provide that the carrying broker may act to protect its interest in
     those securities for which it has not been paid by the introducing broker at the time that the
     introducing broker becomes insolvent, bankrupt or ceases to be a member of a self-regulatory
     organization that is a participating institution in the Canadian Investor Protection Fund.
(13) Required Annual Disclosure: At least annually, the introducing broker shall provide written
     disclosure, in the form satisfactory to the Exchange, to each of its clients whose accounts are being
     carried by the carrying broker, outlining the relationship between the introducing broker and the
     carrying broker and the relationship between such client and the carrying broker. Notwithstanding
     the foregoing, if the name and role of each of the introducing broker and the carrying broker is
     shown on all contracts, statements, correspondence and other documentation in accordance with
     subparagraph (12) above, the introducing broker need not provide annual disclosure as required by
     this subparagraph (13).
(14) Clients Introduced to the Carrying Broker: Each client introduced to the carrying broker by the
     introducing broker shall be considered to be a client of the carrying broker for the purposes of
     complying with Exchange Requirements.
(15) Responsibility for Compliance with all Non-Financial Exchange Requirements: Unless otherwise
     specified in this Rule F.10.00, the introducing broker shall be responsible for the compliance with all
     non-financial Exchange Requirements for each account introduced to the carrying broker by the
     introducing broker.
(16) Cash Transactions: The introducing broker may facilitate cash transactions on behalf of clients
     carried through the carrying broker through the use of an account in the name of either the carrying
     broker or the introducing broker.
(17) Reporting of Principal Positions: The introducing broker shall report all of its principal positions
     carried by the carrying broker for the introducing broker as inventory on its Joint Regulatory Financial
     Questionnaire & Report (Form 1) or Monthly Financial Report. The carrying broker shall report all
     principal positions of the introducing broker carried by it as a client account on its Joint Regulatory
     Financial Questionnaire & Report (Form 1) or Monthly Financial Report.

F.10.12 – Exemption for Arrangements Between a Member and a Foreign Affiliate
Notwithstanding Rule F.1 0.02 through Rule F.1 0.07, on the application of a member, the Exchange may
exempt any arrangements between a member and a member's foreign affiliate pursuant to which the
member carries accounts of the foreign affiliate or its clients from the requirements of Rule F.1 0.02
through Rule F.1 0.11 provided that the arrangement meet the following criteria:
(1)   Exemption Applicable to Affiliates of the member: The exemption in this Rule F.10.12 shall apply
      only to arrangements between a member and a foreign affiliate of the member. The member shall
      provide the Exchange with evidence satisfactory to the Exchange of such relationship and of the
      details of the arrangement between them.
(2)   Disclosure of Relationship to Clients of Foreign Affiliate: The member shall ensure that the foreign
      affiliate, at least annually, provides written disclosure, in a form satisfactory to the Exchange, to each
      of the foreign affiliate's clients whose accounts are being carried by the member, outlining the
      relationship between the member and the member's foreign affiliate and the relationship between
      the member and the client of the foreign affiliate, and outlining any limitations on coverage of such
      client accounts by the Canadian Investor Protection Fund as determined by the Canadian Investor
      Protection Fund in conjunction with the Exchange and the other self-regulatory organizations from
      time to time.


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(3)   Approval by the Requisite Authority in the Foreign Affiliate's Jurisdiction: The exemption provided in
      this Rule F.10.12 shall only be granted by the Exchange upon receipt by the Exchange of written
      approval from the regulatory authority in the foreign affiliate's jurisdiction acknowledging and
      approving the arrangement between the member and the member's foreign affiliate.
(4)   Responsibility for Compliance with Exchange Requirements: Foreign affiliates of a member that
      have an arrangement with the member as set out in this Rule F.10.12, are not required to comply
      with Exchange Requirements solely as a result of such an arrangement.
(5)   Reporting of Balances: In calculating its Risk Adjusted Capital required under Rule G. 1.00, the
      member shall report one balance owing to or from its foreign affiliate in relation to the accounts of
      the clients which the member is carrying on behalf of its foreign affiliate on its Joint Regulatory
      Financial Questionnaire & Report (Form 1) or Monthly Financial Report.
(6)   Segregation of Securities: The member shall be responsible for segregating all securities which it
      holds for clients of its foreign affiliate in accordance with the segregation requirements of Rule
      F.4.00.
(7)   Insurance: The member shall include all accounts introduced to it by its foreign affiliate in its
      calculation of the asset measurement for minimum Financial Institution Bond coverage for Clauses
      (A) through (E) as required under Rule G.4.00.




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RULE F.11.00 UNIFORM SETTLEMENT RULE

F.11.01
No member shall accept an order from a client pursuant to an arrangement whereby payment of
securities purchased or delivery of securities sold is to be made to or by the client or a settlement agent of
the client unless all of the following procedures are followed:
(1)   The member shall have received from the client prior to or at the time of accepting the order, the
      name and address of the settlement agent and account number of the client on file with that agent.
(2)   Each order accepted from the client pursuant to such an arrangement is identified as a delivery or
      receipt against payment trade.
(3)   The member will provide to the client a confirmation, by electronic, physical, facsimile or verbal
      means, of all relevant data customarily contained in a formal confirmation with respect to the
      execution of the order in whole or in part, as early as possible on the next business day after any
      such execution.
(4)   The member has obtained an agreement from the client that the client will furnish his settlement
      agent with instructions with respect to the receipt or delivery of the securities involved in the
      transaction promptly upon receipt by the client of each such confirmation, or the relevant date and
      information as to each execution, relating to such order (even though such execution represents the
      purchase or sale of only a part of the order), and that in any event the client will ensure that his
      settlement agent confirms the transaction no later than the next business day after the date of
      execution of the trade to which the confirmation relates.
(5)   The client and his settlement agent shall utilize the facilities or services of a recognized securities
      depository for the affirmation and settlement of all depository eligible transactions. This will include
      both book based and certificate based settlements.

Notes and Understandings
The following transactions shall be exempt from the provisions of clause (5) above of this Rule:
(1)   transactions that are to be settled outside of Canada; and
(2)   transactions wherein both a member organization and the settlement agent are not participants in
      the same securities depository.
(3)   For the purpose of this Rule, a "securities depository" shall be the Canadian Depository for
      Securities.
(4)   For the purpose of this Rule, "depository eligible transactions" shall mean transactions in those
      securities for which affirmation and settlement can be performed through the facilities of a security
      depository by book entry settlement or certificate based settlement.
(5)   The exemptions contained in subclauses (1.), (2.) and (3.) above and the function of the "Rule" in
      whole or in part shall be periodically reviewed by the Exchange and industry groups to determine its
      functionality and effectiveness.




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RULE F.12.00 – DISPLAY BY MEMBERS OF PARTICIPATING INSTITUTIONS OF CIPF COVERAGE

F.12.01 – Definitions
For the purpose of this Rule, the term:
"advertising" means any promotional material used in or on any newspaper, magazine, radio, video,
television, telephone or cassette recording, motion picture, slide presentation, sign or billboard and any
material promoting the services or business of the member, affiliated corporation, or approved person and
any other sales literature disseminated through the communications media;
"CIPF" means Canadian Investor Protection Fund and "FCPE" means Fonds Canadien De Protection
Des Epargnants;
"CIPF official explanatory statement" means the following statement: or such other statement as may be
prescribed as such by CIPF from time to time for use by members;
"Clients' accounts" are protected by the Canadian Investor Protection Fund within specified limits. A
brochure describing the nature and limits of coverage is available upon request."
"CIPF official brochure" means any brochure or publication prescribed as such by CIPF for use by
members;
"CIPF official symbol" means the symbol, mark or other designation prescribed as such by CIPF for use
by members with the word "member" appearing on top of the official symbol.

F.12.02 – Display at Premises
Each member shall conspicuously display in a prominent place at each of its locations to which clients
have access the CIPF official symbol. No member shall be required to display the CIPF official symbol
until thirty (30) days after the first day of operation as a member.

F.12.03 – Account Statements and Confirmations
Each member shall include on the front of each confirmation and account statement sent to a client the
CIPF official symbol, and shall also include in legible print on either the front or the back (at the member's
option) of each confirmation and account statement sent to a client the CIPF official explanatory
statement in either English or French.

F.12.04 – CIPF Official Brochure
Each member shall make available to its clients on request the current version of the CIPF official
brochure in either English or French as requested.

F.12.05 – Advertising
Each member shall include in any written, visual or audio advertising the words "member CIPF" together
with, at the option of the member, a reproduction of the CIPF official symbol. Except as provided in this
Rule, no member shall display any symbol relating to CIPF other than the CIPF official symbol or include
any symbol, statement or explanation relating to CIPF or the member's membership in CIPF in any
advertising, promotional or other materials other than the CIPF official symbol or CIPF official explanatory
statement.

F.12.06 – Members of CIPF
For the purposes only of complying with this Rule and to the extent permitted by CIPF from time to time,
members shall identify themselves as members of CIPF.




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F.12.07 – English/French Language
Subject to applicable laws, a member may comply with requirements of this Rule in either the English or
French language.

F.12.08 – Termination of Membership
Upon the termination or suspension of its Membership, each member shall immediately cease using the
CIPF official explanatory statement, CIPF official brochure or CIPF official symbol, and shall cease
identifying itself as a member of CIPF.

F.12.09 – Exemptions
A member may be exempted from all or part of the requirements of this Rule to the extent prescribed by
CIPF from time to time or, upon application to the Exchange, if the Exchange is of the opinion that
compliance with the requirements may be misleading to the public or may result in undue hardship to the
member.




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RULE G.1.00 – CAPITAL, MARGIN AND EXAMINATIONS

G.1.01 – Capital Formula Rules
In this Rule G. 1.00 and, unless the contrary is specified, in each by-law, other regulation, ruling, policy or
form of the Exchange, each term used which is not defined herein or therein, but is defined or used in
Form 1 shall have the meaning as defined or used in Form 1.

G.1.02 – Risk Adjusted Capital Deficiency
Every member shall have and maintain at all times risk adjusted capital greater than zero calculated in
accordance with Form 1 and with such requirements as the Board of Governors may from time to time
prescribe. If at any time the risk adjusted capital of a member is, to the knowledge of such member, less
than zero, such member shall immediately notify the Exchange.

G.1.03 – Filing Requirements
Each member shall:
(1) File with the Exchange a copy of a monthly financial report (MFR) of the member as at the end of
each fiscal month or at such other date as may be agreed with the Exchange. Such financial reports shall
contain such information as may be prescribed by the Exchange from time to time; and
(2) In calculating the risk adjusted capital of a member, the financial position of the member may, with the
prior approval of the Exchange, be consolidated (in a manner as set out below) with that of any related
company of a member provided that:
      (a) such related company is subject to all of the by-laws, rules and regulations of at least one of the
           Investment Dealers Association of Canada, the Toronto Stock Exchange, the Montreal
           Exchange or the Exchange; and
     (b)   the member has guaranteed the obligations of such related company and the related company
           has guaranteed the obligations of the member (such guarantee to be in a form acceptable to
           the Exchange and unlimited in amount).
The said consolidation permitted shall be carried out in accordance with the following rules or in such
other manner as may be acceptable to the Exchange:
    inter-company accounts between the member and the related company shall be eliminated;
    any minority interests in the related company shall be eliminated from the capital calculation; and
    calculations with respect to the member and the related company shall be as of the same date.

G.1.04 – Special Deductions
Notwithstanding the provisions of the Capital Formula as set out in Form 1, the Board may, as
circumstances dictate in individual cases, prescribe special capital requirements in order to recognize the
additional risk of loss inherent in large holdings or concentrations of particular securities.
The Board shall have full discretion as to the necessity for and sufficiency of special capital requirements
in any particular individual case, and its decision shall not be limited by the ordinary margin requirements
of the Exchange but shall take into consideration all factors pertaining to the market for the security in
question and the affairs as a whole of the member involved.

G.1.05 – Margin Requirements for Clients and Members
Every member shall obtain from clients and maintain with respect to its own account such minimum


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margin in such amount and in accordance with such requirements as the Board may from time to time
prescribe by rule and regulation. Such minimum margin shall be used for calculations pursuant to Form 1.
For the purpose of this rule, the following margin requirements are hereby prescribed:
(1) Bonds, Debentures, Treasury Bills and Notes
     (a) Bonds, debentures, treasury bills and other securities of or guaranteed by the Government of
         Canada, of the United Kingdom, of the United States of America and of any other national
         foreign government (provided such foreign government securities are currently rated AA or AAA
         by Moody's Investors Service Inc. or Standard and Poor's Corporation respectively) maturing
         (or called for redemption):
           within 1 year                      1% of market value multiplied by the fraction
                                              determined by dividing the number of days to
                                              maturity by 365

           over 1 year to 3 years             1 % of market value
           over 3 years to 7 years            2% of market value
           over 7 years to 11 years           4% of market value
           over 11 years                      4% of market value

     (b)   Bonds, debentures, treasury bills and other securities of or guaranteed by any province of
           Canada and obligations of the International Bank for Reconstruction and Development,
           maturing (or called for redemption):
           within 1 year                      2% of market value multiplied by the fraction
                                              determined by dividing the number of days to
                                              maturity by 365

           over 1 year to 3 years             3% of market value
           over 3 years to 7 years            4% of market value
           over 7 years to 11 years           5% of market value
           over 11 years                      5% of market value

     (c)   Bonds, debentures, or notes (not in default) of or guaranteed by any municipal corporation in
           Canada or the United Kingdom maturing:
           within 1 year                      3% of market value multiplied by the fraction
                                              determined by dividing the number of days to
                                              maturity by 365

           over 1 year to 3 years             5% of market value
           over 3 years to 7 years            5% of market value
           over 7 years to 11 years           5% of market value
           over 11 years                      5% of market value

     (d)   Other non-commercial bonds and debentures, (not in default): 10% of market value;
     (e)   Commercial and corporate bonds, debentures and notes (not in default) and non- negotiable
           and non-transferable trust company and mortgage loan company obligations registered in the


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          member's name maturing:
          within 1 year                        3% of market value

          over 1 year to 3 years               6% of market value
          over 3 years to 7 years              7% of market value
          over 7 years to 11 years             10% of market value
          over 11 years                        10% of market value



          Where such commercial and corporate bonds, debentures and notes are obligations of
          companies whose notes are acceptable notes as defined in Rule G.1.05(1)(f) the margin
          requirements in such rule shall apply.
          (i)    if convertible and selling over par, apply the above rates on par value and add 30% of the
                 excess of market value over par when convertible into option eligible securities or, 50% of
                 the excess of market value over par when convertible into securities acceptable for margin
                 purposes, or 100% of the excess of market value over par when convertible into securities
                 not acceptable for margin purposes with a minimum addition to the above rates of 10% of
                 par value. If convertible and selling at or below par, add 10% of par value to the quoted
                 rates;
          (ii)   if selling at 50% of par value or less and if rated "B" or lower by either Canadian Bond
                 Rating Service or Dominion Bond Rating Service, the margin required is 50% of the
                 market value. In the case of U.S. pay securities rated "B" or lower by either Moody's or
                 Standard and Poor's, the margin required is 50% of the market value;
          (iii) if carried in inventory, convertible into shares which are acceptable for margin purposes
                and which qualify as underlying interest of Options, and selling over par, apply the above
                rates on par value and add 25% of the excess market value over par with a minimum
                addition to the above rates of 10% of par value.
          (iv) if convertible and a residual debt instrument (zero coupon) and the margin requirement
               calculated for the debt instrument pursuant to Rule G.1.05(1)(j) exceeds the margin
               requirement for the instrument pursuant to this subclause (e), margin shall be provided as
               required pursuant to Rule f.
          (v)    if convertible and residual debt instrument (zero coupon) and the margin requirement
                 calculated for the debt instrument pursuant to this subclause (e) exceeds the margin
                 requirement under the rules for the securities into which the instrument can be converted,
                 the margin required need not exceed the margin provided for under the rules on such
                 other securities.
    (f)   Acceptable commercial, corporate and finance company notes, and trust company and
          mortgage loan company obligations readily negotiable and transferable and maturing:
          within 1 year                        3% of market value multiplied by the fraction
                                               determined by dividing the number of days to
                                               maturity by 365

          over 1 year                          apply rates for commercial and corporate bonds,
                                               debentures and notes

          "acceptable commercial, corporate and finance company notes" means notes issued by a
          company incorporated in Canada or in any province of Canada and (i) having a net worth of not


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          less than $10,000,000, (ii) guaranteed by a company having a net worth of not less than
          $10,000,000, or (iii) a binding agreement exists whereby a company having a net worth of not
          less than $25,000,000 is obliged, so long as the notes are outstanding, to pay to the issuing
          company or to a trustee for the note-holders, amounts sufficient to cover all indebtedness under
          the notes where the borrower, either:
          (i)    files annually under the applicable provincial legislation a prospectus relating to its notes
                 which have a term to maturity of one year or less and provides to members acting as
                 authorized agent(s) the following information in written form:
                 1)   disclosure of limitation, if any, on the maximum principal amount of notes authorized
                      to be outstanding at any one time; and,
                 2) a reference to the bank lines of credit of the borrower or of its guarantor if a
                      guarantee is required; or
          (ii)   provides to members acting as authorized agent(s) an information circular or
                 memorandum which includes or is accompanied by the following:
                 1)   recent audited financial statements of the borrower or of its guarantor if a guarantee
                      is required;
                 2)   an extract from the borrower's general borrowing by-law dealing with the borrower's
                      corporate authorization to borrow;
                 3)   a true copy of a resolution of directors of the borrower certified by the borrower's
                      secretary and stating in substance:
                      a) the limitation, if any, on the maximum amount authorized to be borrowed by way
                            of issue of notes; and
                      b)   those officers of the borrower company who may legally sign the notes by hand
                           or by facsimile;
                 4)   where notes are guaranteed, a certified copy of a resolution of directors of the
                      guarantor company, authorizing the guarantee of such notes;
                 5)   a certificate of incumbency and facsimile signatures of the authorized signing officers
                      of the borrower and its guarantor, if any;
                 6)   specimen copies of the note or notes;
                 7)   a favorable opinion of counsel for the borrower regarding the incorporation,
                      organization and corporate status of the borrower, its corporate capacity to issue
                      notes and the due authorization by it of the issuance of notes;
                 8)   where notes are guaranteed, a favourable opinion of counsel for the guarantor
                      regarding the incorporation, organization and corporate status of the guarantor, its
                      capacity to guarantee the notes and the due authorization, validity and effectiveness
                      of its guarantee; and
                 9)   a summary setting forth the following:
                      a) a brief historical synopsis of the borrowing company and of its guarantor, if any;
                      b)   purpose of the issue;
                      c)   a reference to the bank lines of credit of the borrowing company or of its
                           guarantor, if a guarantee is required;
                      d)   the denominations in which notes may be issued;
    (g)   Bonds in default: 50% of market value
    (h)   Income bonds and debentures which have paid in full interest at the stated rate for the two
          preceding years as required by the related trust indenture which must specify that such interest
          be paid if earned:
          currently paying interest at the      10% of market value
          stated rate



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            not paying interest or paying at      50% of market value
            less than the stated rate

      (i)   British Columbia Government Guaranteed Parity Bonds:
            Long Positions: 1/4 of 1% of par value or rates prescribed under Rule G. 1.05(1)(b). Short
            Positions: rates prescribed under Rule G. 1.05(1)(b)
      (j)   Strip Coupons and Residuals
            Strip coupons and residual debt instruments: The percentage of market value which is
            (i)    for instruments with a term to maturity of less than 20 years, 1.5 times;
            (ii)   for instruments with a term to maturity of 20 years or more, 3 times
            the margin rate applicable to the debt instrument which has been stripped or to which the
            detached coupon or other evidence of interest relates, provided that in determining the term to
            maturity of a coupon or other evidence of interest the payment date for such interest shall be
            considered the maturity date. Margin in respect of residual debt instruments which are
            convertible into other securities shall be determined in accordance with subclauses (4) and (5)
            of Rule G.1. 05(1)(e).
(2) Bank Paper
     Deposit certificates, promissory notes or debentures issued by a Canadian chartered bank (and of
     Canadian chartered bank acceptance) maturing:
      within 1 year                          2% of market value multiplied by the fraction
                                             determined by dividing the number of days to
                                             maturity by 365

      over 1 year                            apply rates for commercial and corporate bonds,
                                             debentures and notes

(3)   Acceptable Foreign Bank Paper
      Deposit certificates or promissory notes issued by a foreign bank, readily negotiable and transferable
      and maturing:
      within 1 year                          2% of market value multiplied by the fraction
                                             determined by dividing the number of days to
                                             maturity by 365

      over 1 year                            apply rates for commercial and corporate bonds,
                                             debentures and notes

      "acceptable foreign bank paper" consists of deposit certificates or promissory notes issued by a bank
      other than a Canadian chartered bank with a net worth (i.e. capital plus reserves) of not less than
      $200,000,000.
(4) Acceptable Foreign, Commercial, Corporate and Financial Company Notes.
     Acceptable foreign, commercial, corporate and financial company notes readily negotiable and
     maturing:
      within 1 year                          3% of market value multiplied by the fraction
                                             determined by dividing the number of days to
                                             maturity by 365




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     over 1 year                            apply rates for commercial and corporate bonds,
                                            debentures and notes

     "acceptable foreign, commercial, corporate and finance company notes" means promissory notes
     issued by a company or guaranteed by a company incorporated in a country other than Canada with
     a net worth of not less than $25,000,000 where information equivalent to that required by Rule
     G.1.05(1)(f)is provided by the borrower.
(5) Unhedged Foreign Exchange
     Unhedged foreign exchange positions of a member or client of a member shall be margined in
     accordance with this rule. Foreign exchange positions are monetary assets and liabilities (as
     defined) and shall include currency spot transactions, futures and forward contracts, swaps and any
     other transaction which results in exposure to foreign exchange rate risk.
     (a)   General Principles
           (i)    Each unhedged foreign exchange position shall be margined in the manner provided in
                  this Rule G. 1.05(5)(e) on a currency by currency basis according to the four currency
                  groups defined in Rule G.1.05(5)(e) at the following margin rates, subject to an adjustment
                  to the margin rate of a Group 1, 2 or 3 currency pursuant to Rule G.1.05(5)(e)(iii).
                                                                                            Currency Group
                                                      1             2             3            4

                  Spot Risk Margin Rate               1.0%          3.0%          10.0%        25.0%
                  Weighted Unhedged Rate              1.0%          3.0%          5.0%         12.5%

           (ii)   All calculations in respect of unhedged positions shall be made on a trade date basis.
           (iii) members shall be permitted at their option to margin certain inventory positions in
                 accordance with Rule G.1.05(5)(ii) instead of the other applicable provisions of the Rule
                 G.1.05(5).
           (iv) References to conversion to Canadian dollars at the spot exchange rate shall be to the
                rate quoted by a recognized quote vendor for contracts with a term to maturity of one day.
           (v)    Monetary assets and liabilities are assets and liabilities, respectively, of a member in
                  respect of money and claims to money whether denominated in foreign or domestic
                  currency, which are fixed by contract or otherwise.
           (vi) Inventory long or short currency futures contracts listed on a recognized exchange which
                are included in the unhedged foreign exchange calculations hereunder are not required to
                be margined pursuant to Rule G.1.12.
           (vii) For the purpose of this Rule G. 1.05(5) the Chicago Mercantile Exchange, the Philadelphia
                 Board of Trade and the Toronto Futures Exchange are deemed to be recognized
                 exchanges.
     (b)   Foreign Exchange Margin Requirement
           The foreign exchange margin requirement for foreign exchange positions shall be the
           aggregate of the spot risk margin requirement and the term risk margin requirement calculated
           based on the spot risk margin rate and the term risk margin rate, respectively, specified in Rule
           G.1.05(5)(a)(i).
           (i)    Spot Risk Margin Requirement
                  1)   The spot risk margin requirement shall apply to all monetary assets and liabilities
                       regardless of term to maturity.


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                2)  The spot risk margin requirement shall be calculated as the product of the net
                    monetary position and the spot risk margin rate.
                3) Monetary assets and liabilities will be considered to be spot positions unless they
                    have a term to maturity of more than 3 days.
                4) The spot risk margin requirement shall be converted to Canadian dollars at the then
                    current spot exchange rate.
         (ii)   Term Risk Margin Requirement
                1)   The term risk margin requirement shall apply to all monetary assets and liabilities
                     which have a term to maturity of more than 3 days, where the term to maturity is
                     defined as the amount of time to when the claim to the monetary asset or the
                     obligation to satisfy monetary liability expires.
                2)   The term risk margin requirement is calculated as the product of the market value of
                     the monetary asset or liability, the weighting factor of a monetary asset or liability with
                     a term to maturity of 2 years or less shall be the number of days to maturity of the
                     monetary asset or liability divided by 365 days, provided that if the term to maturity is
                     3 calendar days or less the weighting factor shall be zero.
                3)   The term risk margin rate for an unhedged foreign exchange position shall not
                     exceed the following rates:
                                                                        Currency Group
                                                                1       2           3               4
                     Maximum      Term Risk Margin        4     .0%     7.0%          10.0%         25.0%
                     Rate

         (iii) Where the member has both monetary assets and monetary liabilities the term risk margin
               requirement may be netted as follows:
                1)   2 Years or Less to Maturity
                     The term risk margin requirements in respect of monetary assets or liabilities
                     denominated in the same currency which both have a term to maturity of 2 years or
                     less shall be the net of the term risk margin requirements of the monetary assets and
                     liabilities.
                2)   Over 2 Years To Maturity
                     The term risk margin requirements in respect of monetary assets or liabilities
                     denominated in the same currency which both have a term to maturity of greater than
                     2 years shall be the greater of the term risk margin requirements of the monetary
                     assets and liabilities.
                3)   Provisos
                     a)   The term risk margin requirements in respect of monetary assets or liabilities
                          denominated in the same currency one having a term to maturity of 2 years or
                          less and one having a term to maturity of more than 2 years which have a
                          difference in their respective terms to maturity of 180 days or less shall be the
                          net of the term risk margin requirements of the monetary assets and liabilities.
                     b)   Where a member has offsetting positions, one having a term to maturity of 2
                          years or less and one having a term to maturity of more than 2 years, the sum of
                          the term risk margin requirement of the offsetting positions shall not exceed the
                          product of the market value which is offset and the following rates:




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                           Currency Group
                           1                 2                3               4

                           5.0%              10.0%            20.0%           50.0%

                      c)   The term risk margin requirement shall be converted to Canadian dollars at the
                           then current spot exchange rate.
                      d)   The sum of the security margin requirement and the foreign exchange margin
                           requirement shall not exceed 100%.
    (c)   Alternative Futures and Forward Contract Inventory Margin
          As an alternative to the foreign exchange margin requirement determined under the Rule
          G.1.05(5) for a member's futures and forward contract inventory positions denominated in a
          currency which has a currency futures contract which trades on a recognized exchange, the
          foreign exchange margin requirement may be calculated as follows.
          (i)    Futures Contracts
                 Foreign exchange positions consisting of futures contracts may be margined at the margin
                 rates prescribed by the exchange on which such futures are listed.
          (ii)   Forward Contracts Offsets
                 Forward contract positions which are not denominated in Canadian dollars may be
                 margined as follows:
                 1)   margin shall be the greater of the margin as prescribed in Rule G.1.05(5)(a) and (b)
                      for each position;
                 2)   two forward contracts held by a member which have one currency common to both
                      contracts, are for the same value date, and the amount of the common currency
                      positions are equal and offsetting, may be treated as a single contract for the
                      purposes of this paragraph (b).
          (iii) Futures and Forward Contract Offsets
                 Futures and forward contract positions which are not denominated in Canadian dollars
                 may be margined as follows:
                 1)   a)   margin shall be the greater of the margin as prescribed in Rule G.1.05(5)(a) and
                           (b) for each position;
                      b)   margin rates applicable to unhedged positions under this paragraph (iii) shall be
                           the rates established by this rule and not the rates prescribed by the exchange
                           on which the futures contracts are listed;
                 2)   two forward contracts held by a member which have one currency common to both
                      contracts, are for the same value date, and the amount of the common currency
                      positions are equal and offsetting, may be treated as a single contract for the
                      purposes of this paragraph (c).
    (d)   Customer Margin
          (i)    Unhedged foreign exchange positions of clients shall be margined in accordance with
                 Rule G.1.05(5)(a), (b) and (e), provided that:
                 1)   No margin shall be required in respect of the accounts of clients who are acceptable
                      institutions as defined in Form 1.
                 2)   The margin required in respect of acceptable counterparties and regulated entities as
                      defined in Form 1 shall be calculated on a mark-to- market basis.

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                 3)   The margin required in respect of foreign exchange positions (excluding cash
                      balances) held in the accounts of clients who are classified as other counterparties,
                      as defined in Form 1, shall be the aggregate of the security margin requirement and
                      the foreign exchange margin requirement, provided that where the margin rate
                      applicable to the security is greater than the spot risk margin rate specified in Rule
                      G.1.05(5)(a)(i) the foreign exchange margin requirement shall be nil. The sum of the
                      security margin requirement and the foreign exchange margin requirement shall not
                      exceed 100%.
                 4)   Listed futures contracts shall be margined in the same manner as prescribed in Rule
                      G. 1.12.
    (e)   Currency Groups
          (i)    Currency Group Criteria
                 The qualitative and quantitative criteria for each currency group are as follows:
                 Group 1     -    volatility of the currency must be below the volatility threshold specified in
                                  paragraph (2)(a), and;
                             -    is the primary intervention currency of the Canadian dollar.
                 Group 2     -    volatility of the currency must be below the volatility threshold specified in
                                  paragraph (2)(a), and;
                             -    there must be a daily quoted spot rate by a Canadian Schedule I
                                  chartered bank, and one of the following:
                             -    a daily quoted spot rate by a participant of the Economic and Monetary
                                  Union, or;
                             -    there is a listed future for the currency exists on a recognized exchange.
                 Group 3     -    volatility of the currency must be below the volatility threshold specified in
                                  paragraph (2)(a), and;
                             -    there must be a daily quoted spot rate by a Canadian Schedule I
                                  chartered bank, and;
                             -    the currency must be of a member country of International Monetary
                                  Fund with Article VIII status, and no capital payment restrictions as they
                                  relate to security transactions.
                 Group 4     -    none.
          (ii)   Monitoring Adherence To Currency Group Criteria
                 The Exchange shall be responsible for monitoring the adherence of each Group 1, 2 or 3
                 currency to the quantitative criteria of the currency group described in paragraph (i).
                 1)   Currency Volatility
                      The volatility of each Group 1, 2 or 3 currency shall be monitored as follows. The
                      Canadian dollar equivalent closing price on each of the four trading days succeeding
                      the "base day" shall be compared to the base day closing price. The first of four
                      succeeding trading days on which the percentage change in price (negative or
                      positive) between the closing price on the succeeding day and the closing price on
                      the base day is greater than the unhedged margin rate prescribed for the particular
                      currency in Rule G.1.05(5)(a)(i) shall be designated an "offside base day". If an
                      offside base day has been designated, that day shall be designated the base day for
                      the purpose of making further base day closing price comparisons as aforesaid. If the
                      number of offside base days during any 60 trading day period is greater than 3 the
                      currency shall be deemed to have exceeded the volatility threshold of the currency

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                    group.
               2)   Qualitative Criteria
                    On at least an annual basis, the Exchange shall assess the adherence of each
                    currency in a group to the qualitative criteria of the particular currency group to
                    determine whether the currency continues to satisfy the qualitative criteria of the
                    currency group.
         (iii) Foreign Exchange Margin Surcharge
               If the volatility of a Group 1, 2 or 3 currency exceeds the volatility threshold defined in
               paragraph (2)(a) then the margin rate shall be increased by increments of 10% until the
               application of the increased margin rate would result in no more than two offside days
               during the preceding 60 trading days. The increased margin rate shall apply for a
               minimum of 30 trading days and shall be automatically decreased to the margin rate
               otherwise applicable when after such 30 trading day period the volatility of the currency is
               less than the volatility threshold defined in paragraph (2)(a).
               The Exchange shall be responsible for determining the required increase or decrease in
               foreign exchange margin rates under this paragraph (iii).
         (iv) Currency Group Downgrades and Upgrades Where:
               1)   the Exchange determines that a particular currency no longer satisfies the criteria of
                    the particular currency group as defined in Rule G.1.05(5)(e)(i), or;
               2)   a member has provided to the Exchange information demonstrating that a currency
                    satisfies the criteria specified in Rule G.1.05(5)(e)(i) for a currency group other than
                    the currency group for which the currency is then designated, and
                    the Exchange has verified such information to his or her satisfaction, the Exchange
                    shall recommend to the Capital Committee that the currency be moved to the
                    currency group with the lower or higher margin rate, as the case may be. If the
                    Capital Committee approves the recommendation the Exchange shall notify
                    members of the change in the designated currency group of the particular currency.
         (v)   Foreign Exchange Concentration Charge
               When in respect of any Group 2, Group 3 or Group 4 currency, the aggregate of the
               foreign exchange margin provided under this Rule G. 1.05(5) on a member's monetary
               assets and monetary liabilities and the foreign exchange margin on client accounts
               exceeds 25% of the firm's net allowable assets net of minimum capital (as determined for
               the purposes of Form 1), a concentration charge in addition to the foreign exchange
               margin already provided under this Rule G.1.05(5) shall apply. The concentration charge
               shall be equal to the amount of the foreign exchange margin provided under this Rule
               G.1.05(5) which is in excess of 25% of the member's net allowable assets net of minimum
               capital.
         (vi) National Housing Act (N.H.A.)
               Insured mortgages                   6% of market value

               Conventional first mortgages held 12% of market value or the rates set by chartered
               in member's inventory             banks, whichever is greater

         (vii) 1)   Listed Securities
                    On securities listed and trading on the Exchange, (excluding those securities
                    designated development companies which have not been trading for a minimum of
                    three months, Capital Pool securities and securities listed on any recognized


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                  exchange in Canada or the United States and the stock list of the London Stock
                  Exchange and securities listed on the first section of the Tokyo Stock Exchange, the
                  following margin requirements shall apply:
                  Long Positions                     Margin Required

                  Securities selling:
                  at $2.00 or more                   50% of market value
                  at $1.75 to $1.99                  60% of market value
                  at $1.50 to $1.74                  80% of market value

                  Securities selling under $1.50 may not be carried on margin
                  Short Positions                    Credit Required

                  Securities selling:
                  at $2.00 or more                   150% of market value
                  at $1.50 to $1.99                  $3.00 per share
                  at $.25 to $1.49                   200% of market value
                  at less than $0.25                 market value plus $0.25 per share

                  Notwithstanding the foregoing, the margin required in respect of positions (other than
                  firm positions to which Rule G.1. 14 applies) of warrants issued by a Canadian
                  chartered bank which are listed on any recognized stock exchange or other listing
                  organization referred to above and which entitle the holder to purchase securities
                  issued by the Government of Canada or any province thereof shall be the greater of:
                  a)   the margin otherwise required by this Rule G. 1.05(7)(e) according to the market
                       value of the warrants; or
                  b)   100% of the margin required in respect of the security to which the holder of the
                       warrant is entitled upon exercise of the warrant provided that in the case of a
                       long position the amount of margin need not exceed the market value of the
                       warrant.
             2)   Subject to the existence of an ascertainable market among brokers or dealers the
                  following unlisted securities shall be accepted for margin purposes on the same basis
                  as listed stocks:
                  a)   Securities of insurance companies licensed to do business in Canada.
                  b)   Securities of Canadian Banks.
                  c)   Securities of Canadian trust companies.
                  d)   Securities of mutual funds qualified by prospectus for sale in any province of
                       Canada.
                  e)   Other senior securities of listed companies.
                  f)   Securities which qualify as legal for investment by Canadian life insurance
                       companies, with recourse to the basket clause.
                  g)   Unlisted securities in respect of which application has been made to list on a
                       recognized stock exchange in Canada and approval has been given subject to


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                       the filing of documents and production of evidence of satisfactory distribution
                       may be carried on margin for a period not exceeding 90 days from the date of
                       such approval.
                  h)   All securities listed on The Nasdaq Stock Market (Nasdaq National Market and
                       The Nasdaq SmallCap Market).
             3)   All other unlisted stocks not mentioned above.
                  Long Positions                       Margin Required 100% of market value

                  short position                       credit requirements
                  Securities selling at $ .50 or more 200% of market value


                  Securities selling at less than      Market value plus $ .50 per share
                  $.50

             4)   OTC Put and Call Options
                  a)   All purchase of put and call options shall be for cash.
                  b)   i)    Where a short stock position is offset by a long call option for the same
                             underlying security, the minimum margin required shall be (i) 100% of the
                             acquisition cost of the long call option, plus (ii) 25% of the market value of
                             the short stock, plus (iii) any excess exercise price of the call over the
                             market price of the stock, multiplied by the unit of trading, up to an
                             additional 25% of the market value of the stock.
                       ii)   Where a long stock position is offset by a long put option for the same
                             underlying security, the minimum margin required shall be (i) 100% of the
                             acquisition cost of the long put option, plus (ii) 25% of the market value of
                             the long stock, plus (iii) any excess of the market price of the long stock
                             over the exercise price of the long put, multiplied by the unit of trading, up
                             to any additional 25% of the market value of the long stock.
                  c)   The writing and issue or guarantee for a client of a put or a call shall be
                       marginate pursuant to the provisions of this section as they apply to the same
                       number of shares.
                  d)   Such puts and calls shall be considered for margin purposes as if they were
                       exercised.
                  e)   Each such put or call shall be marginate separately and any difference between
                       the market price and the price of a put or call shall be considered to be of value
                       only in determining the amount of margin required on that particular put or call.
                  f)   If both a put and a call for the same number of shares of the same security are
                       written and issued or guaranteed for a client, the amount of margin required
                       shall be the margin on the put or call whichever is greater.
                  g)   Where a call is written and issued or guaranteed against "long securities" or a
                       put is written and issued or guaranteed against "short securities" no margin will
                       be required on the put or call, provided such "long or short" position is
                       adequately marginate in accordance with this section. Provided, however, that
                       the current market price to be used in computing such margin requirement shall
                       not be greater than the call price in the case of a call or less than the put price in
                       the case of a put.
                  h)   Where a call is carried short against an existing net long position in a security

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                       readily convertible or exchangeable into the underlying interest, the minimum
                       margin required shall be:
                       i)    the margin on the long position required pursuant to this section based on
                             the market price of such security or the exercise price of the short call,
                             whichever is lower; plus
                       ii)   the amount, if any by which the subscription price or conversion price of
                             the long security exceeds the exercise price of the short call, multiplied by
                             the unit of trading. The right to exchange or convert the long security shall
                             not expire prior to the expiration date of the short call. If the expiration of
                             the right to exchange or convert is accelerated (whether by reason or
                             redemption or otherwise), then such short call shall be considered
                             uncovered after the date on which such right to exchange or convert
                             expires.
                  i)   written guarantee by a member, a bank or trust company to receive or deliver
                       securities for a client shall be deemed adequate margin under this section.
                  j)   A member issuing or guaranteeing an undertaking to receive or deliver
                       securities for a client shall be margined as if it were a put or call.
             5)   OTC Options
                  a)   Underlying Interest" means:
                       i)    in the case of an equity or bond option, the security; or
                       ii)   in the case of an index option, the index that is the subject of the option.
                  b)   Trades of Listed Options to be on the Exchange
                       i)    Except as otherwise permitted, the following persons shall not trade or
                             participate in a trade of an option, whether acting as principal or agent,
                             unless the trade is made on the Exchange:
                             1.   A member;
                             2.   A Partner, Director or Officer of a member;
                             3.   An employee of a member that is an Approved Person;
                             4.   A shareholder of a member that carries on as a substantial part of its
                                  business in Canada that of a broker, dealer or advisor in securities,
                                  and that has at least a 20% ownership interest in the member, directly
                                  or indirectly;
                             5.   a related company or affiliate of a member; and
                             6.   a Partner, Director or Officer of a company that is defined in
                                  paragraph 4. or 5. above.
                       ii)   A member or any other person or company subject to Subsection i) shall
                             not avoid its application or the application of any other Exchange
                             requirement by causing a trade in an option to be carried out by another
                             person or company.
                  c)   Over-the-Counter Trades in Options
                       A member or an Approved Person shall not make or participate in an OTC trade
                       in any put or call option unless such option.
                       i)    does not relate to an interest underlying an option issued by the Clearing
                             Corporation, or


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                       ii)      does relate to an interest underlying an option issued by the Clearing
                                Corporation but does not have the same terms as any series of options
                                issued by the Clearing Corporation.
                  Note:       Writing OTC Options constitutes distribution of securities for which a
                              prospectus may be required or for which specific or blanket exemptive relief
                              may be necessary under the applicable securities legislation. The writer of
                              over-the-counter options may, in effect, be an issuer distributing securities
                              and so should accordingly ensure that such distribution is in compliance with
                              applicable securities legislation.
                  d)   Margin Requirements
                       i)       Client Accounts
                                All purchasers of OTC options for clients accounts shall be for cash.
                       ii)      Firm Accounts
                                1.   The charge to capital for a long call and for a long put where the OTC
                                     option's premium is less than $1.00 shall be the market value of the
                                     option.
                                2.   The charge to capital for a long call where the OTC option's premium
                                     is $1.00 or more, and which is not used to offset capital required on
                                     any other position, shall be the market value of the call, less 50% of
                                     the excess of the market value of the underlying interest over the
                                     exercise price of the call.
                                3.   The charge to capital for a long put where the OTC option's premium
                                     is $1.00 or more, and which is not used to offset capital required on
                                     any other position, shall be the market value of the put, less 50% of
                                     the excess of the exercise price of the put over the market value of
                                     the underlying interest.
                       iii)     Short Positions
                                Subject to Subsections (g) and (h), the minimum margin for short positions
                                in OTC options shall be as follows:
                                1.   In the case of a short OTC option position, other than a futures
                                     contract option position, the minimum margin shall be
                                     a.   % of the current premium of the short OTC option,
                                     b.   s the product of multiplying the margin rate of the underlying
                                          interest by the market value of the underlying interest,
                                     c.   s any out-of-the-money amount.
                                2.   Notwithstanding paragraph (1), in the case of a short OTC option
                                     position, in a client account, the minimum margin shall not be less
                                     than
                                     a.   100% of the current premium of the option,
                                     b.   plus 25% of the product of multiplying the margin rate of the
                                          underlying interest by the market value of the underlying interest.
                       iv)      Over-the-counter option positions in inventory or in a client account shall
                                be marked-to-market daily by calculating the value on a basis consistent
                                with the valuation benchmark or mathematical model used in determining
                                the premium at the time the contract was initially entered.


