TD Waterhouse Investor Services Inc. - MRRS Decision

December 7, 2000

MRRS Decision

IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,NEWFOUNDLAND

NOVA SCOTIA AND ONTARIO

AND

IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF TD WATERHOUSE INVESTOR SERVICES (CANADA) INC.

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of the provincesof British Columbia, Alberta, Saskatchewan, Newfoundland, Nova Scotia and Ontario (collectively, the "Jurisdictions")has received an application from TD Waterhouse Investor Services (Canada) Inc. (the "Filer") regarding the operationof the separate division, TD Waterhouse Direct (the "Division") for:

1. a decision under the securities legislation of the Jurisdictions (the "Legislation") that the requirements of theLegislation requiring the Division and its registered salespersons, partners, officers and directors ("RegisteredRepresentatives") to make inquiries of each client of the Division as are appropriate, in view of the nature ofthe client's investments and of the type of transaction being effected for the client's account, to determine (a)the general investment needs and objectives of the client and (b) the suitability of a proposed purchase or saleof a security for the client (such requirements, the "Suitability Requirements") do not apply to the Division andits Registered Representatives; and

2. a decision under the Legislation, other than the securities legislation of Newfoundland and Nova Scotia, thatthe requirements of the Investment Dealers Association of Canada (the "IDA"), in particular IDA Regulation1300.1(b), 1800.5(b) and 1900.4, requiring the Division and its Registered Representatives to make inquiriesof each client of the Division as are appropriate, in view of the nature of the client's investments and of the typeof transaction being effected for the client's account, to determine (a) the general investment needs andobjectives of the client and (b) the suitability of a proposed purchase or sale of a security for the client (suchrequirements, the "IDA Suitability Requirements") do not apply to the Division and its RegisteredRepresentatives;

AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System"), theOntario Securities Commission is the principal regulator for this application;

AND WHEREAS the Filer and the Division have represented to the Decision Makers that:

1. the Filer is a corporation incorporated under the Business Corporations Act (Ontario) and is an indirectsubsidiary of The Toronto-Dominion Bank;

2. the Division is a distinct internal operating division of the Filer;

3. the Filer has 38 branch offices and/or call centres located in all of the provinces of Canada other than PrinceEdward Island;

4. the Filer is registered under the Legislation as an investment dealer or equivalent and is a member of the IDA;

5. TD Waterhouse Direct is a trade name of the Filer registered with each of the Jurisdictions;

6. the Division operates independently using its own letterhead, accounts, Registered Representatives andaccount documentation;

7. the Division and its Registered Representatives do not and will not, except as provided in 14 below, provideadvice or recommendations regarding the purchase or sale of any security and the Filer and the Division haveadopted policies and procedures to ensure the Division and the Division's Registered Representatives do notand will not, with such exception, provide advice or recommendations regarding the purchase or sale of anysecurity;

8. when the Division provides trade execution services to clients it would, in the absence of this Decision, berequired to comply with the Suitability Requirements and IDA Suitability Requirements;

9. clients who request the Division or its Registered Representatives to provide advice or recommendations oradvice as to suitability will be referred to another division of the Filer or another dealer;

10. the Division does not and will not compensate its Registered Representatives on the basis of transactionalvalues;

11. each client of the Filer will be advised of the Decision of the Decision Makers and requested to acknowledgethat:

(a) no advice or recommendation will be provided by the Division or its Registered Representativesregarding the purchase or sale of any security, and

(b) the Division and its Registered Representatives will no longer determine the general investment needsand objectives of the client or the suitability of a proposed purchase or sale of a security for the client;(both (a) and (b) shall constitute the "Client Acknowledgement");

12. the Client Acknowledgement will provide the client with sufficient detail and will explain to each client thesignificance of not receiving either investment advice or a recommendation from the Filer, including thesignificance of the Filer not determining the general investment needs and objectives of the client;

13. each client of the Filer will be advised that he or she has the option of transferring his or her account oraccounts to another division of the Filer or another dealer at no cost to the client if the client does not wish toprovide a Client Acknowledgement (the "Account Transfer Option");

14. the Division and its Registered Representatives will continue to comply with the Suitability Requirements andIDA Suitability Requirements for client accounts for which no Client Acknowledgement is received until June30, 2001;

15. after June 29, 2001, the Division will not permit a transaction in an account for which a Client Acknowledgementhas not been received unless the transaction is a sale for cash or a transfer of assets to another account;

