HSBC Securities (Canada) Inc. and National Bank Financial Ltd.

Headnote

Multilateral Instrument 11-102 Passport System -- National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- National Instrument 33-109 Registration Information (NI 33-109) -- relief from certain filing requirements of NI 33-109 in connection with a bulk transfer of business locations and registered and non-registered individuals under an amalgamation in accordance with section 3.4 of Companion Policy 33-109CP to NI 33-109.

Applicable Legislative Provisions

Multilateral Instrument 11-102 Passport System.

National Instrument 33-109 Registration Information and Companion Policy 33-109CP.

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.

December 23, 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

HSBC SECURITIES (CANADA) INC. ("HSBC") AND

NATIONAL BANK FINANCIAL LTD. ("NBFL"),

("the Filers")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") for relief from sections 2.2, 2.3, 2.5, 3.2 and 4.2 pursuant to section 7.1 of National Instrument 33-109 Registration Information ("NI 33-109") to allow the bulk transfer (the "Bulk Transfer") of the registered individuals carrying on the full service retail brokerage business and related wealth management business ("the Full Service Retail Brokerage Business") and of some locations, to the exception of those in Quebec and New Brunswick, of HSBC to NBFL, on or about January 1, 2012 (the "Completion Date") in accordance with section 3.4 of the Companion Policy to NI 33-109 (the "Exemption Sought").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

a) the Ontario Securities Commission ("OSC") is the principal regulator for this application; and

b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon by the Filers in all of the other provinces and territories of Canada, excluding Quebec and New Brunswick.

Interpretation

Terms defined in MI 11-102 and National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.

Representations

The decision is based on the following facts represented by the Filers:

1. HSBC is registered as a dealer in the category of investment dealer in each of the provinces and territories of Canada, and in the category of derivatives dealer in Quebec. HSBC is also a dealer member of the Investment Industry Regulatory Organization of Canada ("IIROC") and has its head office in Ontario.

2. HSBC is an indirect wholly-owned subsidiary of HSBC Bank Canada ("HSBC Bank"), a Canadian chartered bank validly existing under the laws of Canada.

3. NBFL is registered as a dealer in the category of investment dealer in each of the provinces and territories of Canada, excluding Quebec and New Brunswick, and in the category of futures commission merchant in each of Manitoba and Ontario. NBFL is also a dealer member of IIROC and has its head office in Ontario.

4. NBFL is a wholly-owned subsidiary of National Bank Financial Inc. ("NBFI") and, as a result, is also an indirect wholly-owned subsidiary of National Bank of Canada ("NBC"), a Canadian chartered bank validly existing under the laws of Canada.

5. HSBC and NBFL are not, to the best of their knowledge, in default of any requirement of securities legislation in any province or territory of Canada.

6. Effective as of the Completion Date, it is anticipated that the Full Service Retail Brokerage Business of HSBC (including related registered individuals, permitted individuals, and offices) will be transferred manually through individual NRD submissions to NBFI if located in Quebec and New Brunswick, and in bulk to NBFL if located in all the other jurisdictions.

7. Appropriate notifications to, and requests for non-objections/approvals from, the securities regulatory authorities, IIROC, and certain exchanges have been made by letter regarding the HSBC asset acquisition.

8. All HSBC clients to be transferred to NBFI or NBFL, as the case may be, effective as of the Completion Date have been mailed notice of the proposal that they be transferred from HSBC to the applicable registered firm and of the client's right to close their account and have their assets returned to them, or to have their account transferred to another appropriately registered firm at no cost, in accordance with the requirements in section 14.11 of NI 31-103.

9. The NRD number of each registered business location to be transferred from HSBC to NBFL effective as of the Completion Date are as set out on Schedule "A" attached hereto.

10. The Filers do not anticipate that the completion of the HSBC Asset Acquisition will result in any disruption in the ability of NBFL and/or HSBC, as the case may be, to trade on behalf of their respective clients as of the Completion Date.

11. Effective as of the Completion Date, NBFL will carry on substantially the same full service retail brokerage business in substantially the same manner and with substantially the same personnel.

12. Given the significant number of HSBC individuals to be transferred, comprising approximately 200 registered individuals, and affected business locations of HSBC, it would be unduly time-consuming to transfer manually through individual NRD submissions all affected individuals and business locations to NBFL in accordance with the requirements set out in NI 33-109. Moreover, it is imperative that the transfer of the affected individuals and business locations occur effective as of the same date (i.e., the Completion Date), in order to ensure that there is no interruption in registration.

13. The Bulk Transfer will not be contrary to the public interest and will have no negative consequence on the ability of the Filers to comply with all applicable regulatory requirements or satisfy any obligations to their respective clients.

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 provided that the Filers make acceptable arrangements with CDS Inc. for the payment of the costs associated with the Bulk Transfer, and make such arrangement in advance of the Bulk Transfer.