Canadian Depository for Securities Limited – ss. 21.2(1) and s. 144 fo the Act and Part VI of the OBCA

IN THE MATTER OF
THE SECURITIES ACT
R.S.O. 1990, CHAPTER S.5, AS AMENDED (the "Act")

AND

IN THE MATTER OF
THE BUSINESS CORPORATIONS ACT
R.S.O. 1990, CHAPTER B.16, AS AMENDED (the "OBCA")

AND

IN THE MATTER OF
THE CANADIAN DEPOSITORY FOR SECURITIES LIMITED

RECOGNITION AND DESIGNATION ORDER
(Subsection 21.2(1) and Section 144 of the Act and Part VI of the OBCA)

WHEREAS the Ontario Securities Commission (the "Commission") issued an order dated February 25, 1997, which became effective on March 1, 1997, recognizing The Canadian Depository for Securities Limited ("CDS") as a clearing agency pursuant to subsection 21.2(1) of the Act and designating CDS as a recognized clearing agency pursuant to Part VI of the OBCA (the "1997 Recognition and Designation Order");

AND WHEREAS CDS has applied for an order pursuant to section 144 of the Act to vary the 1997 Recognition and Designation Order;

AND WHEREAS the Commission has received certain representations and undertakings from CDS in connection with its application to vary the 1997 Recognition and Designation Order;

AND WHEREAS the Commission considers it appropriate to set out in the order terms and conditions of CDS' recognition as a clearing agency under the Act which terms and conditions are set out in Schedule "A" attached;

AND WHEREAS CDS has agreed to the terms and conditions as set out in Schedule "A";

AND WHEREAS the terms and conditions set out in Schedule "A" may be varied or waived by the Commission;

AND UPON the Commission being of the opinion that it is not prejudicial to the public interest to vary the 1997 Recognition and Designation Order;

AND UPON the Commission being satisfied that it is in the public interest to continue to recognize CDS as a clearing agency pursuant to subsection 21.2(1) of the Act;

AND UPON the Commission wishing to continue to designate CDS as a recognized clearing agency for the purposes of Part VI of the OBCA;

IT IS ORDERED pursuant to section 144 of the Act that the 1997 Recognition and Designation Order be varied and restated in the form of this order;

THE COMMISSION HEREBY RECOGNIZES CDS as a clearing agency pursuant to subsection 21.2(1) of the Act, subject to the terms and conditions set out in Schedule "A";

AND THE COMMISSION HEREBY DESIGNATES CDS as a recognized clearing agency for the purposes of Part VI of the OBCA.

DATED February 25, 1997, as varied and restated on July 12, 2005.

"Paul M. Moore"

"Suresh Thakrar"

SCHEDULE "A"

TERMS AND CONDITIONS

GOVERNANCE

1. CDS' governance arrangements shall be designed to fulfill public interest requirements and to promote the objectives of its shareholders and the users ("participants") of its depository, clearing and settlement services (collectively, "settlement services").

2. Without limiting the generality of the foregoing, CDS' governance structure shall provide for:

(a) fair and meaningful representation on its board of directors and any committee of the board of directors;

(b) appropriate representation of persons independent of the shareholders and participants on the board of directors and any committees of the board of directors, and, for such purpose, a person is "independent" if the person is not:

(i) an associate, partner, director, officer or employee of a shareholder of CDS,

(ii) an associate, director, officer or employee of a participant of CDS or its affiliates or an associate of such director, officer or employee, or

(iii) an officer or employee of CDS or its affiliates or an associate of such officer or employee; and

(c) appropriate qualifications, remuneration, conflict of interest guidelines and limitation of liability and indemnification protections for directors, officers and employees of CDS.