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                      v)    Where the member is a party to an OTC option, the counterparty to the
                            option shall be considered a client of the member.
                      vi)   All opening short transactions in OTC options must be carried in a margin
                            account.
                      vii) 1.    Notwithstanding subsection iii), the following constitutes adequate
                                 margin for OTC options;
                                 a.   a specific deposit of the underlying interest in negotiable form in
                                      the client's margin account with the member, or
                                 b.   the deposit with the member of an escrow receipt, as defined in
                                      Subsection 2., in respect of the underlying interest.
                                 c.   a put guarantee letter, in the form prescribed by the relevant
                                      exchange.
                            2.   Escrow Receipt
                                 Evidence of a deposit of an OTC option's underlying interest shall be
                                 deemed an escrow receipt for the purposes hereof if the underlying
                                 interest is held by a custodian that is a depository approved by the
                                 Clearing Corporation pursuant to an escrow agreement, acceptable to
                                 the Exchange, between the member with which the escrow receipt is
                                 deposited and the approved depository.
                            3.   Notwithstanding subsection (c), where an OTC option is written by a
                                 client that is not an Acceptable Institution, Acceptable Counterparty or
                                 Regulated Entity the requirements of subsection (g) shall apply:
                                 a.   where the terms of the OTC option require settlement by
                                      physical delivery of the underlying interest, and
                                 b.   where the Exchange has not established a margin rate less than
                                      100% of the underlying interest.
                      viii) Financial Institutions
                            1.   Notwithstanding subsection (c), no margin is required for OTC options
                                 entered into by a client that is an Acceptable Institution.
                            2.   Where the client is an Acceptable Counterparty or Regulated Entity,
                                 the required margin shall be the market value deficiency calculated in
                                 respect of the option position on an item-by-item basis.
                            NOTE: The market value deficiency is the amount by which the premium
                                  paid exceeds the market value of the option.
                      ix)   Margin Offsets
                            1.   Except as otherwise provided in this subsection, client, as defined in
                                 subsection (e), and members are permitted margin offsets for the
                                 purpose of hedging OTC options in the same manner as set out in
                                 Rule I.1.15, provided that the underlying interest is the same.
                            2.   In the case of spreads involving European exercise OTC options,
                                 a.   a margin offset is permitted where the spread consists of a long
                                      and short European exercise option and the contracts have the
                                      same expiration date; and
                                 b.   a margin offset is permitted where the spread consists of a short
                                      European exercise option and a long American exercise option;


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                                           however,
                                      c.   a margin offset is not permitted where the spread consists of a
                                           long European exercise option and a short American exercise
                                           option.
                         x)      Consistent with listed options, members are permitted to apply the
                                 premium credit generated on the OTC option against the margin required
                                 pursuant to this Section.
                         xi)     Margin Agreements
                                 members writing and issuing or guaranteeing OTC options on behalf of a
                                 client shall have and maintain with each client a margin agreement in
                                 writing defining the rights and obligations between them in regard to OTC
                                 options or have and maintain supplementary OTC option agreements with
                                 clients selling such options.
                    e)   Confirmation, Delivery and Exercise
                         i)      Every OTC option shall be confirmed in writing as between the parties,
                                 such confirmation to be mailed or delivered on the day of the transaction;
                         ii)     Payment for an OTC option, settlement, exercise and delivery shall be
                                 made in accordance with the terms of the OTC option contract; and
                         iii)    OTC options shall not be settled, exercised or delivered through the
                                 Clearing Corporation without the approval of the Clearing Corporation.
                    f)   Monthly Reports
                         Unless reported elsewhere, members shall report to the Exchange, as of the
                         close of business on the last trading day of each month, the total number and
                         type of options traded pursuant to Rule G.1.05(7)(f)(iii) during the preceding
                         month. The report shall be in such form as may be prescribed by the Exchange
                         from time to time.
                         NOTE: Reports are not required if the member is reporting under the securities
                               legislation of any Canadian Province, or to a foreign jurisdiction in
                               accordance with that jurisdiction's requirements.
         (viii) Units
               According to components.
         (ix) Gold, Silver and Platinum
               The minimum amount of margin which must be obtained from clients and maintained on
               gold, silver and platinum certificates shall be as follows:
               1)   Gold:       10% of the market value
               2)   Silver: 15% of the market value
               3)   Platinum:      15% of the market value
               For the purposes of this section, negotiable gold, silver and platinum certificates must be
               issued by issuers and under terms and conditions acceptable to the Exchange.
         (x)   Mortgage-backed Securities
               On instruments which are based upon mortgages and are guaranteed as to timely
               payment of principal and interest by an issuer or its agent, the rate specified in Rule
               G.1.05(1)(2)(3) or (4) applicable to securities of such guarantor according to the relevant
               maturity, plus additional margin of 25% of such specified rate.


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         (xi) Bond Margin Surcharge
             For the purposes of Rule G, margin shall be required in addition to the margin
             requirements prescribed elsewhere in the rules, in respect of all securities evidencing a
             debt obligation of an issuer on the following basis:
             1)   A debt security issued by the Government of Canada maturing in each of the three
                  periods below shall be monitored for price volatility in the primary markets in which
                  members trade such securities:
                  a)   over 1 year to 3 years
                  b)   over 3 years to 7 years
                  c)   over 7 years
             2)   Each trading day in the markets being monitored shall be a "base day" for the
                  purposes of this regulation. Subject to the provisions of this subclause (2), the closing
                  price of the relevant security on each base day shall be compared to the closing price
                  of such security on the next four trading days succeeding such base day. The first
                  day of such four succeeding days on which the difference (negative or positive)
                  between
                  a)   the closing price on the day and
                  b)   the base day closing price, expressed as a percentage of the base day closing
                       price, is greater than the margin rate prescribed for the relevant security under
                       the rules shall be designated as an "offside base day". If an offside base day
                       has been designated, no further offside base day shall be designated as a result
                       of the closing price for any base day prior to that offside base day; i.e. further
                       closing price comparisons will only be made with respect to the offside base day
                       and the trading days next succeeding it until another offside base day is
                       designated.
                  For any 90 calendar day period, the percentage that the number of offside base days
                  is to the total number of trading days in such period shall be determined. If such
                  percentage exceeds 5% for any two of the three classes of debt securities being
                  monitored, additional margin will be required for all debt securities in accordance with
                  Rule G. 1.05(11).
             3)   The amount of additional margin that may be required in respect of any securities
                  shall be 50% of the margin otherwise required under G.1.05.
             4)   The period of time during which additional margin shall be required shall not be less
                  than 30 days.
             5)   The Exchange shall be responsible for determining when additional margin is
                  required in accordance with subclause (b) and when the requirement for additional
                  margin shall be revoked in accordance with subclause (f).
             6)   If at any time after additional margin has been required for at least 30 days in
                  accordance with subclause (b) the percentage that the number of offside base days
                  is to the total number of trading days for the immediately preceding 90-day period
                  does not exceed 5%, the requirement for additional margin shall be revoked.
             7)   The Exchange shall notify members of the imposition or revocation of the
                  requirement for additional margin. Any such notification shall be communicated in
                  writing to all members immediately upon the determination that such additional
                  margin is to be imposed or revoked and such notice shall be effective not less than
                  five business days after giving the notice.



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         (xii) Margin on Capital Shares
             1)   Definitions. For the purposes of this clause:
                  a)   "capital share" means a share issued by a split share company which
                       represents all or the substantial portion of the capital appreciation portion of a
                       common share;
                  b)   "capital share intrinsic value" means the sum resulting when the number of
                       capital shares held by a member or client is multiplied by (the product obtained
                       by the net asset value of the split share company divided by the number of
                       outstanding capital shares of the split share company at the time of calculation,
                       less the market value of the preferred share of the split share company at that
                       time);
                  c)   "capital share penalty amount" means the capital share intrinsic value less the
                       exercise value;
                  d)   "combination exchange penalty amount" means, where applicable, the
                       incremental amount required to be paid to the split share company in order to
                       exchange the combination of a corresponding capital share and preferred share
                       for the underlying common share, multiplied by the number of such
                       combinations held;
                  e)   "corresponding" means, in respect of capital shares and preferred shares, the
                       capital shares and preferred shares issued by the same split share company;
                  f)   "equivalent" means, in respect of capital shares, the number of capital shares
                       issued by a split share company for each underlying common share held by the
                       split share company. In calculating the number of capital shares that are
                       equivalent to more than one common share, the number of capital shares
                       issued per common share shall be multiplied by the number of common shares
                       that are the subject of the calculations;
                  g)   "exercise value" means the capital share retraction price, as defined in the
                       prospectus of each split share company, multiplied by the number of capital
                       shares held by a member or client, or where no such definition is included,
                       means the capital share intrinsic value;
                  h)   "identical" means, in respect of common shares, common shares issued by the
                       same issuer;
                  i)   "a long position in capital shares which is covered by a short position in common
                       shares" means:
                       i)    the equivalent number of capital shares are held long as the number of
                             common shares held short, and
                       ii)   the short common shares are identical to the common shares underlying
                             the long capital shares;
                  j)   "a long position in capital shares which is covered by a short position in options"
                       means:
                       i)    the equivalent number of capital shares are held long as the number of
                             common shares underlying the short options, and
                       ii)   the common shares underlying the short options are identical to the
                             common shares underlying the long capital shares;
                  k) "net asset value" means the net asset value of a split share company as defined
                     in the prospectus of that split share company, and where not so defined, means
                     the value of the assets of the split share company less its liabilities;

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                  l)   "preferred share" means a share issued by a split share company which
                       represents all or the substantial portion of the dividend portion of a common
                       share, and includes equity dividend shares of split share companies;
                  m)   "prospectus" means the prospectus issued by a split share company to qualify
                       its capital shares and preferred shares for distribution;
                  n)   "short position in options" or "short options" means a position in which a call has
                       been written;
                  o)   "split share company" means a corporation formed for the sole purpose of
                       acquiring underlying common shares and issuing its own capital shares based
                       on all or the substantial portion of the capital appreciation portion and its own
                       preferred shares based on all or the substantial portion of the dividend income
                       portion of such underlying common shares;
                  p)   "underlying" means, in respect of common shares, the common shares of a
                       company that are purchased by a split share company to hold as securities on
                       which the capital shares and the preferred shares of such split share company
                       are based.
             2)   a)   Subject to subclauses b) and c) of this subclause 2), where a member's or
                       client's long position in capital shares is covered by a short position in common
                       shares, the margin required shall be equal to the sum of:
                       i)     the capital share penalty amount;
                       ii)    130% of the market value of the corresponding preferred shares for a client
                              or 25% for a member; and
                       iii)   where the capital share cannot be tendered to the split share company for
                              retraction directly for the underlying common share at the option of the
                              capital share holder, the margin otherwise required pursuant to this Rule
                              G.1.05(12)(b)(i) shall be increased by an amount equal to 5% of the market
                              value of the common shares;
                       but in no case may the total margin required be less than zero.
                  b)   The margin required pursuant to this subclause (b) shall not be greater than
                       25% of the market value of the common shares if, in the case of a member's
                       position, sub-clause G.1.05(12)(b)(i)(3) does not apply.
                  c)   The margin required pursuant to this subclause shall not be greater than 130%
                       of the market value of the common shares
                       i)     in respect of a client's position, or
                       ii)    30% in respect of a member's position, where subclause
                              G.1.05(12)(b)(i)(3) applies.
             3)   a)   Subject to subclauses b) and c) of this subclause 3), where a member's or a
                       client's long position in capital shares is covered by a short position in common
                       shares, and the member or client also owns identical preferred shares equal to
                       the number of capital shares owned, the total margin required for all three
                       securities shall be:
                       i)     subject to subclause ii) below, the market value of the capital shares less
                              the exercise value of the capital shares, plus the combination exchange
                              penalty amount, or
                       ii)    where the capital shares cannot be tendered to the split share company for
                              retraction directly for the underlying common share at the option of the
                              capital share holder, the margin otherwise required pursuant to subclause

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                             i) above shall be increased by an amount equal to 5% of the market value
                             of the common shares.
                       In no case shall the total margin required be less than zero.
                  b)   The margin required pursuant to subclause (c), shall not be greater than 25% of
                       the market value of the common shares where, in respect of a member's
                       position, subclause G.1.05(12)(c)(i)(2) does not apply.
                  c)   The margin required pursuant to subclause( c.), shall not be greater than 130%
                       of the market value of the common shares:
                       i)    in respect of a client's position, or
                       ii)   30% in respect of a member's position, where subclause
                             G.1.05(12)(c)(i)(2) applies.
             4)   Where a capital share is carried long for a member's or client's account and the
                  account is also short a call option expiring on or before the date of expiration of the
                  long capital share, and written on the same number and class of shares underlying
                  the capital share, the margin required on the short option shall be the lesser of:
                  a)   the margin required pursuant to Exchange requirements in respect of a client's
                       position in respect of a firm's position; or
                  b)   the amount, if any, by which:
                       i)    the excess of the market value of the underlying common shares over the
                             exercise value of the capital shares, plus an amount equal to 5% of the
                             market value of the common shares, if the capital shares cannot be
                             tendered to the split share company for retraction directly for the underlying
                             common shares at the option of the capital share holder; exceeds
                       ii)      the exercise price of the short call, multiplied by the unit of trading of the
                                call option.
         xiii) Margin on Interest Rate Swaps
             1)   Interest Rate Swaps
                  On interest rate swap agreements where payments are calculated with reference to a
                  notional amount, the obligation to pay and the entitlement to receive, shall each be
                  margined as separate positions as follows:
                  a)   where the payment is calculated according to a fixed rate, the margin shall be
                       the rate specified in Rule G.1.05(1)(a), plus 25% of such specified rate,
                       applicable to securities described therein with a principal amount equal to the
                       notional amount of the swap and having the same term to maturity as the
                       outstanding term of the swap, applied to the notional amount. For the purposes
                       of this subclause (1) a fixed rate is a rate which is not reset at least every ninety
                       days;
                  b)   where the payment is calculated according to a floating rate, the margin shall be
                       the rate specified in Rule G. 1.05(1)(a), applicable to securities described
                       therein with a principal amount equal to the notional amount of the swap and
                       having the same term to maturity as the period for which the rate is reset,
                       applied to the notional amount. For the purposes of this subclause( 2), a floating
                       rate is a rate which is not a fixed rate.
                  c)   Counterparty Margin
                       i)    No margin is required for swaps entered into by a client that is an
                             acceptable institution as defined in the Joint Regulatory Financial


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                                Questionnaire and Report (Form 1).
                          ii)   Where the client is an acceptable counterparty, as defined in the Joint
                                Regulatory Financial Questionnaire and Report (Form 1), margin shall be
                                the market value deficiency calculated in respect of the transaction on an
                                item-by-item basis.
               2)   Swap Positions Offset
                    Where a member
                    a)    is a party to an interest rate swap agreement requiring it to pay (or entitling it to
                          receive) fixed or floating rate payments calculated with reference to a notional
                          amount, and
                    b)    is a party to another offsetting interest rate swap agreement (i) entitling the
                          member to receive (or requiring it to pay) fixed or floating rate payments
                          calculated with reference to the same notional amount and in the same currency
                          and, (ii) with the same or a different term to maturity but, for which the same rate
                          of margin applies as the obligation referred to in a),
                    the margin required in respect of the positions in (1) and (2) may be netted., provided
                    that margin on fixed payment (or receipt) positions may only be offset against margin
                    on other fixed receipt (or payment) positions, and margin on floating rate payment (or
                    receipt) positions may only be offset against margin on other floating rate receipt (or
                    payment) positions. For the purposes of this rule, a fixed rate is a rate which is not
                    reset at least every ninety days; and a floating rate is a rate which is not a fixed rate.
               3)   Fixed Rate Swap and Security Position Offset
                    Where a member
                    a)    is a party to an interest rate swap agreement providing for the member to make
                          or receive Canadian dollar or United States dollar payments calculated with
                          reference to a notional amount at a rate which is fixed for the term of the
                          obligation, and
                    b)    holds a long or short position in securities described in Rule G.l.O7(1)(a) with a
                          principal amount equal to and denominated in the same currency as the notional
                          amount of the swap and having the same or different term to maturity (but for
                          which the same rate of margin applies as the position in a) as the outstanding
                          term of the swap,
                    the margin required in respect of the positions in (1) and (2) may be netted.
               4)   Floating Rate Swap and Security Position Offset Where a member
                    a)    is a party to an interest rate swap agreement providing for the member to make
                          or receive Canadian dollar or United States dollar payments calculated with
                          reference to a notional amount at a rate which is not fixed for the term of the
                          obligation, and
                    b)    holds a long or short position in securities described in Rules G. 1.05(1)(a) or
                          G.1.05(2) maturing within one year with a principal amount equal to and
                          denominated in the same currency as the notional amount of the Swap, the
                          margin required in respect of the positions in (1) and (2) may be netted.

G.1.06 – No Margin On Control Blocks
(1) For the purposes of this rule a control block means a sufficient number of securities of an issuer to
affect materially the control of that issuer, but any holding of any person, corporation or combination of
persons or corporations holding more than 20% of the outstanding voting securities of an issuer shall, in


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the absence of evidence to the contrary, be deemed to affect materially the control of that issuer.
(2) Any security which is part of a control block is not acceptable for margin purposes except to the
extent that the control block constitutes any or all of the securities which a member has an obligation or
commitment to acquire, or has acquired, under prospectus offering and Rule G.1.08 is applicable, in
which case the margin rate therein shall apply.
G.1.07 – Short Position Offset
(1) Governments, Maturity Over One Year
     Where a member
     (a)   owns securities described in subclauses (a) or (b) of Rule G. 1.05(1) of one maturity maturing
           over one year, and
     (b)   has a short position in securities
           (i)    issued or guaranteed by the same issuer of the securities referred to in (a) (provided that
                  for these purposes each of the provinces of Canada shall be regarded as the same issuer
                  as any other province).
           (ii)   maturing over one year,
           (iii) maturing within the same periods for the purpose of determining margin rates as the
                 securities referred to in (a), and
           (iv) with a market value equal to the securities referred to in (a) [with the intent that no offset
                shall be permitted in respect of the market value of a long (or short) position which is in
                excess of the market value of the short (or long) position].
                  The two positions may be offset and the required margin computed with respect to the net
                  long or net short position only. This rule also applies to future purchase and sales
                  commitments.
(2) Governments, Maturity Within One Year Where a member:
     (a) owns securities described in subclauses (a) or (b) of Rule G. 1.05(1) maturing within one year,
         and
     (b)   has a short position in securities
           (i)    issued or guaranteed by the same issuer of the securities referred to in (a) (provided that
                  for these purposes each of the provinces of Canada shall be regarded as the same issuer
                  as any other province),
           (ii)   maturing within one year, the margin required shall be the excess of the margin on the
                  short (or long) position. This Rule also applies to future purchase and sales commitments.
(3) Strip Coupon or Residuals - Government Debt
     Where a member holds a short (or long) position in bonds or debentures denominated in Canadian
     dollars issued or guaranteed by either the Government of Canada or by a province of Canada and
     also holds a long (or short) position in the stripped coupon or residual portion of such debt
     instruments, the margin required shall be the excess of margin required on the long (or short)
     position over the margin required on the short (or long) position, provided that the net margin may
     only be determined as foresaid on the basis that:
     (a)   margin required in respect of a short (or long) position in bonds or debentures may only be
           netted against margin required in respect of a long (or short) position in stripped coupons or
           residuals to the extent that the market value of the two positions is equal, and no netting or
           offset shall be permitted in respect of the market value of a short (or long) position which is in
           excess of the market value of the long (or short) position;
     (b)   margin required in respect of bonds or debentures issued or guaranteed by the Government of
           Canada may only be netted against the margin required for the stripped coupon or residual
           portion of other Government of Canada instruments which mature within the same periods

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          referred to in Rule G.1.05(1) for the purpose of determining margin rates; and
    (c)   margin required in respect of bonds or debentures issued or guaranteed by a province of
          Canada may only be netted against the margin required for the stripped coupon or residual
          portion of other province of Canada instruments which mature within the same periods referred
          to in Rule G. 1.05(1) for the purpose of determining margin rates.
          Notwithstanding the foregoing provisions of subclause (3) of this Rule where a member holds:
          (i)    a short position in bonds or debentures issued or guaranteed by the Government of
                 Canada and a long position in the stripped or residual portion of bonds or debentures
                 issued or guaranteed by a province of Canada, or
          (ii)   a short position in bonds or debentures issued or guaranteed by a province of Canada and
                 a long position in the stripped or residual portion of bonds or debentures issued or
                 guaranteed by the Government of Canada.
                 the margin required shall be 50% of the total margin required for both positions otherwise
                 determined under the rules, provided that such margin may only be determined as
                 aforesaid on the basis that:
                 1)   margin required in respect of a short (or long) position in bonds or debentures may
                      only be netted against margin required in respect of a long (or short) position in
                      stripped coupons or residuals to the extent that the market value of the two positions
                      is equal, and no such netting or offset shall be permitted in respect of the market
                      value of a short (or long) position which is in excess of the market value of the long
                      (or short) position;
                 2)   margin required in respect of bonds or debentures may only be netted against the
                      margin required for the stripped coupon or residual coupon of instruments which
                      mature within the same periods referred to in Rule G. 1.05 for the purpose of
                      determining margin rates.
                 3)   The bonds and debentures and the stripped coupon or residual coupon of such debt
                      instruments are both denominated in Canadian dollars.
    (d)   Foreign Currency Debt
          Where a member holds a short (or long) position in bonds or debentures referred to in Rule
          G.1.05(1)(a) denominated in a currency other than Canadian dollars, and also holds a long (or
          short) position in the stripped or residual portion of such debt instruments denominated in the
          same currency, the margin shall be the excess of the margin required on the long (or short)
          position over the margin required on the short (or long) position, provided that the net margin
          may only be determined as aforesaid on the basis that:
          (i)    margin required in respect of a short (or long) position in bonds or debentures may only be
                 netted against margin required in respect of a long (or short) position in stripped coupons
                 or residuals to the extent that the market value of the two positions is equal, and no such
                 netting or offset shall be permitted in respect of the market value of a short (or long)
                 position which is in excess of the market value of the long (or short) position; and
          (ii)   margin in respect of bonds or debentures issued or guaranteed by a particular
                 Government may only be netted against the margin required for the stripped coupon or
                 residual portion of debt instruments of the same Government, which mature within the
                 same periods referred to in Rule G.1.05(1)(a) for the purpose of determining margin rates.




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(4)   Mortgage-Backed Securities
      Where a member holds a short (or long) position in bonds or debentures issued or guaranteed by
      the Government of Canada and also holds a long (or short) position in an instrument described in
      Rule G. 1.05(10) guaranteed by the Government of Canada (a "mortgage-backed security"), the
      margin required shall be the excess of the margin required on the long (or short) position over the
      margin required on the short (or long) position, provided that the net margin may only be determined
      as aforesaid on the basis that:
      (a)   margin required in respect of a short (or long) position in bonds or debentures may only be
            netted against margin required in respect of a long (or short) position in mortgage-backed
            securities to the extent that the market value of the two positions is equal, and no such netting
            of offset shall be permitted in respect of the market value of a short (or long) position which is in
            excess of the market value of the long (or short) position;
      (b)   margin required in respect of bonds or debentures may only be netted against the margin
            required for mortgage-backed securities which mature within the same periods referred to in
            Rule G.1. 05 (10) for the purpose of determining margin rates;
      notwithstanding the foregoing, if the market value of a long (or short) position in mortgage-backed
      securities equals or exceeds the remaining principal amount of such position and the mortgages
      underlying such mortgage-backed securities position are subject to being repaid with or without
      penalty in full at the option of the mortgagee prior to maturity, the margin required shall be the
      greater of the margin as determined otherwise under Rule G.1.05 for (i) the long (or short) position in
      mortgage-backed securities or (ii) the short or long) position in bonds or debentures.
(5) Debt Securities
     Where a member has a short and long position in the following groups of securities (identified by
     reference to the clauses and subclauses of G.1.05):
            Short (Long)                               Long (Short)

      a.    G.1.05(1)(a) Canada and US             & G.1.05(1 )(b) Province of Canada Only
            Treasury Only

      b.    G.1.05(1)(a) Canada and US             & G.1.05(1)(c) Canada Municipal Only
            Treasury Only

      c.    G.1.05(1)(a) Canada Only               & G.1.05(1 )(a) US Treasury Only
      d.    G.1.05(1)(a) Canada and US             & G.1.05(1)(e) Corporate
            Treasury Only

      e.    G.1.05(1)(b) Province of Canada        & G.1.05(1)(c) Canada Municipal Only
            Only

      f.    G.1.05(1)(b) Province of Canada        & G.1.05(1)(e) Corporate
            only

      g-    G. 1.05(1 )(e) Corporate               & G.1.05(1 )(e) Corporate of the same
                                                     issuer

      the margin required in respect of both positions shall be the greater of the margin required on the
      long or short position provided the foregoing offset may only be determined on the basis that:
      (a)   securities described in Rule G. 1.05(1)(e) (corporate) will only be eligible for offset if they are
            not convertible and have single A or higher rating by any of Canadian Bond Rating Service,
            Dominion Bond Rating Service, Moody's Investors Service or Standard & Poor's Bond Record;
      (b)   securities in offsetting positions must be denominated in the same currency;


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     (c)   securities in offsetting positions must mature within the same periods referred to in Rule G. 1.05
           for the purpose of determining margin rates; and
     (d)   the market value of the offsetting positions is equal and no offset shall be permitted in respect
           of the market value of the short (or long) position which is in excess of the market value of the
           long (or short) position.
     For the purpose of this section, securities described in Rule G.1.05(2) (bank paper) are eligible for
     identical offset as securities described in Rule G.1.05(1 )(e) (corporate).
(6) Offsets for Convertible Securities
    Where a member
     (a)   i)     holds a short position in the securities of an issuer; and
           ii)    holds a long position in securities which are currently convertible or exchangeable into the
                  same class and at least the same number of securities referred to in subclause i) above;
           the margin required shall be the excess of the market value of the long position over the market
           value of the securities carried short. Any residual net credit money balance of the market values
           of the offsetting positions may not be used to reduce margin otherwise required on the long or
           short position remaining unhedged after applying the foregoing offset. Where the securities
           representing the long position held by the member are not convertible or exchangeable until the
           expiry of a specific period of time but the member has entered into a written, legally enforceable
           agreement, pursuant to which it has borrowed securities of the same class as those of the short
           position which do not have to be returned until the expiration of the period of time until
           conversion or exchange, the foregoing offset may be applied as if the securities representing
           the long position were currently convertible or exchangeable.
     (b)   (i)    holds a short position in the securities of an issuer; and
           (ii)   holds a long position in warrants, rights, shares, installment receipts or other securities
                  pursuant to the terms of which the holder is entitled to acquire the same class and at least
                  the same number of securities referred to in subclause (i) above;
           the margin required shall be equal to the aggregate of the subscription price or other cost or
           charge payable in connection with the acquisition of the securities pursuant to the warrant,
           right, share, installment, receipt or other security plus (or minus if a negative), the difference
           between (i) the aggregate market value of the warrant, right, share, receipt or other security and
           (ii) the market value of the securities which may be so acquired.
     (c)   Offsets in respect of the accounts of clients with positions as described in subclauses (6)(a) or
           (6)(b) of this rule shall be permitted in the circumstances provided in such Rules. The margin
           required in respect of the accounts of clients with such positions shall be equal to the excess of
           the market value of the long position over the market value of the securities carried short plus
           the aggregate of the subscription price or other cost or charge payable in connection with the
           acquisition of the securities pursuant to the relevant warrant, right, share, installment receipt or
           other security.
(7) Margin Offsets for Corporate Debt and Strips/Residuals
     Where a member holds a short (or long) position in bonds or debentures denominated in Canadian
     currency issued by a corporation with a Single A or higher rating by any of the Canadian Bond
     Rating Services, Dominion Bond Rating Service, Moody's Investors Service or Standard and Poor's
     Bond Record, and also holds a long (or short) position in the stripped coupon or residual portion of
     such debt instruments, the margin required shall be the greater of the margin required on the long
     (or short) position and the margin required on the short (or long) position, to a maximum 20% margin
     rate, provided that the margin may only be determined as aforesaid on the basis that:
     (a)   the offset is permitted only to the extent that the market value of the two positions is equal, and
           no offset shall be permitted in respect of the market value of a short (or long) position which is

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            in excess of the market value of the long (or short) position; and
      (b)   margin required in respect of bonds or debentures issued by a corporation may only be offset
            against the margin required for the stripped coupon or residual coupon of debt instruments of
            the same issuer which mature within the same periods referred to in Rule G.1.05(1)(j) for the
            purpose of determining margin rates.
(8)   Government of Canada Bond Futures
      Where a member
      (a)   holds a long (or short) position in a 5 year or 10 year Government of Canada notional bond
            futures contract and a short (or long) position in securities described in Rule G.1.05(1)(a)
            maturing in 3 to 11 years, the two positions may be offset and the required margin computed in
            respect to the net long or net short position only; or
      (b)   holds a long (or short) position in a 5 year or 10 year Government of Canada notional bond
            futures contract and a short (or long) position in securities described in Rule G.1.05(1 )(b) or
            Rule G.1.05(1 )(e) maturing in 3 to 11 years, the margin requirement in respect of both
            positions shall be the greater of the margin required on the long or short position.

G.1.08 – Margin Requirements for Underwriting Commitments
(1)   In this Rule, the expression:
      (a)   "disaster out clause" means a provision in underwriting agreement substantially in the following
            form:
            The obligation of the underwriter to purchase (the securities) under this agreement may be
            terminated by the underwriter at its option by written notice to that effect to the company at any
            time prior to the closing if there should develop, occur or come into effect or existence any
            event, action, state, condition or major financial occurrence of national or international
            consequence or any law or regulation which in the opinion of the underwriter seriously
            adversely affects, or involves, or will seriously adversely affect, or involve the financial markets
            or the business, operations or affairs of the company and its subsidiaries taken as a whole.
      (b)   "market out clause" means a provision in an underwriting agreement which permits an
            underwriter to terminate its commitment to purchase in the event of unsaleability due to market
            conditions;
      (c)   "new issue letter" means an underwriting loan facility provided by a Canadian chartered bank in
            a form satisfactory to the Exchange;
      (d)   "normal margin" means margin otherwise required by the rules.




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(2)   Where a member has a commitment pursuant to an underwriting agreement or banking group
      agreement to a new issue of securities or a secondary issue of securities with respect to which a
      prospectus has been filed, the following margin rates are hereby prescribed:
                                         Without New Issue Letter With New Issue Letter


      a.    Underwriting agreement       Normal margin required        10% of normal from the
            does not include market      from the date of              date of the letter to 5
            out clause or disaster out   commitment                    business days after the
            clause                                                     settlement date; 25% of
                                                                       normal margin for the next
                                                                       succeeding 5 business
                                                                       days; 50% of normal
                                                                       margin for the next
                                                                       succeeding 5 business
                                                                       days; 75% of normal
                                                                       margin for the next
                                                                       succeeding 5 business
                                                                       days and normal margin
                                                                       thereafter or when the new
                                                                       issue letter expires,
                                                                       whichever is earlier.
       b.     Underwriting agreement      50% of normal margin from 50% of (a) above until the
              includes disaster out       the date of the              expiry of the disaster out
              clause                      commitment until             clause or settlement date,
                                          settlement date or the       whichever is earlier. Margin
                                          expiry of the disaster out   as required in (a) above
                                          clause whichever is earlier. thereafter.
                                          Normal margin required
                                          thereafter.
       c.     Underwriting agreement      No margin required until     No margin required until
              includes market out clause settlement date or the        the expiry of the market out
                                          expiry of the market out     clause or the settlement
                                          clause whichever is earlier. date whichever is earlier.
                                          Normal margin required as Margin required as in (a)
                                          in (a) and (b) above         and (b) above thereafter.
                                          thereafter.
      If the margin rates prescribed above in respect of commitments for which a new issue letter is
      available are less than the margin rates required by the bank providing such letter, the higher rates
      required by the bank shall be applied.
(3)   Where (i) the normal margin required on any one commitment is reduced by a new issue letter in
      accordance with (2) above and (ii) the margin required in respect of such commitment determined in
      accordance with (2)(a) or (b) as applicable and as if a new issue letter were not available exceeds
      25% of such member's net allowable assets, such excess shall be added to total margin required
      pursuant to Form 1. The amount to be deducted may be reduced by the amount of margin provided
      for as required by (2) above on the individual underwriting position to which such excess relates.
(4)   Where (i) the normal margin required on some or all commitments is reduced by new issue letters
      and (ii) the aggregate margin required in respect of such commitments determined in accordance
      with (2)(a) or (b) as applicable and as if new issue letters were not available exceeds 100% of such
      member's net allowable assets, such excess shall be added to total margin required pursuant to
      Form 1. The amount to be deducted may be reduced by the amount of margin provided for as
      required by (2) above on individual underwriting positions and by the amount required to be
      deducted from risk adjusted capital pursuant to (3) above.


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(5)   In determining the amount of a member's commitment pursuant to an underwriting agreement or
      banking group agreement for the purposes of clauses (2), (3) and (4) above, receivables from
      members of the banking or selling groups in respect of firm obligations to take down a portion of a
      new issue of securities (i.e. not after-market trading) may be deducted from the liability of the
      member to the issuer.

G.1.09 – Margin - for Term Repurchase/Resale Agreements and Cash/Securities Loan
Transactions
(1)   Accounting for Repurchase and Resale Agreements
      (a)   For the purposes of this rule, "repo" means an agreement to sell and repurchase securities;
            "reverse repo" means an agreement to purchase and resell securities and "securities loan"
            means a cash and securities loan agreement where cash is to be paid by or delivered to the
            member as part of the transaction.
      (b)   Notwithstanding the requirements of Form 1 to make any provision out of a member's capital in
            respect of a repo, reverse repo or securities loan, where (i) the date of repurchase, resale or
            termination of the loan, as the case may be, is determined at the time of entering into the
            transaction, and (ii) the amount of any compensation, price differential, fee, commission or
            other financing charge to be paid in connection with the repurchase, resale or loan is calculated
            according to a fixed rate (whether expressed as a price, a decimal or percentage per annum or
            any other manner that does not vary until termination), the margin in respect of the obligation of
            the member thereunder shall be determined in accordance with Rule G.1.05(1)(a), provided
            that this subclause (b) shall not apply in the case of an overnight repo, reverse repo or
            securities loan which for the purposes of this rule shall be an obligation to repurchase, resell or
            terminate the loan within five business days of the date the obligation is assumed. All
            calculations must be performed daily and shall make full provision for any principal and return
            of capital then payable, all accrued interest, dividends or other distributions on securities used
            as collateral.
      (c)   Where a member (i) has entered into a repo, reverse repo or securities loan described in
            subclause b. and in respect of which the time to the date of repurchase, resale or termination of
            the loan, as the case may be, is over one year, and (ii) has an offsetting reverse repo, repo or
            securities loan denominated in the same currency and within the same margin category based
            on maturity, the two positions may be offset and the required margin computed with respect to
            the net position only.
      (d)   Where a member (i) has entered into a repo, reverse repo or securities loan described in
            subclause b. in respect of which the time to the date of repurchase, resale or termination of the
            loan is within one year, and (ii) has an offsetting reverse repo, repo or securities loan, as the
            case may be, denominated in the same currency and maturing within one year, the margin
            required shall be the difference between the margin on the two positions.
(2)   Securities sold with a dealer call feature (i.e., securities which the holder can put back to the
      member at any time prior to maturity on twenty-four hours notice or some other specified period of
      notice) are to be margined from day one at the margin rate appropriate for the term to maturity of the
      security, together with a premium of 50%; where the term to maturity is less than 90 days and a
      premium of 100% where the term to maturity is 90 days or greater;
(3)   Securities sold with a dealer call feature that becomes exercisable at any time after a fixed future
      date on giving specified notice (being securities which the holder may put back to the dealer at any
      time after such fixed future date on giving the specified notice) are to be margined from day one at
      the margin rate appropriate for the period between such fixed future date and the maturity date of
      the security, together with a premium of 50%;
(4)   A security having an exercisable borrower call feature is to be margined at the lesser of (i) the
      margin rate, as set out in Rule G.1.05, appropriate to the term of the security and (ii) the spread
      between the end rate at which the dealer can put the security back to the borrower, subject to a

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      minimum of a 1/4 of 1% margin;
(5)   Securities sold with both a borrower call feature and a dealer call feature (or right of the holder to put
      the security back to the dealer for a total consideration representing a specified return) are to be
      margined as follows:
      (a)   if the dealer call feature is identical to the borrower call feature, no margin is applicable;
      (b)   if the total consideration for which the holder may put the security back to the dealer is lower
            than the total consideration for which the dealer may put the security back to the borrower, no
            margin is applicable;
      (c)   if the total consideration for which the holder may put the security back to the dealer ("dealer
            call feature") is above the total consideration for which the dealer may put the security back to
            the borrower ("borrower call feature"), apply the lesser of (i) the margin rate as set out in Rule
            G. 1.05, appropriate to the term of the security, and (ii) the spread between the rate
            represented by the dealer call feature and the rate represented by the borrower call feature,
            subject to a minimum of 1/4 of 1% margin.

G.1.10 – Standby Commitment - Rights Offerings
Where an underwriter has a standby commitment to purchase securities in connection with a rights
offering such commitment shall be margined at the following rates:
(1)   If the market value of the security (the "security") which can be acquired pursuant to the exercise of
      the rights is below the subscription price, the underwriter's commitment shall be valued at the current
      market price for the security and the margin rates applicable to the security under Rule G.1.05.
(2)   If the market value of the security is equal to or greater than the subscription price the commitment
      shall be margined at rates calculated on the subscription price, equal to the following percentages of
      the margin rate applicable to the security under Rule G. 1.05:
            50% where market value is 100% to 105% of the subscription price;
            30% where market value is more than 105% but not more than 110% of the subscription price;
            10% where market value is more than 110% but not more than 125% of the subscription price;
            and
            no margin required where market value is more than 125% of the subscription price.

G.1.11 – Subordination Agreement
No member shall pay or make any payment on account of or in respect of any debt owing by such
member to any creditor of such member contrary to the provisions of, or otherwise fail to comply with, any
subordination or other agreement to which such member and the Exchange is a party.

G.1.12 – Commodity Futures and Futures Contract Options
Commodity futures and futures contract options (other than purchases of futures contract options which
shall be for cash) shall be margined as follows:
(1)   Positions of members and clients shall be marked to market and margined daily at the greatest of:
      (a)   the rate required by the commodity futures exchange on which the contract is entered into or its
            clearing house or
      (b)   the rate required by the member's clearing broker
      provided that, where a member or a client owns a commodity and such ownership is evidenced by
      warehouse receipts or comparable documentation and such member or client also has a short
      position in commodity futures contracts in the same commodity, the two positions may be offset and
      the required margin shall be computed with respect to the net long or net short position only.


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(2)   In the case of a commodity futures exchange or its clearing house that prescribes margin
      requirements based on initial and maintenance rates, initial margin shall be required at the time the
      contract is entered into in an amount not less than the prescribed initial rate. When subsequent
      adverse price movements in the value of the contracts reduces the margin on deposit to an amount
      below the maintenance level, a further amount to restore the margin on deposit to the initial rate
      shall be required. The member may, in addition, require such further margin or deposit against
      liability as it may consider necessary as a result of fluctuations in market prices from time to time.
(3)   Every member shall require from each of its clients for whom trades are effected through an
      omnibus account not less than the amount of margin that would be required from such clients if their
      trades were effected through fully disclosed accounts.
(4)   Spread margins may be applicable to an account whenever the account is in a spread position.
      Every member shall designate such spread position on its margin records.
      Note: Many futures exchanges (especially the United States) prescribe margin requirements based
            on initial and maintenance rates. In such cases, when a contract is entered into, the member
            is required to collect from the client an amount of margin not less than the prescribed initial
            rate. Subsequently, adverse price movements in the value of the futures contract may reduce
            the client's margin on deposit to an amount below the maintenance level. When this happens,
            the member must collect from the client a further amount sufficient to restore the margin on
            deposit to the initial rate.
(5)   For the purpose of determining deductions to net allowable assets in calculating risk adjusted capital
      under Form 1:
      (a)   Every member's positions in futures contracts and each outstanding short position in a futures
            contract option shall be marked to the market daily and any difference shall be charged or
            credited to profit and loss.
      (b)   Subject to any other determination by the Exchange, every member shall deduct from its net
            allowable assets in relation to its principal positions in futures contracts and short positions in
            futures contract options, the amount sufficient to provide margin for such positions. Unless the
            Exchange specifies a higher rate as the basis for these deductions from net allowable assets,
            such deductions shall be based on the margin rate set by the futures exchange on which the
            relevant contract was entered into (or its clearing house). Where the margin requirements of a
            futures exchange are based on an initial margin rate and a maintenance margin level, the
            member's deduction for principal positions shall be based on the initial margin rate. Where the
            futures exchange does not use a two tier system, but a unique rate of margin, the latter shall be
            deducted from the member's net allowable assets.
      (c)   The requirements of the above subclauses (a) and (b) also apply to market- makers' accounts.
      (d)   Subject to any other determination by the Exchange, every member shall deduct from its net
            allowable assets an amount sufficient to provide for any margin deficiencies in its client and
            non-client accounts.
            Unless the Exchange prescribes a higher rate as the basis for determining "margin
            deficiencies" for the purpose of making deductions pursuant to this subsection, such deductions
            shall be made in relation to "market deficiencies" as defined below. According to this definition,
            where a maintenance margin level is specified by the futures exchange on which the relevant
            contract was entered into (or its clearing house), the margin deficiency, if any, will be
            determined on the basis of such maintenance level, and the amount so determined shall be
            deducted from the member's net allowable assets. Where the futures exchange does not use a
            two tier system but a unique rate of margin, the latter shall be used to determine the margin
            deficiency.
            Note: For the purposes of this section, "margin", "margin rate" and "margin requirement",
                  where used with respect to contracts, means the minimum dollar amount per contract
                  prescribed under the rules and regulations of the futures exchange on which the

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                      contract was entered into (or its clearing house) that must be deposited with a member
                      of the futures exchange for the purpose of ensuring performance of obligations under
                      the contract and includes, where applicable, original margin" or initial margin" being the
                      amount that must be deposited on entering the contract and "variation margin" or
                      "maintenance margin" being the amount that must be deposited by a party to the
                      contract to restore margin on deposit to original margin or initial margin when the margin
                      on deposit falls under the prescribed "maintenance level" because of adverse movement
                      in the price of the futures contract or such greater amounts as the Exchange in its
                      discretion may require.
            "Margin deficiency", where used with respect to a client's or non-client's account, including such
            accounts for which trades are effected through an omnibus account, means, in relation to the
            calculation of risk adjusted capital, the amount by which margin on deposit in the client's or
            non-client's account is at any time, below:
                   the maintenance level, where the futures exchange upon which the contract was entered
                   into or its clearing house prescribes such a level; or
                   where no maintenance level is prescribed the margin prescribed under the rules or
                   regulations of the futures exchange upon which a futures contract was entered into (or its
                   clearing house); or
                   such greater amount as the Exchange in its discretion may require.

