Securities Law & Instruments



ASAMENDED (the "Act")






WHEREASthe Commission issued an order dated April 3, 2000 grantingand continuing the recognition of The Toronto Stock ExchangeInc. ("TSE") as a stock exchange pursuant to section 21 of theAct (the "Previous Order");

ANDWHEREAS the Commission has determined that it is notprejudicial to the public interest to issue an order that amendsand restates the Previous Order to reflect the transfer of regulationservices by the TSE to Market Regulation Services Inc.;

ITIS ORDERED, pursuant to section 144 of the Act that thePrevious Order be amended and restated as follows:



CHAPTERS. 21, AS AMENDED (the "Act")






WHEREASthe Commission granted and continued the recognition of TheToronto Stock Exchange Inc. (the "TSE") as a stock exchangeon April 3, 2000 (the "Previous Order") following the continuanceof the TSE under the Business Corporations Act (Ontario) (the"demutualization");

ANDWHEREAS the TSE intends to retain Market RegulationServices Inc. ("RS Inc.") as a regulation services provider("RSP") under National Instrument 21-101 Marketplace Operationand National Instrument 23-101 Trading Rules (the "ATS Rules");

ANDWHEREAS, RS Inc. has agreed, pursuant to an agreementbetween RS Inc. and the TSE (the "Regulation Services Agreement"),to provide certain market regulation services to the TSE as anRSP under the ATS Rules, as the TSE's agent;

ANDWHEREAS the Commission has considered the submissionsof the TSE and based upon the representations and undertakingsmade and given by the TSE;

ANDWHEREAS the Commission considers it appropriate to setout in an order the terms and conditions of the TSE's continuedrecognition as a stock exchange, which terms and conditions areset out in Schedule "A" attached;

ANDWHEREAS the TSE has agreed to the terms and conditionsset out in Schedule "A";

ANDWHEREAS the Commission has determined that recognizingand continuing to recognize the TSE is not prejudicial to thepublic interest;

TheCommission hereby amends the TSE's recognition as a stock exchangeso that the recognition pursuant to section 21 of the Act continues,subject to the terms and conditions attached as Schedule "A".

DATEDApril 3, 2000, as amended on January 29, 2002.

"HowardI. Wetston"       "Derek Brown"




a) The TSE's arrangements with respect to the appointment, removalfrom office and functions of the persons ultimately responsiblefor making or enforcing the rules of the TSE, namely, the governingbody, shall be such as to ensure a proper balance between theinterests of the different entities desiring access to the facilitiesof the TSE ("Participating Organizations"), and, in recognitionthat the protection of the public interest is a primary goalof the TSE, a reasonable number and proportion of directorsshall not be associated with Participating Organizations withinthe meaning of the TSE's by-laws in order to ensure diversityof representation on the Board. In particular, the TSE shallensure that at least fifty per cent (50%) of its directors shallconsist of individuals who are not associated with ParticipatingOrganizations within the meaning of the TSE's by-laws, and,in the event that at any time it fails to meet such requirement,it shall promptly remedy such situation.

b) Withoutlimiting the generality of the foregoing, the TSE's governancestructure shall provide for:

i)Fair and meaningful representation on its governing body, in thecontext of the nature and structure of the TSE, and any governancecommittee thereto and in the approval of rules;

ii)Appropriate representation of persons not associated with ParticipatingOrganizations on the TSE's committees and on any executive committeeor similar body within the meaning of the TSE's by-laws; and

iii)Appropriate qualifications, remuneration, conflict of interestprovisions and limitation of liability and indemnification protectionsfor directors and officers and employees of the TSE generally.


a)Any and all fees imposed by the TSE on its Participating Organizationsshall be equitably allocated. Fees shall not have the effect ofcreating barriers to access and shall be balanced with the criteriathat the TSE have sufficient revenues to satisfy its responsibilities.

b)The TSE's process for setting fees shall be fair and appropriate.


a)The requirements of the TSE shall permit all properly registereddealers that are members of a recognized self-regulatory organizationand that satisfy the TSE's criteria to access the trading facilitiesof the TSE.

b)Without limiting the generality of the foregoing, the TSE shall:

i)establish written standards for granting access to trading onits facilities;

ii)not unreasonably prohibit or limit access by a person or companyto services offered by it; and

iii)keep records of:

(A)each grant of access including, for each entity granted accessto its trading facilities, the reasons for granting such access;and

(B)each denial or limitation of access, including the reasons fordenying or limiting access to any applicant.


a) The TSE shall maintain sufficient financial resources forthe proper performance of its functions.

b) TheTSE shall file quarterly financial statements within 60 days ofeach quarter end and audited annual financial statements within90 days of each year-end.

c)The TSE shall report to the Commission when (1) its liquiditymeasure is equal to or less than zero [working capital plus borrowingcapacity: two years each of net operating income (less depreciationwhich is a non-cash item), capital investment and debt repaymentrequirements]; (2) its solvency ratio is equal to or less than1.3:1 (total assets: total liabilities); or (3) its financialleverage ratio is equal to or greater than 4.0 (total assets:total capital).