3. CDS shall complete the current review of its governance structure by six months from the date of this order and shall submit for the Commission's consideration a report containing recommendations to amend the governance structure. Specifically the report shall:

(a) provide recommendations on alternative voting structures to ensure that the board is, in all cases, able to discharge its responsibilities;

(b) provide recommendations on how to achieve fair and effective representation of all stakeholders on the board of directors, board committees or other committees of CDS; and

(c) review the nomination process for directors and independent directors to include an assessment of the needs of the board and board committees.

4. CDS shall not, without the Commission's prior written approval, make significant changes to its governance structure or constating documents.

5. CDS shall not, without the Commission's prior written approval, enter into any contract, agreement or arrangement that may limit its ability to comply with the terms and conditions contained in this Schedule "A".

FITNESS

6. CDS shall take reasonable steps to ensure that each officer or director of CDS is a fit and proper person and the past conduct of each officer or director affords reasonable grounds for belief that such person will perform his or her duties with integrity.

ACCESS

7. CDS shall provide any person or company reasonable access to its settlement services where that person or company satisfies the eligibility requirements established by CDS to access the settlement services.

8. Without limiting the generality of the foregoing, CDS shall:

(a) establish written standards for granting access to the settlement services;

(b) keep records of:

(i) each grant of access including, for each participant, the reasons for granting such access, and

(ii) each denial or limitation of access, including the reasons for denying or limiting access to any applicant.

FEES AND COSTS

9. CDS shall equitably allocate its fees and costs for settlement services. The fees shall not have the effect of unreasonably creating barriers to access such settlement services and shall be balanced with the criterion that CDS has sufficient revenues to satisfy its responsibilities.

10. CDS' process for setting fees and costs for settlement services shall be fair, appropriate and transparent. The fees, costs or expenses borne by participants in the settlement services shall not reflect any costs or expense incurred by CDS in connection with an activity carried on by CDS that is not related to the settlement services.

DUE PROCESS

11. CDS shall ensure that:

(a) participants affected by its decisions are given an opportunity to be heard or make representations; and

(b) it keeps a record, gives reasons and provides for appeals of its decisions to regulatory authorities.

RISK CONTROLS

12. CDS shall have clearly defined procedures for the management of risk which specify the respective responsibilities of CDS and its participants.

13. Without limiting the generality of the foregoing:

(a) Where a central counterparty service is offered by CDS, CDS shall rigorously control the risks it assumes.

(b) CDS shall reduce principal risk to the greatest extent possible by linking securities transfers to funds transfers in a way that achieves delivery-versus-payment.

(c) Final settlement shall occur no later than the end of the settlement day and intraday or real-time finality should be provided where necessary to reduce risks.

(d) Where CDS extends intraday credit to participants, including where it operates a net settlement system, it shall institute risk controls that, at a minimum, ensure timely settlement in the event that the participant with the largest payment obligation is unable to settle.

(e) Assets accepted by CDS used to settle the ultimate payment obligations arising from securities transactions shall carry little or no credit or liquidity risk. If same-day, irrevocable final funds are not used, CDS shall take steps to protect participants in settlement services from potential losses and liquidity pressures arising from the failure of the payor or its paying agent.

(f) Where CDS establishes links to settle cross-border trades, it shall design and operate such links to reduce effectively the risks associated with cross-border settlements.

(g) Where CDS engages in activities not related to the settlement services, it shall carry on such activities in a manner that prevents the spillover of risk arising from such activities where such risks might negatively impact CDS' financial viability.

(h) Where CDS materially outsources any of its settlement services or systems to a third party service provider, which shall include affiliates or associates of CDS, CDS shall proceed in accordance with best practices. Without limiting the generality of the foregoing, CDS shall:

(i) establish and maintain policies and procedures that are approved by its board of directors for the evaluation and approval of such outsourcing arrangements;

(ii) in entering any such outsourcing arrangement,

A. assess the risk of such arrangement, the quality of the service to be provided and the degree of control to be maintained by CDS, and

B. execute a contract with the third party service provider addressing all significant elements of such arrangement, including service levels and performance standards;

(iii) ensure that any contract implementing such outsourcing arrangement, that is likely to impact the settlement services, permits the Commission to have access to and inspect all data, information and systems maintained by the third party service provider on behalf of CDS for the purposes of determining CDS' compliance with the terms and conditions of this Schedule "A" or securities legislation; and

(iv) monitor the performance of the third party service provider under any such outsourcing arrangement.