G.1.13 – Calculations - Commodity Futures and Options: Concentration
(1)   On each day during which a member carries a firm or client commodity futures position or short
      Futures Options Contract ("FOC") position on any market, excluding those positions maintained for
      financial institutions and spreads (regardless of delivery month) on the same market, such member
      is required to make the following calculations with respect to futures contracts and short futures
      options contracts in each commodity:
      (a)   calculate 40% of net allowable assets;
      (b)   calculate the aggregate value with respect to all firm and client positions in the relevant futures
            contracts or short futures options contracts of two daily limit fluctuations, or, if no daily limit
            fluctuations are provided for, two maintenance margin requirements or the greater of:
            (i)     the long futures contract position, or
            (ii)    the short futures contract position plus the futures contract underlying the short futures
                    options contract position.
(2)   if (a) is greater than (b), no concentration in such futures contracts is deemed to exist.
(3)   if (b) is greater than (a), there may be deducted from this difference on a per client basis, the excess
      margin available in all accounts of the client with positions in the futures contracts or futures options
      contract concerned, after making the market provided that this deduction shall be limited to the total
      aggregate value of two daily limit fluctuations or, if no daily limit fluctuation is provided for, two
      maintenance margin requirements, of the client's positions in the futures contract or the futures
      contract underlying the short futures options contract concerned.
(4)   after allowing for the deduction in Rule G. 1.12, if the difference is not eliminated within five trading
      days after it first occurs, the member's capital requirement shall be increased by an amount equal to
      such difference.
G.1.14 – Securities Owned or Sold Short by Member
Notwithstanding Rule G. 1.05 margin on securities owned or sold short by a member shall be provided at
the following rates:



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(1)   Option Eligible Securities
      25% of the market value if such securities are:
      (a)   on the list of option eligible securities as approved by a recognized stock exchange ("option
            eligible securities"), and such securities continue to sell for $5.00 or more;
      (b)   securities against which options issued by the Options Clearing Corporation are traded;
      (c)   convertible into option eligible securities; or
      (d)   non-convertible preferred shares of an issuer any of whose securities are option eligible
            securities provided that if any of the option eligible securities referred to in this item (d) should
            at any time fail to meet any of the requirements necessary to enable them to be listed as option
            eligible securities (notwithstanding that such option eligible securities may remain so listed),
            margin shall be provided on such non-convertible preferred shares at the rate required by Rule
            G.1.05. For the purpose of this rule, the Board of Governors hereby designate, as recognized
            stock exchanges, the Montreal Exchange, the Toronto Stock Exchange and the Exchange.
(2)   Government Guaranteed Securities
      Margin on equities unconditionally guaranteed as to principal and dividend payments by the
      Government of Canada, or by the government of any province of Canada shall be provided at the
      rate of 25% of the market value of such securities.
(3)   Floating Rate Preferreds
      (a)   For the purpose of this section, the term "floating rate preferred share" means a preferred
            share, by the terms of which the rate of dividend fluctuates at least quarterly, in tandem with a
            prescribed short term interest rate.
      (b)   Margin on floating rate preferred shares of companies with securities which qualify as
            underlying interest of options shall be provided at the rate of 10% of the market value of such
            floating rate preferred shares.
      (c)   Margin on floating rate preferred shares which qualify for margin under this section but which
            are of companies which do not have securities which qualify as underlying interest of options,
            shall be provided at the rate of 25% of the market value of such floating rate preferred shares.
      (d)   Where the issuer is in default of payment of a dividend due on floating rate preferred shares
            which qualify for margin under this section, margin shall be provided at the rate of 50% of the
            market value of such securities.
      (e)   Where the floating rate preferred shares of companies with securities which qualify as
            underlying interests of options are convertible and are selling over par, margin shall be
            provided at the rate of 10% of the par value of such securities plus 25% of the excess of market
            value of such securities over par.
      (f)   Where the floating rate preferred shares of companies which do not have securities which
            qualify as underlying interests of options are convertible and are selling over par, margin shall
            be provided at the rate of 25% of the par value of such securities plus 50% of the excess of
            market value of such securities over par.
(4)   Floating Rate Debt Obligations
      The margin rate on floating rate debt obligations should be at 50% of the margin rates otherwise
      required under Rules G.1.05(1)(a)(b)(c)(f) and G.1.05(2) except, if margin is otherwise required in
      respect of excess market value over par, 100% of the rates of margin otherwise required shall apply
      to the excess market value. This reduced margin rate applies only to floating rate debentures in
      inventory whose interest is adjusted at least quarterly, such adjustments being based upon quoted
      90-day or less rates.



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(5)   Bank Warrants for Government Securities
      100% of the margin required in respect of the securities to which the holder of the warrant is entitled
      upon exercise of the warrant provided that in the case of a long position, margin need not exceed
      the market value of the warrant. For the purpose of subclause (5) of this Rule, bank warrants for
      government securities means warrants issued by a Canadian chartered bank which are listed on any
      recognized stock exchange or other listing organization referred to in Rule G.1.05(7)(a) and which
      entitle the holder to purchase securities issued by the Government of Canada or any province
      thereof.
(6)   Margin - Market-Makers' Accounts
      (a)   Subject to the provisions of subclauses (i) and (ii) hereunder, margin on securities held in a
            market-maker's account shall be provided at the rate of 25% of the market value of the
            securities provided the securities meet the following requirements:
            (i)    the security is a non-options eligible security for which the registered trader has been
                   allocated responsibility or has trading privileges;
            (ii)   the security has traded for a value not less than $2.00 per share for the previous calendar
                   quarter.
      (b)   Notwithstanding subclause (a), the reduced margin rate is applicable only to a maximum total in
            all market-maker accounts of a member of $100,000 of market value per security where 90,000
            shares or more were traded in the previous calendar quarter and $50,000 of market value per
            security if less than 90,000 shares were traded in the previous calendar quarter. Margin for the
            excess portion of market value on amounts over $100,000 and $50,000 respectively shall be
            provided at the rate of 50% of market value for such securities.
      (c)   The quarterly trading volume for the purposes of subclause (b) above shall be the total number
            of shares of the security traded on all exchanges recognized for margin purposes by the
            Exchange and the National Association of Securities Dealers Automated Quotations System.
      (d)   The total reduction in margin which is permitted by subclause (a) above from the amounts
            otherwise required by Rule G. 1.05 shall not exceed 50% of the member's net allowable assets.

G.1.15 – Securities Called for Redemption or Subject to a Cash Purchase Offer
(1)   Notwithstanding Rule G. 1.05, no margin is required in respect of:
      (a)   securities which have been called for cash redemption pursuant to the terms and conditions
            attaching thereto; or
      (b)   securities for which a legal and binding cash offer to purchase has been made and in respect of
            which any conditions have been met, provided that the Exchange has confirmed that no margin
            is required in respect of such securities, and further provided that such securities are not
            carried for an amount in excess of the price offered. In the event that a cash offer described in
            clause (2) below is made for less than all of the issued and outstanding securities of the class,
            the margin required shall be the proportion of margin otherwise required that the number of
            securities of the class for which the offer is not made is of all the issued and outstanding
            securities of the class.
(2)   For the purposes of computing margin on securities which are the subject of a legal and binding offer
      to purchase for consideration comprising in whole or in part of the securities or property of the
      offeror, and for which any conditions in respect of the offer have been met:
      (a)   the number of securities of the offeree may be treated as the number of shares of the offeror
            which would, upon acceptance of the offer, be obtained for that number of securities of the
            offeree; and
      (b)   where the offer is made for less than 100% of the issued and outstanding securities, the margin
            requirement shall be applied pro rata in the same proportion as the offer.

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G.1.16 – Margin Requirements on Options
Exchange margin requirements on options and options-related situations are as set out in the following
rules:
Rules I.1.15                            - for member firm positions (including inventory,
                                        registered trader & market-maker accounts) in TCO
                                        Options & TCO Options-related situations

Rules I.2.09& I.2.10                    - for OCC Options

G.1.17 – Protection of Members' Capital - Guarantees
(1)   No member may give directly or indirectly by means of a loan, guarantee, the provision of security or
      of a covenant or otherwise, any financial assistance to:
      (a)   a holding company of the member;
      (b)   any other associate or affiliate of the member, including a related company; unless the amount
            of the loan, guarantee, provision of security or of the covenant or any other financial assistance
            is limited to a fixed or determinable amount and the amount is provided for in computing the risk
            adjusted capital of the member. The difference between the market value and the margin
            required on any collateral advance by a party other than the member may be taken into
            account in determining the provision to be made, with respect to the loan, guarantee, provision
            of security or of the covenant or any other financial assistance, in computing risk adjusted
            capital.
(2)   Each member shall be responsible for and guarantee all of the obligations incurred by each of its
      related companies and each related company shall guarantee and be responsible for all of the
      obligations of the member with which it is related and all the other related companies of such
      member. Such guarantee shall be in the form from time to time prescribed by the Exchange and filed
      with the Exchange. If the Exchange is satisfied that a member or any related company does not hold
      customers' cash, securities or other property, such member or related company is not required to
      provide such a guarantee. The Board may exempt any member or related company from the
      requirements of this rule.

G.1.18 – Members of Multiple Self-Regulatory Organizations
In calculating the risk adjusted capital requirements of a member, the financial position of the member will
be determined by adherence to the most stringent rule or regulation maintained by the self-regulatory
organizations of which it is a member. For purposes of this rule, self-regulatory organizations are
comprised of the Exchange, the Montreal Exchange, the Toronto Stock Exchange or the Investment
Dealers Association of Canada.

G.1.19 – Margin - Futures Contracts and Options
A member engaged in trading in any futures contracts or options listed on or issued by a recognized stock
exchange, commodity futures exchange, clearing or service corporation, or other listing or issuing
organization, as the case may be, in respect of which the rules do not prescribe specific standards or
requirements, shall comply with the provisions of the relevant by-laws and regulations of such stock
exchange, commodity futures exchange, clearing or service corporation, or other listing or issuing
organization in effect from time to time to the extent not inconsistent with the rules. For the purposes of
this rule, the Board shall, from time to time, designate recognized stock exchanges, futures exchanges,
clearing or service corporations, or other listing or issuing organizations.




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G.1.20 – Discretionary Policies - Trading, Settlement and Margin Requirements
The Exchange may, whenever it shall determine that market conditions so warrant, prescribe:
(1)   higher margin requirements which must be maintained with respect to specific securities traded
      either on or off the Exchange;
(2)   such other terms and conditions as the Exchange shall deem appropriate relating to transactions
      and settlement of transactions in such securities. The following are examples of other terms and
      conditions:
      (a)   a provision that all delivery against payment and receipt against payment transactions must be
            settled by a specified time or be required to be margined on a 100% margin basis;
      (b)   a provision that new transactions be subject to advance payment in full, receipt of securities to
            be sold or prior provision of appropriate margin;
      (c)   a prohibition on short selling;
      (d)   the removal of stop loss orders from the market;
      (e)   the establishment of a fixed maximum price above which shares long may not be priced for
            margin purposes.

G.1.21 – Margin Requirements for Installment Receipts
(1)   For the purposes of this rule, the following definitions shall apply:
      (a)   "installment receipt" means a security issued by or on behalf of an issuer or selling security
            holder that evidences partial payment for an underlying security and that requires one or more
            subsequent payments by installment in order to entitle the holder of the installment receipt to
            delivery of the underlying security;
      (b)   "underlying security" means the security of an issuer purchased pursuant to an installment
            receipt; and
      (c)   "future payments" means the unpaid payment or payments of the purchase price of an
            underlying security pursuant to an installment receipt.
(2)   No member shall purchase or hold an installment receipt which requires the member, or any
      nominee or holder for the member including the Canadian Depository for Securities Limited or other
      depository (collectively a "nominee"), to make any payment pursuant to an installment receipt (other
      than a payment made for the member's own account as beneficial owner of the installment receipt)
      unless the agreement pursuant to which the installment receipts are created and issued permits the
      member or its nominee to be released from the requirement to make any such payment either by
      (a)   transfer of such installment receipt to a person other than the member if there is a failure to pay
            in full any installment when due, and such transfer can take place at any time prior to the close
            of business on the second business day after default in payment of any installment and prior to
            the time the issuer's or selling security holder's rights with respect to non-payment of such
            installment can be enforced; or
      (b)   such other mechanism as may from time to time be approved by Exchange.
(3)   If there has been failure to pay any installment in full when due under an installment receipt and
      such installment receipt is registered in the name of the member or its nominee, such member shall
      forthwith, and in any event, within the time permitted by the relevant agreement pursuant to which
      the installment receipts were created and issued take such steps as are necessary for the member
      to be released for the member to be released from the requirement to make any payment thereunder
      including, if relevant, causing such installment receipt to be transferred to a person other than the
      member.
(4)   Subject to subsections (5) and (6) below, the margin required for an installment receipt held in


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      inventory or a client account shall be the margin applicable to the underlying security.
(5)   The margin required for installment receipts in a client account shall not exceed the market value of
      the installment receipt.
(6)   Where the future payments exceed the market value of the underlying security, the margin required
      for an installment receipt held in inventory shall be the margin applicable for the underlying security
      plus (except in the case of a short position) the amount by which the future payments exceed the
      market value of the underlying security.




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RULE G.2.00 – ACCOUNT GUARANTEES

G.2.01 – Account Guarantees
(1)   Guarantees of Accounts Requiring Margin
      The margin required with respect to the account of a client of a member which is guaranteed in
      accordance with this rule may be reduced to the extent that there is, and by an amount no greater
      than the amount of, excess margin in the accounts of the guarantor held by the member calculated
      on an aggregated or consolidated basis.
      In calculating margin reductions for guaranteed accounts, the following rules shall apply:
      (a)   (i)    Guarantees in respect of clients' accounts by shareholders, registered representatives or
                   employees of the member shall not be accepted, unless subclause (2) is applicable and
                   has been complied with, or in the case of guarantees by shareholders, where there is
                   public ownership of the securities held by the shareholder and the shareholder is not an
                   employee, registered representative, partner, director or officer of the member or the
                   holder of a significant equity interest in respect of the member or its holding company;
            (ii)   Guarantees in respect of clients' accounts by partners, directors or officers of the member
                   shall only be accepted on the following basis:
                   1)   The Exchange shall expressly approve the guarantee, in writing (by providing
                        separate written approval), and the release of the guarantee shall only be effective
                        upon receipt of the express written approval of the Exchange;
                   2)   The guarantor shall not be permitted to transfer cash, securities, contracts or any
                        other property from the accounts of the guarantor in respect of which the margin
                        reduction is based, without the prior written approval of the Exchange.
      (b)   Guarantees in respect of accounts of partners, directors, officers, shareholders, registered
            representatives or employees by clients of the member shall not be accepted.
      (c)   Clauses (a) and (b) do not apply to guarantees by any of the persons referred to therein of
            accounts of members of the immediate families of such persons nor to guarantees of the
            accounts of any of the persons referred to therein by members of their immediate families. For
            the purposes of this section, members of the "immediate families" of an individual means the
            spouse, parents, children or siblings of that individual.
      (d)   The provisions of Rule F.8.00 shall apply to the client's account regardless of the guarantee
            and, if the client's account has been restricted and subsequently fully margined, no trading shall
            occur in the account until the guarantee is released in accordance with subclause (a)(2) above.
      (e)   Upon request made by the guarantor to the member, the guarantor shall be entitled to receive
            from the member written confirmation from time to time of the client's liability to the member in
            respect of the accounts to which the guarantee relates, provided the member has received the
            written consent of the client for such provision of information.
(2)   Hedged Accounts
      Notwithstanding subsection (1), prior to reducing the margin as permitted by subsection (1), a
      member may hedge, subject to the requirements of Rule G.2.03(2) being satisfied:
      (a)   Any long securities positions, other than options, commodity futures contracts or foreign
            exchange contracts, in the account of a guarantor that guarantees an account of a client of a
            member in accordance with this section against any short securities positions, other than
            options, commodity futures contracts and foreign exchange contract positions in that client
            account; and



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      (b)   Any long convertible security, including warrants, options, rights, shares, installment receipts or
            other securities pursuant to the terms of which holder is entitled to currently acquire underlying
            securities, held in the account of a guarantor that guarantees a clients account against any
            short positions in the underlying securities held in that client account, provided that the
            convertible securities held in the guarantor's account are readily convertible into the related
            underlying securities held in that client's account and the number of underlying securities
            available on conversion shall be equal to or greater than the number of securities sold short.

G.2.02 – Audit Confirmation Requirements
In determining the margin deficiency of the account of any client, a guarantee with respect to the account
may be accepted for the purposes of reducing margin unless and until, in connection with the annual
audit, the confirmation requirements shall not have been satisfied in accordance with Exchange
requirements. If an account has not satisfied the audit confirmation requirements, the margin reduction
shall not be allowed until a confirmation is received or a new guarantee agreement is signed by the client.

G.2.03 – Form and Content of Guarantee and Hedge Agreements
(1)   Form and Content of Guarantee Agreement
      (a)   A general guarantee of accounts of clients which does not name or specify such accounts will
            not be accepted and no commingling of a group of accounts will be accepted unless supported
            by proper documentary authority from such clients sufficient to establish the common identity
            and liability of such group of accounts.
      (b)   A guarantee with respect to an account shall only be accepted for margin if it directly
            guarantees the account, and a guarantee with respect to an account of a client who in turn,
            directly or indirectly, provides a guarantee of another account shall not be accepted for margin
            purposes in the latter account.
      (c)   No guarantee shall be accepted unless it is by enforceable agreement evidenced in writing,
            binding upon the guarantor, its successors and assigns and personal legal representatives and
            containing the following minimum terms:
            (i)    the punctual payment on demand of all present and future liabilities of the client to the
                   member with respect to the identified accounts shall be unconditionally guaranteed on an
                   absolute and continuing basis with the guarantor being jointly and severally liable for the
                   obligations of the client;
            (ii)   the guarantee may only be terminated upon written notice to the member, provided that
                   such termination shall not affect the guarantee of any obligations incurred prior thereto;
            (iii) the member shall not be bound to demand from or to proceed or exhaust its remedies
                  against the client or any other person, or any security held to secure payment of the
                  obligations, before making demand or proceeding under the guarantee;
            (iv) the liability of the guarantor shall not be released, discharged, reduced, limited or
                 otherwise affected by: (i) any right of set-off, counterclaim, appropriation, application, or
                 other demand or right the client or guarantor may have; (ii) any irregularity, defect or
                 informality in any obligation, document or transaction relating to the client or its accounts;
                 (iii) any acts done, omitted, suffered or permitted by the member in connection with the
                 client, its accounts, the guaranteed obligations or any other guarantees or security held in
                 respect thereto including any renewals, extensions, waivers, releases, amendments,
                 compromises or indulgences agreed to by the member and including the provision of
                 information by the member to the guarantor as permitted in the Exchange requirements; or
                 (iv) the death, incapacity, bankruptcy or other fundamental change of or affecting the
                 client, provided that in the event the guarantor shall be released for any reason from the
                 guarantee, they shall remain liable as principal debtor with respect to the guaranteed
                 obligations;


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            (v)   the guarantor waives in favour of the member any notices as to the terms and conditions
                  applicable to the client's accounts or agreements or dealings between the member and
                  client, or relating in any way to the status or condition of, or transactions or changes in the
                  clients' accounts, agrees that the accounts as settled or stated between the member and
                  the client shall be conclusive as to the amounts owing, and waives any rights of
                  subrogation until all guaranteed obligations are paid in full; and
            (vi) all securities, money, commodity futures contract and options, foreign exchange contracts
                 and other property held or carried by the member for the guarantor shall be pledged or a
                 security interest granted therein to secure the payment of the guaranteed obligations with
                 the full ability of the member to deal with such assets at any time, before or after demand
                 under the guarantee to satisfy such payment.
(2)   Form and Content of Hedge Agreement
      No hedge shall be accepted unless the member obtains from the guarantor a written Hedge
      Agreement, in the form acceptable to the Exchange; that
      (a)   Authorizes the member to use any and all securities, other than options, commodity futures
            contracts or foreign exchange contracts held in long positions in the guarantor's account to
            hedge any and all short positions in the guaranteed account for the purposes of eliminating the
            margin required in such securities in the client account;
      (b)   Upon the sale of any securities positions that hedges a short position that creates a margin
            deficiency in the guaranteed account, the guarantor agrees that the member may restrict the
            guarantor's account or otherwise restrict the guarantor's ability to enter into transactions in that
            account until such deficiency is rectified; and
      (c)   The guarantor agrees that the terms of the Hedge Agreement shall remain in effect as long as
            any hedge positions between the two accounts remain in effect.

G.2.04 – Corporation Guarantee
A guarantee of a client's account by a corporation not a member of a recognized self-regulatory
organization will not be acceptable for margin for audit purposes unless it is supported by satisfactory
written evidence that it has been duly authorized by all necessary corporate accounts and is within the
power of the corporation.

G.2.05 – Members Guarantees
No member shall provide, directly or indirectly, any guarantee, indemnity or similar form of financial
assistance to any person unless the amount of the guarantee, indemnity or other assistance is limited to a
fixed or determinable amount [except a guarantee provided in accordance with Rule G] and margin is
provided for by the member pursuant to this Rule G. The margin required with respect to any such
guarantee, indemnity or financial assistance shall be the amount thereof, less the loan value (calculated
in accordance with Rule G) of any collateral available to the member in respect of the guarantee,
indemnity or assistance and, in the case of guarantees, provided in accordance with Rule G, no margin
shall be required.




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RULE G.3.00 – RECORDS AND AUDIT

G.3.01 – Records
In addition to any original records otherwise specified in the Rules of the Exchange, each member shall
prepare and maintain current, at least the following books and records relating to its business:
(1)   blotters (or other records of original entry) containing an itemized daily record of all purchases and
      sales of securities, all receipts and deliveries of securities (including certificate numbers), all receipts
      and disbursements of cash and all other debits and credits. Such records shall show the account for
      which each such transaction was effected, the name and amount of securities, the unit and
      aggregate purchase or sale price (if any), the trade date, and the name or other designation of the
      person from whom purchased or received or to whom sold or delivered;
(2)   a general ledger (or other records) maintained in detail reflecting all assets and liabilities, income
      and expense and capital accounts;
(3)   ledger accounts (or other records) itemizing as to each account of every client, all purchases, sales,
      receipts, and deliveries of securities and commodities for such account and all other debits and
      credits to such account;
(4)   ledgers (or other records) reflecting the following:
      (a)   securities in transfer;
      (b)   dividends and interest received or credited;
      (c)   securities borrowed and securities loaned;
      (d)   monies borrowed and monies loaned (together with a record of the collateral therefore and any
            substitutions in such collateral);
      (e)   securities failed to receive and failed to deliver;
(5)   a securities record or ledger reflecting separately for each security as of the trade or settlement
      dates all "long" and "short" positions (including securities in safekeeping) carried for the member's
      account or for the account of clients, showing the location of all securities long and the offsetting
      position of all securities short and in all cases the name or designation of the account in which each
      position is carried;
(6)   a record of each order, and of any other instruction, which may be a copy of the order or instruction,
      given or received for the purchase or sale of securities, whether executed or unexecuted, showing:
      (a)   the terms and conditions of the order or instruction and of any modification or cancellation of
            the order or instruction;
      (b)   the account to which the order or instruction relates;
      (c)   if the order or instruction is placed by an individual other than the person in whose name the
            account is operated or an individual duly authorized to place orders or instructions on behalf of
            a client that is a company, the name, sales number or designation of the individual placing the
            order or instruction;
      (d)   the time of entry of the order or instruction, and, if the order is entered pursuant to the exercise
            of discretionary power of a registrant or any employee of the registrant, a statement to that
            effect;
      (e)   the price at which the order or instruction was executed; and
      (f)   to the extent feasible, the time of execution or cancellation.
      The record of each order must be retained for five years for executed orders and two years for
      unexecuted orders;


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(7)   a record in respect of each account containing the name and address of the beneficial owner (and
      guarantor, if any) of such account; written authorization, or ratification from the client where trading
      instructions were received from any other person, naming such person;
      and in the case of a margin account a properly executed margin agreement containing the signature
      of such owner (and guarantor, if any) provided that, in the case of a joint account or an account of a
      corporation, such records are required only in respect of the person or persons authorized to
      transact business for such account;
(8)   a record of all puts, calls, spreads, straddles and other options in which the member has any direct
      or indirect interest or which the member has granted or guaranteed, containing at least an
      identification of the security and the number of units involved; and
(9)   a record of the proof of money balances of all ledger accounts in the form of trial balances and a
      record of the computation of risk adjusted capital. Such trial balances and computations shall be
      prepared currently at least once a month and be kept available for inspection by the Panel Auditor or
      Exchange.
(10) A record of all margin calls whether such calls are made in writing, by telephone or other means of
     communication.
(11) A Statement of Account shall be sent at the end of each month to each client in whose account there
     have been any transactions recorded therein, exclusive of entries regarding interest and dividends.
     Statements shall also be sent to all clients having open security positions or money balances at the
     end of each quarter. Quarterly statements shall set forth the dollar balance carried forward, and
     security position as of the statement date. Statements shall indicate all securities which are
     segregated or held for safekeeping.
      (a)   Every statement of account issued to a client by a member or affiliated company shall bear the
            following notation:
            "Any free credit balances represent funds payable on demand which, although properly
            recorded on our books, are not segregated and may be used in the conduct of our business."
      (b)   Where a register and transfer agent will not transfer a security for reasons other than because
            of the issuance of a cease trading order or suspension from trading, a member shall not be
            required to deliver to a client the statement of account required above more frequently than
            once every twelve months.
      (c)   A copy of all statements shall be retained by each member for a period of five years.

G.3.01.1 – Confirmation
(1)   A member that has acted in the purchase or sale of a security upon the Exchange (which also
      includes a purchase or sale made through the facilities of the Exchange) shall promptly send or
      deliver to his client, a written confirmation of the purchase or sale setting forth the following:
      (a)   the quantity and description of the security;
      (b)   the consideration;
      (c)   whether the member was acting as principal or agent;
      (d)   if acting as agent, the name of the member from or to or through whom the security was bought
            or sold;
      (e)   the day upon which the purchase or sale took place;
      (f)   the commission, if any, charged in respect of such purchase or sale;
      (g)   the name of the registered representative or other person instructed by the client to make the
            purchase or sale;
      (h)   the Exchange on which the purchase or sale took place.

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      (i)   and in the case of stripped coupons and residual debt instruments, the confirmation shall also
            disclose:
            (i)    the yield thereon calculated on a semi-annual basis in a manner consistent with the yield
                   calculation for the debt instrument which has been stripped; and
            (ii)   the yield thereon calculated on an annual basis in a manner consistent with the yield
                   calculation for other debt securities which are commonly regarded as being competitive in
                   the market with such coupons or residuals such as guaranteed investment certificates,
                   bank deposit receipts and other indebtedness for which the term and interest rate is fixed.
(2)   For the purposes of the above, the member or registered representative may be identified in a
      written confirmation by means of a code or symbols provided the written confirmation also contains a
      statement that the name of the member or registered representative will be furnished to the client on
      request.
(3)   Where a member uses a code or symbols for identification in a confirmation, the member shall, if
      requested by the Exchange, file the code or symbols and their meaning within five days of any
      change in or addition to the code or symbols or their meaning.
(4)   Every member who has acted as agent or principal in connection with any trade in a security shall
      promptly disclose to the Exchange, upon request by the Exchange, the name of the client for whom
      the security was bought or sold.
(5)   Subclause (4) of clause (1), need not be complied with if the written confirmation contains a
      statement that the name of the member from or to or through whom the security was bought or sold
      will be furnished to the client on request.
(6)   A copy of all confirmations shall be retained by each member for a period of five years.
(7)   If the client is located in the United Kingdom and the security is classified as a venture listing, the
      Member must advise that the security is classified as a venture listing and thereby may carry a high
      degree of risk.
(8)   Notwithstanding the provisions of this Rule, a member shall not be required to provide a confirmation
      to a client in respect of a trade in:
      an account of a client managed on a discretionary basis by a person (other than the member),
      registered under any applicable legislation to so manage such account provided that:
      (a)   the client has given prior written waiver of the requirement to be sent a confirmation; and
      (b)   the confirmation required pursuant to this Rule is sent to the person managing the account as if
            they were the client.
      Each such waiver may be terminated by the client by notice in writing. The termination notice shall
      be effective upon receipt of the written notice by the member except with respect to transactions
      entered into prior to the receipt of such notice.

G.3.01.2 – Electronic Confirmations
If a client falls within the definition of "Acceptable Counterparties" or "Acceptable Institutions" as defined
in the General Notes and Definition Section of the Joint Regulatory Financial Questionnaire & Report
(Form 1), Rule G. 3.01.1 may be complied with by delivery of the confirmation of purchase and sale to the
client by electronic means, provided that
(1)   the client has authorized the member to deliver the confirmation by electronic means,
(2)   the system conducting the electronic transfer has been approved by the Exchange,
(3)   the electronic transfer of the confirmation complies with all other requirements in Rule G.3.01.1, and
(4)   the electronic transmission is capable of being readily reproduced in printed form.


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G.3.01.3 – Record of Complaints
(1)   Each member must keep an up-to-date record in a central place of all written complaints received by
      the member that relate in any way to the conduct, business or affairs of the member or of a director,
      partner, officer or employee of the member.
(2)   A complaint and any reply to the complaint must be retained for twenty-four months from the date of
      receipt of the complaint by the member and must be made available to the Exchange upon the
      request of the Exchange.

Guide to interpretation of Rule G.3.01
      Rule G.3.01 represents a codification of record keeping practices now followed by members in that it
      specifies the various items of information which must be reflected upon the member's books. The
      rule does not, however, require the various books and records specified therein to be kept on any
      prescribed form or type of book, ledger or card system. Records may be kept by means of
      mechanical, electronic or other devices where such method of record keeping is not prohibited under
      applicable legislation and the member:
      (a)   takes adequate precautions, appropriate to the means used, to guard against the risk of
            falsification of the information recorded; and
      (b)   provides a means for making the information available in an accurate and intelligible form within
            a reasonable time to any person lawfully entitled to examine the records.

G.3.02 – Auditors - Panel
The Exchange shall select a panel of auditors each of whom shall have practiced in Canada for not fewer
than five years and shall be known as a Panel Auditor and each member shall appoint an auditor from the
panel of auditors.

G.3.03 – Annual Audits and Periodic Questionnaires
(1)   The Panel Auditor appointed by the member under Rule G.3.02 shall, in each year as at a
      permanent date fixed by the Exchange, make an examination of the financial affairs of such member
      and affiliated company of which they have been appointed auditor and shall prepare a balance sheet
      as at such date together with such other statements and reports as deemed advisable and shall also
      make such further examinations and prepare such further statements and reports as the Exchange
      may direct.
All such statements and reports shall be filed by the Panel Auditor with the Exchange within seven weeks
      of the date as of which such statements are required to be prepared. If an extension is required, a
      written request should be made to the Exchange indicating the reason for the extension, an estimate
      of the Risk Adjusted Capital and specifying the date on which the statements and reports are
      proposed to be delivered.
(2)   Each member and affiliated company shall, as at such time as the Exchange may require, file with
      the Exchange an answer to a financial questionnaire in such form as may be prescribed by the
      Exchange.
(3)   The Exchange may from time to time specify the form of balance sheets, statements and reports to
      be supplied by the Panel Auditors and the members and affiliated companies.

G.3.04 – Special Examinations
The Exchange may at any time require any Panel Auditor or the Exchange auditor or Exchange to make
any general or special examination of the financial affairs of any member or affiliated company or to
report upon the whole or any aspect of the business or affairs thereof and in either case and in addition
thereto to regulate and generally supervise the operations of the member or affiliated company for such
period and in such manner as the Exchange may direct.


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G.3.05 – Access to Records
Every Panel Auditor, Exchange auditor and the Exchange, for the purpose of any examination under this
section, shall, with the knowledge of the member, be entitled to free access to all books of account,
securities, cash, documents, bank accounts, vouchers, correspondence and records of every description
of the member or affiliated company whose financial affairs are being examined and no person, member
or affiliated company shall withhold, conceal, destroy or refuse to give any information or thing reasonably
required by Panel Auditor, Exchange auditor, or Exchange for the purpose of their examination.

G.3.06 – Expenses of Panel Auditor
The member shall pay to the Panel Auditor the expenses of every examination, report, regulation and
supervision under this Rule G made by them subject to full repayment thereof forthwith by the member or
affiliated company concerned.

G.3.07 – Change of Accounting System, Business, Association, etc.
The Exchange may in writing require any member or affiliated company to alter, supplement or replace
any system of bookkeeping or record keeping, or the course or method of handling securities, borrowing
monies or generally conducting business, or to alter or dispense with any financial arrangement or
business association or affiliation direct or indirect of which the Exchange disapproves, and to comply
with any requirement of the Exchange.

G.3.08 – Suspension if Audit or Report Unsatisfactory
Where the Board determines as a result of the report of the Exchange Auditor, the Exchange or Panel
Auditor or from any other information given to or obtained by it that a member or affiliated company is
insolvent or does not have risk adjusted capital (after deductions) satisfying the requirements hereinafter
referred to or otherwise is in such financial condition that the Board in its discretion deems it is
undesirable in the public interest or in the interest of the Exchange that such member or affiliated
company should continue to carry on business, the Board may at any time suspend such member or
revoke the approval of such affiliated company concerned for such period and on such terms and
conditions as the Board may determine and notice thereof shall be forthwith mailed or delivered to each
member and may be announced through the facilities of the Exchange.

G.3.09 – Requirement to Provide Information
Every member shall give or procure and give to the Exchange such material, information, reports and
financial statements as the Board may from time to time prescribe.

G.3.10 – Conduct of Audit
Audits by Panel Auditors shall be conducted in accordance with generally accepted auditing standards
and shall include a review of the accounting system, the internal accounting control and procedures for
safeguarding assets. It shall include all audit procedures necessary under the circumstances to support
the opinions which must be expressed in the Panel Auditor's reports of Parts I and II of the Joint
Regulatory Financial Questionnaire and Report (Form 1). Because of the nature of the industry, the
substantive audit procedures relating to the financial position must be carried out as of the audit date and
not as of an earlier date, notwithstanding that the audit is otherwise conducted in accordance with
generally accepted auditing standards.

G.3.11 – Scope
The scope of the audit shall include the following procedures, but nothing herein shall be construed as
limiting the audit or permitting the omission of any additional audit procedure which any Panel Auditor,
would deem necessary under the circumstances. For purposes of this rule, tests fall into two basic
categories (as described in the CICA Handbook);
     (i)   specific item tests, whereby the auditor examines individual items which he or she considers

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             should be examined because of their size, nature or method of recording; and
      (ii)   representative item tests, whereby the auditor's objective is to examine an unbiased selection
             of items. The determination of an appropriate sample on a representative basis may be made
             using either statistical or non-statistical methods.
In determining the extent of the tests appropriate in subclauses (a), (b), (c) and (d) of (1) below, the Panel
Auditor should consider the adequacy of the system of internal control and the level of materiality
appropriate in the circumstances so that in the auditor's professional judgment the risk of not detecting a
material misstatement, whether individually or in the aggregate is reduced to an appropriately low level
(e.g., in relation to the estimated Risk Adjusted Capital and Early Warning reserves).
The Panel Auditor shall:
(1)   As of the audit date:
      (a)    compare ledger accounts with the trial balances obtained from the general and subsidiary
             ledgers and prove the subsidiary ledger totals with their respective control accounts (see below
             re: Electronic Data Processing);
      (b)    account for, by physical examination and comparison with the books and records, all securities,
             including those held in safekeeping or in segregation, currencies and other like assets on hand,
             in vault or otherwise in the physical possession of the member. Where the nature and size of a
             member's operation is such that there are employees who are independent of those employees
             who handle or record securities, such independent employees may undertake all or a portion of
             the count and examination under the Panel Auditor's supervision. The Panel Auditor should test
             count and compare with the independent employees' counts and the security position records,
             sufficient securities so as to be satisfied that the entire count was materially correct. The Panel
             Auditor must maintain control over these assets until the physical examination has been
             completed;
      (c)    on a test basis, verify securities in transfer and in transit between offices of the member;
      (d)    review the balancing of security positions and open commodity and option contracts. Review
             the reconciliation of all mutual funds, brokers, dealers and clearing accounts. Where a position
             or account is not in balance according to the records (after adjustment to the physical count),
             ascertain that an adequate provision has been made in accordance with the Notes and
             Instructions for out of balance positions embodied in Statement B of the Joint Regulatory
             Financial Questionnaire and Report (Form 1) for any potential loss;
      (e)    review bank reconciliations. After allowing at least ten business days to elapse, obtain bank
             statements, cancelled cheques and all other debit and credit memos directly from the banks
             and by appropriate audit procedures substantiate on a test basis the reconciliations with the
             ledger control accounts as of the audit date;
      (f)    ensure that all custodial agreements are in place for securities lodged with acceptable
             locations. In addition, for locations classified as other foreign securities locations, the Panel
             Auditor must obtain evidence, on an annual basis of approval of such locations as documented
             in the minutes of the Board of Directors and/or other duly constituted Board committee
             meetings of the member;
      (g)    shall obtain written confirmation with respect to the following:
             1)   bank balances and other deposits including hypothecated securities;
             2)   money, security positions and open commodity and option contracts including deposits
                  with the clearing houses and like organizations and money and security positions with
                  mutual fund companies;
             3)   money and securities loaned or borrowed (including subordinated loans) together with
                  details of collateral received or pledged, if any;


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          4)     accounts of or with brokers or dealers representing regular, joint and contractual
                 commitment positions including money and/or security positions and open commodity and
                 option contracts;
          5)     accounts of directors and officers or partners, including money and/or security positions
                 and open commodity and option contracts;
          6)     accounts of clients, employees and shareholders, including money and/or security
                 positions and open commodity and option contracts;
          7)     guarantees in cases where required to margin (protect) accounts guaranteed as at the end
                 of the year subject to audit;
          8)     statements from the member's lawyers as to the status of lawsuits and other legal matters
                 pending which, if possible, should include an estimate of the extent of the liabilities so
                 disclosed;
          9)     all other accounts which, in the opinion of the Panel Auditor, should be confirmed;
          Compliance with the confirmation requirements shall be deemed to have been made if positive
          requests for confirmation have been mailed by the Panel Auditor in an envelope bearing his
          return address and second requests are similarly mailed to those not replying to the initial
          request. Appropriate alternate verification procedures must be used where replies to second
          requests have not been received. For accounts mentioned in (4), (6) and (7) above, the Panel
          Auditor shall:
          (i)    select specific accounts for positive confirmation based on (a) their size (all accounts with
                 equity exceeding a certain monetary amount, such amount being related to the level of
                 materiality) and (b) other characteristics such as accounts in dispute, accounts that are
                 significantly undermargined, nominee accounts and accounts that would require significant
                 margin without the existence of an effective guarantee, and
          (ii)   select a representative sample from all other accounts and sufficient extent to provide
                 reasonable assurance that a material error, if it exists, will be detected. For accounts in
                 (4), (6) and (7) above that are not confirmed positively, the Panel Auditor shall mail
                 statements with a request that any differences be reported directly to the Panel Auditor.
                 Clients' accounts without any balance whatsoever and those closed since the last audit
                 date shall also be confirmed on a test basis using either positive or negative confirmation
                 procedures, the extent to be governed by the adequacy of the system of internal control.
          Where a reply to a positive confirmation request for a guarantee in (7) above has not been
          received, the guarantee shall not be accepted for margin purposes in respect of the account
          guaranteed unless and until a written form of confirmation of the guarantee has been received
          by the Panel Auditor [or by the member if subsequent to the filing of the Joint Regulatory
          Financial Questionnaire & Report (Form 1)], or a new guarantee agreement is signed by the
          client. If a guarantor responds to a positive or negative confirmation disputing the validity of the
          guarantee or the extent of the guarantee, such guarantee shall not be accepted for margin
          purposes until the dispute is resolved and the confirmation of the guarantee is provided in
          acceptable form. In addition to the confirmation procedures, the Panel Auditor should review a
          sample of guarantee agreements to ensure duly executed and completed agreements exist and
          such agreements comply with the minimum requirements of Rule G.2.00;
    (h)   subject the Statements in Part I and Schedules in Part II to audit tests and/or other auditing
          procedures to determine that the margin and capital requirements, which are used in the
          determination of the excess (deficiency) of risk adjusted capital are calculated in accordance
          with the rules in all material respects in relation to the financial statements taken as a whole;
    (i)   obtain a letter of representation from the senior officers of the member with respect to the
          fairness of the financial statements including, among other things, the existence of contingent
          assets, liabilities and commitments.


