Maple Group Acquisition Corporation

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief from pre-bid and bid integration rules -- members of Filer group (and their affiliates) are joint offerors -- Filer requests relief for certain acquisitions made before, during and following bid which were all ordinary course trades unrelated to the offer and should not be viewed as being part of the same economic transaction -- Trades do not meet all of the conditions stipulated in ss. 2.1 to 2.4 of OSC Rule 62-504 Take-over Bids and Issuer Bids, however similar requirements imposed as conditions to relief.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 93.2 to 93.4, 104(2)(c).

OSC Rule 62-504 Take-over Bids and Issuer Bids, ss. 2.1 to 2.4.

July 17, 2012

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

MAPLE GROUP ACQUISITION CORPORATION

(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation), in connection with a take-over bid (the Offer) and subsequent plan of arrangement (the Subsequent Arrangement and, together with the Offer, the Filer Acquisition) for the acquisition by the Filer of all of the issued and outstanding common shares (the TMX Shares) of TMX Group Inc. (TMX Group),

(a) that the requirement in s. 93.2 of the Securities Act (Ontario) (the Act) that the Filer shall offer to acquire under the Offer that percentage of TMX Shares that is at least equal to the highest percentage that the number of TMX Shares acquired from a seller in any prior purchase not generally available to holders of TMX Shares and made within the period of 90 days immediately preceding the Offer was of the total number of such securities beneficially owned by the seller(s), will not apply to the Offer (the Pre-Bid Integration Relief); and

(b) that the following requirements will not apply in respect of certain ordinary course trading activity of investment dealers (and their affiliates) who are investors in Filer (the Bid Integration Relief):

(i) the requirement in section 93.1 of the Act that the offeror not acquire TMX Shares or securities convertible into TMX Shares from the day of the announcement of the offeror's intention to make the Offer until the expiry of the Offer;

(ii) the requirement in section 93.3(1) of the Act that the offeror not acquire TMX Shares or securities convertible into TMX Shares from the day of the expiry of the Offer until the 20th business day thereafter; and

(iii) the requirement in section 93.4 of the Act that the offeror not sell TMX Shares or securities convertible into TMX Shares from the day of the announcement of the offeror's intention to make the Offer until the expiry of the Offer.

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

(a) the Ontario Securities Commission (the Commission) is the principal regulator for this application (the Principal Regulator);

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the Yukon, Northwest Territories and Nunavut in respect of the decision; and

(c) the decision is the decision of the Principal Regulator.

Interpretation

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

Representations

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

(a) The Filer

1. The Filer is a corporation existing under the Business Corporations Act (Ontario) (the OBCA). The Filer's registered office is located at 1 First Canadian Place, 100 King Street West, Suite 4400, Toronto, Ontario. The Filer has not carried on any material business other than in connection with the Offer and is not in default under the securities legislation of any jurisdiction.

2. The shareholders of the Filer consist of five of Canada's largest pension funds and four Canadian bank-owned investment dealers, consisting of Alberta Investment Management Corporation{1}Caisse de Dépôt et Placement du Québec, Canada Pension Plan Investment Board, Fonds de solidarité des travailleurs du Québec (F.T.Q.) and Ontario Teachers' Pension Plan Board (together with Desjardins Financial Corporation and The Manufacturers Life Insurance Company, who joined the group of Investors after the initial formation of the Filer, the Fund Investors), and CIBC World Markets Inc., National Bank Financial & Co. Inc., Scotia Capital Inc. and TD Securities Inc. (together with Dundee Capital Markets Inc. and GMP Capital Inc., who joined the group of Investors after the initial formation of the Filer, the Investment Dealer Investors, and together with the Fund Investors, the Investors).{2}As of June 10, 2011 (i.e., the last trading day prior to the Filer commencing the Offer), the Investors and their affiliates beneficially owned or exercised control or direction over in the aggregate less than 6% of the outstanding TMX Shares.

3. The authorized share capital of the Filer consists of an unlimited number of common shares (the Filer Shares) and an unlimited number of preferred shares. As at May 30, 2012, there were 835,702 Filer Shares outstanding and no preferred shares outstanding.