16. all prospective clients of the Division will be advised and required to acknowledge that:

(a) no advice or recommendations will be provided by the Division or its Registered Representativesregarding the purchase or sale of any security, and

(b) the Division and its Registered Representatives will not determine the general investment needs andobjectives of the client or the suitability of a proposed purchase or sale of a security for the client,(both (a) and (b) shall constitute the "Prospective Client Acknowledgement"),

prior to the Division opening an account for such prospective client;

17. the Prospective Client Acknowledgement will provide the client with sufficient detail and will explain to eachclient the significance of not receiving either investment advice or a recommendation from the Filer, includingthe significance of the Filer not determining the general investment needs and objectives of the client, or thesuitability of a proposed purchase or sale of a security for the client;

18. the Filer and the Division have adopted policies and procedures to ensure:

(a) that evidence of all Client Acknowledgements, Prospective Client Acknowledgements and AccountTransfer Options is established and retained pursuant to the record keeping requirements of theLegislation and the IDA,

(b) all client accounts of the Division are appropriately designated as being a client account to which aClient Acknowledgement or Prospective Client Acknowledgement has been received or being a clientaccount to which a Client Acknowledgement has not been received, and

(c) for any client of the Division who does not provide a Client Acknowledgement and chooses to exercisethe client's Account Transfer Option, the Division will transfer the client's account in an expeditiousmanner and at no cost to the client; and

19. the Filer has adopted policies and procedures to ensure that:

(a) the Division will operate separately from any other division of the Filer,

(b) Registered Representatives of the Division will be clearly employed by the Division and will not handlethe business or clients of any other division of the Filer, and

AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that providesthe Decision Maker with the jurisdiction to make the Decision has been met;

THE DECISION of the Decision Makers under the Legislation is that the Suitability Requirements containedin the Legislation shall not apply to the Division and its Registered Representatives so long as:

1. except as permitted by 6 below, the Division and its Registered Representatives do not provide any advice orrecommendations regarding the purchase or sale of any security;

2. clients who request the Division or its Registered Representatives to provide advice or recommendations oradvice as to suitability are referred to another division of the Filer or another dealer;

3. the Division operates independently and operates using its own letterhead, accounts, RegisteredRepresentatives and account documentation;

4. the Division does not compensate its Registered Representatives on the basis of transactional values;

5. each client of the Filer is advised of the Decision of the Decision Makers and requested to make a ClientAcknowledgement or transfer his or her account to another division of the Filer or another dealer if the clientdoes not wish to make a Client Acknowledgement;

6. the Division and its Registered Representatives continue to comply, until June 30, 2001, with their SuitabilityRequirements and IDA Suitability Requirements for client accounts for which no Client Acknowledgement isreceived;

7. commencing June 30, 2001, the Division will not permit transactions in an account for which a ClientAcknowledgement has not been received unless the transaction is a sale for cash or a transfer of assets toanother account;

8. each prospective client of the Division is advised of the Decision of the Decision Makers and required to makea Prospective Client Acknowledgement prior to the Division or its Registered Representation servicing suchprospective client;

9. evidence of all Client Acknowledgements, Prospective Client Acknowledgements and Account Transfer Optionsis established and retained pursuant to the record keeping requirements of the Legislation and the IDA;

10. for any client who elects to exercise the client's Account Transfer Option, the Filer transfers such account oraccounts to another division of the Filer or another dealer in an expeditious manner and at no cost to the client;

11. the Division accurately identifies and distinguishes client accounts for which a Client Acknowledgement orProspective Client Acknowledgement has been provided and client accounts for which no ClientAcknowledgement has been provided;

12. the Filer has in force policies and procedures to ensure that:

(a) the Division continues to operate separately from any other division of the Filer,

(b) Registered Representatives of the Division are clearly employed by the Division and do not handlethe business or clients of any other division of the Filer, and

13. if an IDA rule addressing the IDA Suitability Requirements comes into effect, the Decision with respect to theSuitability Requirements will terminate one year following the date such rule comes into force, unless theDecision Maker determines otherwise.

December 7, 2000

"William R. Gazzard"

THE DECISION of the Decisions Makers, other than Newfoundland and Nova Scotia, is that the IDA SuitabilityRequirements do not apply to the Division and its Registered Representatives so long as: