UBS Securities LLC

Headnote

Multilateral Instrument 11-102 section 4.7(1) -- Exemption granted from requirement to file Form 31-103 F1 -- U.S. broker/dealer subject to U.S. reporting requirements registered as exempt market dealer and thus required to file Form 31-103 F1 pursuant to section 12.1 of National Instrument 31-103 -- Conditions concerning filing of SEC Form X-17a-5 (FOCUS Report) in lieu of Form 31-103F1 and notification of any issues.

Applicable Legislative Provisions

Multilateral Instrument 11-102, s. 4.7(1).

National Instrument 31-103, ss. 12.1, 15.1.

May 6, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(The "Jurisdiction")

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

UBS SECURITIES LLC

(the "Filer")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer (the "Application") for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") that, for the purposes of section 12.1 -- Capital Requirements ("Section 12.1") of National Instrument 31-103 Registration Requirements and Exemptions ("NI 31-103") the Filer be permitted to calculate its excess working capital using United States ("U.S.") Securities and Exchange Commission ("SEC") Form X-17a-5 (FOCUS Report) (the "FOCUS Report") rather than Form 31-103F1 Calculation of Excess Working Capital ("Form 31-103F1") and for the purposes of section 12.12(1)(b) -- Delivering Financial Information -- Dealer ("Section 12.12(1)(b)") of NI 31-103, the Filer be permitted to deliver the FOCUS Report in lieu of Form 31-103F1 (the "Exemption Sought").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this Application, and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System is intended to be relied upon in each of the other provinces and territories of Canada (the "Canadian Jurisdictions").

Interpretation

Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a limited liability company organized under the laws of the State of Delaware. Its head office is located at 677 Washington Boulevard, Stamford, CT 06901.

2. The Filer is an indirect wholly owned subsidiary of UBS AG, a publicly owned Swiss banking corporation.

3. The Filer is registered as a broker-dealer with the U.S. SEC, and is a member of the Financial Industry Regulatory Authority ("FINRA"). The Filer is a member of a number of major U.S. securities exchanges, including the New York Stock Exchange and NASDAQ.

4. The Filer is subject to regulatory capital requirements under the Securities Exchange Act of 1934, specifically SEC Rule 15c3-1 Net Capital Requirements for Brokers or Dealers ("SEC Rule 15c3-1"), that are designed to provide protections that are substantially similar to the protections provided by the regulations regarding excess working capital to which dealer members of the Investment Industry Regulatory Organization of Canada ("IIROC") are subject, and the Filer is in compliance in all material respects with SEC Rule 15c3-1. The SEC and FINRA have the responsibility for ensuring that the Filer operates in compliance with SEC Rule 15c3-1.

5. The Filer is a Foreign Approved Participant of the Montreal Exchange and a Registered Futures Commission Merchant of ICE Futures Canada, Inc. The Filer is also a member of the Chicago Board of Trade, the Chicago Mercantile Exchange, ICE Futures Exchange, and other principal U.S. commodity exchanges.

6. The Filer provides a variety of capital raising, investment banking, market making, brokerage, and advisory services, including fixed income and equity sales and research, commodities trading, foreign exchange sales, emerging markets activities, securities lending, investment banking and derivatives dealing for governments, corporate and financial institutions. The Filer also conducts proprietary trading activities.

7. The Filer is required to prepare and file a FOCUS Report with United States regulators, which is the financial and operational report containing a net capital calculation.

8. The FOCUS Report provides a more comprehensive description of the business activities of the Filer, and more accurately reflects those activities including client lending activity, than would be provided by Form 31-103F1, and the minimum SEC Rule 15c3-1 requirements applicable to the Filer are a substantially greater amount than the minimum requirement of NI 31-103.

Exempt Market Dealer Registration

9. The Filer is registered in the category of exempt market dealer ("EMD") in the Canadian Jurisdictions.

10. Under NI 31-103, EMDs are generally permitted to act as dealers in trading securities being distributed under a prospectus exemption or securities that, were the trades distributions, would be exempt from the prospectus requirement, and are subject to capital, insurance and proficiency requirements and other ongoing compliance requirements.

11. Under NI 31-103, the Filer is required to calculate its excess working capital using Form 31-103F1.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted, as long as:

(a) the Filer is registered under the securities legislation of the United States in a category of registration that permits it to carry on the activities in the United States that registration as an investment dealer would permit it to carry on in the Jurisdiction;

(b) by virtue of the registration referred to in paragraph (a), including required membership in one or more self-regulatory organizations, the Filer is subject to SEC Rule 15c3-1 and SEC Rule 17a-5 Reports to be Made by Certain Brokers and Dealers ("SEC Rule 17a-5"); and that the protections provided by SEC Rule 15c3-1 and SEC Rule 17a-5 in respect of maintaining excess net capital are substantially similar to the protections provided by the capital requirements of IIROC that would be applicable to the Filer if it were registered under the Legislation as an investment dealer and were a member of IIROC;

(c) the Filer submits the FOCUS Report in lieu of Form 31-103F1;

(d) the Filer prepares the FOCUS Report on an unconsolidated basis;

(e) the Filer does not guarantee any debt of a third party;

(f) the Filer gives prompt written notice to the principal regulator of any significant issues arising from analysis by U.S. securities regulators of the FOCUS report filed by the Filer pursuant to FINRA and SEC requirements;

(g) the Filer gives written notice to the principal regulator immediately if excess net capital as calculated on line 25, page 6 of the FOCUS Report is less than zero, and ensures that such capital is not less than zero for 2 consecutive days; and

(h) the Filer provides the principal regulator with at least five days written notice prior to any repayment of subordinated intercompany debt or termination of a subordination agreement with respect to intercompany debt.