FINANCIAL VIABILITY

14. CDS shall maintain sufficient financial and staffing resources to ensure the proper performance of the settlement services.

15. CDS shall establish financial tests for the purpose of monitoring its financial viability. Specifically CDS shall maintain:

(a) a debt to cash flow ratio less than or equal to 4/1; and

(b) a financial leverage ratio less than or equal to 4/1.

For the purpose above:

(i) debt to cash flow ratio is the ratio of total debt to EBITDA (earnings before interest, taxes, depreciation and amortization) for the most recent 12 months, and

(ii) financial leverage ratio is the ratio of total assets to shareholder's equity.

16. CDS shall notify Commission staff as soon as practicable of any decision made to retain all or part of its transaction volatility premiums collected or to be collected.

17. If CDS fails to maintain, or anticipates it will fail to maintain, the debt to cash flow ratio or financial leverage ratio, it shall immediately notify the Commission staff. If CDS fails to maintain either of the debt to cash flow ratio or the financial leverage ratio for a period of more than three months, its Chief Executive Officer will deliver a letter advising the Commission staff of the continued ratio deficiencies and the steps being taken to address the situation.

18. On a quarterly basis (together with the financial statements required to be filed pursuant to item 19), CDS shall report to Commission staff that quarter's monthly calculation of the debt to cash flow ratio and financial leverage ratio.

19. CDS shall file with Commission staff unaudited quarterly financial statements within 60 days of each quarter end and audited annual financial statements, prepared in accordance with generally accepted accounting principles, together with any annual report to the shareholders, within 90 days of each year end. The quarterly and annual financial statements of CDS shall be provided on an unconsolidated and consolidated basis.

OPERATIONAL RELIABILITY

20. CDS shall adopt procedures and processes that, on an ongoing basis, ensure the provision of accurate and reliable settlement services to participants.

21. CDS shall annually file with Commission staff the Report on Internal Controls and Safeguards including CDS' external auditor's opinion on the design and effectiveness of these control systems.

CAPACITY AND INTEGRITY OF SYSTEMS

22. For all of its core systems supporting the settlement services and related business operations (the "systems"), CDS will:

(a) on a reasonably frequent basis, and in any event, at least annually;

(i) make reasonable current and future capacity estimates,

(ii) conduct capacity stress tests of the systems to determine the ability of those systems to process transactions in an accurate, timely and efficient manner,

(iii) develop and implement reasonable procedures to review and keep current the development and testing methodology of the systems,

(iv) review the vulnerability of the systems and data centre computer operations to internal and external threats including breaches of security, physical hazards and natural disasters, and

(v) maintain adequate contingency and business continuity plans;

(b) annually, cause to be performed an independent review and written report, in accordance with generally accepted auditing standards, of the stated internal control objectives of the systems, whether as part of the report described in item 21 or as a separate review; and

(c) promptly notify Commission staff of material systems failures and changes.

PROTECTION OF CUSTOMERS' SECURITIES

23. CDS shall employ securities depository, account maintenance and accounting practices and safekeeping procedures that protect participants' securities.

RULES

24. CDS shall establish rules, operating procedures, user guides, manuals or similar instruments or documents (collectively, "rules") that are necessary or appropriate to govern, regulate, and set out all aspects of the settlement services offered by CDS.

25. The rules shall be consistent with the general goals of:

(a) ensuring compliance with securities legislation;

(b) fostering co-operation and co-ordination with self-regulatory organizations and persons or companies operating marketplaces, clearing and settlement systems and other systems that facilitate the processing of securities transactions and safeguarding of securities; and

(c) controlling systemic risk.

