Barclays Bank PLC -- s. 5.1 of OSC Rule Trading During Distributions, Formal Bids and Share Exchange Transactions

Headnote

Ontario Securities Commission Rule 48-501 -- Relief from the application of s. 2.1 to dealer restricted persons in connection with a distribution of exchange-traded notes -- Relief from the application of s. 2.2 to issuer restricted persons in connection with a distribution of exchange-traded notes.

Applicable Legislative Provisions

OSC Rule 48-501 Trading During Distributions, Formal Bids and Share Exchange Transactions.

October 7, 2011

IN THE MATTER OF

ONTARIO SECURITIES COMMISSION RULE 48-501 --

TRADING DURING DISTRIBUTIONS, FORMAL BIDS

AND SHARE EXCHANGE TRANSACTIONS

AND

IN THE MATTER OF

BARCLAYS BANK PLC (the Filer)

DECISION

(Section 5.1 of the Rule)

UPON the Director having received an application from the Filer for an exemption (Exemption Sought) pursuant to section 5.1 of Ontario Securities Commission Rule 48-501 Trading During Distributions, Formal Bids and Share Exchange Transactions (Rule 48-501) from the application of:

(a) section 2.1 of Rule 48-501 to any "dealer-restricted person" (as defined in Rule 48-501) in connection with the distribution pursuant to the Filer's base shelf prospectus relating to Global Medium Term Notes, Series A (Notes) (or any renewal thereof), as supplemented by a pricing supplement, (together, the Prospectus), of one or more series of iPath-branded Notes or other exchange-traded Notes (each such class of Notes an ETN) that is a "restricted security" (as defined in Rule 48-501); and

(b) section 2.2 of Rule 48-501 to any "issuer-restricted person" (as defined in Rule 48-501) in connection with an ETN that is a "restricted security" (as defined in Rule 48-501).

AND UPON considering the Application and the recommendation of staff of the Ontario Securities Commission.

AND UPON the Filer having represented to the Director as follows:

1. The Filer, a wholly owned subsidiary of Barclays PLC, is a public limited company registered in England and Wales having its registered office at 1 Churchill Place, London, England E14 5HP.

2. The Filer is a reporting issuer in each of the provinces of Canada and is not in default of securities legislation in any province of Canada.

3. The Filer is a major global financial services provider engaged in retail banking, credit cards, corporate banking, investment banking, wealth management and investment management services with an extensive international presence in Europe, the Americas, Africa and Asia.

4. As of December 31, 2010, Barclays was among the largest financial institutions in the world measured by total assets. As of that date, Barclays had total assets of £1,490 billion and total shareholders' equity of £62.3 billion.

5. The Filer intends to distribute pursuant to the Prospectus one or more series of ETNs.

6. The ETNs will be direct, unconditional, unsecured and unsubordinated obligations of the Filer, ranking pari passu with all of its other unsecured and unsubordinated obligations (except such obligations as are preferred by operation of law).

7. The ETNs will be issued under a trust indenture (the Indenture) dated September 16, 2004, between the Filer and The Bank of New York Mellon, as trustee, and will be in registered, book-entry form represented by one or more global notes.

8. Each series of ETNs will be linked to the performance of an underlying index such as an equity index, commodity index, currency index or volatility index. The valuation of each series of ETNs will be primarily derived from the value of the index to which it is linked, subject to an investor fee and any other applicable fees and charges. At the time of issuance of an ETN, to the extent necessary, the Filer will have entered into a license agreement with the sponsor or publisher of each index underlying the ETN, permitting the Filer to link the relevant ETN to that index.

9. At the time of issuance of each series of ETNs the underlying index to which the series of ETNs is linked will be "publicly available" as outlined in CSA Staff Notice 44-304 Linked Notes Distributed under the Shelf Prospectus System in that there is market transparency of the index methodology, the constituents that make up the index and the calculation of the index through information that is published and circulated to the public on a regular basis.

10. Holders of the ETNs will be allowed, at their option and subject to certain restrictions, to cause the Filer to redeem their ETNs on any of the specified daily redemption dates between issuance and maturity. This redemption option is subject to a minimum number of ETNs being redeemed, generally 25,000 or 50,000. Upon redemption, the holder would generally receive a cash payment equal to the principal amount of the ETNs being redeemed multiplied by the indicative value of the ETNs on the redemption date (as adjusted to account for any relevant fees and charges).

