Securities Law & Instruments

Headnote

MutualReliance Review System for Exemptive Relief Applications - relieffrom the Suitability Requirements, as reflected in paragraph 1.5(1)(b)of OSC Rule 31-505, pursuant to section 4.1 of OSC Rule 31-505,subject to the terms and conditions set out in the Decision Document.

Decisionpursuant to s.21.1(4) of the Act, that the IDA Suitability Requirementsdo not apply to the Filer, subject to the terms and conditionsset out in the Decision Document.

ApplicableOntario Statute

SecuritiesAct R.S.O. 1990, c.S.5, as amended, s.21.1(4).

ApplicableOntario Rule

OntarioSecurities Commission Rule 31-505 Conditions of Registration(1999) 22 O.S.C.B. 731.

IDARegulations Cited

IDARegulation 1300.1(b), 1800.5(b), 1900.4.

INTHE MATTER OF

THESECURITIES LEGISLATION OF

ONTARIOAND BRITISH COLUMBIA


AND


INTHE MATTER OF

THEMUTUAL RELIANCE REVIEW SYSTEM FOR

EXEMPTIVERELIEF APPLICATIONS


AND


INTHE MATTER OF SWIFT TRADE SECURITIES INC. /

VALEURSMOBILIÈRES SWIFT TRADE INC.


MUTUALRELIANCE REVIEW SYSTEM DECISION DOCUMENT


WHEREASthe local securities regulatory authority or regulator in eachof the Provinces of Ontario and British Columbia (collectivelythe "Jurisdictions"), being the Ontario Securities Commissionand the British Columbia Securities Commission (collectivelythe "Decision Makers"), has received an application from SwiftTrade Securities Inc. (the "Filer") for:

(a)a decision under the securities legislation of the Jurisdictions(the "Legislation") exempting the Filer and its registered salespersons,officers and directors (collectively the "Registered Representatives")from the requirements of the Legislation to make inquiries abouteach client of the Discount Brokerage Business (as defined below)as are appropriate, in view of the nature of the client's investmentsand of the type of transaction being effected for the client'saccount, to determine (a) the general investment needs and objectivesof the client, and (b) the suitability of a proposed purchaseor sale of a security for the client (such requirements beingcollectively referred to as the "Suitability Requirements");and

(b)a decision under the Legislation exempting the Filer and itsRegistered Representatives from the requirements of the InvestmentDealers Association of Canada (the "IDA"), in particular IDARegulations 1300.1(b), 1800.5(b) and 1900.4, requiring the Filerand its Registered Representatives to make inquiries of eachclient of the Discount Brokerage Business as are appropriate,in view of the nature of the client's investments and of thetype of transaction being effected for the client's account,to determine (a) the general investment needs and objectivesof the client and (b) the suitability of a proposed purchaseor sale of a security for the client (such requirements beingcollectively referred to as the "IDA Suitability Requirements");

ANDWHEREAS under the Mutual Reliance Review System forExemptive Relief Applications (the "System"), the Ontario SecuritiesCommission is the principal regulator for this application;

ANDWHEREAS the Filer has represented to the Decision Makersthat:

1.the Filer is a corporation incorporated under the CanadaBusiness Corporations Act;

2.the Filer is registered as a dealer with unrestricted practice(discount broker) in the Province of Quebec and an investmentdealer in the Provinces of Ontario, Manitoba and British Columbia;

3.the Filer is a member of the IDA;

4.the head office of the Filer is located in Toronto, Ontarioand the Filer has or expects to have officers and directors,branch managers and/or salespersons registered in the Jurisdictionsand in Quebec and Manitoba;

5.the Filer currently provides online discount brokerage servicesto certain of its clients in the Province of Quebec and willbe providing online discount brokerage services to certain ofits clients in the Jurisdictions (the "Discount Brokerage Business");

6.the Registered Representatives of the Filer do not and willnot provide advice or recommendations regarding the purchaseor sale of any security to clients of the Discount BrokerageBusiness (and account opening documentation will inform prospectiveclients of the Filer of such fact) and the Filer has adoptedpolicies and procedures which are designed to ensure the Filerand its Registered Representatives will not provide advice orrecommendations regarding the purchase or sale of any securityto clients of the Discount Brokerage Business;

