Notice of Agreement among certain provincial securities regulators and the Investment Industry Regulatory Organization of Canada (IIROC) with respect to the administration and application of surplus funds generated by the operation of the National Registration Database (NRD) – Investment Industry Regulatory Organization of Canada (IIROC)

 
The Ontario Securities Commission, the British Columbia Securities Commission, the Alberta Securities Commission, the Autorité des marchés financiers and IIROC have entered into an agreement concerning the administration and application of surplus funds generated by the operation of NRD (NRD Surplus Application Agreement).

The NRD Surplus Application Agreement is being published today in the Bulletin in accordance with section 143.10 of the Securities Act. This agreement was delivered to the Minister of Finance on April 21, 2011, and is subject to Ministerial approval.

Questions may be referred to:

Minami Ganaha
Senior Legal IT Counsel
General Counsel's Office
(416) 593-8170
[email protected]

NRD SURPLUS APPLICATION AGREEMENT

This Agreement is made as of the 29th day of October, 2008 among Investment Industry Regulatory Organization of Canada ("IIROC") and British Columbia Securities Commission ("BCSC") and Alberta Securities Commission ("ASC") and Ontario Securities Commission ("OSC") and Autorité des marchés financiers ("AMF") (collectively, the "Principal Regulators").

WHEREAS each of the Principal Regulators is a party to the National Registration Database ("NRD") Operations Agreement dated June 13, 2003 with CDS Inc., as amended (the "NRD Agreement");

WHEREAS an operating surplus has accumulated under the NRD Agreement between November 1, 2004 and March 31, 2008 (the "Existing NRD Surplus");

WHEREAS the Principal Regulators desire to establish the terms and conditions governing the administration and application of the Existing NRD Surplus and any annual operating surpluses ("Annual NRD Surplus") accumulating under the NRD Agreement from NRD operations, including any interest or other amounts earned thereon (collectively, the "Funds");

NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:

1. Upon receipt of such amounts from CDS Inc., the OSC will deposit and hold the Existing NRD Surplus and any Annual NRD Surplus in trust on behalf of the Principal Regulators in one or more segregated accounts, each of which may be a deposit/chequing or investment account and must be held with a bank listed in Schedule I or II to the Bank Act (Canada) or a trust company registered under applicable Ontario or federal legislation (each an "Eligible Account").

2. Notwithstanding section 1, the OSC may, in its discretion, invest the Funds in accordance with an investment policy, the prime consideration of which is the protection of principal and the selection of maturities appropriate to anticipated cash flow needs.

3. The OSC may, in its discretion, retain the services of an investment advisor to assist in the investment and management of the Funds.

4. The OSC will deduct or direct the deduction from the Funds any out-of-pocket expenses it incurs in administering and investing the Funds, including any costs relating to the services of an investment advisor.

5. Subject to section 4, the OSC may only withdraw or direct the payment of amounts from an Eligible Account if such withdrawal or direction:

a. complies with the terms of this Agreement; and

b. has been authorized in writing by a duly authorized representative of each one of the Principal Regulators.

6. For greater certainty, section 5 above does not apply to a transfer of Funds from one Eligible Account to another.

7. The Principal Regulators agree that the Funds shall be used toward one or more of the following:

a) developing, modifying, enhancing, redesigning or replacing NRD;

b) funding any Shortfall (as defined in the NRD Agreement) as contemplated under subsections 9.3 (iii) and 9.3 (v) of the NRD Agreement;

c) reducing fees under the NRD Fee Schedule, as defined in the NRD Filer Manual (as defined in the NRD Agreement); and

d) paying any costs or expenses associated with the operation of NRD which may be mutually agreed upon.

8. The Principal Regulators agree that the OSC will not, nor will any director, officer, employee or agent of the OSC, be subject to any liability whatsoever to the Principal Regulators or any other person, in tort, contract or otherwise, in connection with the Funds or activities in relation to the Funds, for any action taken or permitted by it to be taken, or for its failure to take any action; provided that the foregoing limitation of liability will not apply in respect of any action or failure to act arising from or in connection with wilful misconduct, negligence or reckless disregard of a duty by the OSC hereunder. Except as to the extent provided in this Agreement, the OSC will not be subject to any debts, liabilities, obligations, demands, judgments, costs, charges or expenses against or with respect to the Funds and resort will be had solely to the Funds for the payment thereof.

9. Each of the Principal Regulators warrants and represents that the execution, delivery and performance of this Agreement (i) are within its powers, (ii) have been or will be duly authorized by all necessary proceedings, and (iii) do not and will not contravene or constitute a default under, and do not and will not conflict with any judgment, decree or order, or any contract, agreement, or other undertaking or covenant applicable to such Principal Regulators.

10. This Agreement shall govern the administration and application of Funds until the later of (i) the termination or expiry of the NRD Agreement and (ii) the application and distribution of all Funds in accordance with this Agreement.

11. This Agreement shall be governed by and construed in accordance with the laws in force in the province of Ontario and the federal laws of Canada applicable therein. The Principal Regulators hereby irrevocably attorn to the jurisdiction of courts of the province of Ontario or the Federal Court of Canada sitting in such province.

12. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed to be an original, including any fax counterpart, and it shall not be necessary when making proof of this Agreement to account for more than one counterpart.

13. This agreement, as it pertains to the OSC, comes into effect as of the date hereof once approved by the Minister in Ontario pursuant to section 143.10 of the Securities Act (Ontario).

14. IN WITNESS WHEREOF, the duly authorized signatories of the parties have signed this Agreement as of October 29, 2008.