26. The rules will not:

(a) permit unreasonable discrimination among participants; or

(b) impose any burden on competition that is not necessary or appropriate in furtherance of compliance with securities legislation or the objects and mandate of the clearing agency.

27. CDS' rules and the process for adopting new rules or amending existing rules shall be transparent to participants and the general public.

28. CDS shall file with the Commission all rules and amendments to the rules and comply with the rule protocol attached as Appendix "A", as amended from time to time.

ENFORCEMENT OF RULES AND DISCIPLINE

29. The rules of CDS shall set out appropriate sanctions in the event of non-compliance by participants.

30. CDS shall reasonably monitor participant activities and impose sanctions to ensure compliance by participants with its rules.

INFORMATION SHARING

31. CDS shall share information and otherwise cooperate with the Commission and its staff, other recognized clearing agencies, recognized exchanges, recognized quotation and trade reporting systems, registered alternative trading systems, recognized self-regulatory organizations, the Canadian Investor Protection Fund and any regulatory authority having jurisdiction over CDS, subject to any applicable privacy or other laws governing the sharing of information and the protection of personal information, and subject to any confidentiality provisions contained in agreements entered into with the Bank of Canada pertaining to information received from the Bank of Canada in its roles as registrar, issuing agent, transfer agent or paying agent for the Government of Canada.

32 CDS shall permit the Commission to have access to and inspect all data and information in its possession that is required to assess compliance with the terms and conditions of this Schedule "A" or securities legislation, subject to applicable privacy or other laws governing the sharing of information and the protection of personal information, and subject to any confidentiality provisions contained in agreements entered into with the Bank of Canada pertaining to information received from the Bank of Canada in its roles as registrar, issuing agent, transfer agent or paying agent for the Government of Canada.

33. CDS shall comply with Appendix "B" setting out the reporting obligations, as amended from time to time, regarding the reporting of information to the Commission.

APPENDIX "A"

RULE PROTOCOL REGARDING THE REVIEW AND APPROVAL

OF CDS RULES BY THE OSC

1. Purpose of the Protocol

On July 12, 2005, the Commission issued a varied and restated recognition and designation order ("Recognition Order") with terms and conditions governing CDS' recognition as a clearing agency pursuant to subsection 21.2(1) of the Securities Act (Ontario). To comply with the Recognition Order, CDS must file, among other things, its rules with the Commission for approval. This protocol sets out the procedures for the submission of a rule by CDS and the review and approval of the rule by the Commission.

2. Definitions

In this protocol:

"rule" means a proposed new or amendment to or deletion of a participant rule, operating procedure, user guide, manual or similar instrument or document of CDS which contains any contractual term setting out the respective rights and obligations between CDS and participants or among participants.

All other terms have the respective meanings ascribed to them in the Recognition Order and in securities legislation as that term is defined in NI 14-101.

3. Classification of Rules

CDS will classify a rule as either "material" or "technical/housekeeping" for the purposes of the approval process set out in this protocol.

(a) Technical/Housekeeping Rules

For the purpose of this protocol, a rule will be classified as "technical/housekeeping" if the rule involves only:

(i) matters of a technical nature in routine operating procedures and administrative practices relating to the settlement services;

(ii) consequential amendments intended to implement a material rule that has been published for comment pursuant to this protocol which only contain material aspects already contained in the material rule or disclosed in the notice accompanying the material rule;

(iii) amendments required to ensure consistency or compliance with an existing rule, securities legislation or other regulatory requirement;

(iv) the correction of spelling, punctuation, typographical or grammatical mistakes or inaccurate cross-referencing; or

(v) stylistic formatting, including changes to headings or paragraph numbers;

(b) Material Rules

A rule that is not a technical/housekeeping rule, as defined above, would be classified as a "material" rule.