4. As at May 30, 2012, the Investors or their affiliates own all of the outstanding Filer Shares. Each Investor has also agreed pursuant to an equity commitment letter to subscribe for additional Filer Shares in connection with the Offer.

5. The Filer is not currently a reporting issuer or the equivalent in any of the Jurisdictions.

(b) TMX Group

6. TMX Group is a corporation existing under the OBCA. TMX Group is headquartered in Toronto with offices in Montréal, Calgary and Vancouver. TMX Group's registered office is located at The Exchange Tower, 130 King Street West, Toronto, Ontario.

7. TMX Group owns and operates two national stock exchanges, the Toronto Stock Exchange (the TSX), serving the senior equity market and TSX Venture Exchange, serving the public venture equity market; Montréal Exchange Inc., Canada's national derivatives exchange; Natural Gas Exchange Inc., an exchange providing a platform for the trading and clearing of natural gas, electricity, and crude oil contracts in North America; Shorcan Brokers Limited, an inter-dealer broker; and The Equicom Group Inc., providing investor relations and related corporate communications services.

8. The authorized share capital of TMX Group consists of an unlimited number of TMX Shares and an unlimited number of preferred shares. Based on information provided to the Filer by TMX Group, as at May 30, 2012, there were 74,695,248 TMX Shares outstanding and no preferred shares were outstanding.

9. TMX Group is a reporting issuer or the equivalent in each of the provinces and territories of Canada. The TMX Shares are listed and posted for trading on the TSX.

(c) The Filer Acquisition

10. The Filer commenced the Offer on June 13, 2011 by mailing the circular and related offer documents to the holders of TMX Shares (TMX Shareholders) and concurrently filed such documents on SEDAR.

11. On June 22, 2011, the Filer announced that it was amending the terms of the Offer to provide for an increased offer price and an increase in the percentage of TMX Shares subject to the Offer. A formal notice of variation dated June 24, 2011 (theNotice of Variation) was prepared in respect of such amendments.

12. The first step of the Filer Acquisition is the Offer, pursuant to which the Filer will seek to acquire not less than 70% and up to 80% of the TMX Shares for $50.00 in cash per TMX Share. Immediately following the successful completion of the Offer, the Investors, through the Filer, will own between 70% and 80% of TMX Group and TMX Shareholders will own between 20% and 30% of TMX Group.

13. The second step of the Filer Acquisition is the Subsequent Arrangement to be implemented pursuant to applicable Canadian corporate laws. This will be accomplished by way of a court-approved plan of arrangement providing for a share exchange transaction pursuant to which TMX Shareholders will receive Filer Shares in exchange for their TMX Shares. Following completion of the Subsequent Arrangement, the Investors will own between 58.3% and 72.2% of the outstanding Filer Shares and former TMX Shareholders will own between 27.8% and 41.7% of the outstanding Filer Shares.

14. Following successful completion of the Offer, the Filer will have sufficient votes to cause the Subsequent Arrangement to be completed and will proceed with the Subsequent Acquisition and use its best efforts to complete the Subsequent Arrangement within 35 days of the expiry of the Deposit Extension Period (as defined under the Offer).

15. On October 30, 2011, the Filer and TMX Group entered into a support agreement (the Support Agreement) in respect of the Filer Acquisition, pursuant to which, among other things, the Filer has agreed to pursue the Offer and TMX Group has agreed to take all reasonable actions consistent with the Support Agreement to support the Filer Acquisition with the intention of consummating the Filer Acquisition in accordance with the terms of the Support Agreement. In connection with the entry into the Support Agreement, the Filer agreed to amend the terms of the Offer to, among other things, vary the conditions of the Offer. A formal notice of variation and extension dated October 31, 2011 was prepared which describes the Support Agreement and the variations to the Offer. Further notices of change and/or extension dated January 31, 2012, February 24, 2012, March 30, 2012, May 3, 2012 and May 31, 2012 have been prepared, and as at the date hereof, the Offer is due to expire on July 31, 2012.

16. If the Offer is further varied, the Filer will ensure that the aggregate consideration payable for TMX Shares acquired under the Offer and the Subsequent Arrangement are substantially equivalent in value, regardless of the form of consideration.