11. The Filer intends to apply to list the ETNs on the TSX.

12. It is not anticipated that the ETNs offered under the Prospectus will be distributed by underwriters soliciting expressions of interest from potential investors. Rather, it is intended that Barclays Capital Inc. (BCI), a registered broker-dealer under the 1934 Act and a wholly owned subsidiary of the Filer, will

(a) purchase the ETNs as principal from the Filer and resell the ETNs to Market Makers (as defined below) purchasing as principal; and/or

(b) act as agent of the Filer in selling ETNs to Market Makers purchasing as principal.

The Market Makers will sell the ETNs to investment dealers that place buy orders on the TSX, either as principal or as agent on behalf of their clients.

13. For each ETN offered under the Prospectus, the Filer will appoint one or more TSX participants to act as market maker (the Market Makers) for that ETN, to purchase ETNs from the Filer or BCI when the ETN is initially listed, enter buy and sell orders for the ETNs on the TSX to assist in maintenance of an efficient market for the ETNs, sell ETNs to the Filer or BCI when there is insufficient market demand for the ETNs and purchase additional ETNs from the Filer or BCI when demand exists that cannot be met from third party sellers of ETNs.

14. The Filer, BCI, Barclays Capital Canada Inc. (BCCI), a registered investment dealer and wholly owned subsidiary of the Filer, and/or other registered investment dealers, will enter into a distribution agreement (Distribution Agreement) pursuant to which BCI, BCCI and/or such other registered investment dealers may purchase as principal from the Filer a portion of any ETNs being issued or distribute the ETNs as agent on behalf of the Filer.

15. ETNs may be purchased directly from Market Makers, BCCI or other registered investment dealers and orders may only be placed on any day when there is a trading session on the TSX. Depending on the level of demand for a series of ETNs, the Filer may issue additional amounts of such series of ETNs that would constitute a further distribution of, and trade fungibly with, the ETNs of such series issued on the original issue date.

16. Noteholders that wish to dispose of their ETNs may generally do so by selling their ETNs on the TSX, through a registered investment dealer, subject only to customary brokerage commissions. As described above, holders of the ETNs would be allowed, at their option, to cause the Filer to redeem their ETNs on any of the specified daily redemption dates (provided that redemption dates and valuation dates may be postponed upon the occurrence of certain market disruption events) between issuance and maturity. In order to redeem ETNs, a holder would need to follow the procedures set forth in the applicable pricing supplement to the Prospectus.

17. Section 2.1 of Rule 48-501 prohibits BCI, BCCI and any other registered investment dealer that is party to the Distribution Agreement and Market Makers from bidding for or purchasing ETNs from parties other than distribution participants, as part of secondary market trading in ETNs. Section 2.2 of Rule 48-501 prohibits the Filer from redeeming the ETNs and bidding for and purchasing ETNs from Market Makers, BCI, registered investment dealers and other holders of ETNs as part of secondary market trading in ETNs.

18. The purpose of sections 2.1 and 2.2 of Rule 48-501 is to prevent persons from conditioning the market to facilitate a distribution. Because the underlying value of the ETNs should be tied primarily to the value of the relevant underlying index, purchases or sales of ETNs in the secondary market would not impact their underlying value and therefore should not have a significant impact on their market price. Any significant disparity between the market price of the ETNs and their underlying value should be eliminated by arbitrage activity.

19. The Filer expects that the value of the relevant underlying index on any day will affect the market price of the associated series of ETNs more than any other factor. Other factors may influence the market price of the ETNs, which other factors the Filer believes may include, but would not be limited to, supply and demand for the particular series of ETNs; the volatility of the relevant underlying index; the market price of the components of the relevant underlying index; the rate of interest on Treasury Bills; the volatility of commodities, equities or other asset prices; economic, financial, political, regulatory or judicial events that affect the value of the relevant underlying index or the market price of its components; the general interest rate environment; and the perceived creditworthiness of the Filer. However, as a result of the potential arbitrage opportunities inherent in their structure and assuming that the redemption feature functions as intended, the Filer does not expect that the ETNs will trade at a material discount or premium to the value of the relevant underlying indices.

20. It is expected that intraday "Indicative Values" meant to approximate the economic value of each series of ETNs will be calculated and published by Bloomberg or a similar medium regularly throughout the TSX trading day on each day on which the relevant series of ETNs are traded on the TSX. Additionally, the Filer or a third party will calculate and publish on a website the closing Indicative Value of each series of ETNs on each trading day.

IT IS THE DECISION of the Director pursuant to section 5.1 of the Rule that the Exemption Sought is granted provided that the representations in paragraphs 9 and 10 above are accurate.