4. Procedures for Review and Approval of Material Rules

(a) Prior Notice of a Significant Material Rule

If CDS is developing a material rule that it anticipates will result in a significant change in its policy, will require amendments to a significant number of rules or may be the subject of significant public comment as a result of publication, then CDS will notify Commission staff in writing at least 30 calendar days prior to submitting such a significant material rule. The purpose of such prior notification is to enable the Commission to react in a timely manner to the material rule upon filing. Prior notification shall not be interpreted as an opportunity for Commission staff to participate in CDS policy development. Commission staff will not begin a formal review of the material rule until all relevant documents have been filed.

(b) Documents to be Filed

For a material rule, CDS will file with the Commission the following documents electronically, or by other means as agreed to by Commission staff and CDS from time to time:

(i) a cover letter that indicates the classification of the rule and the rationale for that classification and includes a statement that the rule is not contrary to the public interest;

(ii) the rule and, where applicable, a blacklined version of the rule indicating the proposed changes to an existing rule;

(iii) a notice of publication to be published by the Commission in the OSC Bulletin that contains the following information:

A. a description of the rule,

B. a concise statement, together with supporting analysis, of the nature and purpose of the rule,

C. a description and analysis of the possible effects of such rule on CDS, participants and other market participants and the securities and financial markets in general, including but not limited to any impact on competition, risks and the costs of compliance borne by any of the foregoing parties or within any market, and where applicable, a comparison of the rule to international standards promulgated by Committee on Payment and Settlement Systems of the Bank for International Settlements, the Technical Committee of the International Organization of Securities Commissions and the Group of Thirty,

D. a description of the rule drafting process, including a description of the context in which the rule was developed, the process followed, the issues considered, consultation done, the alternative approaches considered, the reasons for rejecting the alternatives and a review of the implementation plan,

E. where the rule requires technological systems changes to be made by participants, other market participants or CDS, CDS shall provide a description of the implications of the rule on such systems and, where possible, an implementation plan, including a description of how the rule will be implemented and the timing of the implementation,

F. where CDS is aware that another clearing agency has a counterpart to the rule, CDS shall include a reference to the rules of the other clearing agency, including an indication as to whether that clearing agency has a comparable rule or has made or is contemplating making a comparable rule, and a comparison of the rule to same,

G. a statement that CDS has determined that the rule is not contrary to the public interest, and

H. an explanation that all comments should be sent to CDS with a copy to the Commission, and that CDS will make available to the public on request all comments received during the comment period.

(c) Confirmation of Receipt

Commission staff will within 5 business days send to CDS confirmation of receipt of documents filed by CDS under subsection (b).

(d) Publication of a Material Rule by the Commission

As soon as practicable, Commission staff will publish in the OSC Bulletin the notice and rule filed by CDS under subsection (b) for a comment period of 30 calendar days (the "comment period"), commencing on the date on which the notice first appears in the OSC Bulletin or website.

(e) Review by Commission Staff

Commission staff will use their best efforts to conduct their initial review of the material rule and provide comments to CDS during the comment period. However, there will be no restriction on the amount of time necessary to complete the review of the material rule.

(f) CDS Responses to Commission Staff's Comments

(i) CDS will respond to any comments received to Commission staff in writing.

(ii) CDS will provide to Commission staff a summary of all public comments received and CDS' responses to the public comments, or confirmation of having received no public comments.

(iii) If CDS fails to respond to comments from Commission staff within 120 calendar days after receipt of their comment letter, CDS will be deemed to have withdrawn the material rule unless Commission staff otherwise agree.

(g) Approval by the Commission

Commission staff will use their best efforts to prepare the material rule for approval within 30 calendar days of the later of (a) receipt of written responses from CDS to staff's comments or requests for additional information, and (b) receipt of the summary of public comments and CDS' response to the public comments, or confirmation from CDS that there were no comments received. If at any time during the review period, Commission staff determine that they have further comments or require further information from CDS in order to prepare the materials for Commission approval, the review period will be extended by an additional period of 30 calendar days commencing on the day that Commission staff receive responses to the comments or the information requested. Commission staff will notify CDS of the Commission's approval of the material rule within 5 business days.

