CIBC Securities Inc.

Headnote

MI 11-102 Passport System -- Process for Exemptive Relief Applications in Multiple Jurisdictions -- A mutual fund dealer selling model portfolios of mutual funds is exempt from registration as an adviser with respect to discretionary Strategic and Tactical Rebalancing activities carried out by the affiliated adviser to the model portfolios of mutual funds, subject to certain conditions.

Applicable Legislative Provisions

Multilateral Instrument 11-102 Passport System.

Securities Act (Ontario), R.S.O. 1990, c. S.5, as am., ss. 25(3)(a), 74(1).

November 9, 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

CIBC SECURITIES INC.

(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) for an exemption relieving the Filer from the adviser registration requirement (the Relief Sought) in connection with the Rebalancing Activities (as defined below) and the Strategic and Tactical Rebalancing Activities (as defined below) carried out by CIBC Trust Corporation (CIBC Trust) in connection with the Product (as defined and described below).

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,

(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 Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Nunavut, Northwest Territories and Yukon.

Interpretation

Defined terms contained in National Instrument 14-101 Definitions and MI 11-102 have the same meaning in this decision, unless otherwise defined.

Representations

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

1. The Filer is registered as a dealer in each of the jurisdictions in the category of mutual fund dealer and is a member of the Mutual Fund Dealers Association of Canada (MFDA).

2. The Filer is not in default of securities legislation in any jurisdiction.

3. CIBC Trust is a trust company organized under the laws of Canada and has its head office in Toronto, Ontario. It is qualified to carry on the trust business in all the provinces and territories of Canada. CIBC Trust is registered as an adviser, in the category of portfolio manager under National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103), in each of the jurisdictions, other than Ontario and Newfoundland and Labrador, where it can rely on an exemption.

4. CIBC Trust has been offering fully discretionary managed accounts to clients, including those for which only Imperial Pools or CIBC Index Mutual Funds (together, the Funds) are available. CIBC Trust is working with the Filer and CIBC Investor Services Inc. (CIBC ISI, and together with the Filer, the Dealers) to transition existing managed accounts from CIBC Trust to the facilities of the Dealers. All new managed accounts will be opened through the facilities of the Dealers and CIBC Trust will continue to develop and rebalance model portfolios which align substantively with the approach CIBC Trust has taken previously for clients with managed accounts for which only the Funds are available. The service is known as CIBC Personal Portfolio Services (the Product).

5. CIBC ISI is registered in each jurisdiction as a dealer in the category of investment dealer and is a member of the Investment Industry Regulatory Organization of Canada (IIROC).

6. The Dealers and CIBC Trust are each subsidiaries of Canadian Imperial Bank of Commerce (CIBC) and as such, are affiliated entities.

7. The Filer and CIBC ISI intend to offer the Product to clients. While the Product will also be offered by CIBC ISI, it does not require relief from the adviser registration requirements in reliance on the registration exemption in section 8.24 of NI 31-103.

8. The Product consists of a number of model portfolios, which together occupy successive portions of the investing spectrum with respect to the objective of the client, from secure income to aggressive growth. Each model portfolio is comprised of either the Imperial Pools or the CIBC Index Mutual Funds, each a family of mutual funds managed by an affiliate of the Filer, suitable to the objective of that portfolio.

9. Each of the Funds is or will be an open-ended mutual fund trust established under the laws of the Province of Ontario. CIBC is the investment fund manager of the Funds. CIBC Asset Management Inc. (CAMI), an affiliate of CIBC and of CIBC Trust and the Dealers, is the portfolio manager of the Funds. CIBC Trust is the trustee and CIBC Mellon Trust Company is the custodian of the Funds.

10. If a client is interested in the Product, the client completes an application form, which includes all of the relevant know-your-client and suitability information (including the client's investment needs and objectives, financial circumstances and risk tolerance). The client discusses the model portfolios with the applicable Dealer's dealing representative and, based on the client's responses, the dealing representative recommends which model portfolio will be suitable for the client; however, the client ultimately selects the model portfolio. If, however, the dealing representative considers the selected model portfolio unsuitable for the client, prior to the investment in that model portfolio, the dealing representative will inform the client of the dealing representative's opinion and will not finalize the investment in that model portfolio unless the client instructs the dealing representative to proceed nonetheless. Any of the Funds that are used in connection with the Product are or will be qualified under a simplified prospectus that has been filed in the applicable jurisdictions of Canada.