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(2)   Review the accounting system and the system of internal control of the member, paying particular
      attention to the procedures maintained for the safeguarding of securities and in this regard shall
      ensure that the tests are designed in such a way as to cover the entire period under review and:
      (a)   check on a test basis that the member's procedures are such that securities held for
            safekeeping are described on both statements rendered to the client and on the member's
            security position record as being so held;
      (b)   Complete and report on the results of applying the prescribed procedures contained in the
            Report on Compliance for Segregation of Securities in the Joint Regulatory Financial
            Questionnaire & Report (Form 1).
            "Securities held for safekeeping" means those securities held by a member for a client pursuant
            to a written safekeeping agreement. These securities must be free from any encumbrance, be
            kept apart from all other securities and be identified as being held in safekeeping for a client in
            a member's security position record, client's ledger and statement of account. Securities so
            held can only be released pursuant to an instruction from the client and not solely because the
            client has become indebted to the member.
            "Segregated securities" means those clients' securities which are unencumbered and which
            have either been fully paid for or are excess margin securities. Segregated securities must be
            distinguished as being held in trust for the client owning the same. These securities must be
            described as being held in segregation on the member's security position record (or related
            records), client's ledger and statement of account. Whenever a client becomes indebted to a
            member, the member has the right to use, by sale or loan, previously segregated securities to
            the extent reasonably necessary to cover the indebtedness.

G.3.12 – Additional Reporting Requirements
In addition, the Panel Auditor shall:
(1)   Complete and report on the results of applying the prescribed procedures contained in the Report on
      Compliance for Insurance in the Joint Regulatory Financial Questionnaire & Report (Form 1);
(2)   report whether the Exchange seats operated by the member are owned outright and free of any
      encumbrance; and
(3)   report on any subsequent events, to date of filing, which have had a material adverse effect on the
      excess (deficiency) of risk adjusted capital.
(4)   comment on any material inadequacies found to exist in the accounting system, the internal
      accounting control or in the procedures for safeguarding securities and shall indicate any corrective
      action the member has taken or which the member proposes to implement. These comments may
      form part of the complete filing or may be submitted in a separate filing.
(5)   notify immediately the self-regulatory body having primary audit jurisdiction of a capital deficiency or
      any situation which would, in the Panel Auditor's opinion, affect the member's ability to continue as a
      member in good standing. In situations involving uncertainties or doubt, immediate consultation with
      the applicable self-regulatory body in advance of submitting the formal report would be appropriate.

G.3.13 – Computer Control and Audit Guidelines
The Panel Auditor's review of the accounting system, the internal accounting control and procedures for
safeguarding securities prescribed in the above audit requirements should encompass any in-house or
service bureau EDP operations. As a result of such review and evaluation, the Panel Auditor may be able
to reduce the extent of detailed checking of clients and other account statements to trial balances and
security position records.




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G.3.14 – Retention of Audited Questionnaire and Working Papers
Copies of the Joint Regulatory Financial Questionnaire and Report (Form 1) and all audit working papers
shall be retained by the Panel Auditor for six years. The two most recent years shall be kept in a readily
accessible location. All working papers shall be made available for review by the Exchange and the
Canadian Investor Protection Fund.

G.3.15 – Reporting Breaches of Exchange By-laws or Rules
If the Panel Auditor observes, during the regular conduct of his audit, any material breach of the by-laws
or rules of the Exchange pertaining to the calculation of the member's financial position, handling and
custody of securities and maintenance of adequate records he shall make a report to the Exchange.

G.3.16 – Monthly Margin Report
(1)   Each member and related company of a member shall, within seven business days of the end of
      each month, file with the Exchange a report, in the form prescribed by the Exchange, in respect of all
      cash, margin and inventory (positions) accounts carried by them on which the debit balance (loan
      value) as of the immediately preceding month-end exceeded $50,000 to a maximum of twenty
      accounts, of which no more than ten shall be the largest reportable inventory positions and the
      balance shall be the largest reportable cash or margin accounts.
(2)   Where a member or a related company of a member does not have any margin accounts to report
      under clause (1), the member or the related company shall file a nil report under that clause.
(3)   The report filed under clause (1) shall be certified as being correct by:
      (a)   the chief financial officer or the vice-president of Finance, or the treasurer, and
      (b)   the chief executive officer, or the chief operating officer,
      of the member or the related company of the member, and the certification shall include confirmation
      by the certifying officers that they have reviewed the report in its entirety, notwithstanding that it may
      be comprised of a number of separate schedules.
(4)   members and related companies of members which do not maintain inventory accounts or client
      accounts may request an exemption from the requirements of this section, provided that the
      exemption shall only be granted upon receipt by the Exchange of an undertaking by the member or
      the related company in a form acceptable to the Exchange, not to commence to open and maintain
      client and inventory accounts while the exemption remains in force.

G.3.17 – Release of Information by the Exchange
(1)   The Exchange may at any time provide information to Canadian or foreign law enforcement
      organizations, regulatory organizations, self-regulatory organizations or clearing houses.
(2)   The Exchange shall not release any information pursuant to this Rule without the approval of the
      President, the Executive Vice-President or the Vice-President of Compliance.
(3)   The Exchange shall not release information pursuant to this Rule unless, in the opinion of the
      Exchange, such information is relevant to the preservation of the integrity of the financial services
      industry or the provision of such information is in the public interest.
(4)   The Exchange may enter into arrangements for the release of information in a manner consistent
      with the terms of this Rule.
(5)   The term "information" in this Rule includes any information which the Exchange obtains by any
      means and any document or other medium upon which such information is stored.
(6)   All persons under the jurisdiction of the Exchange shall be deemed to have authorized the Exchange
      to provide information in accordance with this Rule, including, without limiting the generality of the
      above, information obtained by the Exchange in accordance Exchange requirements. Further, all


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      persons under the jurisdiction of the Exchange shall be deemed to have released the Exchange and
      each of its Board members, officers and employees from any and all liability whatsoever which may
      arise by the provision of such information in accordance with this Rule.
(7)   When it does not prejudice the confidentiality of an investigation to do so, an Exchange officer
      referred to in clause (2) may advise the member of any information released under this rule.

G.3.18 – Member Application Audit Requirement
(1)   The new membership applicant shall submit to the Exchange:
      (a)   financial statements of the applicant as of a date not more than 45 days prior to the date of
            application for membership (or as of such other date as the Exchange may require), prepared
            in accordance with the Joint Regulatory Financial Questionnaire & Report (Form 1), as
            prescribed by the Exchange for filing annually by its members, and audited by an auditor
            acceptable to the Exchange;
      (b)   an additional report by the applicant's auditor to the effect that, based on his examination of the
            affairs of the applicant, the applicant keeps a proper system of books and records; and
      (c)   such additional financial information, if any, relating to the applicant as the Exchange may, in its
            discretion, request.
(2)   Notwithstanding the provision of clause (a) above, if the applicant has been a member of a
      recognized Canadian self-regulatory organization for a period in excess of fifteen months, such
      applicant may, in lieu of the financial statements referred to in said subclause (a), submit to the
      Exchange its latest audited financial statements together with:
      (a)   a copy of the last monthly financial report filed by such applicant with the relevant self-
            regulatory organization; and
      (b)   a "comfort" letter from the recognized self-regulatory organization having primary audit
            jurisdiction over the applicant, relating to the applicant's standing with such organization in
            compliance, disciplinary and regulatory matters and in a form which is satisfactory to the
            Exchange.
      If such applicant wishes to transfer to the audit jurisdiction of the Exchange, the applicant shall
      submit to the Exchange audited financial statements as of a date not more than 90 days prior to the
      date of application for transfer.

G.3.19 – Late Filing Fees
Each member shall be liable for and pay to the Exchange fees in the amounts prescribed from time to
time by the Board for the failure of the member, its auditors or any person acting on its behalf, to file any
report, form, financial statement or other information required under this Rule G.3.00 within the times
prescribed by this Rule G.3.00, the Board, the Exchange or the terms of such report, form, financial
statement or other information, as the case may be.

G.3.20 – Internal Controls
Every member shall establish and maintain adequate internal controls in accordance with the Internal
Control Policy Statements.

G.3.21 – Affiliated Companies
Affiliated companies as defined by the self-regulatory bodies will be subject to the audit as follows:
(a)   All such affiliated companies of members will be subject to these audit instructions and capital
      requirements except as provided hereunder;
(b)   Affiliated companies who are regulated under the S.E.C. will be subject to the audit procedures and
      capital requirements of that organization and will not be examined under these instructions.

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      However, they are required to forward a copy of all statements and questionnaires filed under all
      S.E.C. audit rules to the applicable self-regulatory body at the same time as the statements and
      questionnaires are sent to the S.E.C.;
(c)   Affiliated firms and corporations which have been specifically exempted from audit and capital
      requirements by the applicable self-regulatory body will not be examined under these instructions;
      and
(d)   If any doubts arise concerning any associated corporation which may or may not be covered by the
      above, the auditor should refer the matter in writing to the applicable self-regulatory body forthwith
      for clarification.




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RULE G.4.00 – INSURANCE

G.4.01 – Mail Insurance
Every member shall effect and keep in force mail insurance against loss arising by reason of any
outgoing shipments of money or securities, negotiable or non-negotiable, by first-class mail, registered
mail, registered air mail, express or air express, such insurance to provide at least 100% coverage.

G.4.02 – Financial Institution Bond
Every member shall, by means of a Financial Institution Bond or Bonds (with Discovery Rider attached or
Discovery Provisions incorporated in the Bond) effect and keep in force insurance against losses arising
as follows:

Clause A - Fidelity
Any loss through any dishonest, fraudulent, or criminal act of any of its employees, committed anywhere
and whether committed alone or in collusion with others, including loss of property through any such act
of any of its employees;

Clause B - On Premises
Any loss of money or securities or other property through robbery, burglary, theft, hold-up or other
fraudulent means, mysterious disappearance, damage or destruction while within any of the insured's
offices, the offices of any banking institution or clearing house or within any recognized place of safe-
deposit, as more fully defined in the Standard Form of Financial Institution Bond (herein referred to as the
"Standard Form");

Clause C - In Transit
Any loss of money and securities or other property through robbery, burglary, theft, hold-up,
misplacement, mysterious disappearance, damage or destruction, while in transit in the custody of any
employee or any person acting as messenger except while in the mail or with a carrier for hire other than
an armoured motor vehicle company, as more fully defined in the Standard Form;

Clause D - Forgery or Alterations
Any loss through forgery or alteration of any cheques, drafts, promissory notes or other written orders or
directions to pay sums in money, excluding securities, as more fully defined in the Standard Form;

Clause E - Securities
Any loss through having purchased or acquired, sold or delivered, or extended any credit or acted upon
securities or other written instruments which prove to have been forged, counterfeited, raised or altered,
or lost or stolen, or through having guaranteed in writing or witnessed any signatures upon any transfers,
assignments or other documents or written instruments, as more fully defined in the Standard Form.

G.4.03 – Notice of Termination or Cancellation
Each Financial Institution Bond maintained by a member shall contain a rider containing provisions to the
following effect:
(1)   The underwriter shall notify the Exchange at least thirty (30) days prior to the termination or
      cancellation of the Bond, except in the event of termination or cancellation of the Bond due to:
      (a)   The expiration of the Bond period specified;
      (b)   Cancellation of the Bond as a result of the receipt of written notice from the insured of its desire
            to cancel the Bond;

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      (c)   The taking over of the insured by a receiver or other liquidator, or by Provincial, Federal or
            State officials; or
      (d)   The taking over of the insured by another institution or entity.
(2)   In the event of termination or cancellation of the Bond as an entirety in accordance with clauses 1(b),
      1(c), or 1(d), the underwriter shall, upon becoming aware of such termination or cancellation, give
      immediate written notice of the termination or cancellation to the Exchange. Such notice shall not
      impair or delay the effectiveness of the termination or cancellation.
(3)   In the event of the takeover of a member by another institution or entity as described in paragraph
      1(d); the member shall ensure that there is a bond coverage which provides a period of twelve (12)
      months from the date of such takeover within which to discover the losses, if any, sustained by the
      member prior to the effective date of such takeover and the member shall pay, or cause to be paid,
      any applicable additional premium.

G.4.04 – Amounts Required
The minimum amount of insurance to be maintained for each Clause under Rule G.4.02 shall be the
greater of:
(1)   $500,000 or, in the case of an introducing Type I Arrangement, $200,000; and
(2)   1% of the base amount (as defined herein);
provided that for each Clause such minimum amount need not exceed $25,000,000. For the purposes of
this rule, the term "base amount" shall mean the greater of:
(1)   The aggregate of net equity for each client determined as the total value of cash and securities owed
      to the clients by the member less the total value of cash and securities owed by that client to the
      member; and
(2)   The aggregate of total liquid assets and total other allowable assets of the member determined in
      accordance with Statement A of Form 1 (JRFQR).

G.4.05 – Provisos (Provisos with respect to Rules G.4.02, G.4.03 and G.4.04)
(1)   The value of securities in transit in the custody of any employee or any person acting as a
      messenger shall not at any time exceed the protection provided under Rule G.4.02;
(2)   The amounts of insurance required to be maintained by a member shall, as a minimum, be by way
      of a Financial Institution Bond with a double aggregate limit or a provision for full reinstatement;
(3)   Should there be insufficient coverage, a member shall be deemed to be complying with Rule G.4.00
      provided that any such deficiency does not exceed 10% of the insurance requirement and that
      evidence is furnished within two (2) months of the dates of completion of the Quarterly Operations
      Questionnaire and the annual audit that the deficiency has been corrected. If the deficiency is 10%
      or more of the insurance requirement, action must be taken by the member to correct the deficiency
      within ten (10) days of its determination and the member shall immediately notify the Exchange;
(4)   Insurance against Clause E losses (Securities) may be incorporated in the Financial Institution Bond
      or may be carried by means of a rider attached thereto or by a Separate Securities Forgery Bond;
(5)   A Financial Institution Bond maintained pursuant to Rule G.4.02 may contain a clause or rider stating
      that all claims made under the bond are subject to a deductible, provided that the member's
      minimum margin requirement is increased by the amount of the deductible; and
(6)   For the purposes of calculating insurance requirements, no distinction is to be made between
      securities in non-negotiable form and those in negotiable form.




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G.4.06 – Qualified Carriers
Insurance required to be effected and kept in force by a member pursuant to this Rule G.4.00 must be
underwritten directly by either (i) an insurer registered or licensed under the Laws of Canada or any
Province in Canada or (ii) any foreign insurer approved by the Exchange. No foreign insurer shall be
approved by the Exchange unless the insurer has the minimum net worth required of $75 million on the
last audited balance sheet, provided that acceptable financial information with respect to such corporation
is available for inspection and the Exchange is satisfied that the insurer is subject to supervision by
regulatory authorities in the jurisdiction of incorporation for the insurer which is substantially similar to the
supervision of insurance companies in Canada.

G.4.07 – Global Financial Institution Bonds
Where the insurance maintained by a member in respect of any of the requirements under this Rule
G.4.00 names as the insured or benefits the member, together with any other person or group of persons,
whether within Canada or elsewhere, the following must apply:
(1)   The member shall have the right to claim directly against the insurer in respect of losses, and any
      payment or satisfaction of such losses shall be made directly to the member; and
(2)   The individual or aggregate limits under the policy may only be affected by claims made by or on
      behalf of:
      (a)   the member,
      (b)   any of the member's subsidiaries, whose financial results are consolidated with those of the
            member, or
      (c)   a holding company of the member provided that the holding company does not carry on any
            business or own any investments other than its interest in the member
      without regard to the claims, experience or any other factor referable to any other person.

G.4.08 – Notice
Every member shall give, to the Exchange, written notice with all available particulars of any loss (other
than client losses relating to lost document bonds) reported in writing by the member to its insurers or
their authorized representatives arising under the financial institution bond or bonds which such member
is required to effect and keep in force under Rule G.4.02. Such notice shall be given within two business
days of the member so reporting to the insurer or its authorized representative.




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RULE G.5.00 – CONCENTRATION OF SECURITIES

G.5.01 – Definitions
(1)   "Amounts loaned" includes:
      (a)   Long Positions
            (i)    loan value of long securities in margin accounts on settlement date;
            (ii)   loan value of long securities in regular settlement cash accounts when any portion of the
                   account is outstanding after settlement date;
            (iii) loan value of long securities in delivery against payment cash accounts when such
                  securities are outstanding after settlement date;
            (iv) loan value of long inventory positions on trade date;
            (v)    loan value of new issues carried in inventory twenty business days after new issue
                   settlement date.
      (b)   Short Positions
            (i)    market value of short positions in margin accounts on settlement date;
            (ii)   market value of short positions in regular settlement cash accounts when any portion of
                   the account is outstanding after settlement date;
            (iii) market value of short positions in delivery against payment cash accounts when such
                  securities are outstanding after settlement date;
            (iv) market value of short inventory positions on trade date.
(2)   "Security" includes:
      (a)   all long and short positions in equity and convertible securities of an issuer;
      (b)   all long and short positions in debt or other securities other than debt securities with a margin
            requirement of 10% or less.
(3)   "Risk Adjusted Capital" means a member's Risk Adjusted Capital as calculated before the securities
      concentration charge (Statement B, line 25 of Form 1) plus minimum capital (Statement B, line 6
      Form 1).

G.5.02 – Calculation
(1)   Security positions which qualify for margin offsets pursuant to Rule G, may be netted for purposes of
      computing the amount loaned.
(2)   Separate calculations must be made for long security positions and short security positions. The
      exposure to be compared to the threshold is the greater of the long or short exposure.
(3)   In computing the total amount being loaned on long (short) positions for each client on any one
      security, there may be deducted from the loan value (market value) of the long (short) position:
      (a)   any excess margin in the client's account, and
      (b)   25% of the market value of long positions in any non-marginable securities in the account
            provided that such securities are carried in readily saleable quantities only.
(4)   In calculating the amount loaned on long positions for a client, where such client (the "Guarantor")
      has guaranteed another client account (the "Guaranteed Account"), any securities in the Guarantor's
      account which are used as collateral to reduce margin required in the Guaranteed Account in
      accordance with Rule G.2.01 shall be included in calculating the amount loaned on each security for


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      the purposes of the Guarantor's account.
(5)   Values of trades with Acceptable Institutions or Acceptable Counterparties, and regulated entities
      which are outstanding ten business days after settlement date and are:
      (a)   not confirmed for clearing through a recognized clearing corporation or,
      (b)   not confirmed by the Acceptable Institutions, Acceptable Counterparties or regulated entities,
      must be included in the concentration calculation in the same manner as delivery against payment
      cash accounts.
(6)   For DAP/RAP accounts of parties which are not Acceptable Institutions or Acceptable
      Counterparties or regulated entities trades less than ten days past settlement date do not have to be
      included in the calculation of potential concentrations if they have been confirmed on or before
      settlement date by a settlement agent which qualifies as an Acceptable Institution.

G.5.03 – Concentration - Capital Requirement
(1)   Subject to Rule G.5.04, where the total amount being loaned by a member on any one security for
      all clients and/or inventory accounts as computed under this rule, exceeds an amount equal to two-
      thirds of the member's Risk Adjusted Capital, before securities concentration charge plus minimum
      capital, as most recently calculated, an amount equal to 150% of the excess of the amount loaned
      over two-thirds of the member's Risk Adjusted Capital, before securities concentration charge plus
      minimum capital, shall be deducted from the Risk Adjusted Capital of the member, unless the
      excess amount is eliminated within five (5) business days of the date it first occurs. For long
      positions, the concentration charge as calculated herein shall not exceed the loan value of the
      security for which the charge is incurred.
(2)   In the event that the total amount being loaned by a member on any one security for all clients
      and/or inventory accounts as computed under this rule, exceeds an amount equal to one-half of the
      member's Risk Adjusted Capital before minimum capital, as most recently calculated, and the
      amount being loaned on any other security which is being carried by a member for all clients and/or
      inventory accounts as computed under this rule, exceeds an amount equal to one-half of the
      member's Risk Adjusted Capital before minimum capital as most recently calculated, an amount
      equal to 150% of the excess amount loaned on the other security over one-half of the member's Risk
      Adjusted Capital before minimum capital shall be deducted from the Risk Adjusted Capital of the
      member, unless the excess amount is eliminated within five business days of the date it first occurs.

G.5.04 – Concentration of Member's Own Securities
Notwithstanding Rule G.5.03 above, where the loaned security is a security issued by: (i) the member, or
(ii) a company where the accounts of a member are included in the consolidated financial statements and
where the assets and revenues of the member constitute more than 50% of the consolidated assets and
50% of the consolidated revenue, respectively, of the company, based on the amounts shown in the
audited consolidated financial statements of the company and the member for the preceding fiscal year,
and the total amount loaned by the member on any one such security for all clients, as calculated
hereunder, exceeds an amount equal to one-third of the member's Risk Adjusted Capital before securities
concentration charge plus minimum capital as most recently calculated, an amount equal to 150% of the
excess of the amount loaned over one-third of the member's Risk Adjusted Capital before securities
concentration charge plus minimum capital shall be deducted from the Risk Adjusted Capital of the
member, unless the excess amount is eliminated within five (5) business days of the date it first occurs.
For long positions, the concentration charge as calculated herein shall not exceed the loan value of the
security for which the charge is incurred.

G.5.05 – Application of Concentration Charge
For the purposes of calculating the concentration charges as required by Rule G.5.03 and Rule G.5.04,
such calculations shall be performed for the first five securities in which there is a concentration.

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G.5.06 – Reporting
Where there is an over exposure in a security and the special capital charge as referred to in Rule G.5.03
or G.5.04 would produce either a capital deficiency or a violation of the Early Warning Rule, the member
must report the over concentration situation to the Exchange on the date the over concentration first
occurs.




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RULE G.6.00 – CASH AND SECURITIES LOAN AGREEMENTS

G.6.01 – General
(1)   For the purposes of this section,
      (a)   "overnight cash loan agreements" mean oral or written agreements whereby a member
            deposits cash with another member for a period not exceeding two business days; and
      (b)   "Schedule I Bank" means a Schedule I Bank pursuant to the Bank Act (Canada) that has a
            capital and reserves position of one billion dollars ($1,000,000,000) or more at the time of the
            securities loan transaction.
(2)   Written Agreements - with the exception of overnight cash loan agreements, all other cash and
      securities loan agreements must be in writing and provide, at a minimum, for the following:
      the rights of either party to retain (and/or realize on) the securities delivered to it by the other party
            pursuant to the loan in the event of default by the other party;
      (b)   events of default;
      (c)   for the treatment of the value of securities or collateral held by the non- defaulting party that is
            in excess of the amount owed by the defaulting party;
      (d)   either:
            (i)    for the provisions enabling the parties to set off their debts; or
            (ii)   1)   for provisions enabling the parties to effect a secured loan and, in particular, for the
                        continuous segregation by the lender of securities held by it as collateral for the loan;
                        and
                   2)   if the parties intend to effect a secured loan, where there is available to the lender
                        more than one method of perfecting its security interest in the collateral, the lender
                        must perfect such interest in a manner that provides it with the higher priority in a
                        default situation; and
      (e)   if the parties intend to rely on set off or effect a secured loan, for the securities borrowed and
            the securities loaned to be, pursuant to applicable legislation, free and clear of any trading
            restrictions and duly endorsed by the transfer.
(3)   Failure to fulfill the condition of clause (2) will result in:
      (a)   the cash or market value of the collateral given by the borrower to the lender being deducted
            from net allowable assets of the borrower; and
      (b)   the cash or market value of the loan given by the lender to the borrower being deducted from
            the net allowable assets of the lender.
      except where the counterparty is an acceptable institution in which case, no margin need be
      provided.

G.6.02 – Buy-in (Liquidity Transactions) Procedures
Buy-ins must be commenced within two business days of the giving of notice for the buy-in.

G.6.03 – Accounting System
Rule G.3.00 applies with respect to record-keeping and control for all securities borrowed and loaned.

G.6.04 – Rules for Cash and Securities Loan Transactions between Regulated Entities
(1)   Written Agreement - in addition to the clauses required in Rule G.6.01 (2), a written cash or

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      securities loan agreement shall provide that the parties acknowledge that either has the right to call
      for any shortfall in the difference between the collateral and the borrowed securities at any time.
(2)   where the cash or securities loan is processed through an acceptable clearing corporation,
      confirmation and month-end statements need not be issued between members.
(3)   letters of credit issued by Schedule I Banks may be used as collateral.
(4)   for purposes of this rule, acceptable clearing corporations are as defined in Form 1.

G.6.05 – Rules for Cash and Securities Loan Transactions between Members and Acceptable
Institutions or Acceptable Counterparties
(1)   Confirmations and month-end statements shall be issued.
(2)   Letters of credit issued by Schedule I Banks may be used as collateral.

G.6.06 – Rules for Cash and Securities Loan Transactions between Members and all Other
Lenders
(1)   Marking to Market
      Borrowed securities and collateral must be marked to market daily on a one-for-one basis.
(2)   Loan Accounts
      Loan accounts must be maintained separate from securities trading accounts maintained by
      members.
(3)   Collateral
      (a)   Securities Pledged
            The securities pledged as collateral must be held by the member on a fully segregated basis or
            must be held by a custodian that is an Acceptable Institution or Acceptable Counterparty
            pursuant to an escrow agreement, acceptable to the Exchange, between the member and the
            Acceptable Institution or Acceptable Counterparty;
      (b)   subject to subclause (c) below, securities pledged as collateral must have a margin rate of 5%
            or less; and
      (c)   preferred shares convertible into the common shares borrowed or convertible debt securities
            convertible into the common shares borrowed may be pledged against common stock of the
            issuer.
(4)   Confirmations and Month-end statements
      (a)   confirmations and month-end statements shall be issued; and
      (b)   loans of securities from retail clients shall be recorded separately from trading accounts for
            retail clients.
(5)   Charge to Net Allowable Assets
      Failure to fulfill the conditions of clause 2 or 3(c) above will result in a charge to the net allowable
      assets of the member as provided in Rule G1.05 for short securities balances in the accounts of
      clients.




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G.6.07 – Letters of Credit
In a cash or securities loan transaction between an acceptable institution, an acceptable counterparty or a
regulated entity, where a letter of credit issued by a Schedule I Bank is used as collateral for the cash or
securities loan transaction pursuant to Rules 6.04(3) or 6.05(2), there shall be no charge to the member's
capital for any excess of the value of the letter of credit pledged as collateral over the market value of the
securities borrowed.




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RULE G.7.00 – EARLY WARNING SYSTEM

G.7.01 – Designation
A member shall be designated in Early Warning Level 1 or Level 2 according to its capital, profitability and
liquidity position from time to time and frequency of designation or at the discretion of the Exchange as
provided in this Rule G.7.00. The terms and definitions used in this rule shall have the same meanings as
used in Statement C and Schedules 13, 13A of Form 1 of the Exchange, unless otherwise defined in the
by-laws or rules or the context requires, and reference shall be made to such Statements and Schedules
in interpreting this rule.

G.7.02 – Level 1
A member shall be designated in Early Warning Level 1 if at any time:

Liquidity
Its Early Warning Reserve is a negative number; or

Capital
Its risk adjusted capital is less than 5% of total margin required; or

Profitability
(1)   The quotients obtained by dividing each of
      (a)   risk adjusted capital as at (the date of calculation); and
      (b)   risk adjusted capital as at the end of the preceding month, by the average of the net profit or
            loss (before interest on internal subordinated debt, bonuses, income taxes and extraordinary
            items) for the six month period ending with (i) the current month and (ii) the preceding month,
            respectively, where such average is a loss, are
      (c)   both greater than or equal to three but less than six, or
      (d)   the quotient obtained using the number in subclause (a) above as a divisor is greater than or
            equal to three but less than six and the quotient using the number in subclause (b) above as a
            divisor is less than three; or
(2)   The risk adjusted capital (at the time of calculation) is less than six times the net loss (as defined
      above) for the current month; or

Discretionary
The condition of the member, in the sole discretion of the Exchange, is not satisfactory for any reason
including, without limitation, financial or operating difficulties, problems arising from record keeping
conversion or significant changes in clearing methods, the fact that the member is a new member or the
member has been late in any filing or reporting required pursuant to the by-laws and rules.

G.7.03 – Level 1 Provisions
If a member is designated in Early Warning Level 1 then, notwithstanding the provisions of any rule (other
than Rule G.7.05), regulation, ruling or policy of the Exchange, the following provisions shall apply:
(1)   The Chief Executive Officer and Chief Financial Officer of the member shall immediately deliver to
      the Exchange a letter containing the following:
      (a)   advice of the fact that any of the circumstances in Rule G.7.02 are applicable;
      (b)   an outline of the problems associated with the circumstances referred to in (a) above;

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      (c)   an outline of the proposal of the member to rectify the problems identified; and
      (d)   an acknowledgement that the member is in Early Warning category and that the restrictions
            contained in Rule G.7.03, clause (4) below, apply;
      a copy of which letter will be provided to the member's auditor and to the Canadian Investor
      Protection Fund.
(2)   The Exchange shall immediately designate the member as being in an Early Warning category Level
      1 and shall deliver to the Chief Executive Officer and Chief Financial Officer a letter containing the
      following:
      (a)   advice that the member is designated as being in Early Warning category Level 1;
      (b)   a request that the member file its next monthly financial report required pursuant to Rule G.1.03
            no later than fifteen business days or, in the discretion of the Exchange if he considers it to be
            practicable, such earlier time following the end of the relevant month;
      (c)   a request that the member respond to the letter as required in clause (3) below and that such
            response, together with the notice received pursuant to clause (1) above, will be forwarded to
            the Canadian Investor Protection Fund and may be forwarded to any securities commission
            having jurisdiction over the member;
      (d)   advice that the restrictions referred to in clause (4) below shall apply to the member;
      (e)   such other information as the Exchange shall consider relevant.
(3)   The Chief Executive Officer and the Chief Financial Officer of the member shall respond by letter
      signed by them both within five business days of receipt of the letter referred to in clause (2) above,
      with a copy to be sent to the auditor of the member, containing the information and
      acknowledgement required pursuant to clause (1), subclauses (b), (c) and (d) above, to the extent
      not previously provided, or an update of such information if any material circumstances or facts have
      changed.
(4)   If and so long as the member remains designated as being in an Early Warning category, it shall not
      without the prior written consent of the Exchange:
      (a)   reduce its capital in any manner including by redemption, repurchase or cancellation of any of
            its shares;
      (b)   reduce or repay any indebtedness which has been subordinated with the approval of the
            Exchange;
      (c)   directly or indirectly make any payments, including those by way of loan, advance, bonus,
            repayment of capital, contractual agreement or other distribution of assets to any director,
            officer, partner, shareholder, or any related connected, associated party or affiliated company;
            or
      (d)   increase its non-allowable assets (as specified by the Exchange) unless a prior binding
            commitment to do so exists or enter into any new commitments which would have the effect of
            materially increasing the non-allowable assets of the member.
(5)   If and so long as the member remains designated as being in an Early Warning category, it shall
      continue to file its monthly financial reports within the time specified pursuant to subclause (b) of this
      Rule G.7.03, clause (2).
(6)   As soon as practicable after the member is designated as being in an Early Warning category, the
      Exchange shall conduct an on-site review of the member's procedures for monitoring capital on a
      daily basis and prepare a report as to the results of the review.
      The Exchange shall also advise any Exchange Committee as required by the Board of the fact that a
      member has been designated as being in an Early Warning category Level 1 and shall, at the
      request of that Committee, disclose the name of the member to the Committee.


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No member shall enter into any transaction or take any action, as described in any of subclauses (a), (b),
(c), or (d), of clause (4) of this Rule G.7.03 which when completed would have, or would reasonably be
expected to have, the effect on the member as described in Rule G.7.02, without first notifying the
Exchange in writing of its intention to do so and receiving the written approval of the Exchange prior to
implementing such transaction or action.

G.7.04 – Level 2
A member shall be designated in Early Warning Level 2 if at any time:

Liquidity
Its Early Warning Excess is a negative number

Capital
Its risk adjusted capital is less than 2% of total margin required or

Profitability
(1)   The quotients obtained by dividing each of
      (a)   risk adjusted capital as at (the date of calculation) and
      (b)   risk adjusted capital as at the end of the preceding month by the average of the net profit or
            loss (before interest on internal subordinated debt, bonuses, income taxes and extraordinary
            items) for the six month period ending with (i) the current month and (ii) the preceding month,
            respectively, where such average is a loss, are
      (c)   both less than three or
      (d)   the quotient obtained by using the number in subclause b. as a divisor is greater than or equal
            to three but less than six, and the quotient obtained by using the number in clause (1) above is
            less than three or
(2)   The risk adjusted capital (as at the time of calculation) is less than three times the net loss (as
      defined above) for the current month or
(3)   The risk adjusted capital (as at the time of calculation) is less than the total net profit or loss (as
      defined above) for the three months ending with the current month.

Frequency
      (a)   It has been designated in an Early Warning level (any combination of Levels 1 and 2) three or
            more times in the preceding six months or
      (b)   It has been designated in Early Warning Level 1 under the profitability criteria and at the time
            has been designated in Early Warning Level 1 under either the liquidity or capital criteria.

Discretionary
      The condition of the member, in the sole discretion of the Exchange, is not satisfactory for any
      reason including, without limitation, financial or operating difficulties, problems arising from record
      keeping conversion or significant changes in clearing methods, the fact that the member is a new
      member or the member has been late in any filing or reporting required pursuant to the by-laws and
      rules.

G.7.05 – Level 2 Provisions
If the member is designated as being in Early Warning Level 2, the following provisions shall apply in
addition to the provisions of Rule G.7.03 which shall continue to apply except to the extent inconsistent


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with this Rule G.7.05:
(1)   The Chief Executive Officer and Chief Financial Officer of the member shall immediately deliver to
      the Exchange a letter advising that the circumstances of this Rule G.7.05 are applicable to the
      member.
(2)   The member shall file its monthly financial reports no later than ten business days or, at the
      discretion of the Exchange if he considers it to be practicable, such earlier time following the end of
      the relevant month.
(3)   The Chief Executive Officer and the Chief Financial Officer of the member shall attend at the offices
      of the Exchange to outline the proposals of the member for rectifying the problems which account for
      the member being designated as being in Early Warning Level 2.
(4)   The member shall file a weekly financial report containing the same information required in a
      monthly financial report pursuant to Rule G. 1.03 no later than five business days or, at the
      discretion of the Exchange if it considers it to be practicable, such earlier time following the end of
      the relevant week.
(5)   The member shall file weekly, on a form prescribed by the Exchange, a report of its aged
      segregation deficiencies and an explanation of the actions proposed to be taken pursuant to Rule
      F.4.00 to correct such deficiencies.
(6)   The member shall prepare and file, within such time of the member being designated in Early
      Warning Level 2, a business plan relating to the member's business for such period and covering
      such matters as the Exchange may direct.
(7)   The Exchange may request and the member shall provide in such time as the Exchange considers
      practicable, such reports or information, on a daily or a less frequent basis, as may be necessary or
      desirable in the opinion of the Exchange to assess and monitor the financial condition or operations
      of the member.
(8)   The Exchange, as soon as practicable after it becomes aware that a member is designated as being
      in Early Warning category Level 2, shall prepare and submit a report to an Exchange Committee as
      directed by the Board outlining the financial condition and operations of the member and shall, at the
      request of the Committee, disclose the name of the member to the Committee.
(9)   The member shall pay at the discretion of the Exchange, the reasonable costs and expenses of the
      Exchange (including staff time) incurred in connection with the administration of this Rule G.7.00 in
      respect of the member.
(10) The amount of client's free credit balances permitted to be used by a member may be reduced to
     such amount as the Exchange may, in his opinion, consider desirable.

G.7.06 – Discretion
The Exchange and/or the designated Exchange Committee may, in its discretion, without affording the
member a hearing, prohibit a member which is designated as being in Early Warning category Level 2
from opening any new branch offices, hiring any new registered representatives, opening any new client
accounts or changing, in any material respect, the inventory positions of the member. Any such
prohibitions which have been imposed shall continue to apply until the member is no longer designated
as being in an Early Warning category Level 1 or Level 2, as demonstrated by the latest, filed monthly
financial report of the member.

G.7.07 – Notice
The Exchange shall promptly advise any other participating institution of the Canadian Investor Protection
Fund of which a member is also a member of the fact that the member has been designated as being in
Early Warning category Level 2, the reasons for such designation and any sanctions or restrictions that
have been imposed upon the member pursuant to Rule G.7.06.


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G.7.08 – Designation in Force
A member shall remain designated as being in Early Warning Level 1 or Level 2, as the case may be,
subject to the provisions of this rule, at the discretion of the Exchange and until the member
demonstrates, in the opinion of the Exchange, that the member no longer is required to be designated as
being in an Early Warning category and has otherwise complied with this rule.




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RULE G.8.00 – DISCLOSURE TO CLIENTS OF MEMBERS' FINANCIAL CONDITION

G.8.01 – Available to Clients
Each member shall make available to its clients, on request, a statement of its financial condition as of
the close of its latest financial year and based on the latest annual audited financial statements provided
that, in order to prepare such statement, the member shall have 75 days from the close of such financial
year. The term "client", as used in this rule, shall mean any person who has had a transaction with a
member within one year of the day on which a request for a settlement of financial condition is made.

G.8.02 – Published Statements
Any statement of financial condition published in a newspaper or other medium in Canada shall be in the
same form and of the same substance as the statement made available to clients.

G.8.03 – Form and Content
The statement of financial condition shall contain information such as the following or similar headings for
items which are material:
(1)   Current Assets
      (a)   Cash
      (b)   Receivable from brokers and dealers
      (c)   Receivable from clients
      (d)   Inventory of securities at the lower of cost or market value or at market value (state basis of
            valuation)
(2)   Miscellaneous accounts receivable
(3)   Other assets (state basis of valuation)
      Investment in subsidiary and affiliated companies Fixed assets
(4)   Current liabilities
      (a)   Call loans and bank overdrafts
      (b)   Payable to brokers and dealers
      (c)   Payable to clients
      (d)   Accounts payable, accrued expenses and income taxes
      (e)   Securities sold short at the higher of cost or market value or at market value (state basis of
            valuation)
(5)   Capital in the business
      (a)   Shareholders' equity (including subordinated loans and retained earnings)
      (b)   Partners' equity

G.8.04 – Auditor's Report
The statement of financial condition shall be accompanied by a report by the member's auditor stating
that it fairly summarizes the financial position of the member.




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G.8.05 – Officers and Directors List
Each member shall make available to its clients, on request, a current list of the names of its partners or
its directors and senior officers made up as of a recent date.

G.8.06 – Disclosure
Each member shall indicate to its clients on each statement of account or in such other manner as may
be approved by the Exchange that the statement of financial condition and list of partners, directors and
senior officers are available upon request.

G.8.07 – Holding Companies, Related Companies & Affiliates
Where the accounts of a member are included in the consolidated financial statements of any holding
company, related company or affiliate of the member which are published in a newspaper or other
medium in Canada and where the holding company, related company or affiliate has a name similar to
that of the member either:
(1)   such statement shall be accompanied by a note to the effect that the entity to which the consolidated
      statements relate is not a member of the Exchange or another recognized self-regulatory
      organization and, while the statements include the accounts of the member, the consolidated
      statements are not the financial statements of the member; or
(2)   if such note disclosure is not included in the consolidated statement of financial condition, the
      member shall, contemporaneously with the publication, send to each of its clients the unconsolidated
      statement of financial condition of the member together with a letter explaining why such statement
      is being sent.




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RULE G.9.00 – CLIENTS' FREE CREDIT BALANCES

G.9.01 – Definition
For the purposes of this Rule G.9.00 "free credit balances" shall mean:
(1)   For cash and margin accounts - the credit balance less an amount equal to the aggregate of (i) the
      market value of short positions, and (ii) margin as required pursuant to the rules on those short
      positions; and
(2)   For commodity accounts - the credit balance less an amount equal to the aggregate of (i) margin
      required to carry open futures contracts and/or futures contract option positions, (ii) less any equity
      in such contracts, (iii) plus any deficits in such contracts, provided that such aggregate amount may
      not exceed the dollar amount of the credit balance.

G.9.02 – Disclosure
Each member which does not keep its clients' free credit balances segregated in trust for clients in an
account with an acceptable institution separate from the other monies from time to time received by such
member shall legibly make a notation on all statements of account sent to its clients in substantially the
following form:
         "Any free credit balances represent funds payable on demand which, although
         properly recorded in our books, are not segregated and may be used in the
         conduct of our business."

G.9.03 – Calculation
No member shall use in the conduct of its business clients' free credit balances in excess of the
aggregate of the following amounts:
(1)   Eight times the net allowable assets of the member; plus
(2)   Four times the Early Warning reserve of the member.
Each member shall hold an amount at least equal to the amount of clients' free credit balances in excess
of the foregoing either (i) in cash segregated in trust for clients in a separate bank account or accounts
with an acceptable institution, or (ii) segregated and separate and apart as the member's property in
bonds, debentures, treasury bills and other securities with a maturity of less than one year of or
guaranteed by the Government of Canada, the United Kingdom, the United States of America and any
other national, foreign government (provided such other foreign government is a member of the Basle
Accord).

G.9.04 – Compliance
(1)   members shall determine, at least weekly, the amounts required to be segregated in accordance
      with Rule G.9.03. In determining such amount, net allowable assets and Early Warning reserve
      balances as at the end of the month-end for which the last monthly report has been filed, shall be
      used. Such monthly report shall also include the amount required to be segregated in accordance
      with Rule G.9.03.
(2)   members shall review, on a daily basis, compliance with Rule G.9.03 against the latest
      determination under this Rule G.9.00 of amounts to be segregated with a view to identifying and
      correcting any deficiency in amounts of free credit balances to be segregated.

G.9.05 – Rectification of Deficiency
In the event that a deficiency exists in amounts of free credit balances required to be segregated by a
member, the member shall expeditiously take the most appropriate action to rectify the deficiency.


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                                       EXCHANGE




RULE H. – LEFT INTENTIONALLY BLANK




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                                                                           EXCHANGE




RULE I.1.00 – OPTIONS

I.1.01 – Definitions:
"Aggregate Exercise Price" means the exercise price of a CDCC option multiplied by the number of units
of the underlying security covered by the CDCC options.
"Business Day" means any day on which the Clearing Corporation is open for business.
"Call" means a CDCC option by the terms of which the holder of the option has the right in accordance
with the terms of the option, to purchase from the Clearing Corporation the number of shares of the
underlying security covered by the CDCC option.
"Canadian Corporation" means a corporation incorporated or continued by or under a general or special
act of the parliament of Canada or the legislature of any province thereof.
"CDCC Option" means a Call or Put option issued by CDCC, pursuant to its by-laws.
"Class of Options" means all CDCC options of the same type covering the same underlying security
except in reference to market-maker appointments where class means both the Calls and Puts on the
same underlying security.
"Clearing Corporation" means Canadian Derivatives Clearing Corporation.
"Clearing member" means a member of the Exchange who is a member of the Clearing Corporation.
"Client Account" means an account established by a member which is confined to option transactions
executed by and positions carried by the member on behalf of its clients.
"Covered Call Writer" means a writer of a CDCC Call who, so long as he remains obligated as a writer,
owns the shares or other units of underlying security covered by the Call, or holds on a share-for-share
basis a Call of the same class as the Call written where the exercise price of the Call held is equal to or
less than the exercise price of the Call written.
"Covered Put Writer" means a writer of a CDCC Put who, so long as he remains obligated as a writer,
holds on a share-for-share basis a Put of the same class as the Put written where the exercise price of
the Put held is equal to or greater than the exercise price of the Put written.
"Escrow Receipt" means a document issued by a financial institution approved by the Clearing
Corporation certifying that a security is held by such financial institution in respect of a specified CDCC
option of a particular client of a member.
"Exercise" means to submit an exercise notice on an options trading floor in order to take delivery of and
pay for, in the case of a Call, or to sell and receive payment for, in the case of a Put, the underlying
security which is the object of a CDCC option.
"Exercise Price" in respect of a CDCC option means the specified price per unit at which the underlying
security may be purchased, in the case of a Call, or sold, in the case of a Put, upon exercise of the CDCC
option.
"In-the-Money" in respect of a CDCC option means the market price of the underlying security is above, in
the case of a Call, or below, in the case of a Put, the exercise price of the CDCC option.
"Long Position" means a person's interest as the holder of one or more CDCC options of a series of
options.
"Member" means a member of the Exchange authorized by the Exchange to deal in CDCC options.
"Out-of-the-Money" in respect of a CDCC option means the market price of the underlying security is


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below, in the case of a Call, or above, in the case of a Put, the exercise price of the CDCC option.
"Outstanding" in respect of a CDCC option means the option has been issued by the Clearing
Corporation and has neither been the subject of a closing writing transaction nor has expired.
"Put" means a CDCC option by the terms of which the holder of the option has the right in accordance
with the terms of the option to sell to the Clearing Corporation the number of shares of the underlying
security covered by the CDCC option.
"Registered Options Principal" means a person who is engaged in the management of a member's
business pertaining to CDCC options who has been designated as such and who has been approved as
such by the Exchange.
"Series of Option" means all CDCC options of the same class with the same exercise price and expiration
date.
"Short Position" means a person's obligation as the writer of one or more CDCC options of a series of
options.
"Type of Option" means the classification of an option as either a "Put" or "Call".
"Uncovered" in respect of a short position in a CDCC option means that the short position is not covered.
"Underlying Security" in respect of a CDCC option means the security which the Clearing Corporation
shall be obligated to sell, in the case of a Call, or purchase, in the case of a Put, upon the valid exercise
of the CDCC option.
"Unit of Trading" means the number of units of the underlying security which have been designated by the
Clearing Corporation as the minimum number to be the subject of a single CDCC option in a series of
options. In the absence of any such designation for a series of CDCC options in which the underlying
security is a stock, the unit of trading shall be 100 shares.

I.1.02 – Requirements for Trading or Dealing in CDCC Options
No member or any Affiliate of the member, or any person acting on its behalf, shall trade or advise in
respect of options unless:
(1)   one or more of the directors, partners or officers of the member or any Affiliate of the member, or
      any person acting on its behalf, is a registered options principal, is designated as such by the
      member or Affiliate and approved as such by the Exchange;
(2)   trading or dealing in CDCC options is conducted in accordance with the rules and policies of the
      Exchange, and with the by-laws and rules of the Clearing Corporation;
(3)   the member or Affiliate complies with directions and rulings of the various Exchange committees
      dealing with CDCC options;
(4)   each of the member's or Affiliate's clients trading or dealing in CDCC options has executed an
      options trading agreement respecting CDCC options containing the provisions set out in Rule I;
(5)   the account of each of the member's or Affiliate's clients trading or dealing in CDCC options has
      been authorized by the designated registered options principal for trading in CDCC options in
      accordance with Rule I;
(6)   the member or Affiliate:
      (a)   distributes to each client trading or dealing in CDCC options before the first trade made by that
            client a copy of the current prospectus, summary statement or other similar disclosure
            document of the Clearing Corporation; and
      (b)   distributes to each client having an account approved for CDCC options transactions each new
            current disclosure statement of the issuer of the option to be traded;
(7)   each of the member's clients trading or dealing in CDCC options has agreed in writing to abide by


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      the applicable provisions of the rules of the Exchange pertaining to CDCC options and the by-laws
      and rules of the Clearing Corporation; and
(8)   each of the member's clients trading or dealing in CDCC options has agreed in writing to comply with
      the applicable provisions of the rules of the Exchange respecting position limits and exercise limits;
      and
(9)   maintains a record available for inspection by the Exchange showing the names and addresses of all
      persons to whom a current prospectus has been delivered and the date when such prospectus was
      delivered;

I.1.03 – Required Courses
(1)   No partner, director or investment advisor of a member shall solicit orders for, advise on trades
      concerning, or trades for the public in, CDCC options unless he has successfully completed such
      course or courses of studies as may from time to time be required by the Exchange and has been
      approved by the Exchange to deal in CDCC options.
(2)   Where a branch of a member trades in CDCC options, the branch manager of that branch shall be
      qualified, pursuant to the Exchange requirements, to supervise options trading.

I.1.04 – Suspensions and Restrictions on Member
Whenever the Exchange shall find, on the basis of a report of an Exchange examiner or otherwise, that a
member has failed to perform his obligations or is insolvent or is in such financial or operational condition
or is otherwise conducting its business in such a manner that he cannot be permitted to continue in
business with safety to his clients or creditors or the Exchange or the Clearing Corporation, the Exchange
may summarily suspend the member or may impose such conditions and restrictions as it considers
reasonably necessary for the protection of the Exchange and the clients of such member. The provisions
of Rule E apply to any suspension under this Rule.

I.1.05 – Position Limits
(1)   Except as either provided for in subsection (3) or with the prior written permission of the Exchange,
      no member shall make, for any account in which it has an interest and no member shall make for the
      account of any client, an opening transaction in any CDCC option if the member has reason to
      believe that, as a result of such transaction, the member or client thereof would, acting alone or in
      concert with others, directly or indirectly, hold or control or be obliged in respect of a position
      (whether long or short) in excess of:
      (a)   3,000 CDCC options, where the underlying security does not meet the requirements set out in
            clauses (b) or (c) hereunder, providing for higher option contract limits;
      (b)   5,500 CDCC options, where either the most recent interlisted six-month trading volume of the
            underlying security must have totaled at least 20,000,000 shares, or the most recent interlisted
            six-month trading volume of the underlying security must have totaled at least 15,000,000
            shares and the underlying security must have at least 40,000,000 shares currently outstanding;
      (c)   8,000 CDCC options, where either the most recent interlisted six-month trading volume of the
            underlying security must have totaled at least 40,000,000 shares, or the most recent interlisted
            six-month trading volume of the underlying security must have totaled at least 30,000,000
            shares and the underlying security must have at least 120,000,000 shares currently
            outstanding;
      on the same side of the market, relating to the same underlying interest.
(2)   The Exchange may from time to time by notice change the position limits. A change in the position
      limit will be effective on the date set by the Exchange and reasonable notice shall be given of each
      new position limit.
      (a)   Except as provided in clause (3) (c) below, for the purposes of this section, Calls written and

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            Puts held are on the same side of the market and Puts written and Calls held are on the same
            side of the market.
      (b)   In the event that a member has reason to believe that a position in any account in which it has
            an interest, or the account of any client is in excess of the applicable limit, such member shall
            promptly take the action necessary to bring the position into compliance with the applicable
            limits.
(3)   Conversions, Reverse Conversions, Long and Short Hedges
      (a)   For the purposes of this section, the following defined hedges are approved by the Exchange:
            (i)    Conversion - where an opening long Put transaction in any option is entirely offset by an
                   opening short Call transaction having the same expiry month and strike price in the same
                   option class, either of which option transaction is effectively hedged by a long position in
                   the underlying interest of the option.
            (ii)   Reverse Conversion - where an opening short Put transaction in any option is entirely
                   offset by an opening long Call transaction having the same expiry month and strike price
                   in the same option class, either of which options transaction is effectively hedged by a
                   short position in the underlying interest of the option.
            (iii) Short Hedge - where an opening long Call transaction or an opening short Put transaction
                  in any option is entirely offset by a short position in the underlying interest of the option.
            (iv) Long Hedge - where an opening short Call transaction or an opening long Put transaction
                 in any option is entirely offset by a long position in the underlying interest of the option.
      (b)   In addition to the CDCC options position limits set out in this Rule, any one account may hold
            an amount not (3) (a) (1) through (3) (a) (4), inclusive.
      (c)   For all equity position limits set out in this Rule, in the case of conversion and reverse
            conversion positions, as defined in clauses (3) (a) (1) and (3) (a) (2), such limits shall apply as if
            Calls written and Puts held, or Puts written and Calls held, as the case may be, were not on the
            same side of the market.

I.1.06 – Reports Related to Position Limits
(1)   Each member shall file with the Exchange on the last business day of each week, a report in such
      form as the Exchange may prescribe, giving the name and address of clients who, on the last
      business day of the week, held aggregate long or short positions in excess of 250 CDCC options on
      the same side of the market in any single class. The report shall indicate for each class of CDCC
      options the number of CDCC options comprising each such position and, in the case of short
      positions, whether covered or uncovered.
(2)   In addition to the reports required by section (1), each member shall report promptly to the Exchange
      any instance in which the member has reason to believe that a client, acting alone or in concert with
      others, has exceeded or is attempting to exceed the position limits.
(3)   For the purposes of this Rule, in addition to the usual definition of the term "client" in respect of any
      member shall include the member, any partner, officer or director of the member, or any participant,
      as such, in any joint group or syndicate account with the member or with any partner, officer or
      director thereof.

I.1.07 – Liquidation of Positions in Excess of Limits
Whenever the Exchange shall find, on the basis of a report of an Exchange examiner or otherwise, that a
person or group of persons acting in concert holds or controls, or is obligated in respect of, a position
(whether long or short) in CDCC options in excess of the applicable position limit, the Exchange may
order all members carrying a position in such CDCC options for such person or persons to liquidate such
position as expeditiously as possible consistent with the maintenance of an orderly market. Whenever


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such an order is given by the Exchange, no member shall accept any order to purchase, sell or exercise
any CDCC options for the account of the person or persons named in the order, unless and until the
Exchange has, by formal notice approved such person or persons for trading in CDCC options.

I.1.08 – Exercise Limits
Except with the prior written permission of the Exchange, no member shall exercise for any account in
which it has an interest and no member shall exercise for the account of any client, a long position in any
CDCC option where such members or client thereof, acting alone or in concert with others, directly or
indirectly, has or will have exercised within any five consecutive business days, aggregate long positions
in excess of:
(1)   3,000 CDCC options, where the underlying security does not meet the requirements set out in
      clauses (2) or (3) hereunder, providing for higher option contract limits;
(2)   5,500 CDCC options, where either the most recent interlisted six-month trading volume of the
      underlying security must have totaled at least 20,000,000 shares, or the most recent interlisted six-
      month trading volume of the underlying security must have totaled at least 15,000,000 shares and
      the underlying security must have at least 40,000,000 shares currently outstanding;
(3)   8,000 CDCC options, where either the most recent interlisted six-month trading volume of the
      underlying security must have totaled at least 40,000,000 shares, or the most recent interlisted six-
      month trading volume of the underlying security must have totaled at least 30,000,000 shares and
      the underlying security must have at least 120,000,000 shares currently outstanding;
on the same side of the market, relating to the same underlying interest.

I.1.09 – Designated Registered Options Principal
(1)   Every member who trades in CDCC options:
      (a)   shall appoint a partner, director or officer as a designated registered options principal, and
      (b)   where necessary to ensure continuous supervision in options trading, may appoint one or more
            alternate registered options principals who must be approved by the Exchange. The designated
            registered options principal shall be responsible for establishing and maintaining procedures for
            and supervising account opening and account activity. He shall ensure that the handling of
            client and proprietary business relating to options is within the bounds of ethical conduct,
            consistent with just and equitable principles of trade and not detrimental to the interest of the
            securities industry. He shall supervise activity relating to options in accordance with Exchange
            requirements and policies. In the absence or incapacity of the designated registered options
            principal, his authority and responsibilities shall be assumed by an alternate registered options
            principal (if any).
(2)   Client Account: Each member shall use due diligence to learn the essential facts relative to every
      client who intends to deal in CDCC options, and an Options Account Application form shall be
      completed for each such client. All such essential facts shall be duly recorded on an Options
      Account Application form designed to obtain the minimum information required on the form
      prescribed by the Exchange.
(3)   Prior to the commencement of any trading activity for an account that is intended to deal in CDCC
      options, it must be authorized or approved:
      (a)   by the designated registered options principal, or
      (b)   except in the case of discretionary and managed accounts and subject to section (4), by the
            branch manager of the branch office where the account is opened and such authorization or
            approval shall be indicated on the Options Account Application form.




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(4)   In order for a branch manager to authorize or approve an options account, the branch manager
      shall:
      (a)   be approved by the Exchange, and
      (b)   have successfully completed the Branch Managers Exam including the Options section.
(5)   Client Transaction. Prior to the execution of any option transaction for a client account, each
      member shall use due diligence:
      (a)   to learn the essential facts relative to every order and to ensure that the acceptance thereof is
            within the bounds of good business practice; and
      (b)   to ensure that recommendations made for any client account are appropriate for the client and
            in keeping with the client's investment objectives.
(6)   Written Procedures. Each member who deals with the public in CDCC options shall have written
      procedures, acceptable to the Exchange, for the proper conduct of its options business.

I.1.10 – Discretionary Orders
(1)   No investment advisor or other employee (other than a director or partner) of a member shall be
      permitted to handle a discretionary order for a CDCC option or to exercise any discretion in the
      handling of an account of a client of a member with respect to CDCC options.
(2)   No member shall exercise any discretionary power with respect to the account of a client with
      respect to trades in CDCC options unless such client has given prior written authorization and the
      account has been accepted in writing by the registered options principal and is to be handled by a
      director or partner of the member. Every discretionary order must be identified as discretionary on
      the order at the time of entry.

I.1.11 – Options Trading Agreement or Letter Of Undertaking
(1)   Each member or Affiliate shall have and maintain, with each client trading or dealing in CDCC
      options, an Options Trading Agreement in writing defining the rights and obligations between them
      on such subjects as the member considers appropriate or which the Exchange may from time to
      time determine:
(2)   Subject to section (3) every Options Trading Agreement between a member and a client shall define:
      (a)   the rights of the member to exercise discretion in accepting orders;
      (b)   the member's obligations with respect to errors and/or omissions and qualification of the time
            periods during which orders will be accepted for execution;
      (c)   the method of allocation of exercise assignment notices;
      (d)   the notice that maximum limits may be set on short positions and that during the last ten days
            to expiry cash only terms may be applied and in addition, that the Exchange may enact other
            rules affecting existing or subsequent transactions;
      (e)   the client's obligation to instruct the member to close out contracts prior to the expiry date;
      (f)   the client's obligation to comply with the applicable rule of the Exchange pertaining to CDCC
            options and the by-laws and rules of the Clearing Corporation;
      (g)   the client's obligation to comply with the applicable provisions of the rules of the Exchange
            respecting position limits and exercise limits adopted by the Exchange;
      (h)   the acknowledgment by the client that he has received the current prospectus referred to in
            Rule I;
      (i)   a statement of the time limit set by the member prior to which the client must submit an
            exercise notice;


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      (j)   any other matter which the exchange, clearing corporation or other organization on or through
            which an option is traded or issued may require.
(3)   Notwithstanding the foregoing, where the client is an acceptable institution or an acceptable
      counterparty, in substitution of the formal agreement as outlined in the foregoing paragraph, a
      member may have and maintain a letter of undertaking from the financial institution in which the
      institution agrees to abide by the rules of the Exchange in respect to CDCC options including the
      exercise and position limits and the by-laws and rules of the Clearing Corporation.

I.1.12 – Transfer of Accounts
Every member shall, upon the written request of a client, co-operate in transferring the client's account to
any other member who deals or trades in CDCC options and is in compliance with the Exchange rules
relating to CDCC options, provided that the clients request shall include a statement by the member to
whom the account is to be transferred, agreeing to accept the account. Commissions shall not be
charged for such transfers by the member from or to whom the account is being transferred.

I.1.13 – Rights and Obligations of Options Holders and Writers
The rights and obligations of holders and writers of CDCC options shall be set forth in the by-laws and
rules of the Clearing Corporation.

I.1.14 – Allocation of Exercise Notices
Each member shall establish a fixed written procedure for the allocation of exercise notices assigned in
respect of a short position in such member's client accounts. The procedure to be adopted may be on a
"first in, first out" basis, on a basis of random selection of another allocation method that is fair and
equitable to the member's clients. In each case, the method shall be approved by the Exchange and shall
not thereafter be changed without Exchange approval.

I.1.15 – Effect of Options and Options-related Positions on Member Firm Capital Calculations
The charges to capital with respect to options and options-related positions held by member firms,
including inventory, registered traders and market-makers, shall be the same as the margin requirements
for clients and non-clients, including the requirements of section I.2.00, with the following exceptions:
(1)   the minimum requirement, as specified in I.2.00 is not applicable;
(2)   in the treatment of spreads, the long position may expire before the short position;
(3)   for market-maker accounts in respect of short positions in CDCC options, the member firm's capital
      will be charged with 15% of the market price of the equivalent number of shares of the underlying
      interest plus 100% of the current premium of the option less any unrealized profit;
(4)   where a member firm inventory, registered trader or market-maker has a short CDCC Call option
      offset by a long position in warrants with respect to the underlying security which may be carried on
      margin, the member firm's capital shall be charged with the aggregate of:
      (a)   25% of that part of the market price of the warrant equal to the excess, if any, of the market
            price of the underlying stock over the subscription price provided in the warrant; plus
      (b)   where the expiration date of the warrant is nine months or more away, 50%, and where the
            expiration date of the warrant is less than nine months away, 100%, of that part of the market
            price of the warrant not used in the calculation in (a) above; plus
      (c)   any amount by which the subscription price of the warrant exceeds the exercise price of the
            CDCC Call option,
      all multiplied by the unit of trading.
(5)   Where an underlying security or a listed equity security that is readily convertible or exchangeable
      into an underlying security is held in an options-related position, the member firm's capital shall be

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      charged with 25% of the market value of such underlying security or such convertible or
      exchangeable security as may be the case.
(6)   Where a short position in an underlying security is offset by a long CDCC Call option on the same
      underlying security, the charge to member firm capital for market-maker and firm accounts shall be
      100% of the market value of the long CDCC Call, plus the lower of:
      (a)   25% of the market value of the short security; or
      (b)   any excess of the exercise price of the Call over the market price of the security, multiplied by
            the unit of trading.
(7)   Where the market price of the underlying security exceeds the exercise price of the Call, this
      difference multiplied by the unit of trading may be applied against the capital charge on the long Call,
      but cannot reduce the capital required on the long Call to less than zero.
(8)   Where the long position in an underlying security is offset by a long CDCC Put option on the same
      underlying security, the charge to member firm capital for market-maker and firm accounts shall be
      100% of the market value of the long CDCC Put, plus the lower of:
      (a)   25% of the market value of the long security; or
      (b)   any excess of the market price of the security over the exercise price of the Put, multiplied by
            the unit of trading.
(9)   Where the exercise price of the Put exceeds the market price of the underlying security, this
      difference multiplied by the unit of trading may be applied against the capital charge on the long Put,
      but cannot reduce the capital required on the long Put to less than zero.
(10) For any short position carried for client or non-client accounts where the account has not provided
     required margin, any shortfall will be charged against the member's capital.
(11) For market-maker and firm accounts, the charge to capital for a long CDCC Call option where the
     premium is $1.00 or more, and which is not used to offset capital required on any other position,
     shall be the market value of the Call, less 50% of the excess of the market value of the underlying
     security over the exercise price of the Call.
(12) For market-maker and firm accounts, the charge to capital for a long CDCC Put option where the
     premium is $1.00 or more, and which is not used to offset capital required on any other position,
     shall be the market value of the Put, less 50% of the excess of the exercise price of the Put over the
     market value of the underlying security.
(13) Where a CDCC Call option is carried short in a market-maker or firm account against an existing net
     long position of an equivalent number of units of the underlying security, or of a security readily
     convertible or exchangeable (without restrictions other than the payment of consideration and within
     a reasonable time) into the underlying security, the minimum capital charge shall be:
      (a)   the capital required on the long position pursuant to Rule G based on the market price of such
            security; plus
      (b)   the amount, if any, by which the subscription or conversion price of the long security exceeds
            the exercise price of the short CDCC Call option, multiplied by the unit of trading.
(14) The market value of any premium credit carried on the short Call may be used to reduce the capital
     required on the long security but cannot reduce the capital required to less than zero.
(15) Where a CDCC Put option is carried short in a market-maker or firm account against an equivalent
     number of units of the underlying security carried short, the short CDCC Put option shall be
     considered fully margined, provided that the short security position is fully margined pursuant to Rule
     G based on the market price of such security. The market value of any premium credit carried on the
     short Put may be used to reduce the capital required on the short security, but cannot reduce the
     capital required to less than zero.


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(16) Where a short position in an underlying security which is offset by a long CDCC Call option on the
     same underlying security is also offset by a short CDCC Put option on the same underlying security,
     the charge to member firm capital on the short stock position shall be as required by Rule I provided
     that the exercise price to be used for the long Call cannot be less than the exercise price of the short
     Put. Such requirement, whether positive or negative, must be adjusted by the net market value of
     the option premium positions outstanding. No additional capital charge is required on the short Put
     position.
(17) Where a long position in an underlying security which is offset by a long CDCC Put option on the
     same underlying security is also offset by a short CDCC Call option on the same underlying security,
     the charge to member firm capital on the long stock position shall be as required by Rule I above,
     provided that the exercise price to be used for the long Put cannot be greater than the exercise price
     of the short Call. Such requirement, whether positive or negative, must be adjusted by the net
     market value of the option premium positions outstanding. No additional capital charge is required
     on the short Call position.
(18) Where a long call and a long put are paired, on the same underlying security, the margin required is
     the market value of the call option plus the market value of the put option less the higher of the
     following amounts:
      (a)   the excess of the exercise price of the Put option over the exercise price of the Call option; or
      (b)   50% of the total of the amount by which each option is in-the-money.
      Note: To recognize the in-the-money amount, the premium should be equal to or greater than $1.00
            or 20 basis points in the case of options on treasury bills.
(19) Where a long Call is paired with a short Call and with a long Put on the same underlying securities,
     the capital required is the market value of the long Call plus the market of the long Put less the
     market value of the short Call less the gain or plus the loss if both Call options were exercised.
      Note: The exercise price of the Call option to be used in determining the loss or the profit is the lower
            of the exercise price of the short Call or long Put option.
(20) In the case of Equity or Participation Unit Options, a short stock or Participation Unit position is offset
     by a long Call for the same Underlying Interest, the minimum margin required shall be 100% of the
     acquisition cost of the long Call plus the lesser of:
      (a)   amount of the exercise price of the long Call multiplied by the unit of trading: or
      (b)   The margin requirement for the short position pursuant to Rule G.

I.1.16 – Reports to Exchange
Each member who trades or deals in CDCC options is required to submit to the Exchange:
(1)   a report in a form and manner prescribed by the Exchange of all transactions by that member
      together with a summary of open positions showing those that are uncovered and those that are
      covered;
(2)   a report in a form and manner prescribed by the Exchange of all holdings by a client on the previous
      day, in aggregate long or short positions of one hundred or more CDCC options of any single class
      thereof. The report shall indicate for each such class of CDCC options the number of CDCC options
      comprising each such position and, in the case of short positions, whether covered or uncovered.

I.1.17 – Submission for Clearance
All transactions shall be submitted for clearance to the Clearing Corporation. Clearing of transactions in
underlying securities arising from exercise notices will be through the facilities of the Exchange Clearing
House.



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I.1.18
A CDCC option may be accepted, traded or dealt with by a member.

I.1.19
The provisions of Rule G.3.01 apply, unless the context otherwise requires, to transactions in CDCC
options.

I.1.20
The provisions of Rule I shall apply to transactions in exchange traded options by members regardless of
the options exchange or stock exchange on which they were completed.




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RULE I.2.00 – TRADING IN O.C.C. OPTION CONTRACTS

I.2.01 – Definitions
"Exchange contract" as defined includes an O.C.C. option.
"O.C.C. Option" means a Call or Put option issued by the Options Clearing Corporation.
"Registered Options Principal" means a person who is engaged in the management of a member's
business pertaining to O.C.C. options who has been designated as such and who has been approved as
such by the Exchange.

I.2.02 – Trading in O.C.C. Options
No O.C.C. option shall be traded or dealt with in any way by a member unless:
(1)   one of the directors, partners or officers of the member is a registered options principal; and
(2)   trading or dealing in O.C.C. options is in accordance with the rules of the Exchange and with the
      rules and regulations of the options clearing corporation adopted by the Exchange; and
(3)   each client of the member trading or dealing in O.C.C. options has executed an options trading
      agreement respecting O.C.C. options containing the provisions set out in Rule I;
(4)   the account of each client of the member trading or dealing in O.C.C. options has been authorized
      by the registered options principal of that member for trading in O.C.C. options in accordance with
      Rule I; and
(5)   the member complies with the applicable provisions of the rules of the Exchange and the rules of the
      exchanges who are participants in O.C.C. as the case may be, respecting position limits and
      exercise limits adopted by the Exchange; and
(6)   the member:
      (a)   delivers to each client, prior to the first trade made by that client, a copy of the current options
            disclosure document filed with the applicable securities commission;
      (b)   distributes to each client having an account approved for options transactions each new current
            options disclosure document filed with the applicable securities commission;
      (c)   maintains a record available for inspection by the Exchange showing the names and addresses
            of all persons or companies to whom a current options disclosure document has been delivered
            or distributed and the date when such prospectus was delivered or distributed;
      (d)   the term "current disclosure statement" used hereinbefore means a prospectus which meets
            the requirements of the applicable securities laws,
(7)   each client of the member trading or dealing in O.C.C. options has agreed in writing to abide by the
      applicable rules of the Exchange and the rules and regulations of the options clearing corporation
      pertaining to O.C.C. options; and
(8)   each client of the member trading or dealing in O.C.C. options has agreed in writing to comply with
      the applicable provisions of the rules of the Exchange and the rules of the exchanges who are
      participants in O.C.C., as the case may be, respecting position limits and exercise limits adopted by
      the Exchange.
(9)   where a branch of a member trades in O.C.C. options, the branch manager of that branch shall be
      qualified, pursuant to the requirements of Rule I.2.04 to supervise O.C.C. options trading.




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I.2.03 – Requirements for Trading in O.C.C. Options
(1)   An applicant for approval as a registered options principal, alternate options principal or options
      supervisor must have successfully completed such course or examination as may be prescribed by
      the Exchange.
(2)   No partner, director, officer or investment advisor of a member shall solicit orders regarding, advise
      on trades, or deal with the public in O.C.C. options unless he:
      (a)   has successfully completed such course or examination as may be prescribed by the
            Exchange; and
      (b)   has been approved by the Exchange.

I.2.04 – Relations with Clients Trading in O.C.C. Options
(1)   Every member who trades in O.C.C. options:
      (a)   shall designate a partner, director or officer as a registered options principal (the "ROP"), and
      (b)   where necessary to ensure continuous supervision in O.C.C. options trading, may appoint one
            or more alternate registered options principals, who must be approved by the Exchange. The
            registered options principal shall be responsible for establishing and maintaining procedures for
            a supervising account opening and account activity. The ROP shall ensure that the handling of
            client business relating to such options is within the bounds of ethical conduct, consistent with
            just and equitable principles of trade and not detrimental to the interest of the securities
            industry. The ROP shall supervise activity relating to O.C.C. options in accordance with
            Exchange requirements and policies. In the absence or incapacity of the registered options
            principal, the ROP's authority and responsibility shall be assumed by an alternate registered
            options principal (if any).
(2)   For each account that is intended to deal in O.C.C. options, there must be a properly completed
      Options Account Application form and, prior to the commencement of any trading activity for such
      account, it must be authorized or approved
      (a)   by the registered options principal, or
      (b)   except in the case of discretionary and managed accounts, and subject to subsection (4), by
            the branch manager of the branch office where the account is opened, and such authorization
            or approval shall be indicated on the Options Account Application form.
(3)   All procedures to carry out the provision of subsections (1) and (2) shall be in writing.
(4)   In order for a branch manager to authorize or approve an O.C.C. options account, the branch
      manager shall:
      (a)   be approved by the Exchange; and
      (b)   have successfully completed such course as may be prescribed from time to time by the
            Exchange.

I.2.05 – Prohibition Against Discretionary Orders
(1)   No investment advisor or other employee (other than a director) of a member shall be permitted to
      handle a discretionary order for an O.C.C. option or exercise any discretion in the handling of an
      account of a client with respect to O.C.C. options of a member.
(2)   No member shall exercise any discretionary power with respect to the account of a client with
      respect to trades in O.C.C. options unless such client has given prior written authorization and the
      account has been accepted in writing by the registered options principal and is to be handled by a
      director. Such written authorization to be reviewed annually. Every discretionary order must be
      identified as discretionary on the order at the time of entry.


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I.2.06 – Reporting
Each member of the Exchange who trades or deals in O.C.C. options is required to submit to the
Exchange:
(1)   a report in a form and manner prescribed by the Exchange of all transactions together with a
      summary of open positions showing those that are uncovered and those that are covered;
(2)   a report in a form and manner prescribed by the Exchange of all holdings on the previous day, in
      aggregate long or short positions of the minimum amount or over as specified by O.C.C. regulations
      in O.C.C. options of any single class thereof. The report shall indicate for each class of option
      contracts the number of option contracts comprising each such position and in the case of short
      positions whether covered or uncovered.

I.2.07 – Commissions
Commissions charged on trades in O.C.C. options shall be agreed upon between the member and client.

I.2.08 – Options Trading Agreement
(1)   Notwithstanding existing margin agreements each member shall have and maintain with each client
      trading or dealing in O.C.C. options an options trading agreement in writing defining the rights and
      obligations between them on such subjects as may be determined from time to time by the
      Exchange.
(2)   Every options trading agreement between a member and a client shall define:
      (a)   the terms specified in Rule F;
      (b)   the rights of the member to exercise discretion in accepting orders;
      (c)   the member's obligations with respect to error and/or omissions and qualification of the time
            periods during which orders will be accepted for execution;
      (d)   the method of allocation of Exercise Assignment Notices;
      (e)   notice that maximum limits may be set on short positions and that during the last ten days to
            expiry cash only terms may be applied and in addition, the Options Clearing Corporation may
            enact other rules affecting existing or subsequent transaction;
      (f)   the client's obligation to instruct the member to close-out contracts prior to the expiry date;
      (g)   the client's obligation to comply with the applicable rules of the Exchange and the rules of the
            Options Clearing Corporation pertaining to O.C.C. options;
      (h)   the clients obligation to comply with the applicable provisions of the rules of the Exchange and
            the rules of the exchanges who are participants in O.C.C., as the case may be, respecting
            position limits and exercise limits adopted by the Exchange;
      (i)   the acknowledgment by the client that he has received the current disclosure statement.

I.2.09 – Margin Requirements
The minimum amount of margin which must be obtained in margin accounts of clients having positions in
O.C.C. options shall be as follows:
(1)   Long positions:
      (a)   subject to section (b), all purchases of O.C.C. options shall be for cash.
      (b)   where the underlying security in respect of a long O.C.C. Call option is the subject of a legal
            and binding take-over bid, the margin required on such Call option shall be the market value of
            the Call, less the amount by which the amount offered exceeds the exercise price of the Call.
            Where the cash take over bid is made for less than 100% of the issued and outstanding

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            securities, the margin requirement shall be applied pro rata on the same proportion as the offer.
(2)   Short positions:
      (a)   the minimum margin on an O.C.C. equity call option carried short in any account shall be 25%
            of the market price of the equivalent number of shares of the underlying interest, plus 100% of
            the current premium of the option, reduced by any excess of the exercise price over the current
            market price of the underlying interest multiplied by the unit of trading.
      (b)   the minimum margin on an O.C.C. equity put option carried short in any account shall be 25%
            of the market price of the equivalent number of shares of the underlying interest, plus 100% of
            the current premium of the option reduced by any excess of the current market price of the
            underlying interest over the exercise price multiplied by the unit of trading.
      (c)   notwithstanding any other provision contained herein, the minimum amount of margin which
            must be carried in an account trading in O.C.C. equity options shall be not less than 5% of the
            market price of the equivalent number of shares of the underlying interest, plus 100% of the
            current premium.
      (d)   each O.C.C. option shall be margined separately and any difference between the market price
            of the underlying security and the exercise price of the option shall be considered to be of value
            only in providing the amount of margin requirements on that particular option.
      (e)   where an O.C.C. Call option is carried "long" for a client's account and the account is also
            "short" an O.C.C. Call option expiring on or before the date of expiration of the "long" option,
            and written on the same number of shares of the same security, the margin required on the
            "short" option shall be the lower of (i) the margin required pursuant to section (2) (a) and (c); or
            (ii) the amount, if any, by which the exercise price of the "long" option exceeds the exercise
            price of the "short" option multiplied by the unit of trading.
      (f)   where an O.C.C. Put option is carried "long" for a client's account and the account is also
            "short" an O.C.C. Put option expiring on or before the date of expiration of the "long" option and
            written on the same number of shares of the same security, the margin required on the "short"
            option shall be the lower of (I) the margin required pursuant to section (2) (a) and (b); or (ii) the
            amount, if any, by which the exercise price of the "short" option exceeds the exercise price of
            the "long" option.
      (g)   where an O.C.C. Call option is carried "short" against an existing net "long" position in the
            underlying security or in any security exchangeable or convertible (within a reasonable time
            provided such time shall be prior to the expiration of the call option without restrictions other
            than the payment of consideration) into the underlying security under option, no margin need
            be required on the option provided such net "long" position is adequately margined except that
            where an option is carried "short" against a net "long" position in an exchangeable or
            convertible security, as outlined above, margin shall be required on the option equal to any
            amount by which the conversion price of the "long" security exceeds the exercise price of the
            option. In determining net "long" and net "short" positions, offsetting "long" and "short" positions
            in exchangeable or convertible securities or in the same security, shall be deducted. In
            computing on such an existing net stock position carried against an option, the current market
            price to be used shall not be greater than the exercise price.
      (h)   where an O.C.C. Put option is carried "short" for a client's account and the account is "short"
            equivalent units of the underlying stock, the "short" Put option shall be considered fully
            margined, provided that the "short" stock position is fully margined, using the greater of market
            price or exercise price of the put option.
      (i)   no margin shall be required in respect of a Call option contract carried in a short position which
            is covered by a "specific deposit" or "escrow deposit" evidenced by an escrow receipt and the
            underlying security deposited in respect of such option contract shall not be deemed to have
            any value for margin purposes. A deposit of the underlying security shall be deemed a "specific
            deposit" or "escrow deposit" for the purposes hereof if the agreements required by the

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            Exchange, clearing corporation or other organization on or through which the option is traded
            and such agreements have been executed and delivered thereunder and if a copy thereof shall
            be available to the Exchange on request. The issuer of the escrow receipt covering the "specific
            deposit" or "escrow deposit" must be a depository or financial institution approved by the
            Exchange, clearing corporation or other organization on or through which the option is traded.
      (j)   where an O.C.C. Call option is carried short for a client's account and the account is also
            "short" a Put option written on the same number of shares of the same security, the margin
            required shall be the margin on the short Call position, or the short Put position whichever is
            greater, increased by any unrealized loss on the position having the lower requirements.
      (k)   no margin shall be required in respect of a Put option where the client has delivered to the
            member with which such position is maintained a "Bank Guarantee Letter" issued by a bank
            authorized to issue escrow receipts in a form satisfactory to the Exchange, which certifies that
            such bank holds, on deposit for the account of the client, cash in the full amount of the
            aggregate exercise price of such Put option contract and that such amount will be paid to the
            member against delivery of the underlying security covered by such Put option contract.
(3)   Option-related Positions
      (a)   where a short stock position is offset by a long O.C.C. Call option for the same underlying
            security, the minimum margin required shall be:
      (b)   100% of the acquisition cost of the long Call option; plus
      (c)   25% of the market value of the short stock; plus
      (d)   any excess of the exercise price of the Call over market price of the stock, multiplied by the unit
            of trading, up to an additional 25% of the market value of the stock.
      (e)   where a long stock position is offset by a long O.C.C. Put option for the same underlying
            security, the minimum margin required shall be:
            (i)    100% of the acquisition cost of the long Put option; plus
            (ii)   25% of the market value of the long stock; plus
            (iii) any excess of the market price of the long stock over the exercise price of the long Put,
                  multiplied by the unit of trading, up to an additional 25% of the market value of the long
                  stock.

I.2.10 – Capital Requirement with respect to O.C.C. Options and O.C.C. Option-related Positions
For member inventory or other firm accounts, the capital charge for O.C.C. options or O.C.C. option-
related positions shall be the same as set out in Rule I.1.15.

I.2.11
(1)   The provisions of Rule F apply, unless the context otherwise requires, to transactions in O.C.C.
      options.
(2)   Where a client has in his account either:
      (a)   a long and or a short Exchange traded option; or
      (b)   a short O.C.C. option and a long Exchange traded option, and
      (c)   the underlying interest of the O.C.C. option and the underlying interest of the Exchange traded
            option are the same. The Exchange traded option may be considered to be an O.C.C. option
            for the purpose of the calculation under this section of the margin requirements of the client's
            account.
(3)   For the purpose of the calculation of this section, both the premium and the exercise price of any
      O.C.C. options shall be converted into Canadian dollars.

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(4)   The Exchange may impose from time to time special margin requirements with respect to O.C.C.
      options positions.




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RULE J.1.00 – COMMODITY FUTURES CONTRACTS AND OPTIONS

J.1.01 – Definitions
For the purpose of this rule, unless the subject matter or context otherwise requires, the expression:
"clearing corporation" or "clearing house" means an association or organization, whether incorporated or
unincorporated, or part of a commodity futures exchange through which trades in contracts entered into
on such exchange are cleared;
"commodity" means, whether in the original or a processed state, any agricultural product, forest product,
product of the sea, mineral, metal, hydro-carbon fuel, currency or precious stone or other gem, and any
goods, article, service, right or interest, or class thereof, designated as a commodity;
"commodity futures exchange" means an association or organization whether incorporated or
unincorporated, operated for the purpose of providing the physical facilities necessary for the trading of
contracts by open auction;
"contract" means any futures contract and any futures contract option;
"dealer" means a person or company that trades in contracts in the capacity of principal or agent;
"futures contract" means a contract to make or take delivery of a specified quantity and quality, grade or
size of a commodity during a designated future month at a price agreed upon when the contract is
entered into on a commodity futures exchange pursuant to standardized terms and conditions set forth in
such exchange's by-laws, rules or regulations;
"futures contract option" means a right, acquired for a consideration, to assume a long or short position in
relation to a futures contract at a specified price and within a specified period of time and any other option
of which the subject is a futures contract;
"omnibus account" means an account carried by or for a member or an affiliate of a member in which the
transactions of two or more persons are combined and effected in the name of a member or affiliate
without disclosure of the identity of such persons.