(h) Publication of Notice of Approval

Commission staff will prepare and publish in the OSC Bulletin and on its website a short notice of approval of the material rule within 15 business days of delivery of the notification to CDS of the decision. CDS will provide the following information to accompany the publication of the notice of approval:

(i) a short summary of the material rule;

(ii) CDS' summary of public comments and responses received, if applicable; and

(iii) if changes were made to the version published for public comment, a blacklined copy of the revised material rule.

(i) Effective Date of a Material Rule

A material rule will be effective as of the date of the notification of approval by Commission staff in accordance with subsection (g) or on a date determined by CDS, if such date is later.

(j) Significant Revisions to a Material Rule

When a material rule is revised subsequent to its publication for comment in a way that Commission and CDS staff determine has a material effect on the substance of the rule or its effect, the revision will be published in the OSC Bulletin with a notice for a second 30 calendar day comment period. The request for comment shall include CDS' summary of comments and responses submitted in response to the previous request for comments, together with an explanation of the revision to the material rule and the supporting rationale for the amendment.

(k) Withdrawal of a Material Rule

If CDS withdraws or is deemed to have withdrawn a rule that was previously submitted, then it will provide a notice of withdrawal to be published by the Commission in the OSC Bulletin as soon as practicable.

5. Procedures for Review and Approval of a Technical/Housekeeping Rule

(a) Documents to be Filed

For a technical/housekeeping rule, CDS will file with the Commission the following documents electronically, or by other means as agreed to by the Commission staff and CDS from time to time:

(i) a cover letter that indicates the classification of the rule and the rationale for that classification;

(ii) the rule and, where applicable, a blacklined version of the rule indicating the proposed changes to an existing rule; and

(iii) a short notice of publication to be published by the Commission in the OSC Bulletin that contains the following information:

A. a brief description of the technical/housekeeping rule,

B. the reasons for the technical/housekeeping classification, and

C. the effective date of the technical/housekeeping rule, or a statement that the technical/housekeeping rule will be effective on a date subsequently determined by CDS.

(b) Effective Date of Technical/Housekeeping Rules

The technical/housekeeping rule will be effective upon CDS filing the documents in accordance with subsection (a) or on a date determined by CDS. Where CDS does not receive any communication of disagreement with the classification from Commission staff in accordance with subsection (d) within 15 business days after filing the rule, CDS may assume that the Commission staff agree with the classification.

(c) Confirmation of Receipt

Commission staff will within 5 business days send to CDS confirmation of receipt of documents filed by CDS under subsection (a).

(d) Disagreement with Classification

Where CDS has classified a rule as "technical/housekeeping" and Commission staff disagree with the classification:

(i) Commission staff will communicate to CDS, in writing, the reasons for disagreeing with the classification of the rule within 15 business days after receipt of CDS' filing.

(ii) After receipt of Commission staff's written communication, CDS will re-classify the rule as material and the Commission will review and approve the rule under the procedures set out in section 4.

(iii) Commission staff may require that CDS immediately repeal the technical/housekeeping rule and inform its participants of the reason for the repeal of the rule.

(e) Publication of Technical/Housekeeping Rules

Commission staff will publish the notice filed by CDS under clause (a)(iii) as soon as practicable.

(f) Comments received on Technical/Housekeeping Rules

If comments are raised in response to the publication of the notice or the implementation of the technical/housekeeping rule, Commission staff may review the rule in light of the comments received. Commission staff may determine that the rule was incorrectly classified and require that the rule be classified as a material rule and reviewed and approved by the Commission in accordance with the procedures set out in section 4 with necessary modifications. If the Commission subsequently disapproves the material rule, CDS will immediately repeal the material rule and inform its participants of the disapproval.