7.the Filer, its Registered Representatives and any other of itsemployees do not and will not directly promote to clients ofthe Discount Brokerage Business that any such clients use daytrading strategies (or any strategies similar to day tradingstrategies) (such promotions to such clients being referredto as "Promotional Activities") or directly solicit such clientsto become clients of the Day Trading Business (such solicitationsto such clients being referred to as "Solicitations"), and theFiler has adopted policies and procedures which are designedto ensure the Filer, its Registered Representatives and anyother of its employees do not engage in Promotional Activitiesor Solicitations, except that Promotional Activities shall notinclude where the Filer, one of its Registered Representativesor other employees, at the request of any client of the DiscountBrokerage Business for information about opening an accountwith the Day Trading Business, provides such information aboutaccount opening procedures, entry requirements, costs, scheduling,and other related general information that a client would reasonablywant to know, as long as any information provided does not consistof any recommendation, advice or strategy with respect to tradingsecurities (collectively, "Requested Information");

8.when the Filer provides trade execution service to clients ofthe Discount Brokerage Business it would, in the absence ofa Decision by the Decision Makers, be required to comply withthe Suitability Requirements and the IDA Suitability Requirements;

9.clients of the Discount Brokerage Business who request the Fileror its Registered Representatives to provide advice or recommendationsor advice as to suitability are referred to a registered dealeror adviser that provides those services;

10.in the event the Filer becomes affiliated with another entitythat provides investment services to clients which include thedetermination of general investment needs and objectives andthe suitability of proposed purchases or sales of securitiesfor clients, the Filer will adopt policies and procedures whichensure that:

(i)the Filer operates separately from any such affiliate of theFiler; and

(ii)Registered Representatives of the Filer are clearly employedby the Filer and do not handle the business or clients of anysuch affiliate of the Filer;

11.the Filer does not and will not compensate its Registered Representativeson the basis of transactional values in connection with theDiscount Brokerage Business;

12.prior to the Filer opening an account for a prospective clientof the Discount Brokerage Business, each such client will berequested to acknowledge, in the account opening documentation,that:

(a)no advice or recommendations will be provided by the Filer orits Registered Representatives regarding the purchase or saleof any security, and

(b)the Filer and its Registered Representatives will not determinethe general investment needs and objectives of the client orthe suitability of a proposed purchase or sale of a securityfor the client

(a)and (b) constituting collectively the "Prospective Client Acknowledgement");

13.the Prospective Client Acknowledgement explains to each prospectiveclient the significance of not receiving either investment adviceor a recommendation from the Filer, including the significanceof the Filer not determining the general investment needs andobjectives of the client or the suitability of a proposed purchaseor sale of a security for the client;

14.the Filer has adopted policies and procedures to ensure that:

(a)evidence of all Prospective Client Acknowledgements is establishedand retained pursuant to the record-keeping requirements ofthe Legislation and the IDA,

(b)client accounts of the Discount Brokerage Business are ableto be accurately identified and designated as such and distinguishedfrom any client accounts which do not relate to the DiscountBrokerage Business, and

(c)the Filer can track that a Prospective Client Acknowledgementhas been received for each such account;

15.in the event of Internet interruption, clients of the DiscountBrokerage Business will not be permitted to place orders bytelephone to trade securities unless employees of the Filertaking the orders are properly registered in the Jurisdictions;

16.clients of the Filer will not be permitted to have both an accountwith the Discount Brokerage Business and the day trading businessof the Filer;

17.all correspondence from the Filer will clearly indicate to whichbusiness it relates; and

18.the Filer has previously obtained relief from the applicationof suitability requirements in connection with activities relatingto the day trading business of the Filer pursuant to an MRRSDecision of the Decision Makers dated June 29, 2001.

ANDWHEREAS under the System, this MRRS Decision Documentevidences the decision of each Decision Maker (collectively,the "Decision");

ANDWHEREAS each of the Decision Makers is satisfied thatthe test contained in the Legislation that provides the DecisionMaker with the jurisdiction to make the Decision has been met;

THEDECISION of the Decision Makers under the Legislationis that the Suitability Requirements contained in the Legislationshall not apply to the Filer and its Registered Representativesin connection with the Discount Brokerage Business, so longas:

(a)the Filer and its Registered Representatives do not provideany advice or recommendations to clients of the Discount BrokerageBusiness regarding the purchase or sale of any security;

(b)clients of the Discount Brokerage Business who request the Fileror its Registered Representatives to provide advice or recommendationsor advice as to suitability are referred to a registered dealeror adviser that provides those services;

(c)the Filer, its Registered Representatives and any other of itsemployees do not and will not directly engage in PromotionalActivities or Solicitations, except with respect to RequestedInformation, and the Filer has adopted policies and procedureswhich are designed to ensure the Filer, its Registered Representativesand any other of its employees do not engage in PromotionalActivities or Solicitations;