d)If the TSE fails to satisfy any of the above acceptable liquiditymeasure, solvency or financial leverage ratios for a period ofmore than three months, its President will deliver a letter advisingthe Commission of the reasons for the continued ratio deficienciesand the steps being taken to rectify the problem, and the TSEwill not, without the prior approval of the Director, make anycapital expenditures not already reflected in the financial statements,or make any loans, bonuses, dividends or other distributions ofassets to any director, officer, related company or shareholderuntil the deficiencies have been eliminated for at least six months.

e)The TSE shall provide a report annually of the monthly calculationof the measure and ratios, the appropriateness of the calculationsand whether any alternative calculations should be considered.


a)The TSE shall retain RS Inc. as an RSP to provide, as agent forthe TSE, certain regulation services which have been approvedby the Commission. The TSE shall provide to the Commission, onan annual basis, a list outlining the regulation services providedby RS Inc. and the regulation services performed by the TSE. Allamendments to those listed services are subject to the prior approvalof the Commission;

b)In providing the regulation services, as set out in the RegulationServices Agreement, RS Inc. will act as the agent of the TSE pursuantto a delegation of the TSE's authority in accordance with Section13.0.8(4) of the Toronto Stock Exchange Act and will be entitledto exercise all the authority of the TSE with respect to the administrationand enforcement of certain market integrity rules and other relatedrules, policies and by-laws.

c)TSE shall provide the Commission with an annual report with suchinformation regarding its affairs as may be requested from timeto time. The annual report shall be in such form as may be specifiedby the Commission from time to time.

d)The TSE shall continue to perform all other regulation functionsnot performed by RS Inc.

e)Management of the TSE (including the President and CEO) shallat least annually assess the performance by RS Inc. of its regulationfunctions and report thereon to the Board, together with any recommendationsfor improvements. The TSE shall provide the Commission with copiesof such reports and shall advise the Commission of any proposedactions arising therefrom.


Foreach of its systems that support order entry, order routing, execution,data feeds, trade reporting and trade comparison, capacity andintegrity requirements, the TSE shall:

a)Make reasonable current and future capacity estimates;

b)Conduct capacity stress tests of critical systems on a reasonablyfrequent basis to determine the ability of those systems to processtransactions in an accurate, timely and efficient manner;

c)Develop and implement reasonable procedures to review and keepcurrent the development and testing methodology of those systems;

d)Review the vulnerability of those systems and data centre computeroperations to internal and external threats including physicalhazards and natural disasters;

e)Establish reasonable contingency and business continuity plans;

f)On an annual basis, perform an independent review, in accordancewith established audit procedures and standards, of its currentsystems technology plans and whether there are appropriate processesin place to manage the impact of changes in technology on theexchange and parties interfacing with exchange systems. This willinclude an assessment of the TSE's controls for ensuring thateach of its systems that support order entry, order routing, execution,data fees, trade reporting and trade comparisons, capacity andintegrity require-ments is in compliance with paragraphs (a) through(e) above. Senior management will conduct a review of a reportcontaining the recommendations and conclusions of the independentreview; and

g)Promptly notify the Commission of material systems failures andchanges.


TheTSE shall, subject to the terms and conditions of this RecognitionOrder and the jurisdiction and oversight of the Commission inaccordance with Ontario securities laws, through RS Inc. and otherwise,establish such rules, regulations, policies, procedures, practicesor other similar instruments as are necessary or appropriate togovern and regulate all aspects of its business and affairs andshall in so doing specifically govern and regulate so as to:

a)Seek to ensure compliance with securities legislation;

b)Seek to prevent fraudulent and manipulative acts and practices;

c)Seek to promote just and equitable principles of trade;

d)Seek to foster cooperation and coordination with persons or companiesengaged in regulating, clearing, settling, processing informationwith respect to, and facilitating transactions in, securities;and

e)Seek to provide for appropriate discipline.


a)The TSE shall comply with the existing protocol between the TSEand the Commission, as it may be amended from time to time, concerningCommission approval of changes in its rules and regulations.

b)All by-laws, rules, regulations and policy statements of generalapplication, and amendments thereto, adopted by the TSE must befiled with the Commission.


TheTSE shall file audited annual and quarterly financial statements.


TheTSE shall ensure, through RS Inc. and otherwise, that its ParticipatingOrganizations are appropriately disciplined for violations ofsecurities legislation and the by-laws, rules, regulations, policies,procedures, practices and other similar instruments of the TSE.


TheTSE shall ensure that the requirements of the TSE relating toaccess to the facilities of the TSE, the imposition of limitationsor conditions on access and denial of access are fair and reasonable,including in respect of notice, an opportunity to be heard ormake representations, the keeping of a record, the giving of reasonsand the provisions for appeals.


TheTSE shall co-operate by the sharing of information and otherwise,with the Commission and its staff, the Canadian Investor ProtectionFund and other Canadian exchanges, recognized self-regulatoryorganizations and regulatory authorities responsible for the supervisionor regulation of securities firms and financial institutions.


TheTSE shall file any information required under the ATS Rules.