6. Immediate Implementation of a Material Rule

(a) Criteria for Immediate Implementation

CDS may make a material rule effective immediately where CDS determines that there is an urgent need to implement the material rule because of a substantial and imminent risk of material harm to CDS, participants, other market participants, or the Canadian capital markets or due to a change in operation imposed by a third party supplying services to CDS and to its participants.

(b) Prior Notification

Where CDS determines that immediate implementation is necessary, CDS will advise Commission staff in writing as soon as possible but in any event at least 5 business days prior to the implementation of the rule. Such written notice will include an analysis to support the need for immediate implementation.

(c) Disagreement on Need for Immediate Implementation

If Commission staff do not agree that immediate implementation is necessary, the process for resolving the disagreement will be as follows:

(i) Commission staff will notify CDS, in writing, of the disagreement, or request more time to consider the immediate implementation, within 3 business days of being advised by CDS under subsection (b).

(ii) Commission staff and CDS will discuss and resolve any concerns raised by Commission staff.

(iii) If no notice is received by CDS by the 3rd business day after Commission staff received CDS' notification, CDS may assume that Commission staff does not disagree with their assessment.

(d) Review of Material Rules Implemented Immediately

A material rule that has been implemented immediately will be published, reviewed and approved by the Commission in accordance with the procedures set out in section 4 with necessary modifications. If the Commission subsequently disapproves the material rule, CDS will immediately repeal the material rule and inform its participants of the disapproval.

7. Miscellaneous Provisions

(a) Waiving Provisions of the protocol

Commission staff may waive any part of this protocol upon request from CDS. Such a waiver must be granted in writing by Commission staff.

(b) Amendments

This protocol and any provision hereof may be amended at any time or times with the agreement of the Commission and CDS.

8. Effective Date

This protocol comes into effect on July 12, 2005.

APPENDIX "B"

REPORTING OBLIGATIONS

In addition to the notification, reporting and filing obligations set out in Schedule "A" to the Recognition and Designation Order, CDS shall also comply with the reporting obligations set out below.

1. Prior Notification

1.1 CDS shall provide to Commission staff prior notification of:

(a) any proposed change to CDS' corporate governance structure other than significant changes to the governance structure or constating documents for which prior approval is required under item 4 of Schedule "A" to the Recognition and Designation Order;

(b) a decision to enter into an agreement, memorandum of understanding or other similar arrangement with any governmental or regulatory body, self-regulatory organisation, clearing agency, stock exchange, other marketplace or market; or

(c) a decision to, either directly or through an affiliate, engage in a new type of business activity or cease to engage in a business activity in which CDS is then engaged.

2. Immediate Notification

2.1 CDS shall provide to Commission staff immediate notice of:

(a) the appointment of any new director or officer, including a description of the individual's employment history; and

(b) the resignation or intended resignation of a director or officer or the auditors of CDS, including a statement of the reasons for the resignation or intended resignation.

2.2 CDS shall immediately notify Commission staff if it:

(a) becomes the subject of any order, directive or other similar action of a governmental or regulatory authority;

(b) becomes aware that it is the subject of a criminal or regulatory investigation; or

(c) becomes, or is aware that it will become, the subject of a material lawsuit.

2.3 CDS shall immediately file with Commission staff copies of all notices, bulletins and similar forms of communication that CDS sends its participants.

2.4 CDS shall immediately file with the Commission staff any unanimous shareholder agreements to which it is a party.

3. Quarterly Reporting

3.1 CDS shall file quarterly with Commission staff a list of the internal audit reports and risk management reports issued in the previous quarter.

4. Annual Reporting

4.1 CDS shall provide to Commission staff annually:

(a) a list of the directors and officers of CDS;

(b) a list of the committees of the CDS board of directors, setting out the members, mandate and responsibilities of each of the committees; and

(c) a list of all participants in each settlement service operated by CDS.

5. General

5.1 CDS shall continue to comply with the reporting obligations set out in its tailored Automation Review Program document.