J.1.02 – Approval
No member or any affiliate of a member, or any person acting on its behalf, shall trade or advise in
respect of futures contract or futures contract options without prior approval of the Exchange and unless:
(1)   in the case of trading or advising in respect of futures contracts:
      (a)   one or more of the partners, directors or officers of the member or the affiliate is appointed or
            designated in writing by the member or affiliate as a designated futures contract principal and, if
            necessary to ensure continuous supervision, one or more alternate designated futures contract
            principals, and who shall have the authority and be responsible for the matters described in
            Rule J.1.05; and
      (b)   any person designated as a futures contract principal or alternate under item a.
            aforementioned, and every partner, director, officer or employee of a member or affiliate of a
            member who deals with customers with respect to trading or advising in respect of futures
            contracts has been approved pursuant to Rule J.1.03;
(2)   in the case of trading or advising in respect of futures contract options:
      (a)   one or more of the partners, directors or officers of the member or the affiliate is appointed by
            the member or affiliate as a designated futures contract options principal and, if necessary to
            ensure continuous supervision, one or more alternate designated futures contract options

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            principals, who shall have the authority and be responsible for the matters described in Rule J.
            1.05; and
      (b)   any person designated as a futures contract options principal or alternate under item (a) above,
            and every partner, director, officer or employee of the member or affiliate who deals with
            customers with respect to trading or advising in respect of futures contract options has been
            approved pursuant to Rule J.1. 03;
(3)   each of the member's or the affiliate's customers has acknowledged receipt of a futures contract
      trading agreement or futures contract options trading agreement referred to in Rule J. 1.09;
(4)   the account of each customer of the member or the affiliate trading in futures contracts or futures
      contract options has been authorized in accordance with Rule J.1. 04 by a futures contracts principal
      in the case of futures contracts or by a futures contract options principal in the case of futures
      contract options; or (other than a branch manager in the case of discretionary or managed accounts)
      by the branch manager of the branch office handling the trade, if the branch manager has been
      approved pursuant to Rule J.1.03 to supervise accounts trading in futures contracts or futures
      contract options, as applicable;
(5)   in the case of trading or advising in respect of trades in futures contracts, the member or the affiliate:
      (a)   has available at each of its offices (other than a sub-branch office) to serve customers two or
            more persons qualified in accordance with Rules J.1.03 and J.1.04 to deal with customers in
            respect of futures contracts and one or more persons to carry out trading instructions, but only
            two of such persons must be available to serve customers at any time in normal circumstances
            and during usual business hours provided one of such persons is qualified in accordance with
            Rules J. 1.03 and J. 1.04;
      (b)   distributes to each customer, prior to opening a futures contract account, a copy of the then
            current risk disclosure statement of the member or affiliate, the form of which has been
            approved by the Exchange and obtains from the customer written acknowledgement of the
            receipt thereof, and thereafter distributes to each such customer any amendments which have
            been approved by the Exchange to the then current risk disclosure statement; and
      (c)   maintains a record available for inspection by the Exchange showing the names and addresses
            of all persons to whom a current risk disclosure statement or an amendment thereto has been
            distributed and the date or dates of such distribution;
(6)   in the case of trading or advising in respect of trades in futures contract options, the member or the
      affiliate:
      (a)   has available at each of its offices (other than a sub-branch office) to serve customers two or
            more persons qualified in accordance with Rules J.1.03 and J.1.04 to deal with customers in
            respect of futures contract options and one or more persons to carry out trading instructions,
            but only two of such persons must be available to serve customers at any time in normal
            circumstances and during usual business hours provided one of such persons is qualified in
            accordance with Rules J. 1.03 and J. 1.04;
      (b)   distributes to each customer, prior to opening a futures contract options account, a copy of the
            then current risk disclosure statement of the member or affiliate , the form of which has been
            approved by the Exchange and obtains from the customer written acknowledgement of the
            receipt thereof, and thereafter distributes to each such customer any amendments which have
            been approved by the Exchange to the then current risk disclosure statement;
      (c)   maintains a record available for inspection by the Exchange showing the names and addresses
            of all persons to whom a current risk disclosure statement or an amendment thereto has been
            distributed and the date or dates of such distribution; and
(7)   the approval of the Exchange shall have been obtained in respect of the procedures required by
      Rule J. 1.05 and the accounting, settlement and credit control systems that the member uses in
      trading and dealing with customers' accounts and firm accounts with respect to futures contracts or

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      futures contract options.

J.1.03 – Qualifications
(1)   Application for approval as a futures contract principal, or alternate or a futures contract options
      principal or alternate or a person who deals with customers with respect to futures contracts or
      futures contract options shall be made to the Exchange in such form as the Board may from time to
      time prescribe. Subject to Rule J.1.04, the Exchange may grant approval to any such applicant who
      has successfully completed such course or courses of studies as may from time to time be required
      by the Exchange.
(2)   In addition to the required courses of studies referred to in the above paragraph, in the case of an
      applicant as a futures contract principal or alternate or as a futures contract options principal or
      alternate or as a branch manager authorized to supervise accounts trading in futures contracts or
      futures contract options, has successfully completed the Commodity Supervisors Examination and
      any other examination or requirements as may be prescribed by the Exchange; provided that in lieu
      of meeting the requirements of (1) approval of an application may be granted by the Exchange if it is
      satisfied that the applicant has the experience and qualifications which are equivalent to those
      specified in (1). A futures contract principal or alternate, futures contract options principal or alternate
      or a person who deals with customers with respect to futures contracts or futures contract options
      and the member in respect of which any of them is approved shall report in writing to the Exchange
      within ten days of the event any change in the information submitted pursuant to the application for
      approval including, without limitation, any required information with respect to criminal or bankruptcy
      proceeding pertaining to such person.

J.1.04 – Responsibilities of Designated Principals
The designated futures contract principal or designated futures contract options principal of a member or
an affiliate of a member designated pursuant to Rule J. 1.02 shall ensure that the handling of customer
business relating to futures contracts or futures contract options, as the case may be, is in accordance
with Exchange Requirements. In this respect the member shall have written procedures acceptable to the
Exchange describing the control, supervisory and delegation procedures used by the member to ensure
compliance with Exchange Requirements. In the absence or incapacity of the designated futures contract
principal or futures contract options principal or when the trading activity of the member requires
additional qualified persons in connection with the supervision of the member's business, an alternate, if
any, shall assume the authority and responsibility of such designated persons. Without limiting the
foregoing, each designated futures contract Principal and designated futures contract options principal
shall be responsible for the following matters with respect to trading or advising in respect of futures
contracts and futures contract option, respectively:
(1)   opening all new contract accounts pursuant to a New Account Application form approved by the
      Exchange and the approval in writing on such form of all accounts prior to the commencement of
      any trading activity;
(2)   using due diligence to learn and remain informed of the essential facts relative to every customer
      (including the customer's identity, credit worthiness and reputation) and to every order or account
      accepted, to ensure that the acceptance of any order for any account is within the bounds of good
      business practice and to ensure that recommendations made for any account are appropriate for the
      customer and in keeping with the customer's investment objectives;
(3)   obtaining prior to the commencement of any trading activity in any futures account the executed
      futures contract or contract trading agreement referred to in Rule J. 1.08 or the letter of undertaking
      referred to in Rule J. 1.09;
(4)   imposing any appropriate restriction on futures contracts or futures contract options accounts and
      the proper designation of accounts and related orders;
(5)   the continuous supervision of each day's trading in futures contracts and futures contract options
      and the completion of a review of each day's trading no later than the next following trading day;

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(6)   reviewing on a monthly basis the cumulative trading activity of each futures contract and futures
      contract options account no later than the date of mailing of the monthly statement for each month;
(7)   monitoring performance as necessary of any duties that have been delegated by the designated
      futures contract principal or designated futures contract options principal, as the case may be; and
(8)   performing such other responsibilities as the Exchange may prescribe from time to time.
A designated futures contract principal or designated futures contract options principal may delegate by
written direction the performance of any of his duties under this rule (except those described in clauses
(7) or (8) unless permitted by the Exchange and except those that are expressly stated not to be
delegated) to any person whom he or she has reason to believe is capable of performing such duties
provided that the futures contract principal or futures contract options principal shall remain fully
responsible for the performance of such duties.
            Rule J.1.04 amended August 1,2001

J.1.05 – Institutional Account Requirements
Notwithstanding Rule J.1.04 or any other rule, where a futures contract or futures contract options
account is opened by an acceptable institution or acceptable counterparty, another dealer on its own
behalf or on behalf of a customer by an advisor or other person qualified pursuant to any applicable
legislation to advise in respect of trading or to effect trades, as the case may be, by that specific account
in futures contracts or options and provided further that such advisor or other person is required by
applicable legislation or other authority to ensure investments by its customers are suitable for them:
(1)   where the person opening the account executes orders in its own name or identifies its clients by
      means of a code or symbols, the member or affiliate shall satisfy itself as to the credit worthiness of
      such person opening the account but shall not otherwise have any responsibility for the suitability of
      any trade for the customers of such person;
(2)   where the person opening the account executes orders in the names of its customers with no
      agreement that payment of the account is guaranteed by such person, the member or affiliate shall:
      (a)    obtain full information concerning the customer with a view to determining the credit worthiness
             of the client; or
      (b)    obtain a letter of undertaking from the person opening the account which letter shall refer to the
             familiarity of the person with applicable rules of account supervision and shall contain a
             covenant to make the investigation contemplated by those rules and to advise, where known, if
             the customer is a partner, director, officer, employee or security holder of a dealer or an
             associate of any such persons or an affiliate of the dealer but the member or affiliate shall not
             have the responsibility for determining the suitability of any trade for the customers.

J.1.06 – Reporting Requirements
Each member or affiliate of a member that trades in futures contracts shall file such reports on futures
contracts trading as may be prescribed from time to time by the Exchange. Each member and affiliate of
a member shall report to the Exchange the greater of the market value of the total long or the total short
futures contracts for each commodity, determined as at the close of business on the last day of each
month (or, where such day is not a trading day, on the next preceding trading day). Such report shall be
made on a form of monthly position report approved by the Exchange.

J.1.07 – Non-Client Orders
All non-client orders entered for the purchase or sale of futures contracts or futures contract options shall
be clearly identified as such. For the purpose of this rule, orders identified as "pro" or "non-client" shall
include an order for an account in which:
(1)   a member or affiliate of a member;


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(2)   a partners, directors or officers of a member or an affiliate ; or
(3)   an employee of a member or an affiliate to the extent that such employee has received approval
      pursuant to the rules of the Exchange, has a direct or indirect interest other than an interest in the
      commission charged.

J.1.08 – Account Trading Agreement
Each member or affiliate of a member shall have and maintain with each customer trading in futures
contracts or futures contract options an account agreement in writing defining the rights and obligations
between them on such subjects as the Exchange may from time to time determine, and shall include the
following:
(1)   the rights of the member or affiliate to exercise discretion in accepting orders;
(2)   the obligation of the member or affiliate with respect to errors and/or omissions and qualification of
      the time periods during which orders will be accepted for execution;
(3)   the obligation of the client in respect of the payment of his indebtedness to the member or affiliate
      and the maintenance of adequate margin and security, including the conditions under which the
      funds, securities or other property held in the account or any other accounts of the client may be
      applied to such indebtedness or margin;
(4)   the obligation of the client in respect of commissions, if any, on futures contracts or futures contract
      options bought and sold for his account;
(5)   the obligation of the client in respect of the payment of interest, if any, on debit balances in his
      account;
(6)   the extent of the right of the member or affiliate to make use of free credit balances in the client's
      account either in its own business or to cover debit balances in the same or other accounts, and the
      consent, if given of the client to the member or affiliate taking the other side to the client's
      transactions from time to time;
(7)   the rights of the member or affiliate in respect of raising money on and pledging securities and other
      assets held in the client's account;
(8)   the extent of the right of the member or affiliate to otherwise deal with securities and other assets in
      the client's account and to hold the same as collateral security for the client's indebtedness;
(9)   the client's obligation to comply with the rules pertaining to futures contracts or futures contract
      options with respect to reporting, position limits and exercise limits, as applicable, as established by
      the commodity futures exchange on which such futures contracts or futures contract options are
      traded or its clearing house;
(10) the right of the member or affiliate , if so required, to provide regulatory authorities with information
     and/or reports related to reporting limits and position limits;
(11) the acknowledgement by the client that he has received the current risk disclosure statement
     provided for in Rule J. 1.02 unless provided for by other approved means;
(12) the right of the member or affiliate to impose trading limits and to close out futures contract or futures
     contract options under specified conditions;
(13) that minimum margin will be required from the client in such amounts and at such times as the
     commodity futures exchange on which a contract is entered or its clearing house may prescribe and
     in such greater amounts at other times as prescribed by the rules and as determined by the member
     or affiliate, and that such funds or property may be commingled and used by the member or affiliate
     in the conduct of its business;
(14) in the case of futures contract options accounts, the method of allocation of exercise assignment
     notices and the client's obligation to instruct the member or the affiliate to close out contracts prior to
     the expiry date; and

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(15) unless provided for in a separate agreement, the authority, if any, of the member or affiliate to effect
     trades for the client on a discretionary basis, which authority shall be separately acknowledged in a
     part of the agreement prominently marked off from the remainder and shall not be inconsistent with
     any rules relating to discretionary accounts.

J.1.09 – Letter of Undertaking
Rule J.1.08 shall not apply to the opening of a futures contracts or futures contract options account where
the client is a dealer on its own behalf, a dealer on behalf of its client if the dealer is required to maintain
with its customer an account agreement substantially similar to that described in Rule J.1.08, or is an
advisor registered under any applicable legislation relating to trading or advising in respect of futures
contracts or futures contract options or is an acceptable institution or acceptable counterparty provided
the member or affiliate has obtained from the client a letter of undertaking specifying:
(1)   that a person opening the account will comply with Exchange Requirements and clearing house
      upon or through which trades in contracts are to be effected including, without limitation, Exchange
      Requirements establishing position and reporting limits; and
(2)   where the client also maintains with the same member or affiliate an account in which the client is
      charged interest when there is a debit balance in the account, the conditions under which transfers
      of funds, securities or other property held in such other account will be made between accounts,
      unless provision is made elsewhere in a document signed by the person opening the account.
            Rule J.1.09 amended August 1,2001

J.1.10 – Records
(1)   A record shall be kept by each member or affiliate of a member in its office of any order or other
      instruction given or received with respect to a trade in a futures contract or futures contract option
      whether executed or unexecuted showing:
      (a)    the terms and conditions of the order or instruction and any modification or cancellation of the
             order or instruction;
      (b)    the account to which the order or instruction relates;
      (c)    where the order relates to an omnibus account, the component accounts within the omnibus
             account on whose behalf the order is to be executed;
      (d)    where the order or instruction is placed by a person other than the client in whose name the
             account is operated, the name, or designation of the party placing the order or instruction;
      (e)    the time of the entry of the order or instruction and, where the order is entered pursuant to the
             exercise of discretionary authority of a member or affiliate , identification to that effect;
      (f)    to the extent feasible, the time of altering instructions of cancellation; and
      (g)    the time of report of execution.
(2)   A copy of all unexecuted orders shall be kept for a period of two years and a copy of all executed
      orders shall be kept for a period of six years.




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RULE J.2.00 – INDUSTRY MEMBER

J.2.01 – Industry Member
"Industry member" means, in respect of any member, an individual who has been approved by the
Exchange for purposes of this definition and is actively engaged in the business of the and devotes a
major part of his time to that business. In considering whether to approve an individual as an industry
member, the Exchange shall take into account whether the individual:
(1)   has had experience acceptable to the Exchange as a broker or dealer in securities or commodities,
      or working in the office of a broker or dealer in securities or commodities, in each case for at least
      five years or such lesser period as may be approved by the Exchange;
(2)   to an extent acceptable to the Exchange, is actively engaged in the business of the member and
      devotes the major portion of his time thereto, except if he is on active government service or his
      health does not permit; and
(3)   has successfully completed such courses of study as may from time to time be required by the
      Exchange.




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TSX VENTURE EXCHANGE: TRADING POLICIES


                                    Table of Contents


Trade Policies Policy Statement CR01
   Repealed
Policy Statement CR02
   Policy Statement concerning Securities Related Transactions Between
           Members/Approved Persons and Clients
Policy Statement CR03
   Procedure for Settlement of a Client's Financial Obligation to a Member or Approved
           Person by Delivery of Listed Securities in Lieu of Payment
Policy Statement CR04
   Repealed
Policy Statement CR05
   Policy Statement Regarding Provisions and Exemptions Concerning Rule G. 1.06 Control
           Blocks
Policy Statement CR06
   Minimum Industry Standards for Retail Account Supervision
Policy Statement CR07
   Internal Control Policy Statements
Policy Statement CR08
   Circuit Breaker Policy
Policy Statement CR09
   Course and Examination Exemptions
Policy Statement CR10
   Repealed
Policy Statement CR11
   Odd Lot Trading Policy
Policy Statement CR12
   Continuing Education Requirements
Policy Statement CR13
   Sponsorship Policy Statements
Policy Statement CR14
   Calculated Opening Price


                                             -i-
Policy Statement CR15
   Buy-In Procedures




                        -ii-
                             Policy Statement CR02
            Policy Statement concerning Securities Related
     Transactions Between Members/Approved Persons and Clients
From time to time a Member or a partner, director or officer of a Member may engage in
dealings with clients which are beyond the traditional brokerage and underwriting functions
covered by the Exchange By-laws and Rules. When the client is a listed company, the Listing
Rules and Policies of the Exchange provide a framework in which Members and approved
persons are permitted to provide goods and services for cash or shares from the company
treasury. This policy covers instances where a Member or approved person deals with a client
other than a listed company (often a principal shareholder or promoter of the company). Such
non-traditional transactions arise when a Member/partner/director also acts as a dealer in (or
casual vendor of) mining claims, patents, marketing rights or other assets; a provider of bridge
financing or other loans; a "finder" or provider of consulting services.

After extensive consideration by a committee and comments from Members, the Exchange has
determined that the following framework is in the public interest and consistent with other rules
and practices of the Exchange.

1.     Members

       Member firms (as distinct from approved persons) are permitted to have relationships
       with clients which include dealing in assets, lending and providing fee services. All such
       transactions are, of course, to be accounted for in the books and records of the Member.

2.     Approved Persons

       Subject to internal policies of the Member and providing that the level of activity is not
       inconsistent with the "full time" requirement for approval under the Securities Act, the
       rules of the Exchange do not bar partners/directors/officers from having such dealings
       with principal shareholders or promoters of listed companies. Exchange Rule F.2.14 and
       the Manual for Registered Representatives already provide that registered representatives
       (who are not also partners, directors or officers) are proscribed from securities related
       business dealings with their clients, except for the customary securities advisor
       relationship.

       The Member firm (Executive/Management Committee) with which the
       partner/director/officer is associated must be advised of any such dealings and must
       maintain an adequately detailed file of such transactions. A review of such file will be
       part of the Exchange's examination program.

3.     Fees for services rendered and asset transactions should be negotiated in standard
       monetary units. Except as provided in #7 below, they may not be
       negotiated/denominated in terms of shares of listed companies.

                                                -1 -
4.   Finders fees and other fees for services rendered by approved persons should be paid
     through the Member. Payments by clients for purchases of assets, repayments of private
     loans, interest on loans, etc. may be made directly to the partner, director or officer
     involved, subject to the Member having a record of the transaction on file.

5.   In the normal course, the great majority of obligations for payment for goods and services
     or for repayment of loans will be honored on a timely basis (or renegotiated as to time
     and amount) and mature as standard commercial transactions.

6.   It is necessary, however, to recognize that some transactions between Members or
     partners/directors/officers of a Member and clients may result in obligations for payment
     which the client is unable to meet in cash (or may prefer to meet in shares) when it comes
     due. In such circumstances, the client may offer shares of a listed company in settlement
     of the obligation. The Exchange should not prevent the acceptance of such settlement
     but it should set out a procedure which is consistent with maintaining the integrity of an
     open public market. The required procedure is set out in CR03.

7.   Members and directors/partners of Members who provide corporate finance/merchant
     banking services of a substantial nature in connection with the re-organization/re
     financing of a client are permitted to negotiate fees for such services in the form of
     shares or options on shares owned by the client. The payment in shares is a trade in
     listed securities through the facilities of the Exchange. Policy Statement and Procedural
     Guideline CR01, article 9, sets out the conditions and procedures relevant to such
     transactions.




                                             -2-
                               Policy Statement CR03
       Procedure for Settlement of a Client's Financial Obligation to a
     Member or Approved Person by Delivery of Listed Securities in Lieu
                                of Payment
In the normal course of acting for clients or as a result of transactions with clients as described in
Policy Statement CR02, Members and approved persons associated with Members may be owed
money by their clients. On some occasions, the financial obligations may fall into default, and
by mutual agreement, it may be agreed that they will be settled by the delivery of shares of a
listed company to the Member/approved person. A delivery of this nature is a transaction which
involves a Member/approved person and is therefore subject to Exchange rules. Such
transactions must be carried out through the facilities of the Member and in accordance with
Exchange requirements.

1.       The agreement to settle the debt by delivery of shares must be set out in a letter from the
         client stating the origin of the obligation, the reason it has not been settled in the usual
         manner (for cash), the number of shares, the agreed price and the name of the security
         offered in settlement.

2.       The letter must also instruct the Member to cross the shares in an Exchange transaction
         and direct that the proceeds of the sale be transferred forthwith from the debtor to the
         account of the Member/approved person to whom the obligation is owed.

         If the debt is owed to an approved person rather than the Member, the agreement must be
         acknowledged by the approved person.

         The agreement to settle for shares must also be acknowledged by an appropriate officer of
         the Member attesting that the transaction has conformed to Exchange requirements.

3.       In order to accomplish the mechanics of the settlement set out in the letter, the shares will
         be offered through the facilities of the Exchange, down to the price agreed to between the
         two parties, with the Member/approved person providing a guaranteed purchase of the
         shares.

         If the transactions on the Exchange will result in trades at significantly lower prices than
         the current market, the Exchange should be consulted. If other purchasers buy some or
         all of the shares, so much the better. In fact, the transaction is much like the sell out of an
         overdue cash or margin account except that it is known that there will be a purchaser at
         the price, by virtue of the agreement.

4.       Because the Member/approved persons' buy order is specifically designed to meet the
         client's "sell" order, (and is not a bid available to other sellers on the Exchange), the
         Exchange will arrange for any portion of the transaction which is crossed to be put
         through on a "special terms" basis, free of interference on the sell side.


                                                   -1 -
5.   The Member must keep a file of authorizations in respect of transactions used to settle a
     financial obligation between a client and the Member/approved person. Exchange
     examiners will review this file as part of their field inspection program.




                                             -2-
                             Policy Statement CR05
                Policy Statement Regarding Provisions and
             Exemptions Concerning Rule G.1.06 Control Blocks
The following provisions can be applied to the security holdings of control persons in the
determination of margin eligibility status.

1.     If the member is not a control person, (and does not become one in the process) the firm
       will be allowed to liquidate shares of a control person held on margin to recover the debt
       owed.

       This applies to those "control block" shares which were purchased in the pre-public
       stage, in the market, or issued pursuant to a Prospectus or Statement of Material Facts. If,
       however, these shares were purchased under specific exemptions, the member may be
       restricted in selling the shares. Legal counsel should be obtained at this stage.

2.     A control person of an Exchange issuer may freely dispose of, on or through the facilities
       of the Exchange, any securities acquired by the control person on the Exchange, up to a
       maximum of 5% of the outstanding securities of the issuer in any ninety day period.

3.     The Member must ensure proper adherence to the applicable securities legislation and
       regulations and appropriate exemptions where available




                                               -1 -
                            Policy Statement CR06
       Minimum Industry Standards for Retail Account Supervision
Introduction

This Policy establishes minimum industry standards for retail account supervision. These
standards were developed by the Joint Industry Compliance Group.

These standards represent the minimum requirements necessary to ensure that a Member has in
place procedures to properly supervise retail account activity.

The document does not:

1.     Relieve Members from complying with specific SRO by-laws, rules, regulations and
       policies and securities legislation applicable to particular trades or accounts; or

2.     Preclude Members from establishing a higher standard of supervision and in certain
       situations, a higher standard may be necessary to ensure proper supervision.

Many of the standards in this policy are taken from SRO by-laws and rules. Securities
legislation was generally not canvassed. To ensure that the Member has met all applicable
standards, Members are required to know and comply with all SRO by-laws, rules, regulations
and policies and applicable securities legislation which may apply in any given circumstance.

The following principles have been used to develop these minimum standards:

1.     The term "review" in this Policy has been used to mean a preliminary screening to detect
       items for further investigation or an examination of unusual trading activity or both. It
       does not mean that every trade must be reviewed.

2.     It has been assumed that Members have, or will provide, the necessary resources and
       qualified supervisors to meet these standards.

3.     The initial compliance with the "Know-Your-Client" rule and suitability of investment
       requirements are primarily the responsibility of the registered representative (RR). The
       supervisory standards in this Policy relating to know-your-client and suitability are
       intended to provide supervisors with a check-list against which to monitor the handling
       of these responsibilities by the registered representative.




                                              -1 -
                                   Policy Statement CR06
       Minimum Industry Standards for Retail Account Supervision

                                                   Table of Contents




I       Establishing and Maintaining Procedures, Delegation and Education ............................. 3
II      Opening New Accounts (Retail Accounts) ....................................................................... 5
III     Branch Office Account Supervision ................................................................................. 7
IV      Head Office Account Supervision .................................................................................... 9
V       Option Account Supervision........................................................................................... 11
VI      Futures/Futures Options Account Supervision................................................................ 13
VII     Discretionary Account Supervision ................................................................................ 15
VIII    Client Complaints........................................................................................................... 18




                                                               -2-
                                              I
                          Establishing and Maintaining Procedures,
                                  Delegation and Education

Introduction

Effective self-regulation begins with the Member establishing and maintaining a supervisory
environment which fosters both the business objectives of the Member and maintains the self-
regulatory process. To that end, a Member must establish and maintain procedures which are
supervised by qualified individuals. A major aspect of self-regulation is the ongoing education
of staff in all areas of sales compliance.

1.     Establishing Procedures

       a.      Member firms must appoint designated principals who have the necessary
               knowledge of industry regulations and Member firm policy to properly perform
               the duties.

       b.      Written policies must be established to document supervision requirements.

       c.      Written instructions must be supplied to all supervisors and alternates to advise
               them on what is expected of them.

       d.      All policies established or amended should have senior management approval.

2.     Maintaining Procedures

       a.      Evidence of supervisory reviews must be maintained.

       b.      An ongoing review of sales compliance procedures and practices must be
               undertaken both at head office and at branch offices.

3.     Delegation of Procedures

       a.      Tasks and procedures may be delegated but not responsibility.

       b.      The Member must advise supervisors of those specific functions which cannot be
               delegated such as approval of new accounts and accepting discretionary accounts.

       c.      The supervisor delegating the task must ensure that these tasks are being
               performed adequately and that exceptions are brought to his/her attention.

       d.      Those who are delegated tasks must have the qualifications to perform them and
               should be advised, in writing, of their expected tasks.




                                                -3-
4.   Education

     a.    The firm's current sales practices and policies must be made available to all sales
           and supervisory personnel.

     b.    Introduction and continuing education should be provided for all approved
           persons.

     c.    Information contained in compliance related bulletins from SROs and Regulatory
           Organizations must be communicated to all sales and other approved persons.
           Procedures relating to the method and timing of distribution of compliance related
           bulletins must be clearly detailed in the Member's written procedures.




                                            -4-
                                            II
                           Opening New Accounts (Retail Accounts)

Introduction

To comply with the "Know-Your-Client" rule, each Member must establish procedures to
maintain accurate and complete information on each client. The first step towards compliance
with this rule is completing proper documentation when opening new accounts. Accurate
completion of the documentation when opening a new account allows both the RR and the
supervisory staff to conduct the necessary review to ensure that recommendations made for any
account are appropriate for the client and in keeping with his investment objectives. Maintaining
accurate and current documentation will allow the RR and the supervisory staff to ensure that all
recommendations made for any account are, and continue to be, appropriate for a client's
investment objective.

1.     Documentation

       a.      A New Account Application Form (NAAF) must be completed for each new
               account. Such forms shall be duly completed to conform with the "Know-Your-
               Client" rule.

       b.      The new account must be approved by the branch manager or the designated
               director, partner or officer, in writing, prior to the initial trade or promptly
               thereafter (next day).

       c.      Where the client is an employee of another dealer, written approval by the
               employer to open an account must be obtained prior to the opening of such an
               account. Such accounts must be designated as non-client accounts.

       d.      A complete set of documentation must be maintained by the firm and RRs must
               maintain a copy of the NAAF.

       e.      The RR must update the copy of the NAAF where there is a material change in
               client information.

       f.      When there is a change of RR, the new RR must verify the information on the
               NAAF to ensure it is current.

       g.      Account numbers must not be assigned unless they are accompanied by the
               proper name and address of the client and such name and address must be
               supported by the NAAF no later than the following day.

2.     Pending Documents

       a.      Firms must have procedures in place to ensure supporting documents are received
                within a reasonable period of time of opening the account.



                                                 -5-
     b.     Incomplete NAAFs and documentation not received must be noted, filed in a
            pending documentation file and be reviewed on a periodic basis.

     c.     Failure to obtain required documentation within 25 clearing days must result in
            positive actions being taken.

3.   Client Master Files

     a.     Entering and amending client master files must be controlled and accompanied by
            proper documentation.

     b.     All hold mail must be authorized by the client, in writing, and be controlled,
            reviewed on a regular basis and maintained by the responsible supervisor.

     c.     Returned mail is to be properly investigated and controlled.

     d.     For supervisory purposes, "non-client" accounts, RRSP accounts, managed
            accounts, discretionary accounts and restricted accounts must be readily
            identifiable.




                                             -6-
                                              III
                               Branch Office Account Supervision

Introduction

Each branch manager must undertake certain activities within the branch for purposes of
assessing compliance with regulatory and the Member's requirements. These activities should be
designed to identify failures to adhere to required policy and procedure and provide a means of
revealing undesirable account activity.

1.     Daily Activity

       a.      New Account Approval

               New Account applications must be reviewed and approved no later than the next
               day. Alternate procedures for securing interim approval will be acceptable to
               prevent undue delays provided the manager applies prompt final approval
               following the initial transaction(s).

       b.      Daily Activity Review(s)

               The branch manager (or designate) must review the previous day's trading for
               unusual trading activity using any convenient means. This review is undertaken to
               attempt to detect, among other things, the following:

               •   lack of suitability;

               •   undue concentration of securities;

               •   excess trade activity;

               •   trading in restricted securities;

               •   conflict of interest between RR and client trading activity;

               •   excessive trade transfers, trade cancellations, etc., indicating possible
                   unauthorized trading;

               •   inappropriate/high risk trading strategies;

               •   quality downgrading of client holdings;

               •   excessive/improper crosses of securities between clients;

               •   improper employee trading;

               •   front running;


                                                  -7-
            •   account number changes;

            •   late payment; and

            •   outstanding margin calls.

            In addition to transactional activity, managers must also keep themselves
            informed as to other client related matters such as:

            •   client complaints;

            •   cash account violations;

            •   undisclosed short sales; and

            •   trading under margin.

2.   Monthly Activity

     Client and branch personnel monthly statements must be reviewed on a monthly basis
     and should encompass areas of concern as discussed in the daily activity review.

     It is recognized that it may not be possible to review each statement produced. However,
     managers must undertake to review all monthly statements which produce gross
     commissions of $1,000 or more for the month.

     All non-client accounts must be reviewed on a monthly basis.

     This review should be completed within 21 days of the period covered by the statement
     unless precluded by unusual circumstances. Evidence of the review such as inquiries
     made, replies received, date of completion, etc., must be maintained for two years.




                                               -8-
                                    IV Head Office Account
                                         Supervision

Introduction

A two-tier structure is required to adequately supervise client account activity. While the head
office or regional area level of supervision by its nature cannot be in the same depth as branch
level supervision, it should cover all the same elements.

1.     Daily Reviews

       The criteria to be used to conduct daily head office reviews is, among other things, the
       following:

       •   stock trades with a value over $5,000 and a price under $5.00 per share;

       •   stock trades with a value over $20,000 and a price at or over $5.00 per share;

       •   bond trades over $ 100,000 value per trade;

       •   non-client trading;

       •   client accounts of producing branch managers;

       •   all client accounts not reviewed by a branch manager;

       •   trade cancellations;

       •   trading in restricted accounts;

       •   trading in suspense accounts;

       •   account number changes;

       •   late payment; and

       •   outstanding margin calls.

       There must be closer supervision of trading by approved persons who have had a history
       of questionable conduct.

       Daily reviews should be completed within a day unless precluded by unusual
       circumstances.

2.     Monthly Reviews

       The criteria to be used to conduct monthly head office reviews is, among other things, the
       following:

                                               -9-
•   clients' statements which generated more than $2,500 commission during the month;

•   all client and non-client accounts not reviewed by a branch manager which generated
    more than $1000 commission during the month.



Special situations such as concentration of securities must be reviewed. For all

reviews, evidence should be kept of inquiries, responses and actions.

Monthly reviews should be completed within 21 days of the period covered by the
statement unless precluded by unusual circumstances.




                                       -10-
                                              V
                                  Option Account Supervision

Introduction

Each Member dealing in options or Exchange traded commodity and indexed warrants, must
have an approved designated registered options principal (DROP) with overall responsibility for
the opening of new option accounts and the supervision of account activity to ensure that all
recommendations made for any account are, and continue to be, appropriate for the client and in
keeping with his investment objectives. In addition, there should be an alternate registered
options principal (ROP) to assist in supervisory activities and to carry out the functions of the
DROP in his/her absence. All supervisory reviews must be conducted by options qualified
personnel. The DROP must ensure that only registered individuals engage in trading or advising
in respect of options. Any branch trading in options must have a branch manager who is options
qualified.

1.     Account Opening and Approval

       a.      The Option Trading Agreement and Option Account Approval Form must be
               completed, signed and on hand prior to the first trade. This applies to new
               accounts or existing accounts approved for other products.

       b.      The Option Trading Agreement contents must meet or exceed SRO requirements.

       c.      All accounts must be approved, in writing, by the option qualified branch
               manager or the DROP or the alternate ROP.

       d.      The Option Account Approval Form must indicate any trading restrictions
               imposed.

2.     Supervision

       a.      Daily Reviews

               •   branch office must review daily trading activity for suitability, position limits,
                   exercise limits, concentration, commission activity and exposure of uncovered
                   positions;

               •   head office must review on a daily basis all option trading activity in excess of
                   ten contracts in any one account.

       b.      Monthly Reviews

               •   branch office must review on a monthly basis all option activity based on the
                   same criteria as for regular equity trading activity;

               •   head office must review on a monthly basis all option activity based on the
                   same criteria as for regular equity trading activity.

                                                -11 -
c.   DROP Responsibilities

        all discretionary and managed accounts must be reviewed by the DROP on a
        daily and monthly basis;

        the DROP must establish procedures to ensure clients are notified of
        impending expiry dates;

        the DROP must establish procedures allowing for the dissemination of new
        developments in the trading and regulation of options contracts in a prudent
        and appropriate manner; dissemination to all clients of any changes in a firm's
        business policy;

        all advertising and market letters to more than ten clients relating to options
        must be approved by the DROP;

        solicitation of clients to use option programs must have DROP approval.




                                     -12-
                                             VI
                        Futures/Futures Options Account Supervision

Introduction

Each Member dealing in futures must have an approved Designated Registered Futures Principal
(DRFP) with overall responsibility for the opening of new futures accounts and the supervision
of account activity. The DRFP must ensure that only registered individuals engage in trading or
advising in respect to futures and that all recommendations made for any account are and
continue to be appropriate for the client and in keeping with his investment objectives. These
minimum standards also apply to futures contract options.

1.     Account Opening and Approval

       a.      All accounts must be approved by a Branch Manager qualified as a Futures
               Contract Supervisor, DRFP or alternate prior to trading.

       b.      All clients must acknowledge, in writing, receipt of the Information Statement
               and the Summary Disclosure Statement prior to trading.

       c.      Clients must sign a Futures Contract Trading Agreement or Letter of Undertaking
               prior to trading.

       d.      Before granting approval to a client as a hedger, procedures must be present for
               establishing acceptability of a client as a hedger including use of hedge letter or
               statement and verification procedures.

       e.      Any trading restrictions which apply to the account must be written on the new
               client account form.

2.     Re vie w of Trading

       A firm must review all futures trading on both a daily and monthly basis, a.

       Daily Review

               Members must conduct daily reviews for futures and futures options trading
               activity. For example, a Member must review:

               •   excessive day trading resulting in trading large numbers of contracts;

               •   trading while under margin;

               •   trading futures/futures options without approval;

               •   trading beyond margin or credit limits;



                                               -13-
            •   cumulative losses exceeding stated risk capital (the aggregate of cumulative
                profits and cumulative losses);

            •   suitability;

            •   inappropriate trading strategies;

            •   position and exercises limits;

            •   front running;

            •   conflicts of interest;

            •   excessive commission activity; and

            •   all guaranteed accounts,

     b.     Monthly Review

            Members must conduct monthly reviews for futures and futures options trading
            activity. For example, a Member must review:

            •   speculative trading in hedge accounts;

            •   cumulative losses exceeding stated risk capital (the aggregate of cumulative
                profits and cumulative losses);

            •   trading beyond approved limited;

            •   continual awareness of pending delivery months;

            •   acceptability of a client as hedger; and

            •   all guaranteed accounts.

3.   Discretionary Accounts

     Futures discretionary accounts must meet all the requirements for equity discretionary
     accounts. In addition to the requirements for equity discretionary accounts, a DRFP must
     conduct the following additional activities for futures and futures options:

            •   Discretionary authority must be accepted, in writing, by DRFP.

            •   DRFP must review monthly financial performance of each account.




                                            -14-
                                   VII Discretionary Account
                                          Supervision

Introduction

Simple discretionary accounts relate to accounts where the discretionary authority has not been
solicited.

Managed accounts are investment portfolios solicited for discretionary management on a
continuing basis whereby the firm has held itself out as having special skills or abilities
regarding the management of investment portfolios.

The Member must consent to accepting discretionary accounts and have the proper
documentation and supervisory procedures in place to handle such accounts. A policy under
which discretionary accounts are handled must be developed by the firm and distributed to all
approved persons.

1.     Simple Discretionary Accounts

       a.      Client must request his account be handled on a discretionary basis indicating
               reason for the discretion.

       b.      Request for discretion must be approved, in writing, by a partner, director or
               officer appointed as a designated person.

       c.      A discretionary Account Agreement must be signed by the client and the Member
               and must include any restrictions to the trading authorizations which must be
               agreed to by the partner, director or officer.

       d.      No approved person may exercise discretionary authority over a client unless the
               account is maintained with the employer of the approved person.

2.     Entry of Orders

       a.      All discretionary orders must be marked as such at the time of entry.

       b.      All orders for discretionary accounts handled by RRs must be approved by a
               partner, director, branch manager or officer (if the officer is a designated person).

       c.      If the Member firm is publicly traded, no discretionary account may hold those
               shares.

3.     Account Supervision

       a.      Discretionary client account reviews must include all discretionary accounts
               handled by RRs, branch managers, partners, directors and officers.



                                                -15-
     b.     Persons conducting reviews must have adequate "Know-Your-Client" information
            readily available for each discretionary account.

     c.     Firms must identify in its books and records discretionary accounts to ensure that
            proper supervision can occur.

     d.     Financial performance reviews of discretionary accounts must be done monthly
            by head office.

     Note: Orders initiated for client accounts by producing branch managers and partners,
     directors and officers must be reviewed no later than the next day by head office.

4.   Termination of Agreement

     Either the client or the Member may cancel the authorization for discretion provided that it
     is, in writing, given an effective date which allows the client to make other arrangements.
     The firm must give the client 30 days notice.

5.   Managed Accounts

     The firm must be approved by the SRO to handle managed accounts and comply with all
     the requirements which are specifically detailed in the by-laws, rules and policies of the
     SRO. Only qualified portfolio managers may handle managed accounts.

6.   Approval for Managed Accounts

     a.     Client must sign a Managed Account Agreement.

     b.     Member must accept managed accounts, in writing, signed by a designated
            partner, director or officer. The authorization must indicate the client's
            investment objectives.

     c.     Member must designate, in writing, one of the partners, directors or officers to
            assume supervisory responsibility for each managed account and the client must
            be informed, in writing, of the identity of that individual or any subsequent
            changes thereto.

7.   Restrictions for Managed Accounts

     In a managed account, the Member cannot without the written consent of the client:

     a.      Invest in an issuer in which the responsible person is an officer or director. No
     such investment may be made unless such office or directorship has been disclosed to the
     client.

     b.     Invest in a security which is being bought or sold from a responsible persons'
            account to a managed account.


                                            -16-
      c.       Make a loan to a responsible person or to an associate. 8.

Cancellation

      The Member must receive and acknowledge, in writing, cancellation by the client. The
      Member may terminate the arrangement, in writing, provided that it is not earlier than 30
      days from the time of mailing.




                                               -17-
                                          VIII Client
                                          Complaints

Each Member must establish procedures to deal effectively with client complaints.

1.     Each Member must acknowledge all written client complaints.

2.     Each Member must convey the results of its investigation of a client complaint to the
       client in due course.

3.     Client complaints involving a registrant's sales practices must be in writing and must be
       handled by qualified sales supervisors/compliance staff. Copies of all such written
       submissions must be filed with the Compliance Department of the Member.

4.     Each Member must ensure that all pending legal actions are made known to head office.

5.     Each Member must ensure that RRs and their supervisors are made aware of all
       complaints filed by their clients.

6.     Each Member must put procedures in place so that senior management is made aware of
       complaints of serious misconduct and of all legal actions.

7.     Each Member must maintain an orderly record of complaints together with follow-up
       documentation for regular internal/external compliance reviews. This record must cover
       the past two years at least.

8.     Each Member must establish procedures to ensue that breaches of the by-laws, rules and
       policies of the SROs are subjected to appropriate internal disciplinary procedures.

9.     When a Member finds complaints to be a significant factor, internal procedures and
       practices should be reviewed, with recommendations for changes to be submitted to the
       appropriate management level.




                                              -18-
                            Policy Statement CR07
                         Internal Control Policy Statements
                                          Table of Contents




Internal Control Policy Statement 1   -    General Matters .............................................................. 1
Internal Control Policy Statement 2   -    Capital Adequacy ........................................................... 4
Internal Control Policy Statement 3   -    Insurance ........................................................................ 6
Internal Control Policy Statement 4   -    Segregation of Clients' Securities .................................. 8
Internal Control Policy Statement 5   -    Safekeeping of Clients' Securities ............................... 10
Internal Control Policy Statement 6   -    Safeguarding of Securities and Cash............................ 11




                                                    -i -
                              Internal Control Policy Statement 1
                                       General Matters

This Policy Statement is one in a series that prescribes requirements for and provides guidance
on compliance with the requirement in Rule G.3.20 that states "every Member shall establish and
maintain adequate internal controls in accordance with the Internal Control Policy Statements in
Policy No. CR07".

Internal Control is defined as follows:

       Internal Control consists of the policies and procedures established and maintained by
       management to assist in achieving its objective of ensuring, as far as practical, the orderly
       and efficient conduct of the entity's business. The responsibility for ensuring adequate
       internal control is part of management's overall responsibility for the ongoing activities of
       the entity. (CICA Handbook, 5200.03)

The effectiveness of specific policies and procedures is affected by many factors, such as
management philosophy and operating style, the function of the board of directors (or equivalent)
and its committees, organizational structure, methods of assigning authority and responsibility,
management control methods, system development methodology, personnel policies and
practices, management reaction to external influences, and internal audit. These and other aspects
of internal control affect all parts of the Member's firm.