11. The client receives a description of the model portfolio selected by the client (the Selected Model Portfolio); the description provides information on the Selected Model Portfolio's Asset Classes (as defined below) and Permitted Ranges (as defined below).

12. The client is also provided with a simplified prospectus or fund facts document required by securities legislation for the Funds prior to investing in the Funds that may be used to comprise the Selected Model Portfolio.

13. The client will then enter into an agreement with the Filer or CIBC ISI, as applicable, (the Account Agreement). The Account Agreement must be approved by the Branch Manager of the applicable Dealer.

14. The Account Agreement includes express disclosure that CIBC Trust will be providing discretionary investment management services in connection with the rebalancing activities. The Account Agreement states that the client appoints the Filer as its agent to retain CIBC Trust to develop and rebalance the portfolios on the terms set out in the Account Agreement. The Account Agreement goes on to include provisions whereby CIBC Trust is appointed by the Filer to provide the rebalancing services for the model portfolios.

15. Under the Account Agreement, the client agrees to pay CIBC Trust the fees set forth in the Fee Schedule for the model portfolios using the Imperial Pools or the Fee Schedule for the CIBC Index Mutual Funds, as the case may be, which amount is used to pay for the services of the relevant Dealer, and CIBC Trust. Fees may be changed from time to time on 60 days' prior written notice to the client.

16. CIBC, as manager of the Funds, continues to be responsible for the fees of CAMI for its services as portfolio adviser to the Funds. Each of the Funds may pay CIBC, as manager of the Funds, an annual management fee of up to 0.25% of the net asset value of the specific Fund. Each of the Funds will also pay its own operating expenses.

17. No management fees will be charged by CIBC Trust or the Filer directly to the clients or to the Funds in relation to the series or class of units of the Funds that are available under the Product.

18. No sales charges or commissions will be payable by the client in respect of any rebalancing activities described below.

19. As a result, there will be no duplication of any fees between CIBC Trust and the Filer.

20. To the extent that there are investors in the Funds who acquire units of the Funds outside the Product, such investors will not bear expenses attributable to the Product.

21. After investing in the Selected Model Portfolio, the client is provided with details of the Funds held in their account with the Filer in the quarterly, or more frequent, account statements as required by IIROC or the MFDA, as the case may be; the account statement will also include information about how a client can obtain a copy of the current simplified prospectus required by securities legislation for the Funds if the client requires further details.

22. CIBC Trust undertakes to develop and manage the model portfolios on a discretionary basis. Each model portfolio is comprised of different asset classes (the Asset Classes) which are determined by CIBC Trust in its sole discretion. CIBC Trust allocates each Asset Class a permitted range (Permitted Range), being a minimum and maximum percentage of the model portfolio that can be allocated to investments of a particular Asset Class. CIBC Trust can change the Permitted Range or the Asset Classes of a model portfolio (including adding a new Asset Class) or both, if the client is provided at least 60 days' advance written notice of the change. CIBC Trust's actions will be carried out with a view to ensuring that the model portfolio continues to abide by the stated objectives.

23. CIBC Trust also uses its discretion in choosing which of the Funds will be used for each Asset Class, provided the investment objective and strategies of any Fund are consistent with the Asset Class. CIBC Trust's actions will be carried out with a view to ensuring that the Selected Model Portfolio continues to abide by the stated objectives.

24. The client's account will be periodically rebalanced through a series of purchase and redemption trades effected by CIBC Trust. If the percentage weighting of at least one of the Asset Classes in the Selected Model Portfolio exceeds or falls below the Permitted Range for that Asset Class, CIBC Trust will effect trades on behalf of all clients invested in the Selected Model Portfolio to bring the Asset Classes of the Selected Model Portfolio within the Permitted Range for each Asset Class. Additionally, a client account may be rebalanced if the percentage weighting of at least one Fund in a client account exceeds or falls below the rebalancing threshold for that Fund in an Asset Class. CIBC Trust will effect trades on behalf of that client account to bring the Funds in the client account back to their target range (and within the Permitted Range for the Asset Class). These trades are referred to herein as the Rebalancing Activities.