(d) Trading Activities

17. Each of the Investment Dealer Investors or its applicable affiliate is a Canadian investment dealer registered as an investment dealer under National Instrument 31-103 -- Registration Requirements and Exemptions (NI 31-103). Four of the Investment Dealer Investors are wholly-owned subsidiaries of Canadian Schedule I banks.

18. The Investment Dealer Investors and their affiliates (and including any additional investors in Maple and their affiliates who are registered as investment dealers under NI 31-103, collectively, the Dealer Affiliated Entities), engage in a wide variety of trading activities in the ordinary course of their business, which may include trading in TMX Shares and other securities of TMX Group (collectively, TMX Group Securities). Such trading activity includes the following categories of trading which may involve the acquisition or disposition of beneficial ownership of TMX Group Securities (or control or direction over TMX Group Securities) by Dealer Affiliated Entities in a non-principal capacity:

(a) Facilitation Trading and Market Making:Certain Dealer Affiliated Entities may purchase or sell TMX Group Securities in order to facilitate trading in TMX Group Securities by third party customers or in order to provide liquidity to the market in its capacity as a designated market maker for TMX Group Securities. When undertaking "facilitation trading", a Dealer Affiliated Entity will acquire or dispose of beneficial ownership of TMX Group Securities which either anticipate or respond to client demands. By buying or selling these TMX Group Securities, the Dealer Affiliated Entity will provide improved liquidity and execution certainty for a client who wishes to transact in TMX Group Securities. While the Dealer Affiliated Entity will acquire (or dispose of) TMX Group Securities which are the subject of this facilitation trading, the transactions are not done with a view to acquiring a long term investment position in TMX Group Securities. As a result, TMX Group Securities which are the subject of facilitation trading will typically be held for a brief period, and remain available for sale in the inventory of the Dealer Affiliated Entity (the Facilitation and Market Making Trades).

(b) Hedge Trading:Certain Dealer Affiliated Entities may purchase or sell TMX Group Securities for the purpose of hedging positions of, or in relation to, TMX Group Securities (or adjusting or liquidating existing hedge positions). For example, the Investment Dealer Investor who is a designated market maker for TMX Group derivatives on the Montreal Exchange enters into derivative transactions in relation to TMX Group Securities in order to provide liquidity to the market and such derivatives would normally be hedged through the purchase or sale of corresponding TMX Group Securities. In addition, certain Dealer Affiliated Entities are market makers (often referred to as "designated brokers") for exchange traded funds which may have investments in TMX Group Securities or provide facilitation trading in these exchange traded funds. When a Dealer Affiliated Entity undertakes this activity, in order to hedge its exposure, it will simultaneously buy or sell the constituent elements of the particular exchange traded fund (i.e., purchase constituent elements if it is selling units of the fund or sell the constituent elements if it is buying units of the fund) to ensure that it is hedging its exposure to the trade (the Hedge Trades).

(c) Basket Related Trading:Certain Dealer Affiliated Entities may purchase or sell TMX Group Securities by virtue of TMX Group Securities being part of an index or a larger basket of securities and as a result of externally driven events. For example, trades may be effected in order to appropriately adjust index-related portfolios in response to changes in the applicable indices or to provide liquidity for an investment fund (the Basket Trades).

(d) Securities Lending Trading:Certain Dealer Affiliated Entities may enter into securities lending agreements in connection with TMX Group Securities held by them. Pursuant to the terms and conditions of such agreements, the applicable borrower is provided with the incidents of ownership of the applicable TMX Group Securities, including the right to transfer and vote such TMX Group Securities, as applicable. Upon the expiry or earlier termination of the loan agreement, the borrower is under an obligation to return an equivalent number of TMX Group Securities to the applicable Dealer Affiliated Entity, together with compensation in lieu of any dividends and distributions that occur during the period of the loan agreement. The applicable Dealer Affiliated Entity can, at any time, request redelivery of the loaned TMX Group Securities (or an equivalent number thereof) in order to terminate the loan arrangement (Securities Lending Trades).

For the purposes hereof: (a) sales of TMX Group Securities during the pendency of the Offer pursuant to Facilitation and Market Making Trades, Hedge Trades, Basket Trades and Securities Lending Trades; and (b) acquisitions of TMX Group Securities during the pendency of the Offer pursuant to Basket Trades and Securities Lending Trades, are referred to as "Offer Ordinary Course Unrelated Trades". Acquisitions of TMX Group Securities pursuant to Facilitation and Market Making Trades, Hedge Trades, Basket Trades and Securities Lending Trades following the expiry of the Offer in accordance with its terms are referred to as "Post-Offer Ordinary Course Unrelated Trades".

