JovInvestment Management Inc. and ProShare Advisors LLC -- ss. 78(1), 80 of the CFA

Section 80 of the Commodity Futures Act (Ontario) -- Relief from the adviser registration requirements of subsection 22(1)(b) of the CFA granted to sub-adviser not ordinarily resident in Ontario in respect of advice regarding trades in commodity futures contracts and commodity futures options, subject to certain terms and conditions. Relief mirrors exemption available in section 7.3 of OSC Rule 35-502 -- Non-Resident Advisers (Rule 35-502) made under the Securities Act (Ontario).

Statutes Cited

Commodity Futures Act, R.S.O. 1990, c. C.20, as am., ss. 22(1)(b), 78, 80.

Securities Act, R.S.O. 1990, c. S.5, as am. -- Rule 35-502 -- Non Resident Advisers.

IN THE MATTER OF

THE COMMODITY FUTURES ACT,

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

(the CFA)

AND

IN THE MATTER OF

JOVINVESTMENT MANAGEMENT INC.

AND

PROSHARE ADVISORS LLC

ORDER

(Section 78(1) and Section 80 of the CFA)

UPON the application (the Application) of JovInvestment Management Inc. (the Principal Adviser) and ProShare Advisors LLC (the Sub-Adviser) to the Ontario Securities Commission (the Commission) for an order:

(a) pursuant to section 78(1) of the CFA, revoking the exemption order granted by the Commission to the Sub-Adviser on December 15, 2006; and

(b) pursuant to section 80 of the CFA, that the Sub-Adviser be exempt, for a period of five years, from the adviser registration requirement in paragraph 22(1)(b) of the CFA when acting as an adviser for the Principal Adviser in respect of its Clients(as defined below) regarding commodity futures contracts and commodity futures options traded on commodity futures exchanges (collectively, the Commodity Instruments) and cleared through clearing corporations.

AND UPON considering the Application and the recommendations of staff of the Commission;

AND UPON the Sub-Adviser and the Principal Adviser having represented to the Commission that:

The Parties

1. The Principal Adviser is a corporation incorporated under the laws of Ontario and its principal business office is located in Toronto, Ontario.

2. The Principal Adviser is currently registered as:

(a) an adviser in the category of portfolio manager under the Securities Act (Ontario) (the Act); and

(b) as a commodity trading counsel and as a commodity trading manager under the CFA.

3. The Sub-Adviser is a limited liability company organized under the laws of the State of Maryland, United States. The head office of the Sub-Adviser is located in Bethesda, Maryland.

4. The Sub-Adviser is registered as an investment adviser in the United States with the U.S. Securities and Exchange Commission.

The Clients

5. The Principal Adviser provides portfolio management services to its clients in Ontario including mutual funds and other investment vehicles (individually each Client, collectively, the Clients).

6. The Principal Adviser, pursuant to a written agreement with each Client:

(a) acts as an adviser in respect of trading securities and Commodity Instruments; and

(b) exercises discretionary authority in respect of the investment portfolio of each Client for the purchase and sale of securities and Commodity Instruments.

7. In connection with the Principal Adviser acting as an adviser to each Client in respect of the purchase or sale of Commodity Instruments, the Principal Adviser may, from time to time, pursuant to a written agreement made between the Principal Adviser and the Sub-Adviser, retain the Sub-Adviser to act as an adviser to it (the Proposed Advisory Services) by exercising discretionary authority on behalf of the Principal Adviser, in respect of the investment portfolio of each Client, including discretionary authority to buy or sell Commodity Instruments for the Client, provided that:

(a) in each case, the Commodity Instruments must be cleared through an acceptable clearing corporation; and

(b) such investments are consistent with the investment objectives and strategies of each Client.

8. Paragraph 22(1)(b) of the CFA prohibits a person or company from acting as an adviser unless the person or company is registered as an adviser under the CFA, or is registered as a partner or an officer of a registered adviser and is acting on behalf of a registered adviser. Under the CFA "adviser" means a person or company engaging in or holding himself, herself or itself out as engaging in the business of advising others as to trading in "contracts", and "contracts" means commodity futures contracts and commodity futures options.

9. By providing the Proposed Advisory Services, the Sub-Adviser will be acting as an adviser with respect to Commodity Instruments, and in the absence of being granted the requested relief, would be required to register as an adviser under the CFA.