(d)in the event the Filer becomes affiliated with another entitythat provides investment services to clients which include thedetermination of general investment needs and objectives andthe suitability of proposed purchases or sales of securitiesfor clients, the Filer will adopt policies and procedures whichensure that:

(i)the Filer operates separately from any such affiliate of theFiler; and

(ii)Registered Representatives of the Filer are clearly employedby the Filer and do not handle the business or clients of anysuch affiliate of the Filer;

(e)the Filer does not compensate its Registered Representativeson the basis of transactional values in connection with theDiscount Brokerage Business;

(f)each prospective client of the Discount Brokerage Business isadvised by the Filer of the Decision of the Decision Makersand required to sign a Prospective Client Acknowledgement priorto the Filer servicing such prospective client;

(g)evidence of all Prospective Client Acknowledgements is establishedand retained pursuant to the record keeping requirements ofthe Legislation;

(h)client accounts of the Discount Brokerage Business are ableto be accurately identified and designated as such and distinguishedfrom any client accounts which do not relate to the DiscountBrokerage Business;

(i)the Filer tracks that a Prospective Client Acknowledgement hasbeen received for each applicable account;

(j)in the event of Internet interruption, clients of the DiscountBrokerage Business are not permitted to place orders by telephoneto trade securities unless employees of the Filer taking theorders are properly registered in the Jurisdictions;

(k)clients of the Filer are not permitted to have both an accountwith the Discount Brokerage Business and the day trading businessof the Filer;

(l)all correspondence from the Filer clearly indicates to whichbusiness it relates; and

(m)the Decision with respect to the Suitability Requirements willterminate one year from September 6, 2001, the date the IDArule amendments addressing the IDA Suitability Requirementscame into force, unless the Decision Makers determine otherwise.

December18, 2001

"RandeePavalow"


THEDECISION of the Decision Makers is that the IDA SuitabilityRequirements shall not apply to the Filer and its RegisteredRepresentative in connection with the Discount Brokerage Business,so long as:

(a)the Filer and its Registered Representatives do not provide anyadvice or recommendations to clients of the Discount BrokerageBusiness regarding the purchase or sale of any security;

(b)clients of the Discount Brokerage Business who request the Fileror its Registered Representatives to provide advice or recommendationsor advice as to suitability are referred to a registered dealeror adviser that provides those services;

(c)the Filer, its Registered Representatives and any other of itsemployees do not and will not directly engage in Promotional Activitiesor Solicitations, except with respect to Requested Information,and the Filer has adopted policies and procedures which are designedto ensure the Filer, its Registered Representatives and any otherof its employees do not engage in Promotional Activities or Solicitations;

(d)in the event the Filer becomes affiliated with another entitythat provides investment services to clients which include thedetermination of general investment needs and objectives and thesuitability of proposed purchases or sales of securities for clients,the Filer will adopt policies and procedures which ensure that:

(i)the Filer operates separately from any such affiliate of the Filer;and

(ii)Registered Representatives of the Filer are clearly employed bythe Filer and do not handle the business or clients of any suchaffiliate of the Filer;

(e)the Filer does not compensate its Registered Representatives onthe basis of transactional values in connection with the DiscountBrokerage Business;

(f)each prospective client of the Discount Brokerage Business isadvised of the Decision of the Decision Makers and required tosign a Prospective Client Acknowledgement prior to the Filer servicingsuch prospective client;

(g)evidence of all Prospective Client Acknowledgements is establishedand retained pursuant to the record-keeping requirements of theIDA;

(h)client accounts of the Discount Brokerage Business are able tobe accurately identified and designated as such and distinguishedfrom any client accounts which do not relate to the Discount BrokerageBusiness;

(i)the Filer tracks that a Prospective Client Acknowledgement hasbeen received for each applicable account;

(j)in the event of Internet interruption, clients of the DiscountBrokerage Business are not permitted to place orders by telephoneto trade securities unless employees of the Filer taking the ordersare properly registered in the Jurisdictions;

(k)clients of the Filer are not permitted to have both an accountwith the Discount Brokerage Business and the day trading businessof the Filer;

(l)all correspondence from the Filer clearly indicates to which businessit relates; and

(m)the Decision with respect to the IDA Suitability Requirementswill terminate one year from September 6, 2001, the date the IDArule amendments addressing the IDA Suitability Requirements cameinto force, unless the Decision Makers determine otherwise.

December18, 2001.

"PaulMoore"       "R. Stephen Paddon"