19. In addition, purchases of TMX Shares by Dealer Affiliated Entities for the purposes of Facilitation and Market Making Trades and Securities Lending Trades in the 90 days preceding the Offer (the Pre-Bid Purchases) may have resulted in such Dealer Affiliated Entities acquiring beneficial ownership of such TMX Shares in circumstances that do not qualify for the exception for normal course purchases, including as a result of the purchase not being entered into on a "published market" as defined in section 89(1) of the Act or other applicable conditions in section 2.3 of OSC Rule 62-504 -- Take Over Bids and Issuer Bids (OSC 62-504) not being satisfied. The specific percentage of TMX Shares purchased by the Dealer Affiliated Entities pursuant to the Pre-Bid Purchases is not known. None of the Pre-Bid Purchases was for a price in excess of $48.00 per TMX Share. The Pre-Bid Purchases, to the extent that any of such purchases involved the purchase of more than 80% of the TMX Shares held by the applicable seller, may require the Filer to offer to acquire under the Offer the highest percentage that the number of TMX Shares acquired from a seller in the Pre-Bid Purchases was of the total number of TMX Shares beneficially owned by that seller at the time of the applicable Pre-Bid Purchase.

20. Each of the Investment Dealer Investors has established internal procedures and protocols to limit the ability of Investment Dealer Investors and Dealer Affiliated Entities to engage in any trading of TMX Group Securities other than pursuant to Offer Ordinary Course Unrelated Trades and Post-Offer Ordinary Course Unrelated Trades until such time as the Offer has expired in accordance with its terms or until the 20th business day after the expiry of the Offer, as applicable.

21. The personnel at the Investment Dealer Investors and Dealer Affiliated Entities who are involved in advising or soliciting in respect of the Offer are not involved in any decision-making in respect of the relevant trading activities by any of the Investment Dealer Investors and Dealer Affiliated Entities.

22. None of the Pre-Bid Purchases, Offer Ordinary Course Unrelated Trades or Post-Offer Ordinary Course Unrelated Trades have been or will be made in furtherance of or to facilitate the Offer and therefore as a policy matter do not need to be integrated with the Offer. Each of the Pre-Bid Purchases, Offer Ordinary Course Unrelated Trades and Post-Offer Ordinary Course Unrelated Trades have been and will be, as applicable, made in the ordinary course of business of the Dealer Affiliated Entities and will not be made on the basis of any undisclosed material information with respect to TMX Group or the Offer.

(e) Relevant Restrictions on Trading in Relation to Take-Over Bids

23. Section 93.1 of the Act requires (subject to section 93.1(2) of the Act) that an offeror not acquire the securities of an offeree issuer subject to a take-over bid, or securities convertible into such securities, from the day of the announcement of the offeror's intention to make the take-over bid until the expiry of the applicable take-over bid.

24. Section 93.2(1) of the Act requires that an offeror shall offer to acquire under a take-over bid that percentage of securities of an offeree issuer subject to the take-over bid that is at least equal to the highest percentage that the number of securities of an offeree issuer subject to the take-over bid acquired from a seller in any purchase not generally available to holders of securities of the offeree issuer subject to the take-over bid and made within the period of 90 days immediately preceding the take-over bid was of the total number of such securities beneficially owned by the seller.

25. Section 93.3(1) of the Act requires that an offeror shall not acquire securities of an offeree issuer subject to a take-over bid, or securities convertible into such securities, from the day of the expiry of the applicable take-over bid until the 20th business day thereafter.

26. Section 93.4 of the Act requires that an offeror not sell securities of an offeree issuer subject to a take-over bid, or securities convertible into such securities, from the day of the announcement of the offeror's intention to make a take-over bid until the expiry of such take-over bid.