10. There is presently no rule or other regulation under the CFA that provides an exemption from the adviser registration requirement in paragraph 22(1)(b) of the CFA for a person or company acting as an adviser in respect of Commodity Instruments that is similar to the exemption from the adviser registration requirement of paragraph 25(1)(c) of the Act for acting as an adviser (as defined in the Act) in respect of securities that is provided under section 7.3 of OSC Rule 35-502 Non Resident Advisers (OSC Rule 35-502).

11. The relationship among the Principal Adviser, the Sub-Adviser and the Clients will satisfy the requirements of section 7.3 of Rule 35-502.

12. As would be required under section 7.3 of OSC Rule 35-502 :

(a) the duties and obligations of the Sub-Adviser will be set out in a written agreement with the Principal Adviser;

(b) The Principal Adviser will contractually agree with each Client to be responsible for any loss that arises out of the failure of the Sub-Adviser:

(i) to exercise the powers and discharge the duties of its office honestly, in good faith and in the best interests of the Principal Adviser and the Clients; or

(ii) to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances (together with (i), the Assumed Obligations); and

(c) the Principal Adviser cannot be relieved by the Clients from its responsibility for any loss that arises out of the failure of the Sub-Adviser to meet the Assumed Obligations.

13. The Sub-Adviser is not a resident of any province or territory of Canada.

14. The Sub-Adviser is appropriately registered or licensed, or is entitled to rely on appropriate exemptions from such registrations or licences, to provide advice to the Clients pursuant to the applicable legislation of the Sub-Adviser's principal jurisdictions.

15. The Sub-Adviser will only provide the Proposed Advisory Services so long as the Principal Adviser is, and remains registered under the CFA as a commodity trading counsel and as a commodity trading manager under the CFA.

16. Prior to purchasing any Commodity Instruments for Clients that reside in Ontario, each Client will receive written disclosure that includes:

(a) a statement that the Principal Adviser is responsible for any loss that arises out of the failure of the Sub-Adviser to meet the Assumed Obligations; and

(b) a statement that there may be difficulty in enforcing any legal rights against the Sub-Adviser (or the individual representatives of the Sub-Adviser) advising the relevant Client, because such entity is resident outside of Canada and all or substantially all of its assets are situated outside of Canada.

17. Pursuant to an order of the Commission dated December 15, 2006, reported at Re ProShare Advisors LLC (2006), 29 OSCB 10002 (the Previous Order), the Commission granted the Sub-Adviser an exemption from the adviser registration requirement in paragraph 22(1)(b) of the CFA in respect of advice regarding trades in Commodity Instruments provided on a sub-advisory basis to the Principal Adviser (formerly known, as Jove Investment Management Inc.), subject to certain terms and conditions. The Previous Order is scheduled to expire on December 15, 2009.

AND UPON the Commission being satisfied that it would not be prejudicial to the public interest for the Commission to grant the exemption requested on the basis of the terms and conditions proposed;

IT IS ORDERED, pursuant to section 78(1) of the CFA, that the Previous Order is revoked; and

IT IS FURTHER ORDERED, pursuant to section 80 of the CFA that the Sub-Adviser is exempted from the adviser registration requirement of paragraph 22(1)(b) of the CFA, in respect of the Proposed Advisory Services provided to the Principal Adviser for a period of five years, provided that at the relevant time that such activities are engaged in:

(a) the Principal Adviser is registered under the CFA as a commodity trading counsel and a commodity trading manager;

(b) the Sub-Adviser is appropriately registered or licensed, or is entitled to rely on appropriate exemptions from such registrations or licences, to provide advice to the Principal Adviser relating to Commodity Instruments pursuant to the applicable legislation of its principal jurisdiction;

(c) the duties and obligations of the Sub-Adviser are set out in a written agreement with the Principal Adviser;

(d) the Principal Adviser has contractually agreed with each Client to be responsible for any loss that arises out of any failure of the Sub-Adviser to meet the Assumed Obligations;

(e) the Principal Adviser cannot be relieved by the Clients from its responsibility for any loss that arises out of the failure of the Sub Adviser to meet the Assumed Obligations; and

(f) prior to purchasing any Commodity Instruments for Clients in Ontario, each Client will receive written disclosure that includes:

(i) a statement that the Principal Adviser is responsible for any loss that arises out of the failure of the Sub-Adviser to meet the Assumed Obligations; and

(ii) a statement that there may be difficulty in enforcing any legal rights against the Sub-Adviser (or the individual representatives of the Sub-Adviser) advising the relevant Client, because such entity is resident outside of Canada and all or substantially all of its assets are situated outside of Canada.

December 11, 2009