THE MANITOBA SEC URITIES COM MISSION THE COMMODITY FUTURES ACT Order No. 6608 Section 66(1) October 31, 2012 MACQUARIE CAPITAL MARKETS CANADA LTD. WHEREAS: (A) Macquarie Capital Markets Canada Ltd . (the "Applicant") has applied to The Manitoba Securities Commission (the "Commission") for an order pursuant to section 66(1) of The Commodity Futures Act (the "CFA") exempting the Applicant from the requirements of sections 44 and 45 of the CFA to deliver certain confirmations and statements of trades to customers (the "Delivery Requirements") in connection with acting as a executing broker for Give-Up Transactions. (8) The Applicant has represented to the Commission that: (1) The Applicant is a corporation amalgamated under the laws of Ontario. The head office of the Applicant is located in Toronto, Ontario. (2) The Applicant is a wholly-owned indirect subsidiary of Macquarie Group Limited ("Macquarie"). Macquarie is a bank holding company subject to the regulation and oversight of the Australian Prudential Regulatory Authority ("APRA"). (3) The Applicant is: a dealer member of the Investment Industry Regulatory Organization of Canada ("IIROC"); registered as an investment dealer in British Columbia , Alberta, Saskatchewan, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories , Nunavut and Yukon, an investment dealer and a futures commission merchant in Ontario and Manitoba, and an investment dealer and derivatives dealer in Quebec; a participating organization or member of the TSX, TSX Venture Exchange and Montreal Exchange and other electronic markets ; and a member of the Canadian Derivatives Clearing Corporation . (4) The Applicant intends to launch a new business in Canada (the "Subject Business") which will trade in, among other things , commodity futures contracts and commodity futures options (collectively, "Futures Contracts") and in options on equities or indexes (collectively, "Securities") that are listed or traded on one or more marketplaces, and in the context of such launch is seeking the relief described below. The Applicant has been informed by Macquarie that , pursuant to the rules of the APRA, the Applicant will be required to transfer the Subject Business after its launch within a prescribed period (expected to be approximately 18 months) to another existing or new wholly-owned indirect subsidiary of Macquarie (the "APRA Transfer Requirement").
The Applicant defined below) involving Futures Contracts and intends, at some point, to in I Dealer Member Rule 1,1 ("Institutional Customers"), (6) Applicant will provide trading (7) A Give-Up Transaction is a purchase or Securities by an Institutional Customer that has an existing relationship as a client with a clearing but more other executing brokers for the purpose of executing such purchases or ("Subject Transactions") on one or more markets, Under Transactions as directed by the Customer and for clearing, settlement broker will be limited to trade execution only. (8) clearing broker Requirements in respect of its Institutional Customers in Give-Up Transactions, clearing broker will maintain an administered in accordance documentation of clearing broker that Customer. For a documentation with the executing rgr"gl\"g monies, securities, margin or collateral from the Institutional Institutional Customer, however, will enter into an agreement with the executing broker and the broker that governs their "give-up" relationship (a Agreement") , (9) Although the Applicant bookkeeping, custody, respect of its own Institutional Customers, it does not provide Account an execution-only Institutional Customer. responsibility of those Institutional Customers' clearing broker, (10) The Applicant accounting system all Give-up Transactions that comprise those allocated to any its own unallocated positions to the relevant clearing brokers who either positions so allocated on If a (11) Applicant prepares a monthly or detailing all Give-Up Transactions (including Applicant for execution each Institutional Customer under a such invoice to clearing with its own records, 2 to act as executing broker in (as well, the Applicant as a clearing broker for "institutional clients" as defined pn",..,,'" only to Institutional of or to use trade executions of one or domestic or global. the broker will Subject such to the clearing custody. The provided by the will remain to Delivery account for Institutional Customer that is with terms and conditions of account by the Institutional Transaction, Institutional Customer will not nor will the executing broker The is responsible for own record-keeping, other administrative functions ("Account in for Such Account remain the however, record in its own books and records and it executes, which generally Futures Contract positions held it that are not accounts, The Applicant communicates these or reject the behalf of their based on existing Give-Up a allocation, the Applicant to obtain clarifying instructions and then instructions so amount of commission to that the Applicant conducted during the month for Agreement. The Applicant delivers who reconciles the Transactions
(1 The clearing broker will Customers and is contractually responsible for reporting, trade confirmations (13) Applicant is in compliance with all IIROC requirements relating to the maintenance of records of executed transactions and all or derivatives legislation in (14) 1) of the an agent in respect a trade in a commodity futures contract or commodity futures option, including a upon without delay, provide a written confirmation of the transaction to, among others, the customer. (15) 45( 1) the agent in respect of a liquidating trade in a commodity futures contract or commodity futures option shall, without confirmation, a prescribed form of written statement of the purchase and among others, the customer. (16) 45(2) of the or commodity futures option transaction remains outstanding an unexpired and unexercised commodity futures option, or an commodity futures contract, in a prescribed form written monthly statement the Delivery Requirements (a) duplicative confirmations Institutional Customers would capture only some, information that contained in Institutional (b) required to of Give-Up Transactions as between the Applicant and a clearing broker. (18) The Applicant further favour of any Canadian subsidiary (within 103 Registration Requirements, Exemptions and Ongoing Registrant Obligations) of Macquarie (a "Complying Affiliate") which: (a) acquires the the APRA Transfer Requirement and operates the Subject Business in a manner herein; Page 3 the primary relationship with Institutional and risk monitoring as well as sending out monthly applicable securities, jurisdiction. requires that a that acted as exercise of a commodity option, shall, that a that as delay, provide, in addition to a written trade to, provides that where a commodity futures contract been during a month, or there account, the must a the customer. Applicant when it provides in of Transactions would' and confusing because delivery of required and statements accounts to execution-only not all, of would by confirmations and the statements of account delivered to same by their clearing brokers; and an trail or reconciliation that the exemptive be granted in meaning of National Instrument 31Â Business from the Applicant in compliance with with representations the Applicant
Page 4 (b) is, at the time of operating the Subject Business, a member of IIROC, in compliance with aliliROC requirements; (c) together with the Applicant, as applicable, has filed a notice with the securities regulatory authority or regulator in each of the jurisdictions and with IIROC (i) setting out the identity of the Complying Affiliate, (ii) confirming that the transfer of the Subject Business has occurred, and (iii) confirming that the facts set out in paragraphs 5 to 12 above continue to apply to the business of the Complying Affiliate ; and (d) undertakes to comply with the conditions of the exemptive relief granted. (C) Based on the foregoing, the Commission is of the opinion that it would not be prejudicial to the public interest to grant the order requested. IT IS ORDERED: 1. THAT pursuant to section 66(1) of the CFA the Applicant and any Complying Affiliate are exempt from the requirements of sections 44(1) and 45(1)(2) of the CFA for the purposes of acting as executing broker for Give-Up Transactions provided that: (a) the Applicant, or the Complying Affiliate, as applicable, provides trade execution services in respect of Give-Up Transactions only for Institutional Customers; (b) the Applicant, or the Complying Affiliate, as applicable, enters into a Give-Up Agreement with the clearing broker and the Institutional Customer; (c) the clearing broker has agreed to provide each Institutional Customer with written trade confirmations and statements of account that include information for any Subject Transaction; and (d) in the case of the exemption granted to a Complying Affiliate, the Applicant and the Complying Affiliate have filed the notice and undertaking referred to in paragraph 18 above. 2. THAT the fee for this order is $650.00. BY ORDER OF THE COMMISSION - (egal
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