ProShare Advisors LLC - s. 80 of the CFA

Headnote

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 made under the Securities Act (Ontario).

Statutes Cited

Commodity Futures Act, R.S.O. 1990, c. C.20, as am., s. 22(1)(b), 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 S.20, AS AMENDED

(the CFA)

AND

IN THE MATTER OF

PROSHARE ADVISORS LLC

ORDER

(Section 80 of the CFA)

UPON the application (the Application) of ProShare Advisors LLC (ProShares) to the Ontario Securities Commission (the Commission) for an order pursuant to section 80 of the CFA that ProShares and its members, officers and representatives be exempt from the registration requirements of clause 22(1)(b) of the CFA with respect to the investment advice to be provided by ProShares on a sub-advisory basis to exchange traded funds (each an ETF);

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

AND UPON ProShares having represented to the Commission that:

1. ProShares is a limited liability company organized under the laws of the State of Maryland, U.S.A. Its head office is located in Bethesda, Maryland.

2. ProShares is currently registered as an investment adviser with the U.S. Securities and Exchange Commission (SEC) and is exempted from registration with the U.S. Commodities Futures Trading Commission (CFTC).

3. ProShares is in the process of negotiating a sub-advisory investment management agreement (the Agreement) with the adviser of the ETFs, Jove Investment Management Inc. (Jove), and BetaPro Management Inc. (BetaPro), the manager and trustee of the ETFs. As the sub-adviser to the ETFs, ProShares will provide investment advice to the ETFs with respect to derivative instruments including commodity futures contracts and related products that trade on commodity futures exchanges (the Proposed Advisory Services).

4. ProShares currently advises 12 exchange traded funds in the United States which employ similar investment strategies to the ETFs.

5. Jove is registered under the Securities Act (Ontario) (the Act) as an adviser in the categories of investment counsel and portfolio manager and as a commodity trading counsel and commodity trading manager under the CFA.

6. Each ETF will be an open-ended exchange traded fund established under the laws of Ontario.

7. Each ETF will be a "mutual fund" as defined in subsection (1) of the Act and a "commodity pool" as defined in subsection 1(1) of National Instrument 81-104.

8. Jove will be responsible for providing investment advice to the ETFs and will be responsible for the investment advice provided to the ETFs by ProShares.

9. Pursuant to the terms of the Agreement, Jove will be responsible for any loss arising out of the failure of ProShares to:

(a) exercise its powers and discharge its duties honestly, in good faith and in the best interests of the ETFs; or

(b) exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances,

(collectively, the Standard of Care), which responsibility cannot be waived.

10. ProShares will only provide the Proposed Advisory Services to the ETFs provided Jove is registered as an adviser in the categories of investment counsel and portfolio manager under the Act and as a commodity trading counsel and commodity trading manager under the CFA.

11. The offering documents of the ETFs will disclose that Jove will be responsible for ProShares' investment advice and, to the extent applicable, there may be difficulty in enforcing any legal rights against ProShares as it is resident outside of Canada and all or a substantial portion of its assets are situated outside of Canada.

AND UPON the Commission being satisfied that it would not be prejudicial to the public interest for the Commission to grant the requested relief;

IT IS ORDERED pursuant to section 80 of the CFA that ProShares, its members, officers and representatives are exempt from the registration requirements of clause 22(1)(b) of the CFA with respect to the Proposed Advisory Services to be provided by ProShares to the ETFs, provided that:

(a) Jove is registered the under the Act as an adviser in the categories of investment counsel and portfolio manager and as a commodity trading counsel and commodity trading manager under the CFA;

(b) ProShares is registered as an investment adviser with the SEC and is exempted from registration with the CFTC;

(c) the obligations and duties of ProShares are set out in the Agreement with Jove;

(d) Jove, pursuant to the Agreement, has agreed to be responsible for any loss that arises out of the failure of ProShares to meet the Standard of Care;

(e) Jove, pursuant to the Agreement, cannot be relieved for any loss that arises out of the failure of ProShares to meet the Standard of Care; and

(f) this Order shall terminate three years from the date hereof.

December 15, 2006

"Susan Wolburgh Jenah"

"David L. Knight"