In addition to compliance with required policies and procedures set out in these Policy
Statements, a Member must consider the following, to the extent that they suggest a higher
standard than would otherwise be required:

1.     Recommended provisions set out in these Policy Statements;

2.     Authoritative literature such as the Internal Control Guidelines published by the
       Investment Dealers Association of Canada and publications of the Canadian Institute of
       Chartered Accountants;

3.     Comments on internal control that may have been made by internal and external auditors
       and by industry regulators, and actions that the Member has taken as a result;

4.     The balance struck between preventive and detective internal controls. "Preventive
       controls are those which prevent, or minimize the chance of occurrence of, fraud and
       error. Detective controls do not prevent fraud and error but rather detect them, or
       maximize the chance of their detection, so that corrective action may be promptly taken.
       The known existence of detective controls may have a deterrent effect, and be preventive
       in that sense." (CICA Handbook, 5205.13);

       The extent of preventive controls implemented by a Member will depend on
       management's view of the risk of loss and the cost-benefit relationship of controlling such
       risk. Where the inherent risk is high (e.g., cash, negotiable securities), the cost of effective
       preventive controls will usually be warranted and expected by industry

                                                -1 -
       regulators. On the other hand, where the inherent risk is very low (e.g., prepaid
       expenses, stock exchange seats), the cost of preventive controls would usually not be
       warranted nor expected by industry regulators. Further, in a circumstance where a
       preventive control is warranted, a detective control should not be considered to be a
       suitable alternative unless it will result in prompt detection of fraud and error and provide
       near certainty of recovery of the property that is the subject of the fraud or error;

       For example, the safeguarding of customers' segregated securities warrants the
       implementation of highly effective preventive controls. Accordingly, Members
       safeguard such securities by placing them in recognized depositories whenever possible
       or storing them in bank and/or in-house vaults of an appropriate class suitable to insurers.
       It would not be appropriate to keep such securities in standard filing cabinets even if such
       securities were counted monthly since the risk of loss would be high and the possibility
       of recovery could be very low; and

5.     Industry practice.

Determining whether internal control is adequate is a matter of judgment. However, a Member
should not consider internal control to be adequate if it does not reduce to a relatively low level
the risk of failing to meet control objectives stated in this series of Policy Statements and, as a
consequence, one or more of the following conditions has occurred or could reasonably be
expected to do so:

1.     A Member is inhibited from promptly completing securities transactions or promptly
       discharging the Member's responsibilities to clients, to other brokers, or to the industry;

2.     Material financial loss is suffered by the Member, clients or the industry;

3.     Material misstatements occur in the Member's financial statements; and

4.     Violations of regulations occur to the extent that could reasonably be expected to result
       in the conditions described in (1) to (3) above.

Other Policy Statements in this series set out control objectives, required and recommended firm
policies and procedures and indications that internal control is not adequate. While
recommended firm policies and procedures will be appropriate in many cases to meet the stated
objectives, they constitute merely one of a number of methods which members may utilize. It is
recognized that Member firms may conduct their business in compliance with legal and
regulatory requirements although they may employ procedures which differ from the
recommended firm policies and procedures contained in the Policy Statements. The information
is designed to provide guidance to Member firms in the preparation of procedures tailored to the
specific needs of their individual environment in meeting the stated control objectives.

Members must maintain a detailed written record which as a minimum should include the
specific policies and procedures approved by senior management to comply with these Internal
Control Policy Statements. These policies and procedures must be reviewed and approved by
senior management at least annually, or more frequently as the situation arises, for their

                                                 -2-
adequacy and suitability. One method of documentation is to note on a copy of this Statement
the policies and procedures selected, and details of their performance such as who performs
them, when, and how performance is evidenced. Other forms of documentation, such as
procedures manuals, flowcharts and narrative descriptions are recommended.




                                              -3-
                              Internal Control Policy Statement 2
                                       Capital Adequacy

This Policy Statement is one in a series that prescribes requirements for and provides guidance
on compliance with the requirement in Rule G.3.20 that states "every Member shall establish and
maintain adequate internal controls in accordance with the Internal Control Policy Statements in
Policy No. CR07". It should be read in the context of Policy Statement No. 1 dealing with
General Matters.

This Policy Statement focuses on the monitoring of a Member firm's capital position, principally
through its system of management reporting. The effectiveness of such monitoring depends in
large measure on the timeliness, completeness and accuracy of the accounting books and records
from which those management reports are drawn. Establishing and maintaining policies and
procedures to ensure such timeliness, completeness and accuracy is part of a Member's
responsibility for internal control. However, these matters are outside the scope of Policy
Statement No. 2.

Control Objective

To monitor and act upon information produced by the management reporting system so that Risk
Adjusted Capital is maintained at all times in an amount at least equal to the minimum required
by regulation.

Minimum Required Firm Policies and Procedures

1.     The Chief Financial Officer is responsible for continuous monitoring of the capital
       position of the firm to ensure that at all times Risk Adjusted Capital is maintained as
       prescribed by Exchange Rules;

2.     The firm's planning process recognizes the projected capital requirements resulting from
       current and planned business activities;

3.     Activity limits for the major functional areas of the firm (such as capital markets,
       principal trading, borrowing/lending, etc.) are designed to ensure that the combined
       operations of the firm maintain at least the minimum required amount of Risk Adjusted
       Capital;

4.     Such activity limits are approved by senior management and communicated to the
       executives responsible for the various major functional areas. Actual performance is
       compared to such limits by the Chief Financial Officer or designated person assigned the
       task of monitoring the capital position, and breaches are reported promptly to senior
       management;

5.     At least weekly, but more frequently if required (e.g., the firm is operating close to Early
       Warning levels or volatile market conditions exist), the Chief Financial Officer or
       designated personal assigned the task for monitoring the capital position documents that
       he/she has:

                                                -4-
      a.     received management reports produced by the accounting system showing
             information relevant to estimation of the capital position;

      b.     obtained other information concerning items that, while they may not yet be
             recorded in the accounting system, are likely to significantly affect the capital
             position (e.g. bad and doubtful debts, unreconciled positions, underwriting and
             inventory commitments and margin requirements);

      c.     estimated the capital position, compared it to planned capital limits and the prior
             period and reported adverse trends or variances to senior management;

6.    Senior management takes prompt action to avert or remedy any projected or actual
      capital deficiency and reports any deficiencies, when required, immediately to the
      appropriate regulators;

7.    The month-end estimate of Risk Adjusted Capital is reconciled to the Monthly Financial
      Report submitted for regulatory filing. Material discrepancies are investigated and steps
      taken to preclude re-occurrence; and

8.    At least annually there is a documented supervisory review of the firm's management
      reporting system related to capital, to identify and implement changes required to reflect
      developments in the business or in regulatory requirements.

Indications that Internal Control is not Adequate

1.    The accounting system produces information that is late or requires correction;

2.    Staff responsible for preparing Risk Adjusted Capital reports lack an understanding of the
      regulatory requirements;

3.    Chief Financial Officer or person designated with the supervisory task of monitoring the
      capital position of the firm lacks an understanding of the business of the different
      functional areas of the firm and cannot properly evaluate their activities level and
      capital/risk implications for the firm;

4.    No steps are taken to establish the reliability of management reports utilized to monitor
      the capital position;

5.    Planning procedures fail to take into account the impact of planned activities on required
      capital;

6.    The firm is operating unexpectedly near its Early Warning levels; and

7.    The firm experiences significant unexpected changes in its capital position.




                                               -5-
                              Internal Control Policy Statement 3
                                          Insurance

This Policy Statement is one in a series that prescribes requirements for and provides guidance
on compliance with the requirement in Rule G.3.20 that states "every Member shall establish and
maintain adequate internal controls in accordance with the Internal Control Policy Statements in
Policy No. CR07". It should be read in the context of Policy Statement No. 1 dealing with
General Matters.

Control Objective

To ensure that:

1.     The firm is in compliance with regulatory requirements for insurance;

2.     Other insurance coverage is in accordance with business needs; and

3.     Insurable losses are identified and claimed on a timely basis.

Minimum Required Firm Policies and Procedures

1.     Insurance requirements and level of coverage are reviewed and approved at least
       annually by the Member's Executive Committee or Board of Directors;

2.     A senior officer of the firm is designated by the Member's Executive Committee or Board
       of Directors as responsible for insurance matters;

3.     The senior officer or designated person assigned the task reviews the terms of insurance
       policies regularly and ensures that the Member's operating procedures are designed to
       result in compliance with policy terms and regulations;

4.     The senior officer or designated person assigned the task monitors business changes to
       evaluate the need for changes in coverage or operating procedures;

5.     The senior officer or designated person assigned the task monitors business operations to
       ensure that insured losses are identified, insurer notified and claimed on a timely basis
       and their effect on aggregate limits are taken into account; and

6.     Senior management takes prompt action to avert or remedy any projected or actual
       insurance deficiency and reports any deficiencies, when required, immediately to the
       appropriate regulators.

Indications that Internal Control is not Adequate

1.      Staff responsible for insurance matters are ill-informed of their duties or insufficiently
       trained;



                                                 -6-
2.   Material breaches of insurance policies which could result in denial of coverage are not
     detected on a timely basis;

3.   No steps are taken to establish the reliability of reports utilized for the monitoring of
     variables that may affect insurance coverage;

4.   Failure to report claims or failure to recover on claims thought to be covered; and

5.   Deficiencies in coverage are indicated on regulatory capital filings.




                                              -7-
                               Internal Control Policy Statement 4
                                Segregation of Clients' Securities

This Policy Statement is one in a series that prescribes requirements for and provides guidance
on compliance with the requirement in Rule G.3.20 that states "every Member shall establish and
maintain adequate internal controls in accordance with the Internal Control Policy Statements in
Policy No. CR07". It should be read in the context of Policy Statement No. 1 dealing with
General Matters.

Control Objective

To segregate clients' fully-paid and excess margin securities so that:

1.     The firm is in compliance with regulatory and legal requirements for segregation; and

2.     Fully-paid and excess margin securities are not improperly used.

Minimum Required Firm Policies and Procedures

1.     At least twice weekly the information system produces a report of items requiring
       segregation (the "segregation report");

2.     Items requiring segregation are placed in "acceptable securities locations" as defined by
       Exchange Rules on a timely basis;

3.     Written Custodial Agreements with applicable regulatory provisions exist for securities
       held at acceptable securities locations;

4.     Securities are moved into or out of segregation only by authorized personnel;

5.     There is a daily supervisory review of compliance with segregation requirements for
       clients' securities according to the latest segregation report and of action taken to settle
       previously identified deficiencies;

6.     If any segregation deficiency exists, the most appropriate action prescribed by Exchange
       Rules required to settle the deficiency is taken expeditiously;

7.     There is supervisory review or other procedures in place to ensure the completeness and
       accuracy of segregation reports;

8.     If any segregation deficiency is identified in such supervisory review, the most
       appropriate action required to settle the deficiency is taken expeditiously;

9.     Management has set reasonable guidelines so that any material segregation deficiency is
       reported to senior management on a timely basis; and

10.    At least annually there is a documented supervisory review of firm policies and
       procedures to identify and correct any divergence from regulatory requirements.

                                                 -8-
Indications that Internal Control is not Adequate

1.    Insufficient attention is paid to preventing violations of legal and regulatory provisions
      concerning securities held in segregation, including preventing the hypothecation of
      fully-paid and excess margin securities;

2.    Staff responsible for segregation procedures are ill-informed of their duties or
      insufficiently trained;

3.    No steps are taken to establish the reliability of segregation reports utilized (e.g. by a
      service bureau);

4.    Segregation deficiencies persist for an extended period of time without proper
      management attention; and

5.    Securities are held at locations that do not meet the criteria of an acceptable securities
      location and/or without a written Custodial Agreement.




                                                -9-
                              Internal Control Policy Statement 5
                               Safekeeping of Clients' Securities

This Policy Statement is one in a series that prescribes requirements for and provides guidance
on compliance with the requirement in Rule G.3.20 that states "every Member shall establish and
maintain adequate internal controls in accordance with the Internal Control Policy Statements in
Policy No. CR07". It should be read in the context of Policy Statement No. 1 dealing with
General Matters.

Control Objective

To provide safekeeping services to clients so that:

1.     The firm is in compliance with regulatory requirements for safekeeping; and

2.     Securities in safekeeping are not improperly used.

Minimum Required Firm Policies and Procedures

1.     Securities held in safekeeping are held pursuant to a written safekeeping agreement with
       the client;

2.     There are procedures in place to ensure that safekeeping securities are kept apart from all
       other securities;

3.     Securities held in safekeeping are recorded as such in the firm's securities position
       records, client's ledger and statement of account; and

4.     Securities held in safekeeping are released only on instruction from the client.

Indications that Internal Control is not Adequate

1.     Insufficient attention is paid to preventing violations of legal and regulatory provisions
       concerning securities held in safekeeping, including those requiring them to be:

       a.      kept apart from all other securities held by the firm;

       b.      not used to finance the operations of the firm;

       c.      registered in the name of the client;

       d.      not released solely because the client has become indebted to the firm;

2.     A client's power of attorney on hand for securities held in safekeeping is held by
       personnel having access to the securities; and

3.     Physical access to securities held in safekeeping is not restricted to a minimum number of
       authorized persons.


                                               -10-
                              Internal Control Policy Statement 6
                              Safeguarding of Securities and Cash

This Policy Statement is one in a series that prescribes requirements for and provides guidance
on compliance with the requirement in Rule G.3.20 that states "every Member shall establish and
maintain adequate internal controls in accordance with the Internal Control Policy Statements in
Policy No. CR07". It should be read in the context of Policy Statement No. 1 dealing with
General Matters.

Control Objective

To safeguard both firm and client securities and cash so that:

1.     Securities and cash are protected against material loss; and

2.     Potential losses are detected and reported (for regulatory, financial and insurance
       purposes) on a timely basis.

Minimum Required Firm Policies and Procedures

(It is recognized that Members with small operations may not be able to comply with the
segregation of duties requirements due to the limitation inherent in the size of their firm and
operations. To the extent that these minimum requirements are inappropriate in the operations of
such Members, they would not be required to follow them and must implement compensating
control procedures to meet the stated control objectives of this Policy Statement).

1.     Receipt and Delivery of Securities

       a.      personnel responsible for the receipt and delivery of securities do not have access
               to the record keeping of such securities;

       b.      securities handling is done in a restricted and secure area;

       c.      receipts and deliveries are promptly and accurately recorded (certificate numbers,
               registrations, coupon numbers, etc.);

       d.      negotiable certificates delivered through the mail are sent by means of registered
               mail; and

       e.      signed receipts are obtained from the client or agent for all securities delivered
               free;

2.     Restricted Access to Securities

       a.      only designated individuals are permitted to physically handle securities;

       b.      physical handling of securities is carried out in a restricted and secure area;


                                                -11 -
     c.     custody of securities is entrusted to individuals not involved in maintaining or
            balancing of stock records; and

     d.     vault facilities are physically appropriate to the value and negotiability of the
            securities they contain;

3.   Clearing

     a.     clearing reports containing the settlement activity from the previous day are
            compared and balanced to company records promptly;

     b.     the reconciliation of the clearing or settlement of accounts should be performed
            by firm personnel independent of trading;

     c.     prompt action is taken to correct differences;

     d.     aged "fails" to deliver and receive are reviewed regularly to determine reason(s)
            for delay in settlement;

     e.     any fail that continues for an extended period of time is reported promptly to
            senior management;

     f.     client securities are not used in settling short "pro" sales unless the client's written
            permission has been obtained, appropriate collateral is provided to the client, and
            the use of such securities is not contrary to any laws;

     g.     clearing records are reconciled regularly to clearing house and depository records
            to ensure agreement of securities and cash on deposit;

4.   Depositories

     a.     a risk assessment is performed on any securities location which holds securities
            on behalf of the firm and its clients;

     b.     limits are set on the value of securities or other assets (e.g. gold, letters of credit,
            dividends, interest, etc.) held at any securities location;

     c.     the firm has a suitable written agreement with each acceptable securities location
            used to hold securities as required by Exchange Rules;

     d.     processing controls include an adequate division of duties over the recording of
            entries and over the initiation of transfers made on the records of the depositories
            (e.g. transfers between "free" and "seg"); and

     e.     security and other asset positions as per the company's records are reconciled on a
            regular basis (at least monthly) to the positions as per the custodian's records.
            Differences are investigated and appropriate adjustment entries are made;


                                              -12-
5.   Security Records

     a.    personnel responsible for maintaining and balancing stock records are not
           involved in custody of the physical securities;

     b.    stock records are promptly updated to reflect changes in the location and
           ownership of all securities under the firm's control; and

     c.    journal entries made to stock records are clearly identified and adjustments are
           properly reviewed and approved before processing;

6.   Security Counts

     a.     segregated and safekeeping securities are counted at least once a year in addition
            to the count conducted during the annual external audit as required by Exchange
            Rules;

     b.     securities contained in current boxes are counted at least monthly;

     c.     interim surprise counts are conducted by individuals other than those who have
            custody of securities;

     d.     count procedures ensure that all physical securities are included and related
            positions such as transit and transfers are also verified simultaneously; and

     e.     during a security count, both the description of the security and quantity should be
            compared to the records of the firm. Any discrepancies should be investigated
            and corrected promptly. Positions not reconciled within a reasonable period are
            reported promptly to senior management and the capital impact, if any, are
            accounted for promptly;

7.   Branch Transits

     a.     separate transit accounts are used on the security position records to record the
            location of certificates in transit between each office of the firm. These accounts
            are reconciled on a monthly basis;

     b.     entries are made to book out securities to or from the branch to the transit
            account, and then upon physical receipt the securities are booked from the transit
            account to the receiving branch;

     c.     the receiving branch checks securities received against the accompanying transit
            sheet; and

     d.     methods of transportation selected for securities in transit comply with insurance
            policy terms and take into account value, negotiability, urgency, and cost factors;



                                            -13-
8.    Transfers

      a.     a record is maintained showing all securities sent to and held by transfer agents;

      b.     authority to request transfers into a name other than the firm's name is restricted
             to designated individuals outside the transfer department and is permitted only in
             respect of fully-paid securities (new issues excepted);

      c.     the transfer department executes transfers only upon receipt of a properly
             authorized request;

      d.     securities out for transfer are recorded as such in the firm's security position
             record;

      e.     all positions for securities at transfer agents are supported by a receipt;

      f.     an aging of all transfer positions is prepared weekly and reviewed by management
             to verify the validity of the positions and the reasons for any undue delay in
             receiving securities from transfer agents; and

      g.     the duties of personnel handling transfers do not include other security cage
             functions such as deliveries, current box or segregation;

9.    Re-Organization

      a.     a formal procedure exists to identify and document the timing and terms of all
             forthcoming rights, offers, etc.;

      b.     there is a clear method of communicating forthcoming re-organization activity to
             the sales force, including deadlines for submitting special instructions in writing
             including any special handling procedures required around the key dates;

      c.     responsibilities for organizing and handling each offer are clearly assigned to a
             single person or department;

      d.     procedures to balance positions daily and to provide for the physical control of
             these securities are clearly defined; and

      e.     suspense accounts involving offers and splits are reconciled and reviewed
             regularly;

10.   Dividends and Interest

      a.     a system is in place to accrue the total amounts of dividends and interest payable
             and receivable at due date;

      b.     individuals in charge of record keeping do not handle cash or authorize payments;


                                              -14-
      c.     dividend and interest accounts are reconciled at least monthly and reviews
             performed of aged dividend receivables;

      d.     write-offs are authorized by the department manager or other senior personnel
             only;

      e.     journal entries to and from dividend and interest accounts are approved by the
             supervisor/manager;

      f.     other than as part of an automatic settlement system, dividend claims are not paid
             unless accompanied by supporting documents, proof of registration, etc. Such
             supporting documents are compared to internal records for validity and approved
             by a senior member of the department;

      g.     non-resident tax is withheld where applicable by law; and

      h.     a system is in place to ensure appropriate reporting of client income for income
             tax purposes, as required by law;

11.   Internal Accounts

      a.     internal accounts are reconciled at least monthly; and

      b.     the reconciliation is subject to a supervisory review;

12.   Cash

      a.     a senior official is responsible for reviewing approving all bank reconciliations;

      b.     bank accounts are reconciled, in writing, at least monthly, with an identification
             and dating of all reconciling items;

      c.     journal entries to clear reconciling items are made on a timely basis and approved
             by management;

      d.     the reconciliation of bank accounts is performed by someone without
             incompatible functions, including access to funds (both receipts and
             disbursements), access to securities and record keeping responsibilities, including
             the authority to write or approve journal entries;

      e.     approval levels required to requisition a cheque are established by senior
             management;

      f.     cheques are pre-numbered and numerical continuity is accounted for;

      g.     cheques are signed by two authorized individuals;




                                             -15-
      h.     cheques are only signed when the appropriate supporting documentation is
              provided. The supporting documentation is cancelled after the cheque is signed;
              and

      i.     where facsimile signature is used, access to the machine is limited and supervised.

Recommended Firm Policies and Procedures Messengers

1.    Background checks are performed when messengers are hired to ensure their integrity
      and reliability;

2.    Messengers receive adequate training;

3.    Messengers perform an initial inspection of cheques and securities received for quantity,
      amount, description, negotiability, etc.;

4.    Messengers obtain a receipt or valid security of equivalent value upon delivery of
      cheques or securities; and

5.    Management set carrying limits and monitors them to ensure compliance with insurance
      policy terms.

Indications that Internal Control is not Adequate

1.    There is a significant number and dollar value of unreconciled positions and balances;

2.    Significant differences in reconciliations are not resolved on a timely basis;

3.    A large number of staff is involved in reconciling positions; and

4.    Material losses have occurred.




                                              -16-
                             Policy Statement CR08
                                  Circuit Breaker Policy

Except as otherwise directed by the President, in the event The New York Stock Exchange
invokes its circuit breaker policy, TSX Venture Exchange shall halt and reinstate trading in all
securities in cooperation with the other Canadian exchanges.




                                                -1 -
                            Policy Statement CR09
                       Course and Examination Exemptions
Introduction

This Policy outlines the exemptions that exist from the Exchange's course and examination
requirements for persons seeking to be registered in certain categories of registration. This
Policy exempts applicants from the requirement to rewrite courses or examinations that they
have successfully completed if they are re-entering the industry, re-registering in a category or
seeking initial registration within certain time periods. This Policy also provides exemptions to
applicants from the requirements to initially write a course or examination if the applicant
satisfies one of the specifically enumerated exemptions based on grandfathering provisions or
the successful completion of other courses and examinations. In addition, this Policy sets out the
basis upon which staff of the Exchange may grant a discretionary exemption.

Definitions

For the purposes of this Policy No. CR09:

"approved person" means an applicant that is approved by and registered with a self-regulatory
organization in a category of registration;

"IFIC" means the Investment Funds Institute of Canada; and

"recognized foreign self-regulatory organization" means a foreign self-regulatory organization
which offers a reciprocal treatment to Canadian applicants and which has been approved as such
by the Exchange.

All courses and examinations, unless otherwise specified, are administered by the Canadian
Securities Institute.

A.     Exemptions from Rewriting

1.     The Canadian Securities Course

       An applicant shall be exempt from rewriting the Canadian Securities Course if the
       applicant

       (a)     was an approved person, currently seeking to re-enter the industry within the
               same category of registration within five years of their registration lapsing;

       (b)     is an approved person, currently seeking re-registration within the same category
               of registration within five years of that category of registration lapsing; or

       (c)     is currently seeking registration within three years and four months of
               successfully completing the Canadian Securities Course.



                                               -1 -
2.   The Conduct and Practices Handbook Course (formerly the Registered Representative
     Manual Examination)

     An applicant shall be exempt from rewriting the Conduct and Practices Handbook Course
     if the applicant

     (a)    was an approved person, currently seeking to re-enter the industry within the
            same category of registration within three years of their registration lapsing;

     (b)    is an approved person, currently seeking re-registration within the same category
            of registration within three years of that category of registration lapsing; or

     (c)    is currently seeking registration within two years of successfully completing the
            Conduct and Practices Handbook Course.

3.   The Partners, Directors and Senior Officers Qualifying Examination

     An applicant shall be exempt from rewriting the Partners, Directors and Senior Officers
     Qualifying Examination if the applicant

     (a)    was an approved person, currently seeking to re-enter the industry within the
            same category of registration within three years of their registration lapsing;

     (b)    is an approved person, currently seeking re-registration within the same category
            of registration within three years of that category of registration lapsing; or

     (c)    is currently seeking registration within two years of successfully completing the
            Partners, Directors and Senior Officers Qualifying Examination.

4.   The Derivatives Fundamentals Course

     An applicant shall be exempt from rewriting the Derivatives Fundamentals Course if the
     applicant

     (a)    was an approved person currently seeking to re-enter the industry within the same
            category of registration within three years of their registration lapsing;

     (b)    is an approved person, currently seeking re-registration within the same category
            of registration within three years of that category of registration lapsing; or

     (c)    is currently seeking registration within two years of successfully completing the
            Derivatives Fundamentals Course.




                                            -2-
5.   The Options Licensing Course (formerly the Canadian Options Course)

     An applicant shall be exempt from rewriting the Options Licensing Course if the
     applicant

     (a)    was an approved person, currently seeking to re-enter the industry within the
            same category of registration within three years of their registration lapsing;

     (b)    is an approved person, currently seeking re-registration within the same category
            of registration within three years of that category of registration lapsing; or

     (c)    is currently seeking registration within two years of successfully completing the
            Options Licensing Course.

6.   The Registered Options Principals Qualifying Examination

     An applicant shall be exempt from rewriting the Registered Options Principals Qualifying
     Examination if the applicant

     (a)    was an approved person, currently seeking to re-enter the industry within the
            same category of registration within three years of their registration lapsing;

     (b)    is an approved person, currently seeking re-registration within the same category
            of registration within three years of that category of registration lapsing; or

     (c)    is currently seeking registration within two years of successfully completing the
            Registered Options Principals Qualifying Examination.

7.   The Futures Licensing Course (formerly the Canadian Futures Examination, Parts I and
     II, formerly the National Commodity Futures Examination and the Canadian Commodity
     Futures Examination)

     An applicant shall be exempt from rewriting the Futures Licensing Course if the
     applicant

     (a)    was an approved person, currently seeking to re-enter the industry within the
            same category of registration within three years of their registration lapsing;

     (b)    is an approved person, currently seeking re-registration within the same category
            of registration within three years of that category of registration lapsing; or

     (c)    is currently seeking registration within two years of successfully completing the
            Futures Licensing Course.




                                            -3-
8.    The Canadian Commodity Supervisors Examination

      An applicant shall be exempt from rewriting the Canadian Commodity Supervisors
      Examination if the applicant

      (a)    was an approved person, currently seeking to re-enter the industry within the
             same category of registration within three years of their registration lapsing;

      (b)    is an approved person, currently seeking re-registration within the same category
             of registration within three years of that category of registration lapsing; or

      (c)    is currently seeking registration within two years of successfully completing the
             Canadian Commodity Supervisors Examination.

9.    The Canadian Branch Managers Examination

      An applicant shall be exempt from rewriting the Canadian Branch Managers Qualifying
      Examination if the applicant

      (a)    was an approved person, currently seeking to re-enter the industry within the
             same category of registration within three years of their registration lapsing;

      (b)    is an approved person, currently seeking re-registration within the same category
             of registration within three years of that category of registration lapsing; or

      (c)    is currently seeking registration within two years of successfully completing the
             Canadian Branch Managers Qualifying Examination.

10.   The Professional Financial Planning Course

      An applicant shall be exempt from rewriting the Professional Financial Planning Course
      if the applicant

      (a)    was an approved person, currently seeking to re-enter the industry within the
             same category of registration within three years of the registration lapsing;

      (b)    is an approved person, currently seeking re-registration within the same category
             of registration within three years of that category of registration; or

      (c)    is currently seeking registration within two years of successfully completing the
             Professional Financial Planning Course.

11.   The Investment Management Techniques Course

      An applicant shall be exempt from rewriting the Investment Management Techniques
      Course if the applicant




                                             -4-
      (a)    was an approved person, currently seeking to re-enter the industry within the
             same category of registration within three years of the registration lapsing;

      (b)    is an approved person, currently seeking re-registration within the same category
             of registration within three years of that category of registration; or

      (c)    is currently seeking registration within two years of successfully completing the
             Investment Management Techniques Course.

12.   The Canadian Investment Funds Course

      An applicant shall be exempt from rewriting the Canadian Investment Funds Course
      administered by IFIC if the applicant

      (a)    was an approved person, currently seeking to re-enter the industry within the
             same category of registration within three years of their registration lapsing;

      (b)    is an approved person, currently seeking re-registration within the same category
             of registration within three years of that category of registration lapsing; or

      (c)    is currently seeking registration within two years of successfully completing the
             Canadian Investment Funds Course.

13.   The Investment Funds in Canada Course

      An applicant shall be exempt from rewriting the Investment Funds in Canada Course if the
      applicant

      (a)    was an approved person, currently seeking to re-enter the industry within the
             same category of registration within three years of their registration lapsing;

      (b)    is an approved person, currently seeking re-registration within the same category
             of registration within three years of that category of registration lapsing; or

      (c)    is currently seeking registration within two years of successfully completing the
             Investment Funds of Canada Course.

14.   The Principles of Mutual Funds Investment Course

      An applicant shall be exempt from rewriting the Principles of Mutual Funds Investment
      Course if the applicant

      (a)    was an approved person, currently seeking to re-enter the industry within the
             same category of registration within three years of their registration lapsing;

      (b)    is an approved person, currently seeking re-registration within the same category
             of registration within three years of that category of registration lapsing; or

                                            -5-
     (c)    is currently seeking registration within two years of successfully completing the
            Principles of Mutual Funds Investment Course.

B.   Exemptions from Writing

1.   The Canadian Securities Course

     An applicant shall be exempt from writing the Canadian Securities Course if the
     applicant

     (a)    has been approved continuously as a registered representative since November,
            1962;

     (b)    has successfully completed the previously existing IDA Course I and II, or the
            previously existing IDA Course I and has acquired five consecutive years of
            industry experience and

            (i) is currently approved as an investment representative or investment
                   adviser,

            (ii) was an approved person, currently seeking to re-enter the industry within
                   the same category of registration within three years of their registration
                   lapsing, or

            (iii) is an approved person, currently seeking re-registration within the same
                     category of registration within three years of the registration of that
                     category lapsing;

     (c)    has successfully completed the Canadian Investment Management program, Parts
            I and II and

            (i) is currently approved as an investment representative or an investment
                    adviser;

            (ii) was an approved person, currently seeking to re-enter the industry within
                   the same category of registration within three years of the registration
                   lapsing,

            (iii) is an approved person, currently seeking re-registration within the same
                     category of registration within three years of that category of registration
                     lapsing, or

            (iv) is currently seeking registration within two years of successfully
                   completing the Canadian Investment Management program, Parts I and II;
                   or




                                             -6-
     (d) has been registered or licensed with a recognized foreign self-regulatory
           organization prior to application with the Exchange and has successfully
           completed the New Entrants Course.

2.   The Conduct and Practices Handbook Course (formerly the Registered Representative
     Manual Examination)

     An applicant shall be exempt from writing the Conduct and Practices Handbook Course
     if the applicant

     (a)    has been approved continuously as an investment adviser since December, 1971;
            or

     (b)    has successfully completed the Partners, Directors and Senior Officers Qualifying
            Examination and

            (i) is currently approved as a partner, director, senior officer, investment
                   representative or investment adviser,

            (ii) was an approved person, currently seeking to re-enter the industry within
                   the same category of registration within three years of their registration
                   lapsing,

            (iii) is an approved person, currently seeking re-registration within the same
                     category of registration within three years of that category of registration
                     lapsing, or

            (iv) is currently seeking registration within two years of successfully
                   completing the Partners, Directors and Senior Officers Qualifying
                   Examination.

3.   The Partners, Directors and Senior Officers Qualifying Examination

     An applicant shall be exempt from writing the Partners, Directors and Senior Officers
     Qualifying Examination if the applicant

     (a) has been approved continuously as a partner, director or senior officer since
            January, 1971.

4.   The Derivatives Fundamentals Course

     An applicant shall be exempt from writing the Derivatives Fundamentals Course if the
     applicant has successfully completed

     (a)    the Canadian Options Course and

            (i)   is currently approved as a registered options representative,


                                             -7-
            (ii) was an approved person, currently seeking to re-enter the industry within
                   the same category of registration within three years of their registration
                   lapsing,

            (iii) is an approved person, currently seeking re-registration within the same
                     category of registration within three years of that category of registration
                     lapsing, or

            (iv) is currently seeking registration within two years of successfully
                   completing the Canadian Options Course;

     (b)    the Canadian Futures Examination, Parts I and II and

            (i) is currently approved as an investment adviser futures contract/futures
                    contract options,

            (ii) was an approved person, currently seeking to re-enter the industry within
                   the same category of registration within three years of their registration
                   lapsing,

            (iii) is an approved person, currently seeking re-registration within the same
                     category of registration within three years of that category of registration
                     lapsing, or

            (iv) is currently seeking registration within two years of successfully
                   completing the Canadian Futures Examination, Parts I and II; or

     (c)    the National Commodity Futures Examination and the Canadian Commodity
            Futures Examination and

            (i) is currently approved as an investment adviser futures contract/futures
                    contract options,

            (ii) was an approved person, currently seeking to re-enter the industry within
                   the same category of registration within three years of their registration
                   lapsing, or

            (iii) is an approved person, currently seeking re-registration within the same
                     category of registration within three years of that category of registration
                     lapsing.

5.   The Options Licensing Course (formerly the Canadian Options Course)

     An applicant shall be exempt from writing the Options Licensing Course if the applicant

     (a)    has successfully completed the Put/Calls examination offered by The Toronto
            Stock Exchange or the Vancouver Stock Exchange or the Montréal Exchange and


                                             -8-
            (i)    is currently approved as a registered options representative,

            (ii) was an approved person, currently seeking to re-enter the industry within
                   the same category of registration within three years of their registration
                   lapsing, or

            (iii) is an approved person, currently seeking re-registration within the same
                     category of registration within three years of that category of registration
                     lapsing; or

     (b)   has successfully completed the Canadian Options Course and

            (i)    is currently approved as a registered options representative,

            (ii) was an approved person, currently seeking to re-enter the industry within
                   the same category of registration within three years of their registration
                   lapsing,

            (iii) is an approved person, currently seeking re-registration within the same
                     category of registration within three years of that category of registration
                     lapsing, or

            (iv) is currently seeking registration within two years of successfully
                   completing the Canadian Options Course.

6.   The Registered Options Principals Qualifying Examination [soon to be the Options
     Supervisors Course and thus add additional exemption if written the ROP.]

     An applicant shall be exempt from writing the Registered Options Principals Qualifying
     Examination if the applicant

     (a) has been approved continuously as a registered options principal since January,
            1978.

7.   The Futures Licensing Course (formerly the Canadian Futures Examination, Parts I and
     II, formerly the National Commodity Futures Examination and the Canadian Commodity
     Futures Examination)

     An applicant shall be exempt from writing the Futures Licensing Course if the applicant

     (a) has successfully completed the National Commodity Futures Examination and the
            Canadian Commodity Futures Examination, or the Canadian Futures
            Examination, Parts I and II, or the National Commodity Futures Examination and
            the Canadian Futures Examination, Part II, or the Canadian Commodity Futures
            Examination and the Canadian Futures Examination, Part I and

            (i) is currently approved as an investment adviser futures contract/futures
                    contract options,

                                            -9-
           (ii) was an approved person, currently seeking to re-enter the industry within
                  the same category of registration within three years of their registration
                  lapsing,

           (iii) is an approved person, currently seeking re-registration within the same
                    category of registration within three years of that category of registration
                    lapsing, or

           (iv) is currently seeking registration within two years of successfully
                  completing the course requirements outlined in subparagraph (a).

8.   The Canadian Commodity Supervisors Examination

     An applicant shall be exempt from writing the Canadian Commodity Supervisors
     Examination if the applicant

     (a)   has been approved continuously as a commodity supervisor since January, 1980.

9.   The Canadian Branch Managers Examination

     An applicant shall be exempt from writing the Canadian Branch Managers Qualifying
     Examination if the applicant

     (a)   has been approved continuously as a sales manager since January 1, 1994;

     (b)   has been approved continuously as a branch manager since August 1, 1987; or

     (c)   has successfully completed both

           (i) the Partners, Directors and Officers Qualifying Examination prior to
                  February 1, 1990 and

                  A.       is currently approved as a partner, director or officer,

                  B.       was an approved person, currently seeking to re-enter the industry
                           within the same category of registration within three years of their
                           registration lapsing, or

                  C.       is an approved person, currently seeking re-registration within the
                           same category of registration within three years of that category of
                           registration lapsing, and

           (ii)        the Registered Options Principals Qualifying Examination and

                  A.      is currently approved as a designated registered options principal, an
                          alternate registered options principal or a branch manager,



                                                -10-
                   B.      was an approved person, currently seeking to re-enter the industry
                           within the same category of registration within three years of their
                           registration lapsing,

                   C.      is an approved person, currently seeking re-registration within the
                           same category of registration within three years of that category of
                           registration lapsing, or

                   D.      is currently seeking registration within two years of successfully
                           completing the Registered Options Principals Qualifying Examination.

10.   The Professional Financial Planning Course

      An applicant shall be exempt from writing the Professional Financial Planning Course if
      the applicant

      (a)    was registered for a minimum of two years with a securities commission or
             recognized foreign self-regulatory organization and has not been out of the
             industry for a period of greater than three years;

      (b)    has successfully completed the Chartered Financial Analyst designation
             administered by the Association for Investment Management and Research and

             (i) is currently approved as an investment representative or an investment
                     adviser,

             (ii) was an approved person, currently seeking to re-enter the industry within
                    the same category of registration within three years of their registration
                    lapsing,

             (iii) is an approved person, currently seeking re-registration within the same
                      category of registration within three years of the registration of that
                      category lapsing, or

             (iv) is currently seeking registration within two years of successfully
                    completing the Chartered Financial Analyst designation administered by
                    the Association for Investment Management and Research; or

      (c)    has successfully completed the Canadian Investment Management program, Part I
             and

             (i)        is currently approved as an investment adviser,

             (ii) was an approved person, currently seeking to re-enter the industry within
                    the same category of registration within three years of their registration
                    lapsing,



                                               -11 -
            (iii) is an approved person, currently seeking re-registration within the same
                     category of registration within three years of that category of registration
                     lapsing, or

            (iv) is currently seeking registration within two years of successfully
                   completing the Canadian Investment Management program, Part I.

11.   The Investment Management Techniques Course

      An applicant shall be exempt from writing the Investment Management Techniques
      Course if the applicant

      (a)   was registered for a minimum of two years with a securities commission or
            recognized foreign self-regulatory organization and has not been out of the
            industry for a period of greater than three years;

      (b)   has successfully completed the Chartered Financial Analyst designation
            administered by the Association for Investment Management and Research and

            (i) is currently approved as an investment representative or an investment
                    adviser,

            (ii) was an approved person, currently seeking to re-enter the industry within
                   the same category of registration within three years of their registration
                   lapsing,

            (iii) is an approved person, currently seeking re-registration within the same
                     category of registration within three years of the registration of that
                     category lapsing, or

            (iv) is currently seeking registration within two years of successfully
                   completing the Chartered Financial Analyst designation administered by
                   the Association for Investment Management and Research; or

      (c)   has successfully completed the Canadian Investment Management program, Part I
            and

            (i)   is currently approved as an investment adviser,

            (ii) was an approved person, currently seeking to re-enter the industry within
                  the same category of registration within three years of their registration
                  lapsing,

            (iii) is an approved person, currently seeking re-registration within the same
                    category of registration within three years of that category of registration
                    lapsing, or



                                            -12-
             (iv)   is currently seeking registration within two years of successfully
                    completing the Canadian Investment Management program, Part I.

12.   The Canadian Investment Funds Course

      An applicant shall be exempt from writing the Canadian Investment Funds Course
      administered by IFIC if the applicant

      (a)   has successfully completed the Canadian Securities Course and

             (i)    is currently approved as a registered mutual fund representative,

             (ii) was an approved person, currently seeking to re-enter the industry within
                    the same category of registration within three years of their registration
                    lapsing,

             (iii) is an approved person, currently seeking re-registration within the same
                      category of registration within three years of that category of registration
                      lapsing, or

             (iv) is currently seeking registration within two years of successfully
                    completing the Canadian Securities Course.

13.   The Investment Funds in Canada Course

      An applicant shall be exempt from writing the Investment Funds in Canada Course if the
      applicant

      (a)   has successfully completed the Canadian Securities Course and

             (i)    is currently approved as a registered mutual fund representative,

             (ii) was an approved person, currently seeking to re-enter the industry within
                    the same category of registration within three years of their registration
                    lapsing,

             (iii) is an approved person, currently seeking re-registration within the same
                      category of registration within three years of that category of registration
                      lapsing, or

             (iv) is currently seeking registration within two years of successfully
                    completing the Canadian Securities Course.




                                             -13-
14.     The Principles of Mutual Funds Investment Course

       An applicant shall be exempt from writing the Principles of Mutual Funds Investment
       Course if the applicant

       (a)     has successfully completed the Canadian Securities Course and

               (i)    is currently approved as a registered mutual fund representative,

               (ii) was an approved person, currently seeking to re-enter the industry within
                      the same category of registration within three years of their registration
                      lapsing,

               (iii) is an approved person, currently seeking re-registration within the same
                        category of registration within three years of that category of registration
                        lapsing, or

               (iv) is currently seeking registration within two years of successfully
                      completing the Canadian Securities Course.

C.     Discretionary Exemptions

Exemption from Writing and/or Rewriting

Staff of the Exchange may grant an exemption from the requirement to write or rewrite any
required course or examination, in whole or in part, subject to such conditions or restrictions as
may be imposed in the exemption, if the applicant demonstrates adequate experience and/or
successful completion of industry courses or examinations that staff, in its opinion, determines is
an acceptable alternative to the required proficiency.




