HR Strategies Inc. and HRS Liquid Strategies L.P.

Decision

Headnote

Under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, a registered firm must not permit an individual to act as a dealing, advising or associate advising representative of the registered firm if the individual is registered as a dealing, advising or associate advising representative of another registered firm. The dually registered representatives will have sufficient time to adequately serve both firms. Both firms will be managing different investment strategies, which will mitigate the risk of conflicts of interest arising from the dual registration. Both firms have policies and procedures in place to address potential conflicts of interest and the dually registered representatives are aware of those procedures. The firms are exempted from the prohibition.

Applicable Legislative Provisions

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 4.1, 15.1.

May 22, 2015

IN THE MATTER OF THE SECURITIES LEGISLATION OF QUEBEC AND ONTARIO AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF THE DERIVATIVES LEGISLATION OF QUEBEC AND IN THE MATTER OF HR STRATEGIES INC. (HRS) AND HRS LIQUID STRATEGIES L.P. (HRS LS) (THE FILERS)

DECISION

Background

The securities regulatory authority in Quebec (the Principal Decision Maker) and the regulator in Ontario (the Ontario Decision Maker and together with the Principal Decision Maker, the Dual Exemption Decision Makers) have received an application from the Filers for a decision under the securities legislation of each of Quebec and Ontario (the Legislation) for relief from the prohibition in paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103), pursuant to section 15.1 of NI 31-103, to permit any current and any future dealing representative, advising representative and/or associate advising representative of HRS (the Securities Representatives) to also be registered as a dealing representative, advising representative and/or associate advising representative with HRS LS (the Exemption Sought).

The Principal Decision Maker has also received an application under the derivatives legislation of Quebec for relief from the prohibition in paragraph 4.1(1)(b) of NI 31-103 as applicable by section 11.1 of the Derivatives Regulation (Quebec) CQLR c. I-14.01, r. 1, pursuant to section 86 of the Derivatives Act (Quebec), CQLR c. I-14.01 to permit any current and any future derivatives advising representative and derivatives associate advising representative of HRS (with the Securities Representatives, each a Representative) to also be registered as a derivatives advising representative or derivatives associate advising representative of HRS LS (the Derivatives Exemption Sought).

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

a) the Principal Decision Maker is the principal regulator for this application,

b) the decision with respect to the Exemption Sought is the decision of the Principal Decision Maker and the decision evidences the decision of the Ontario Decision Maker, and

c) the decision with respect to the Derivatives Exemption Sought is the decision of the Principal Decision Maker.

Interpretation

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

Representations

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

1. HRS LS was created on June 10, 2014, by way of a limited partnership agreement between HRS Liquid Strategies General Partner Inc. (the GP) and HRS, as the initial limited partner, for the purposes of acting as an investment firm managing portfolios of liquid strategies for institutional and high net worth investors. As HRS is a control person of the GP and the initial limited partner of HRS LS, HRS and HRS LS are affiliated firms.

2. HRS's head office is located in Montreal, Quebec. The firm is registered as investment fund manager, portfolio manager and exempt market dealer in Ontario and Quebec. The firm is also registered as a derivatives portfolio manager in Quebec and a commodity trading manager in Ontario.

3. HRS LS's head office is in Montreal, Quebec. As mentioned above, HRS LS is a limited partnership and is an affiliate of HRS. It is seeking registration in Quebec and Ontario as investment fund manager, portfolio manager and exempt market dealer. HRS LS is also seeking registration as a derivatives portfolio manager in Quebec and a commodity trading manager in Ontario.

4. While both HRS and HRS LS are primarily engaged in the business of investment management, each of HRS and HRS LS will be managing different investment strategies.

5. The advising representatives of HRS are currently or will be registered as such in all jurisdictions where HRS is registered as a portfolio manager, i.e. Quebec and Ontario. The dealing representatives of HRS are currently or will be registered as such in all jurisdictions where HRS is registered as an exempt market dealer, i.e. Quebec and Ontario. The associate advising representatives of HRS are currently or will be registered as such in all jurisdictions where HRS is registered as a portfolio manager, i.e. Quebec and Ontario. The derivatives advising representatives and derivatives associate advising representatives of HRS are currently or will be registered as such in all jurisdictions where HRS is registered as a derivatives portfolio manager, i.e. Quebec. The advising representatives of HRS are currently or will be registered as such in all jurisdictions where HRS is registered as a commodity trading manager, i.e. Ontario.

Business Reasons

6. HRS and a team of investment professionals within HRS have developed and manage specific investment strategies, including the liquid investment strategies (the Liquid Investment Strategies). As a result of the establishment of a strategic relationship with an investor which will have a partnership interest in HRS LS, the Liquid Investment Strategies will be spun off and transferred to HRS LS.

7. Although the Representatives seeking dual registration will act for HRS LS when managing the Liquid Investment Strategies, they will continue to act for HRS when managing one or some of the various other investment strategies managed by HRS.

8. As the Representatives' skill and expertise are required to develop and manage not only the Liquid Investment Strategies, but other investment strategies managed by HRS, dual registration of the Representatives is required.

Dual Registration

9. If the Exemption Sought and Derivatives Exemption Sought are granted, each of the Representatives of HRS will also be Representatives of HRS LS (the Dually Registered Representatives).

10. The dual registration of the Dually Registered Representatives may give rise to a conflict of interest. However, HRS and HRS LS have policies and procedures in place to address these conflicts and the Dually Registered Representatives are aware of those procedures.

11. HRS and HRS LS will be managing different investment strategies, which will mitigate the risk of conflicts of interest arising from the dual registration.

12. The Dually Registered Representatives will have sufficient time to adequately serve both Filers. The management teams of the Filers, which are identical, will ensure that all Dually Registered Representatives continue to have sufficient time to adequately serve each Filer and will mitigate the risk of conflicts of interest.

13. The dealing and advising services that will be provided to the clients of HRS and HRS LS by the Dually Registered Representatives will not interfere with their responsibilities to either Filer.

14. The Dually Registered Representatives will be required to act fairly, honestly and in good faith and in the best interests of the clients of each Filer.

15. The Filers will have the same chief compliance officer and appropriate compliance and supervisory policies and procedures in place to monitor the conduct of its registered individuals, including any material conflicts of interest that may arise as a result of the dual registration of the Dually Registered Representatives. In particular, the Dually Registered Representatives will be subject to the supervisory, and the applicable compliance, requirements of each of the Filers.

16. In order to minimize client confusion, the dual registration of the Dually Registered Representatives and the relationship between HRS and HRS LS will be appropriately disclosed to the clients of the Dually Registered Representatives.

17. In the absence of the Exemption Sought and the Derivatives Exemption Sought, the Filers would be prohibited from having Dually Registered Representatives.

18. Neither of the Filers is in default of any requirement of securities or derivatives legislation in any jurisdiction of Canada.

Decision

Each of the Dual Exemption Decision Makers is satisfied that the decision meets the tests set out in the Legislation and the Derivatives Act (Quebec), as applicable, for each of them to make the decision.

The decision of the Dual Exemption Decision Makers under the Legislation is that the Exemption Sought is granted.

The decision of the Principal Decision Maker under the Derivatives Act (Quebec) is that the Derivatives Exemption Sought is granted.

"Eric Stevenson"
Superintendent, Client Services and Distribution Oversight