Toronto Dominion Bank et al. - s. 5.1 of OSC Rule 48-501 Trading During Distributions, Formal Bids and Share Exchange Transactions

Headnote

Application for a decision, pursuant to section 5.1 of OSC Rule 48-501, exempting the applicants from trading restrictions imposed by sections 2.1(a) and 2.2 of OSC Rule 48-501. Decision granted.

Rules Cited

Ontario Securities Commission Rule 48-501 - Trading During Distributions, Formal Bids and Share Exchange Transactions.

IN THE MATTER OF

THE SECURITIES ACT,

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

(the Act)

AND

ONTARIO SECURITIES COMMISSION RULE 48-501

TRADING DURING DISTRIBUTIONS, FORMAL

BIDS AND SHARE EXCHANGE TRANSACTIONS

(the Rule)

AND

IN THE MATTER OF

THE TORONTO-DOMINION BANK

THE CANADA TRUST COMPANY

TD ASSET MANAGEMENT INC.

TD WATERHOUSE CANADA INC. ,

TD WATERHOUSE PRIVATE

INVESTMENT COUNSEL INC. AND

TD SECURITIES INC.

DECISION

(Section 5.1 of the Rule)

UPON the Director (as defined in the Act) having received an application (the Application) from The Toronto-Dominion Bank (TD Bank), The Canada Trust Company (TCTC), TD Asset Management Inc. (TDAM), TD Waterhouse Canada Inc. (TDWCI), TD Waterhouse Private Investment Counsel Inc. (TDWPIC) and TD Securities Inc. (TDSI) for a decision (or its equivalent) pursuant to section 5.1 of the Rule exempting certain insiders of TD Bank and TCTC, TDAM, TDWCI and TDWPIC (the Asset Managers), from trading restrictions imposed upon issuer-restricted persons by section 2.2 of the Rule, and exempting TDSI from certain trading restrictions imposed upon dealer-restricted persons by section 2.1(a) of the Rule;

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

AND UPON TD Bank, each of the Asset Managers and TDSI having represented to the Director that:

1. TD Bank is a Schedule I bank under the Bank Act (Canada).

2. Certain insiders of TD Bank (Exempt Insiders) are exempt from insider reporting requirements pursuant to sections 2.1, 2.2, 2.3 and 3.2 of National Instrument 55-101 Insider Reporting Exemptions (NI 55-101).

3. TCTC is a wholly-owned subsidiary of TD Bank. Its principal business is acting as a trustee for personal and corporate clients. It is regulated by the Office of the Superintendent of Financial Institutions Canada.

4. TDAM is a wholly-owned subsidiary of TD Bank that carries on the business of a portfolio manager throughout Canada. It is registered as an adviser in the categories of investment counsel and portfolio manager or their equivalent under the securities legislation of all provinces and territories of Canada, as a limited market dealer under the Act and the Securities Act (Newfoundland and Labrador), and as a commodity trading manager under the Commodity Futures Act (Ontario).

5. TDWCI is a wholly-owned subsidiary of TD Bank. It is registered as an investment dealer or its equivalent in all provinces and territories of Canada, and is a member of the Investment Dealers Association of Canada (IDA) and it is an approved participant of the Montreal Exchange (ME).

6. TDWPIC is registered as an adviser in the categories of investment counsel and portfolio manager or their equivalent under the securities legislation of all provinces and territories of Canada and as a limited market dealer under the Act and the Securities Act (Newfoundland and Labrador).

7. Each of the Asset Managers manages accounts (the Managed Accounts) for their clients on a discretionary basis.

8. TDAM is the manager and/or portfolio adviser of each of the index, and enchanced index, mutual funds that are listed on Schedule A (the Index Funds).

9. TD Bank is the sponsor and administrator of the Employee Future Builder (EFB) and the Employee Savings Plan (ESP), two voluntary savings programs that are available to all employees of TD Bank and its affiliates that are resident in Canada including, without limitation, insiders of TD Bank that are not Exempt Insiders (Participating Insiders).

10. TDSI is a wholly-owned subsidiary of TD Bank that conducts an institutional brokerage business throughout Canada. It is registered as a dealer in the category of investment dealer or its equivalent under the securities legislation of all provinces and territories of Canada, a member of the IDA and the TSX Venture Exchange, a participating organization of The Toronto Stock Exchange and an approved participant of the ME.