27. Each of the restrictions in sections 93.1, 93.2, 93.3(1) and 93.4 of the Act (collectively, the Bid Integration Rules) apply to acquisitions or sales by the "offeror". For purposes of the Bid Integration Rules, section 93 of the Act provides that "offeror" means (a) a person making a bid, (b) a person acting jointly or in concert with a person making a bid, (c) a control person of a person making a bid, or (d) a person acting jointly or in concert with such control person.

28. Pursuant to section 91(1) of the Act, the affiliates of each of the Investment Dealer Investors may be deemed to be acting jointly or in concert with the respective Investment Dealer Investor. As such, pursuant to section 93 of the Act, the Dealer Affiliated Entities may be "offeror(s)" for purposes of the Bid Integration Rules.

29. Further, the Investment Dealer Investors may have been or may currently be control persons of Maple within the meaning of section 1(1) of the Act and may continue to be control persons during the pendency of the Offer. As such, each Investment Dealer Investor may be an "offeror" for purposes of the Bid Integration Rules.

30. While certain exemptions are generally available in connection with the Bid Integration Rules under applicable securities laws, none of such exemptions are available in respect of the Pre-Bid Purchases, Offer Ordinary Course Unrelated Trades and Post-Offer Ordinary Course Unrelated Trades. In particular:

(a) the Pre-Bid Purchases may not have been completed on a "published market" or otherwise completed in accordance with section 2.3 of OSC 62-504;

(b) acquisitions of TMX Group Securities as part of the Basket Trades or Securities Lending Trades completed during the period while the Offer is outstanding may be completed other than in accordance with section 2.1 of OSC 62-504; and

(c) acquisitions of TMX Group Securities pursuant to Post-Offer Ordinary Course Unrelated Trades completed during the 20 business day period following completion of the Offer may be completed other than in accordance with section 2.4 of OSC 62-504,

for the reason that, the applicable Dealer Affiliated Entity (or a party acting on its behalf) may have (i) solicited or arranged or may in the future solicit or arrange for the solicitation of offers to sell TMX Group Securities; (ii) solicited or arranged or may in the future solicit or arrange for the solicitation of offers to buy TMX Group Securities.

(f) Effect of Decision

31. The Filer acknowledges that the granting of this decision does not constitute approval by the Commission of the Filer Acquisition for any regulatory purpose.

Decision

Based on the facts represented by the Filer, 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: (a) the Pre-Bid Integration Relief is granted in respect of the Pre-Bid Purchases; and (b) the Bid Integration Relief is granted in respect of the Offer Ordinary Course Unrelated Trades and Post-Offer Ordinary Course Unrelated Trades, provided that:

(a) all such trades are entered into in the normal course of business and not in furtherance of or to facilitate the Offer;

(b) no broker acting for any Dealer Affiliated Entity performs services beyond the customary broker's functions in regards to the Offer Ordinary Course Unrelated Trades and Post-Offer Ordinary Course Unrelated Trades;

(c) no broker acting for any Dealer Affiliated Entity receives more than the usual fees or commission in regards to the Offer Ordinary Course Unrelated Trades and Post-Offer Ordinary Course Unrelated Trades than are charged for comparable services performed by the broker in the ordinary course;

(d) the Dealer Affiliated Entity or any person or company acting for the Dealer Affiliated Entity does not solicit or arrange for the solicitation of offers to sell the TMX Group Securities, except for the solicitation by the applicable Dealer Affiliated Entity or members of the soliciting dealer group under the Offer;

(e) the seller or any person or company acting for the seller of TMX Group Securities to a Dealer Affiliated Entity does not, to the knowledge of such Dealer Affiliated Entity, solicit or arrange for the solicitation of offers to buy TMX Group Securities; and

(f) any Offer Ordinary Course Unrelated Trades and Post-Offer Ordinary Course Unrelated Trades are completed in accordance with applicable United States securities laws.

"James Turner"
Vice-Chair
Ontario Securities Commission
 
"Mary Condon"
Vice-Chair
Ontario Securities Commission


{1} The shares of the Filer are actually held by AIMCO Maple 1 Inc. and AIMCO Maple 2 Inc., affiliates of Alberta Investment Management Corporation.

{2} As at the date of this Decision, GMP Capital Inc. (GMP) was a shareholder of the Filer. However, as has been announced prior to the date of the Decision, GMP is in the process of disposing of its shares of the Filer such that it will no longer be a shareholder of the Filer.