                                               -14-
                             Policy Statement CR11
                                  Odd Lot Trading Policy


1. Inventory of securities traded in odd lots is considered the property and the responsibility of
   the Odd Lot Member.

2. The Odd Lot Member may assign one or more of its own Full Approved Trader employee(s)
   as it's Odd Lot Trader(s).

3. Each Odd Lot Member may be assigned and maintain up to 375 Exchange-listed securities in
   their odd lot inventory.

4. When the odd lot inventory for every Odd Lot Member exceeds 375 Exchange-listed
   securities by an aggregate maximum of 375, new Members will be invited to apply to
   participate in odd lot trading of said securities.

5. If more than one Member makes application to participate in odd lot trading, the Exchange
   will select the Member by way of Lottery.

6. If no new Member applies to become an Odd Lot Member, the excess inventory will remain
   with the existing Odd Lot Member until such time that a new Member does make application
   to participate.

7. If an Odd Lot Trader requests or is requested to withdraw from the pool of Odd Lot Traders,
   the Odd Lot Member may, at its discretion, reassign its odd lot inventory to another
   Approved Trader employee of that same Odd Lot Member or give up its total Odd Lot
   Inventory to the Exchange for reassignment to a new Member. In the latter event, and
   notwithstanding the provisions of CR11.5, the Exchange will invite other Member Firms to
   apply for the Odd Lot Inventory.

8. If an Odd Lot Member wishes to give up its total Odd Lot Inventory, including but not
   restricted to the provisions in CR11.7, they must give the Exchange not less than 90 days
   notice of their intention to withdraw their services.

9. The method of allocating odd lot securities between Odd Lot Members will be determined by
   the Exchange.

10. The Odd Lot Trader for a listed security may make a sale of one board lot after the
    acquisition of an odd lot in carrying out the Odd Lot Dealer's responsibilities.




                                                -1 -
11. The Odd Lot Member must adhere to Rules C.2.08 & C.2.09 with respect to the premiums
    and discounts permitted by the Exchange.

12. A name change and/or symbol change of an issue will not be considered, for purposes of odd
    lot inventory allocation, a newly listed security.




                                              -2-
                             Policy Statement CR12
                        Continuing Education Requirements
Introduction

This policy establishes a program of continuing education for participants registered in certain
categories.

The Continuing Education Program requires certain registered persons to complete compliance
and product knowledge or professional development courses within three-year cycles, subject to
certain exemptions outlined under this policy.

Definitions

For the purposes of this policy:

"Implementation Date" means the date, as determined by the Exchange, for the commencement
of the Continuing Education Program; and

"program" means the Continuing Education Program.

A.     Overview of Program

       1.      The program operates in three-year cycles commencing on the Implementation
               Date. The starting and ending date of each cycle is the same for all participants.

       2.      The program requires participants, unless otherwise stated in this policy, to
               complete one compliance course and one product knowledge or professional
               development course in each three-year cycle.

B.     Participants in the Program

       1.      Participants Required to Fulfil Complete Program

       (a)     Those registered as Investment Advisers (IAs) must participate in the program
               throughout their career, subject to the exemptions set out in subparagraphs 3(b)
               and (c).

       (b)     Those registered as IAs and also registered/approved in other categories must
               participate in the program as IAs.

       (c)     Those approved as branch managers, sales managers, futures principals or
               designated registered options principals must participate in the program


                                                -1 -
            throughout their career, subject to the exemptions set out in subparagraphs 3(b)
            and (c).

2.   Participants Required to Fulfil Compliance Portion Only

     (a)    Those registered as Investment Representatives (IRs) must participate in the
            compliance portion of the program throughout their career.

     (b)    Those registered in all other registration categories and not also registered as IAs,
            must participate in the compliance portion of the program throughout their career.

3.   Exemptions from Program

     (a)    Those registered as non-trading partners, directors or officers shall be exempt
            from the program.

     (b)    Those registered/approved as IAs, branch managers, sales managers, futures
            principals and designated registered options principals who have been
            continuously registered for more than 15 years as of the Implementation Date,
            must participate in the compliance portion of the program throughout their career.

     (c)    Those registered/approved as IAs, branch managers, sales managers, futures
            principals and designated registered options principals who have been
            continuously registered for more than 10 but less than 15 years as of the
            Implementation Date, must participate in the program for one three-year cycle.
            After the completion of that cycle, they shall participate in the compliance portion
            of the program throughout their career.

4.   Entry of Recently Registered Investment Advisers

     (a)   Those registered as IAs within the three years prior to the Implementation Date and
           those entering the industry after the Implementation Date shall not enter the
           program during their first three years of registration. These IAs shall enter the
           program as follows:

            (i)    if the three years since registration ends in year one of a cycle, that
                   individual is placed in year one of that cycle.

            (ii)   if the three years since registration ends in year two or year three of a
                    cycle, that individual is placed in year one of the next three-year cycle of
                    the program.



                                              -2-
      (b)    Once they enter the program, these IAs must participate in the program
             throughout their entire career.

5.    Exemptions from Examination Rewrite Requirements for Voluntary Participants

      (a)    Registered individuals leaving the industry within the three years prior to the
             Implementation Date or after the Implementation Date may maintain their
             standing in the program on a voluntary basis by taking the program through
             Canadian Securities Institute (CSI) courses. Those doing so are exempt from the
             examination rewriting requirements outlined in the Exchange's Course and
             Examination Exemptions Policy.

      (b)    Graduates of the Canadian Securities Course (CSC) and the Conduct and
             Practices Handbook course (CPH) within the three years prior to the
             Implementation Date or after the Implementation Date who have not been
             registered as IAs may join the program on a voluntary basis. Those taking the
             program through CSI courses are exempt from the examination rewriting
             requirements outlined in the Exchange's Course and Examination Exemptions
             Policy.

C.    The Compliance Course

Study material includes a review of sections of the CPH, an update on new developments
and by-laws and an ethics component. The course serves as a reminder and refresher.

1.    The compliance course is a mandatory component of the program for all participants.

2.    Branch managers, sales managers and others in a supervisory position shall have an
      additional section added to their course in recognition of their additional responsibilities.

3.    Member firms have the option of having their participant employees take the CSI's
      course, developing and administering their own program, combining various CSI
      modules with their own materials or having their participant employees take a course
      developed and administered by another Member firm.

4.    The use of a compliance course developed by a Member firm is subject to the following
      requirements:

      (a)    The course must comply with the guidelines issued by the Exchange.

      (b)    Participants completing a course offered by a Member firm shall have the
             Member firm sign off on their successful completion of that course. The Member
             firm shall determine its own method for making this evaluation of knowledge
             acquisition.


                                                -3-
       (c)    Member firms must update the Exchange with the names of their participant
              employees completing their course or a course provided by another Member firm.

D.     Product Knowledge and Professional Development Courses

Participants in the program are encouraged to choose courses that enable them to stay current
within their chosen area of specialization or to expand that area.

1.     Participants may choose a CSI course, a course given by an external course provider or a
       suitable training program offered by their Member firm.

2.     The course chosen by the individual, whether a CSI course, an external course or a
       Member firm course, must be approved by the Member firm's training supervisor or
       other responsible person as being relevant to that participant's functions in the
       investment industry.

3.     The use of product knowledge and professional development courses developed by a
       Member firm is subject to the following requirements:

       (a)     The courses must comply with the guidelines issued by the Exchange.

       (b)     Participants completing courses offered by their Member firm shall have the
               Member firm sign off on their successful completion of that course. The Member
               firm determines its own method for making this evaluation of knowledge
               acquisition.

       (c)     Member firms must update the Exchange with the names of their participant
               employees completing their courses.

4.     The use of product knowledge and professional development courses developed by
       external course providers is subject to the following requirements:

       (a)     Member firms must update the Exchange with the names of their participant
               employees completing courses from an external course provider.

       (b)     A course provided by a Member firm other than a participant's employer shall be
               considered an external course.

5.     Participants fulfilling other registration requirements, such as insurance licensing
       requirements, may receive credit subject to paragraph 2 above.




                                                -4-
E.   Accumulating Credit

1.   A maximum of one approved course completed prior to the Implementation Date may be
     carried forward into the first cycle as a product knowledge and professional development
     credit.

2.   A course completed during a cycle, which is in addition to a course fulfilling that cycle's
     requirement, may be carried forward to the next cycle. A maximum of one course may
     be carried forward.

3.   Participants completing a multi-year course, such as more than one year of the Chartered
     Financial Analyst Course, during a cycle may carry forward a credit to the next cycle.
     This means that they will fulfil their product knowledge and professional development
     course requirement for that cycle and may be exempted from the next cycle's product
     knowledge and professional development course requirement.

4.   No carry forwards shall be allowed for the compliance course.

F.   Penalties

1.   If a participant does not complete the course requirements within a three-year cycle, the
      following restrictions shall come into effect:

     (a)     At the beginning of year one of the next three-year cycle, a monthly fee in the
             amount of $500, payable by the participant's Member firm employer, shall be
             imposed until the participant completes the course requirements, or for six
             months, whichever comes first.

     (b)     If the program requirements have still not been met by the end of the sixth month,
             the participant's approval shall automatically be suspended until such time as the
             participant has successfully completed the course requirements.

     (c)     If the participant has not completed the compliance portion of the program within
             the three-year cycle, they shall also be subject to strict supervision in accordance
             with the Exchange's strict supervision provisions.

G.   Extension from Completion of Course Requirements in a Three-Year Cycle

1.   A participant may be granted an extension from the requirement to complete the course
     requirements within a three-year cycle due to, but not limited to, a leave of absence or
     illness, if



                                              -5-
           (a)          a partner, director or officer, at the Member firm of the participant

                 (i)          approves the delay of completion of the course requirements,

                 (ii)        delivers a letter to the Exchange (Attention: Member Services) outlining the
                             reasons for the delay, and

                 (iii)       except where the participant is on an indefinite leave of absence, states a
                             new date for completion of the course requirements; and

     (b)         Exchange staff, in its discretion, determines that the delay is warranted.

2.         Despite paragraph 1, the granting of such an extension does not permit the participant to
           delay the commencement of the next three-year cycle.




                                                          -6-
                           Policy Statement CR13
                          Sponsorship Policy Statements

                                 Table of Contents


Introduction                     -   ............................................................................................. 2
Sponsorship Policy Statement 1   -   Requirement for a Sponsor Report ...................................... i
Sponsorship Policy Statement 2   -   Qualifications Required to Act as Sponsor ........................ iii
Sponsorship Policy Statement 3   -   Minimum Review Required for Preparation
                                     of Sponsor Report ........................................................... viii
Sponsorship Policy Statement 4 -     Disclosure Required in Sponsorship Report ..................... xiv
Sponsorship Policy Statement 5 -     Disclosure of Sponsor ..................................................... xvii




                                                    -1 -
                                Introduction

This Policy Statement CR13 is the companion Policy Statement to Rule B.2.00 and is
comprised of a series of five Sponsorship Policy Statements which prescribe
requirements for and provide guidance on the required contents of the Sponsor
Report, the minimum Review Procedures required to be conducted by a Sponsor and
the qualifications that must be met for a Member to constitute a Sponsor.

Unless otherwise defined, capitalized terms used in this Policy Statement CR13 have
the meanings set out in Policy 1.1 of the Corporate Finance Manual.

In connection with any Initial Listing, references in this Policy Statement CR13, to
"issuer" shall refer to the applicant. In connection with a Reverse Take-Over,
Qualifying Transaction or Change of Business, references in this Policy Statement
CR13 to the "issuer", shall include the listed issuer and any Target Issuer. Where a
Sponsor Report is required in connection with any other transaction, references to
issuer shall refer to the listed issuer, unless the circumstances otherwise reasonably
require.




                                   -2-
         Sponsorship Policy Statement 1

       Requirement for a Sponsor Report
1. A full Sponsor Report will be required in connection with all applications for
   New Listings, whether by way of an initial listing (concurrent with an initial
   public offering, including by a Capital Pool Company) a Reverse Take-Over, a
   Qualifying Transaction or an application for listing by an issuer previously quoted
   or listed on another market.

2. A Sponsor Report will also generally be required in connection with a Change of
   Business by a Tier 2 listed issuer. Where there is no Change of Management or
   no Change of Control in connection with the Change of Business, the scope of the
   Sponsor Report may be limited to the Review Procedures relating to the proposed
   new business or assets of the listed issuer and a determination of whether such
   business or assets meet the applicable Tier Maintenance Requirements.

3. The Exchange may request a Sponsor Report in the case of a Change of
   Management or in respect of a Change of Control where the new directors,
   management or new control persons do not have a sufficient history of
   involvement and experience with the Exchange or another recognized Canadian
   exchange. In such case, the scope of the Sponsor Report may be limited to a
   review of such new persons.

4. Except where a preliminary prospectus has been filed, when a sponsorship
   agreement has been entered into, a Sponsorship Acknowledgement Form,
   (Appendix 2A to the Corporate Finance Manual) should be filed with the
   Exchange. Generally, submission of the Sponsorship Acknowledgement Form
   will be required prior to any halt in trading of the listed issuer's securities being
   lifted where such halt resulted from the announcement of a Qualifying
   Transaction, Reverse Take-Over or, in regard to a Tier 2 Issuer, a Change of
   Business.

5. The Sponsor is required to submit a preliminary Sponsor Report, together with
   written confirmation that the majority of the Review Procedures have been
   conducted before a Qualifying Transaction, Reverse Take-Over or, in regard to a
   Tier 2 Issuer, a Change of Business will be presented for consideration to the
   Listing Committee. A Sponsor should not submit a preliminary Sponsor Report
   until it is reasonably comfortable that no material adverse issues will arise from
   completion of the balance of the Due Diligence.




                                     -i -
6. Subject to paragraphs 7 and 8, below, a final executed Sponsor Report will be
   required prior to an Exchange Bulletin being issued confirming final acceptance
   of the transaction in respect of which the Sponsor Report was required. The final
   executed Sponsor Report may be required at such earlier time as specified by the
   Exchange.

7. The final executed Sponsor Report required in connection with an initial listing
   pursuant to a prospectus will generally be required to be filed with the Exchange
   prior to filing of the final prospectus.

8. In the case of a Reverse Take-Over or Qualifying Transaction, the final executed
   Sponsor Report will generally be required to be filed with the Exchange prior to
   mailing of the information circular.

9. Due to the increased reliance upon the Sponsor in connection with a New Listing
   by a Foreign Issuer, the Exchange may require that the final executed Sponsor
   Report be submitted prior to a New Listing or a Change of Business by a Tier 2
   Issuer being considered by the Listing Committee.

10. In exceptional circumstances, the Exchange, in its discretion, may agree to waive
    the requirement of a Sponsor Report.




                                   - ii -
        Sponsorship Policy Statement 2

Qualifications Required to Act as Sponsor
1. A Sponsor must be a Member and unless specifically waived or agreed to by the
   Exchange must meet all of the minimum specifications set forth in this Policy
   Statement 2.

2. The Sponsor shall:

   a. not have previously been advised that it may no longer act as a Sponsor or if
      so previously advised, the Exchange has subsequently agreed to accept the
      Member as a Sponsor;

   b. be a registrant in good standing with each Securities Commission in which it
      is registered as an adviser, securities dealer, underwriter, portfolio manager or
      other or similar category of registrant pursuant to applicable securities law
      and has not had any securities law registration refused, cancelled, restricted or
      suspended; and

   c. be a member in good standing with each exchange or other self-regulatory
      body of which it is a member;

   d. have policies and procedures that encompass the following, to the extent
      applicable:

       1) conflicts of interest which may arise in connection with acting in multiple
          roles, including acting as an underwriter and/or Sponsor and trading or
          advising the public in regard to the securities of a listed issuer;

       2) separation of underwriting functions and/or Sponsorship functions from
          trading functions, including the establishment of safeguards for dealing
          with confidential information;

       3) the accumulation and maintenance of a complete list of connected parties
          and related parties (as defined in BCSC Rule 75(1)) or connected issuers
          and related issuers (as defined in ASC Policy 7.1 and Proposed Multi-
          Jurisdictional Instrument 33-105);

       4) restricting the Sponsor from preparing a Sponsor Report on behalf of any
          related party, connected party, related issuer or connected issuer;

       5) establishing proficiency requirements including standards for acceptable
          corporate finance staff education and experience, which are commensurate
          with the requirements and responsibilities of underwriting;


                                   - III -
       6) ensuring that proper Due Diligence, commensurate with that of an
          underwriter, is undertaken by or on behalf of the Sponsor prior to the
          execution by the Sponsor of a Sponsor Report; and

       7) procedures for periodic review of the Sponsor's policies and procedures.

3. Without limiting the generality of paragraph 2(d)(2) above, the Sponsor shall
   have established a corporate finance department to deal with underwriting
   functions and the preparation of Sponsor Reports which department is separate
   and apart from any of its trading and advising functions.

4. The Sponsor shall have policies and procedures for the purpose of:

   a. to the greatest extent possible, restricting access to Material Information (as
      defined in Corporate Finance Policy 1.1 Interpretation) from or relating to
      issuers in respect of which the Member has been engaged to act as an
      underwriter or Sponsor where the information obtained is not necessarily in
      the public domain ("Confidential Information") such that the Confidential
      Information shall only be made available to and access only provided to the
      corporate finance department personnel and the Sponsor's authorized
      directors and senior officers ("Corporate Finance Persons");

   b. ensuring that where Confidential Information is required to be or is otherwise
      provided to non-Corporate Finance Persons, those persons are advised that
      they possess Confidential Information which cannot be communicated to any
      other person;

   c. physically separating, to the greatest extent possible, the work space of
      members of the corporate finance department, from other areas of the
      Member's office and ensuring that access to the corporate finance department
      work space is restricted;

   d. securing physical and electronic Confidential Information in locked cabinets,
      computers or offices, and restricting access only to Corporate Finance
      Persons;

   e. securing at all times, Confidential Information which is not being immediately
      reviewed or utilized by the Corporate Finance Persons;

   f. ensuring that Confidential Information is not discussed in areas outside of the
      corporate finance department or within the proximity of persons other than
      Corporate Finance Persons;




                                  - iv-
   g. to the greatest extent possible, providing the corporate finance department
       with separate and dedicated telephones, messaging services, facsimile
       machines, photocopiers and confidential mail and courier delivery service to
       ensure that persons engaged in trading or advising functions do not have
       access, inadvertently or otherwise, to Confidential Information; and

   h. providing education to Member personnel with respect to their ethical
      responsibilities, including what constitutes Confidential Information, inside
      information, insider trading, tipping and the legal restrictions on transmission
      and use of Confidential Information or insider information and the legal
      consequences, criminal, quasi-criminal, civil and regulatory for breaches of
      such restrictions and in respect of insider trading and tipping.

5. When engaged as Sponsor in regard to an issuer, the Sponsor is required to assess
   and determine whether it is appropriate and advisable to monitor, restrict or
   discontinue certain activities of itself and of its employees in relation to the
   securities of such issuer, including, trading, advising and dissemination of
   research material.

6. Without limiting any other obligation or restriction under applicable Securities
   Law or Exchange Requirements, the Sponsor shall have policies and procedures
   which provide that once the Sponsor has agreed to act as Sponsor of an issuer and
   until such time as the applicable information circular, prospectus, filing statement
   or other disclosure document is properly filed and disseminated:

   a. the Corporate Finance Persons are prohibited from purchasing or selling any
      of the securities of such issuer;

   b. all partners, directors, officers, approved persons and employees of the
      Sponsor, who by virtue of their position with the Sponsor or involvement with
      the issuer have or can reasonably be expected to gain access to Confidential
      Information in regard to the issuer are prohibited from:

       1) soliciting purchase orders of the issuer's securities; or

       2) purchasing or selling the issuer's securities for accounts beneficially
             owned or controlled by them.

   c. the Sponsor is prohibited from: disseminating research reports relating to the
      issuer; buying, selling or otherwise trading the issuer's securities for its own
      account, except for permitted transactions and stabilizing bids contemplated
      by Rule F.2.09; and, further, in regard to Capital Pool Companies, the exercise
      of an agent's option and sale of securities issued to the Sponsor by the issuer
      pursuant to the exercise of a previously issued agent's option to the extent
      specifically permitted by section 6.2 of Policy 2.4; and

   d. trading in the securities of the issuer by all partners, directors, officers and

                                     -v-
       employees and approved persons shall be monitored by a designated and duly
       qualified officer of the Sponsor to assess whether trading has or might
       reasonably appear to have occurred based on access to Confidential
       Information.

7. Without limiting the generality of paragraph 2(d)(5) (and without limiting any
   other educational requirements required under applicable Securities Law or
   Exchange Requirements), the Sponsor shall employ a corporate finance officer,
   compliance officer or branch manager who will oversee and be responsible for the
   preparation and execution of the Sponsor Report and who:

   a. has successfully completed the Canadian Securities Course,

   b. has successfully completed the Partners, Directors and Senior Officers
      Qualifying Exam (CSI);

   c. is not engaged in trading on behalf of or advising public clients; and either:

       1) has at least seven continuous years of relevant experience in the securities
          industry or securities regulatory industry, two years of which must have
          been with an underwriter that is a member of a Canadian stock exchange
          or other self-regulatory body in Canada,

       2) has at least five continuous years of relevant experience with an
          underwriter that is a member of a Canadian stock exchange or other self-
          regulatory body in Canada or five continuous years of relevant experience
          with a securities regulatory body or Canadian exchange,

       3) is licensed by the Association of Investment Management and Research to
          use the designation "Chartered Financial Analyst" or "CFA" or is licensed
          to use the designation Chartered Business Valuator or "CBV", or

       4) has at least three years of relevant experience in the securities industry or
          securities regulatory industry and has other professional qualifications
          satisfactory to the Exchange.

8. The Sponsor shall employ or retain at least one individual with reasonably
   satisfactory education or experience in evaluating and assessing the technical
   aspects of businesses in the industry sector in respect of which the issuer in regard
   to whom the Sponsor Report is to be provided is, or is intended to be, engaged.

9. Subject to section 1(n) of Sponsorship Policy Statement 4, the Sponsor agrees to
   provide upon request by the Exchange, all and any part of the materials and
   information obtained or compiled in connection with the Review Procedures
   conducted.




                                    -vi -
10. The Exchange may refuse to accept a Sponsor Report from a Member where it is
   not satisfied that the Member qualifies as a Sponsor, and without limiting the
   generality of the foregoing, may refuse to accept a Sponsor Report where it
   reasonably appears that the Member has not implemented internal policies which
   are designed to ensure that Confidential Information obtained in the course of the
   preparation of the Sponsor Report is not communicated or made available to or
   used by any person involved in the trading of securities or providing investment
   advice to clients.




                                  -vii -
         Sponsorship Policy Statement 3

          Minimum Review Required for
          Preparation of Sponsor Report
General
1. The scope and extent of Due Diligence considered appropriate will vary in each
   circumstance. The Exchange will rely heavily upon the assumption that a
   Sponsor has the expertise and ability to determine what constitutes appropriate
   Due Diligence and to fulfill its responsibilities in that regard. The Due Diligence
   process should provide the Sponsor with a thorough understanding of the business
   of the listed issuer and the risks associated with the listed issuer's business. The
   understanding gained from this process puts the Sponsor in a better position to
   decide whether to sponsor the listed issuer and to sign the Sponsor Report.

Use of Experts
2. Where the Sponsor, in its professional judgment determines that particular
   experience or technical expertise is necessary to conduct the appropriate Due
   Diligence or the required Review Procedures, the Sponsor is required to ensure
   that such experience or technical expertise exists either among the Corporate
   Finance Persons or the Sponsor may rely upon an outside expert consultant, or
   specialist (an "Expert") to prepare an assessment report or technical report on
   which the Sponsor can rely. Where the Sponsor employs in-house, an individual
   with the requisite experience or technical expertise, the Sponsor may rely upon
   the services of such person. The Sponsor may also rely upon the professional
   services of any accounting firm, law firm, or search house (a "Professional") to
   assist it with the conduct of its Review Procedures.            However, it is the
   responsibility of the Sponsor to take reasonable steps to confirm that any
   employee, Expert or Professional retained or relied upon, possesses the
   appropriate business or other experience and education necessary to assess the
   business, products, services or technology or to otherwise perform the services for
   which they were retained. The Sponsor is also responsible for confirming that
   any Expert or Professional retained by the Sponsor or upon whom the Sponsor
   may rely, is not a related party, connected party, related issuer or connected issuer
   of the listed issuer, or does not otherwise have a relationship with the listed issuer
   that may lead a reasonable person to conclude that the Expert's or Professional's
   independence or objectivity could be compromised. The Sponsor must confirm
   that any Expert does not have any direct, indirect or contingent interest in any of
   the securities or assets of the listed issuer, its Insiders, or any Associates or
   Affiliates of the listed issuer.




                                    - VIII -
Review Procedures
3. As part of the Review Procedures, a Sponsor shall perform a review of the
   Insiders and Principals of the listed issuer, the listed issuer's business and the
   conformity of the listed issuer to the applicable Minimum Listing Requirements.
   In certain circumstances, the Sponsor, in its reasonable professional judgement,
   may determine that certain Review Procedures are not required as they have been
   otherwise satisfied. In such instances, the Sponsor must specifically state in the
   Sponsor Report any non-conformity with the requirements of this Sponsorship
   Policy Statement and the reasons for such non-conformity. The Exchange may
   nevertheless determine that the stated Review Procedures must be conducted.
   Unless specifically waived by the Exchange, a site visit must be conducted and
   title opinions must be prepared in respect of all Foreign Issuers. However, the
   Sponsor may determine, in its professional judgment, that the requirement for a
   site visit in respect of resource properties has been satisfied by the site visit
   conducted by the engineer or geologist providing the Geological Report.

4. Set forth below are the minimum Review Procedures which must be performed
   prior to execution of a Sponsor Report.

Insiders and Principals

5. The Sponsor must undertake a review of the past conduct of existing and
   proposed Insiders and Principals of the issuer for purposes of assessing their
   general experience and integrity. As part of the review, the Sponsor must
   determine whether the Insiders and Principals have demonstrated a history of
   regulatory compliance and corporate and financial success. Subject to section 3,
   in making these assessments the Sponsor's review shall include:

   a. inquiries with various regulatory bodies having jurisdiction over the applicant
      listed issuer and its existing and proposed Insiders and Principals and any
      issuers or reporting issuers with which the applicant's existing and proposed
      Insiders and Principals have previously been associated;

   b. inquiries through appropriate data base searches, which in the case of a non-
      Canadian resident, will require at least appropriate Lexis/Nexis searches;

   c. inquiries and discussions with references, former and present business
      associates and with other offices of the Sponsor;

   d. engagement of counsel or reputable search houses or services to perform
      checks in relevant areas of residence or other locations of business;

   e. review of Personal Information Forms; and

   f. searches for civil actions and judgements.


                                   - ix-
6. The Sponsor must also confirm to its satisfaction that the Insiders and Control
   Persons of the listed issuer understand their statutory trading and reporting
   obligations as prescribed by applicable Securities Law.

Management and Directors

7. In respect of the proposed key directors and management, a review of their
   general business acumen, their experience in the type of business carried on by
   the applicant listed issuer, their securities and industry related experience and
   responsible business conduct and practices which subject to section 3, shall
   include:

   a. confirmation of educational and professional qualifications;

   b. review of financial statements of other material public and private issuers in
      respect of which such persons are, or have been, involved either in the
      capacity of a Director or member of senior management, including an
      assessment as to the financial success of such issuers and whether the
      allocation between funds spent on general and administrative expenses
      relative to those spent on any work program and the compensation paid to
      management or parties associated or affiliated with management appears
      appropriate and in accordance with prudent business practices;

   c. an assessment of management's goals and expenditure controls to determine
      whether it is reasonable to assume that management will use Available Funds
      (as defined in Exchange Form 3A) as publicly disclosed;

   d. a review of directors' resolutions and banking documents to ensure that
      internal controls exist which require that the signatures of two authorized
      persons are required on all cheques and other instruments binding the listed
      issuer;

   e. confirmation of the amount of time to be devoted to the business of the listed
      issuer by each of such persons and an assessment of whether each of such
      persons is committing sufficient time to properly manage the business and
      corporate affairs of the listed issuer;

   f. based on the Sponsor's assessment of the past conduct and experience of the
      directors and senior officers, the Sponsor is reasonably satisfied that:

       1) such persons can reasonably be expected to prepare and publish all
          information required by applicable Securities Law and all Exchange
          Requirements, including without limitation, Corporate Finance Policies
          3.1, Directors, Officers and Corporate Governance, 3.3, Timely
          Disclosure, and 3.2 Filing Requirements and Continuous Disclosure, in a
          timely and responsible manner; and


                                   -x-
       2) such persons appreciate the nature of their responsibilities as directors or
          officers of an Exchange listed issuer.

Business of the issuer

8. The Sponsor shall conduct a review of the business of the issuer which shall
   include:

   a. an assessment of the issuer's business plan, including an assessment as to
      whether the budgets and projections are reasonable and whether the
      predictions and assumptions are consistent with the issuer's past performance
      having regard to payment terms under agreements or other arrangements with
      suppliers, costs of financing, royalty obligations, long term liabilities, working
      capital requirements and the availability of financing alternatives;

   b. investigations in respect of the consultants (e.g. engineers, geologists,
      management consultants, authors of valuations, technical assessments or
      feasibility studies and authors of non-Canadian legal or title opinions),
      including the education and credentials of such parties and whether they have
      completed such reports for the Exchange in the past;

   c. a physical inspection of the material assets, whether owned or leased,
      including property, plant, equipment and inventory used, or to be used, in
      connection with the issuer's stated business objectives, or full particulars as to
      why a physical inspection was not considered necessary;

   d. if applicable, an analysis of the issuer's production methods;

   e. if applicable, an analysis of the issuer's actual or proposed marketing plan,
      including distribution channels, pricing policies, after-sales service,
      maintenance and warranties;

   f. if applicable, an investigation into a third party's ability to supply a product,
      service or technology where the third party supplies a unique product service
      or technology to the issuer that is not readily available, or not readily
      available at reasonably comparable prices from other sources;

   g. a review of all material financial statements for at least the three preceding
      years of operations by the issuer or its relevant predecessors and, if applicable
      securities law or Exchange Requirements require financial statements for
      some additional prior period to be filed with a securities commission or the
      Exchange, a review of the financial statements for such additional reporting
      periods;




                                    -xi -
h. a review of any title opinions on the assets, property or technology considered
    necessary or advisable (and for greater certainty, in respect of assets, property
    or technology not physically situated in Canada or the U.S.A. (such title
    opinions will always be presumed by the Exchange to be necessary or
    advisable);

i. to the extent appropriate, inquiries and discussions with principal suppliers,
     customers, auditors, accountants, creditors, bankers, etc.;

j. review and analysis of the business aspects of all material contracts of the
     issuer;

k. a review of all material legal proceedings, and proceedings known to be
    contemplated, involving the issuer;

l. an analysis of the business aspects of any legislation or publicly available
    proposed legislation, such as industry or environmental regulations or controls
    on ownership or profit repatriation that, in the Sponsor's professional
    judgement, may materially affect the issuer's operations;

m. an analysis of the business aspects of any economic or political conditions
   that, in the Sponsor's professional judgement, may materially affect the
   issuer's operations;

n. investigations of the industry and target markets in which the issuer's business
    will principally operate or its management anticipates that it will principally
    operate, including geographical area, competition within that segment
    (including existing and potential principal competitors and their relative size
    and aggregate market share) and market segment;

o. if appropriate, investigation and confirmation of the existence of any
   proprietary interests, intellectual property rights and licensing arrangements
   material to the issuer's business;

p. investigation of the technical feasibility of any new product or technology
    developed, under development or proposed to be developed pursuant to the
    issuer's business plan;

q. assessment of the stage of the applicant's development and the commercial
    viability of its product or technology, including an assessment of
    obsolescence, market controls or regulation and seasonal variation; and




                                -xii -
   r. a review, analysis or investigation of any other matters specifically requested
       by the Exchange to be reviewed, including without limitation, the
       appropriateness of any valuation submitted to the Exchange in support of the
       exchange of securities or such other comment on the fairness and
       reasonableness of the exchange of securities.

Integrity of Financial and Corporate Information

9. The Sponsor shall assess the integrity of the financial and corporate information
   produced by the issuer and in doing so shall:

   a. consider the material financial statements of the issuer or its predecessor(s)
      prepared in regard to at least the preceding three years and, if applicable
      securities law or Exchange Requirements require financial statements for
      some additional prior period to be filed with a securities commission or the
      Exchange, a review of the financial statements for such additional reporting
      periods;

   b. consider the reasonableness of the "Available Funds" (as defined in Exchange
      Form 3 A) and the sufficiency of working capital; and

   c. analyze the capital structure, including its impact on the ability of the listed
      issuer to conduct future financings and an assessment of whether it provides
      for a satisfactory public distribution.

Minimum Listing Requirements and Exchange Requirements

10. The Sponsor shall consider whether the issuer at the time of listing or completion
    of the applicable transaction will meet applicable Minimum Listing
    Requirements, Tier Maintenance Requirements and other Exchange Requirements
    and in doing so the Sponsor shall make a determination as to whether:

   a. the listed issuer, upon completion of any New Listing will meet the applicable
      Minimum Listing Requirements of the Exchange as described in Exchange
      Policy 2.1 (except in regard to distribution requirements on Reverse Take-
      Overs and Qualifying Transactions of Capital Pool Companies, in regard to
      which the listed issuer need only comply with paragraph b., below);

   b. the listed issuer will meet the applicable distribution requirements described
      in Exchange Policy 2.5, Tier Maintenance Requirements; and

   c. the listed issuer and its directors and officers are in compliance with the
      applicable provisions of Exchange Policy. 3.1, Directors, Officers and
      Corporate Governance.




                                   - xiii -
        Sponsorship Policy Statement 4

Disclosure Required in Sponsorship Report
1. The Sponsor shall disclose in the Sponsor Report all material information which
    is reasonably necessary to determine whether the issuer is suitable for listing on
    the Exchange and the material Review Procedures conducted. Without limiting
    the generality of the foregoing, the Sponsor Report shall contain:

   a. a brief summary of the procedures conducted by the Member in respect of the
      Review Procedures required by Sponsorship Policy Statement 3, including a
      list of all database searches conducted in regard to each Person;

   b. identification of any Review Procedures not taken and an explanation as to
      how the Sponsor otherwise satisfied itself in respect of the Review
      Procedures;

   c. identification of any information or facts which the Sponsor is aware or has
      become aware in the course of conducting its Due Diligence which might
      reasonably impact upon the Exchange's determination of the suitability for
      listing of the issuer;

   d. confirmation that the Member has met the criteria required to qualify as a
      Sponsor;

   e. the qualifications and experience of the person(s) primarily responsible for the
      investigation and preparation of the Sponsor Report, including knowledge of
      the proposed industry and/or business of the applicant, and without limitation
      such person's;

       1) name, address and occupation;

       2) relevant educational background, including areas of principal studies;

       3) relevant employment history, including a description as to how it relates to
          the material aspects of the principal business of the listed issuer;

       4) experience in the areas of corporate planning and financial analysis;

       5) membership in any professional organization; and

       6) the period during which the review procedures were carried out;




                                  -xiv-
f. disclosure of any conflicts of interest, including:

   1) a statement to the effect that the person referred to in section 1(e) has no
      material conflicts of interest as a result of his or her relationship with the
      issuer, and the issuer's Insiders, Associates and Affiliates;

   2) a statement that the person referred to in section 1(e) does not own any
      direct, indirect or contingent interest in any of the securities or assets of
      the issuer, or of any Associates or Affiliates of the issuer or disclosure of
      any such interest, which interest must not be material;

   3) full particulars of any material past dealings between the Sponsor and any
      current or proposed Related Party of the issuer; and

   4) full particulars of any direct, indirect or contingent interest in any of the
      securities or assets of the issuer or of any Associates or Affiliates of the
      issuer beneficially owned or controlled by the Sponsor;

g. where the Sponsor, in preparing the Sponsor Report, has retained the services
   of, or otherwise relied upon the services of, a consultant or specialist, the
   Sponsor shall state, in respect of each consultant or specialist upon whom the
   Sponsor has relied, the information described in subparagraphs (1), (2), (3),
   (5) and (6) of paragraph (e);

h. where the Sponsor in preparing the Sponsor Report has retained the services
    of any Professional, the name, address, telephone number, professional
    designations and principal contact person of such Professional must also be
    disclosed;

i. a list of any significant documents examined by the Sponsor in the course of
    performing its review;

j. full particulars of material discussions between the Sponsor and the existing
     and proposed senior officers and Directors regarding their experience and
     expertise and prior involvement with other reporting issuers and public
     companies;

k. the conclusions reached by the Sponsor regarding management's ability to
    carry out their responsibilities as management and directors of a listed issuer
    and to implement the proposed business plan;

l. the conclusions reached by the Sponsor regarding the suitability of the
    applicant for listing on the Exchange including a statement as to the issuer's
    conformity to Exchange Policies 2.1, Minimum Listing Requirements and 3.1,
    Directors, Officers and Corporate Governance;

m. any other facts or information considered to be material by the Sponsor that


                                -xv-
       could reasonably be expected to significantly affect the value of the securities
       of the issuer to be listed; and

   n. an undertaking to maintain for a period of six years from the date of the
       Sponsor Report and, upon request, to provide information and materials
       pursuant to paragraph 9. of Sponsorship Policy Statement 2.

2. In regard to the initial listing of Capital Pool Companies, (See Corporate Finance
   Policy 2.4), the Sponsor shall also be required to state that after inquiry of the
   directors and management of the proposed Capital Pool Company, it is not aware
   of any Agreement in Principle as defined in Corporate Finance Policy 2.4.

3. The Sponsor Report shall be signed by two duly authorized officer(s) and/or
   director(s) of the Sponsor, one of whom shall be the corporate finance officer,
   compliance officer or branch manager referred to in Sponsorship Policy
   Statement 2.




                                  -xvi -
                   Sponsorship Policy Statement 5

                            Disclosure of Sponsor
The identity of a Sponsor may be publicly disclosed and the Exchange will generally require
public disclosure to be made upon an agreement being reached whereby the Sponsor agrees to
sponsor an issuer and provide a Sponsor Report.




                                            - XVII -
                            Policy Statement CR14
                              Calculated Opening Price

The system shall calculate the price of the opening trade(s) as follows:

  (1) The calculated opening price ("COP") shall be determined by the system continuously
      from 7:00 a.m. E.T. until the opening time (9:30 a.m. E.T.).based upon the orders entered
      into the system up to that time.

  (2) The COP shall be the price at which the most stock will trade on the opening.
  (3) If there are two or more prices at which an equal volume of stock will trade, the COP
      shall be the price that would leave the least imbalance at that price.

  (4) If there is no imbalance, or if the imbalances are equal, then the opening price shall be
      the price nearest to the previous closing price.

  (5) If the COP exceeds the price volatility parameters set by the Exchange, at 9:30 a.m. E.T.
      the system shall automatically delay the opening of the security.
  (6) If a stock does not automatically open for trading at 9:30 a.m. E.T., the trading system
      shall continue to calculate and display the COP until the security has opened for trading.
  (7) For intra-day openings, the COP shall be calculated in the same manner.




                                               -1 -
                             Policy Statement CR15
                                     Buy-In Procedures

The following outlines the procedure that the Exchange follows when executing buy-ins:

•   Buy-in Notices are to be delivered to the Toronto Stock Exchange (the "TSE") by fax to
    Trading Services ("TS") at 416-947-4280.
•   Cancellations and CFO's of buy-ins must be received by the TSE by 3:00 p.m. ET.
•   All new additions, cancellations and CFO's are processed and recorded in the central file in
    TS.
•   CXL's or CFO's will be accepted verbally from the issuing party or member until 3:00 p.m.
    ET, however, a follow-up letter must be sent promptly to the TSE.
•   A Buy-In Notice, in the prescribed form for issuance under Rule C.3.05(5) is published
    electronically on Trader Notes.
•   A Buy-In Notice, in the prescribed form for issuance under Rule C.3.05(1) and (5) is
    available from the Clearing Corporation.
•   A printout of outstanding buy-ins for securities, loans or stocks issuances is available in the
    Exchange Daily Record.

Executing Buy-Ins

•   TS must be informed if stock will be available for cash at 3:00 p.m. ET.
•   When possible, TS will call the issuing party or member prior to execution to confirm that
    the buy-in is still valid.
•   The Exchange will issue ticker notices every ½ hour beginning at 1:00 p.m. ET and
    continuing up and until 2:30 p.m. ET, stating the outstanding buy-in total on each security.
•   All buy-ins are executed at 3:00 p.m. ET for cash next day delivery pursuant to Rule C.3.05
    unless otherwise permitted by a Market Official.
•   If stock is available for cash, a Market Official will be asked to rule, using the approved
    guidelines, that the premium or discount is reasonable and the buy-in may take place.
•   The Member in default under a buy-in issued under Rule C.3.05 or the Clearing Corporation
    on behalf of said Member is given a notice prepared by TS informing the Member or the
    Clearing Corporation that the buy-in has been executed under the rules and containing the
    details of the trade.
•   These cash trades go across the Exchange ticker shortly after 3:00 p.m. ET and are identified
    on the previous trades files as cash trades.
•   Issuing Members or the Clearing Corporation will receive notification of buy-in executions
    by 3:30 p.m. ET.




                                                 -1 -
Price Guidelines:

Last Sale                          Suggested Maximum Spread from Last Sale
Under .05                                $.02
.05-.14                                  $.03
.15-.24                                  $.04
.25 - .49                                $.05
.50-4.99                                 10%
5.00-9.99                                $.50
10.00-14.99                              $.75
15.00-24.99                              $1.00
25.00-34.99                              $1.25
35.00-49.99                              $1.50
50.00-74.99                              $1.75
75.00-99.99                              $2.00
100.00 and Over                          $3.00

Note: The suggested premiums set out above are provided for guideline purposes only, and are
not meant to establish the maximum price at which a buy-in may be executed. A Market Official
maintains the discretion to execute the buy-in at such price above or below the suggested
maximum premium which, in the opinion of such an Official is required to complete the buy-in
and is consistent with a fair market for the securities sought.

				
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