11. TD Bank and Commerce Bancorp, Inc. (Commerce Bancorp) have entered into an Agreement and Plan of Merger (the Merger Agreement) pursuant to which Commerce Bancorp will be acquired by TD Bank. Pursuant to the Merger Agreement, a newly-formed wholly-owned subsidiary of TD Bank will merge with and into Commerce Bancorp with Commerce Bancorp surviving the merger.

12. In connection with TD Bank's acquisition of Commerce Bancorp (the Acquisition), Commerce Bancorp's common shareholders will have the right to receive for each common share of Commerce Bancorp a combination of 0.4142 common shares of TD Bank (Shares) and U.S. $10.50 in cash.

13. The Acquisition is subject to the approval of Commerce Bancorp's shareholders.

14. TDSI has been appointed by TD Bank as TD Bank's advisor in respect of obtaining security holder approval for the acquisition and its compensation for such services is dependant upon the outcome of the acquisition.

15. The Shares that are to be delivered to the shareholders of Commerce Bancorp pursuant to the Merger Agreement are being registered under the Securities Act of 1933 pursuant to a registration statement on Form F-4 that has been filed with the U.S. Securities and Exchange Commission. Commerce Bancorp proposes to mail a proxy statement/prospectus (the Proxy Statement) to its shareholders as soon as practicable following the declaration of the Form F-4s effectiveness. The meeting of Commerce Bancorp's shareholders that is being held to consider the Acquisition will be convened approximately 20 business days following the date of the mailing.

16. TD Bank currently anticipates issuing approximately 80.2 million Shares (the "Merger Distribution") as partial consideration for the shares of Commerce Bancorp that it will acquire pursuant to the Acquisition.

17. As a result of the Merger Distribution, each of the Exempt Insiders, each Participating Insider, the Asset Managers and TDSI is an issuer-restricted person, and TDSI is also a dealer-restricted person, for purposes of the Rule.

18. As an issuer-restricted person, each of the Exempt Insiders, the Participating Insiders and the Asset Managers is subject to trading restrictions (the Trading Restrictions) that prohibit it from purchasing Shares for either its own account or for any account over which it exercises control or direction during the issuer-restricted period applicable to the Merger Distribution (the Restricted Period).

19. The Restricted Period will begin on the date of dissemination of the Proxy Statement and end on the date on which the Proposed Acquisition is approved by the shareholders of Commerce Bancorp or the Proposed Acquisition is terminated.

20. The Shares meet the requirements in the Rule to be considered a "highly-liquid security".

21. As a dealer-restricted person, TDSI is exempt from the Trading Restrictions because the Shares are highly-liquid securities.

22. As a dealer-restricted person, TDSI is prohibited from purchasing Shares for an account which TDSI knows, or reasonably ought to know, is an account of an issuer-restricted person.

23. The Exempt Insiders comprise senior officers of TD Bank and its subsidiaries other than executive officers of TD Bank, directors of TD Bank subsidiaries, and directors and senior officers of issuers that are insiders of TD Bank and the subsidiaries of such issuers that do not in the ordinary course of business receive, or have access to, undisclosed material information concerning TD Bank or its securities. Accordingly, although the Exempt Insiders are therefore removed from the orbit of the executive officers of TD Bank who may have access to undisclosed material information in relation to the Proposed Acquisition, they will be unable to purchase Shares during the Restricted Period for either their own accounts or accounts over which they exercise control or direction that have beneficiaries that would not be prohibited from purchasing Shares for their own accounts in the absence of the exemption sought on behalf of TD Bank and the Exempt Insiders pursuant to the Application even though the Shares are highly-liquid securities for purposes of the Rule. Any benefit associated with having to monitor the trading activities of the Exempt Insiders throughout the Restricted Period is therefore outweighed by the costs of doing so.

24. In the absence of an exemption from the Trading Restrictions that has been sought on behalf of the Asset Managers pursuant to the Application, each Asset Manager would be unable to purchase Shares during the Restricted Period on behalf of Managed Accounts having holders or beneficiaries at arm's length to TD Bank and its affiliates who have provided the Asset Manager with an unsolicited express written direction to purchase Shares on behalf of the Managed Accounts (the Directed Accounts).