25. In addition to the Rebalancing Activities described above that are effected by CIBC Trust, CIBC Trust will review all of the model portfolios on a periodic basis, whenever needed and currently at least annually, to ensure the model portfolios are consistent with their stated objectives, include appropriate Funds, and weight each Fund desirably. CIBC Trust may also change the weightings of the Funds within the model portfolios to take advantage of market conditions and trends. All changes effected by CIBC Trust as described above will be done on a fully discretionary basis and in a manner consistent with the stated objectives of the model portfolios. In connection with its responsibilities under the Product, CIBC Trust will carry out the trades in the Funds that are necessary and incidental in connection with modifying the model portfolios. These activities are referred to herein as the Strategic and Tactical Rebalancing Activities.

26. The Filer will at all times also be ultimately responsible to the client for the rebalancing activities undertaken by CIBC Trust.

27. The Filer will carry out the trades in units of the Funds for a client in connection with the investment of monies (an Investment) by the clients in the Funds comprising the Selected Model Portfolio at the time of Investment; CIBC Trust will carry out trades in units of the Funds for a client that are necessary and incidental to its Rebalancing Activities and Strategic and Tactical Rebalancing Activities, other than trades relating to an Investment; all trades will be reflected in the client's account on the day following the trade, and will also be reflected in the trade blotter to be shared by the Filer and CIBC Trust in connection with the Product.

28. The trades carried out by CIBC Trust as described above will be reflected in the records of the Filer, and subject to oversight by the MFDA.

29. MFDA Investor Protection Corporation coverage will apply to the investments in the Funds held in the clients' accounts with the Filer on the same terms as other mutual fund investments.

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 Relief Sought is granted, provided that:

(a) the Asset Classes and Permitted Ranges cannot be changed without providing at least 60 days' advance written notice to the client; and

(b) the Filer ensures that the Account Agreement or other materials delivered to the client with respect to the Selected Model Portfolio fully describe the Product and applicable model portfolio including (but not limited to):

(i) that CIBC Trust manages the investment portfolios of the model portfolios pursuant to the Account Agreement;

(ii) that the Filer and CIBC Trust are affiliated entities;

(iii) that while CIBC Trust manages the model portfolio, it is not responsible for determining or confirming the suitability of a model portfolio for the client (the Filer retains the responsibility for determining and confirming the suitability of a model portfolio for the client) and, all other terms and restrictions respecting the client's relationship with CIBC Trust are set out in the Account Agreement;

(iv) that the Asset Classes comprising a model portfolio will be listed along with the Permitted Range for each Asset Class;

(v) that the Asset Classes and Permitted Ranges cannot be changed without providing at least 60 days' advance written notice to the client;

(vi) that CIBC Trust will in its discretion choose the Funds in which each Asset Class will invest and their weightings, and each Asset Class of a model portfolio will be invested in units of the Funds that have investment objectives and strategies that are consistent with the Asset Class;

(vii) that CIBC Trust will carry out the trades in units of the Funds for clients that are necessary and incidental to its Rebalancing Activities and Strategic and Tactical Rebalancing Activities, other than trades related to an Investment. All trades will be reflected in the client's account on the day following the trade, and will also be reflected in the trade blotter to be shared by the Filer and CIBC Trust in connection with the Product;

(viii) full disclosure of the compensation paid to CIBC Trust and the Filer, including:

(A) no management fees will be charged by CIBC Trust or the Filer directly to the clients or to the Funds in relation to the series or class of units of the Funds that are available under the Product; no sales charges or commissions will be payable by the client in connection with any Rebalancing Activities or Strategic or Tactical Rebalancing Activities, and each Fund pays its own operating expenses;

(B) the client will pay CIBC Trust the fees set forth in the applicable Fee Schedule, which amount is used to pay for the services of the Filer and CIBC Trust; which fees will be based on the net asset value of the client's account, subject to a minimum amount; and which fees can only be changed from time to time provided the client is given at least 60 days' advance written notice.