25. In the absence of the exemption sought by the Asset Managers pursuant to the Application, the Asset Managers would be unable to purchase Shares during the Restricted Period on behalf of Managed Accounts having portfolios that are derived from a quantitative investment model that is embedded in proprietary computer software that has been developed by TDAM (Proprietary Model Accounts).

26. As a result of the Trading Restrictions, TDAM will be unable to purchase Shares on behalf of the Index Funds throughout the Restricted Period.

27. The Index Funds that are index mutual funds seek to replicate the performance of a particular index by purchasing each of the securities that comprise the index in close tolerance to the weighting that has been assigned to each security within the index.

28. The Index Funds that are enhanced index mutual funds are similar to the Index Funds that are index mutual funds because they also purchase each of the securities that comprise a particular index. Unlike index mutual funds, however, the Index Funds that are enhanced index mutual funds seek to outperform the underlying index primarily as the result of adjustments that are made to the weightings that have been assigned to the securities that comprise the index.

29. TD Bank is a component of the underlying index for each of the Index Funds with the Shares currently representing no more than 3.7% of any of the indexes underlying the Index Funds. TDAM has therefore obtained: (i) exemptive relief from the Canadian securities regulatory authorities to permit secondary market purchases of Shares by mutual funds managed by TDAM that are not reporting issuers, and (ii) standing instructions from the Independent Review Committee for mutual funds managed by TDAM that are reporting issuers to permit such mutual funds to purchase Shares (the Conflicts Exemptions). It is a condition of the Conflicts Exemptions that purchases of Shares by TDAM on behalf of an Index Fund must be made so that the Index Fund can hold Shares in substantially the weighting that has been assigned to the Shares within the underlying index whether the Index Fund is an index mutual fund or an enhanced index mutual fund.

30. In the absence of the exemption sought by TDAM pursuant to the Application, TDAM would be precluded from discharging its fiduciary obligation to the Index Funds by continuing to manage the Index Funds in accordance with their investment objectives throughout the Restricted Period even though the Shares are highly-liquid securities and TDAM's ability to purchase Shares on behalf of the Index Funds is constrained by the Conflicts Exemptions in the manner described above.

31. As the administrator of the EFB and the EFP (collectively, the Employee Plans), TD Bank pays all administration and investment management fees associated with the execution of the investment options that are selected by Employee Plan participants. TD Bank makes all Share purchases on behalf of the Employee Plans and their participants through TDSI.

32. Each of the Employee Plans is an automatic securities purchase plan for purposes of Part 5 of all NI 55-101.

33. Although TDSI will be able to purchase Shares for its own account or for accounts over which it exercises control or direction throughout the Restricted Period in reliance upon the exemption for highly -- liquid securities that is available pursuant to section 3.1(1)(b) of the Rule, it will be unable to purchase Shares on behalf of the Exempt Insiders when they are purchasing Shares for their own accounts and it will be unable to purchase Share on behalf of TD Bank when it is purchasing Shares on behalf of a Participating Insider in the absence of an exemption from section 2.1(a) of the Rule.

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

IT IS THE DECISION of the Director pursuant to section 5.1 of the Rule that for purposes of the Acquisition, the following are exempt from section 2.2 of the Rule:

(a) purchases of Shares by an Exempt Insider for either his or her own account or an account over which the Exempt Insider exercises control or direction;

(b) purchases of Shares by an Asset Manager on behalf of a Directed Account;

(c) purchases of Shares by an Asset Manager on behalf of a Proprietary Model Account;

(d) purchases of Shares by TDAM on behalf of an Index Fund; and

(e) purchases of Shares by TD Bank on behalf of Participating Insiders.

IT IS ALSO THE DECISION of the Director pursuant to section 5.1 of the Rule that for the purposes of the Acquisition, TDSI is exempt from section 2.1(a) of the Rule in respect of any purchases of Shares on behalf of an Exempt Insider who is purchasing the Shares for his or her own account and on behalf of TD Bank when it is purchasing Shares on behalf of a Participating Insider.

December 31, 2007

SCHEDULE A

TD Index Funds