Securities Law & Instruments

Headnote

MutualReliance Review System for Exemptive Relief Applications - relieffrom requirement to be recognized as a "stock exchange" or "exchange"under securities legislation and relief from sections6.6(b), 6.7, 8.1, 8.2, 10.1, 9.2(1), 9.4, and 12.2 of NationalInstrument 21-101 Marketplace Operation subject to such timelimitations as stated in the MRRS Decision Document - relieffrom requirements, solely with respect to clients that are registereddealers, to provide monthly or quarterly statements of accountand perform compliance officer review of new account, tradingand advice, provided that the filer is registered as an investmentdealer or the equivalent in a jurisdiction.

INTHE MATTER OF

THESECURITIES LEGISLATION OF

ONTARIO,BRITISH COLUMBIA, MANITOBA AND QUEBEC

AND

INTHE MATTER OF

THEMUTUAL RELIANCE REVIEW SYSTEM

FOREXEMPTIVE RELIEF APPLICATIONS

AND

INTHE MATTER OF

COLLECTIVEBIDSYSTEMS INC. AND CBID SECURITIES INC.

MRRSDECISION DOCUMENT

WHEREASthe local securities regulatory authority or regulator in eachof the provinces of Ontario, British Columbia and Quebec issueda decision (the "Original Decision") on December 19, 2001 underthe securities legislation of the Jurisdictions (the "Legislation")exempting CollectiveBid Systems Inc. ("CB") and CBID SecuritiesInc. ("CBID" and, with CB, the "Filers") from the requirementto comply with National Instrument 21-101 Marketplace Operationand National Instrument 23-101 Trading Rules (the "ATS Rules")until April 1, 2002;

ANDWHEREAS the Filers have applied to local securities regulatoryauthority or regulator (the "Decision Maker") in each of the provincesof Ontario, British Columbia, Manitoba and Quebec (collectively,the "Jurisdictions") for a decision under the Legislation thatthe requirements contained in the Legislation to be recognizedas a stock exchange or an exchange and certain requirements ofNational Instrument 21-101 Marketplace Operation ("NI 21-101")do not apply to CBID;

ANDWHEREAS under the Mutual Reliance Review System for ExemptiveRelief Applications (the "System"), the Ontario Securities Commission(the "OSC") is the principal regulator for this application;

ANDWHEREAS the Filers have represented to the Decision Makersas follows.

1.CB is a corporation amalgamated under the Canada Business CorporationsAct (the "CBCA") on October 1, 2001.

2.CBID is a wholly-owned subsidiary of CB that was incorporatedunder the CBCA on October 18, 2001. CBID is a member of the InvestmentDealers Association of Canada (the "IDA") and is registered asan investment dealer in Ontario and has applied to be registeredin the equivalent category in British Columbia, Manitoba and Quebec.

3.CBID operates a marketplace (the "Marketplace") as defined inNI 21-101 that allows customers to electronically execute tradesof bonds and other fixed income securities through a website.

4.The Marketplace receives firm two-sided bid/ask quotes on a numberof fixed income securities from other entities, who to date areall registered dealers, known as liquidity providers. On the otherside, the Marketplace receives orders from counterparties. Todate, all of the counterparties are registered dealers. Institutionalcustomers may be added once CBID is registered as an investmentdealer or the equivalent in the Jurisdiction in which the institutionalcustomer is resident (unless an exemption is granted in a particularJurisdiction). An execution engine uses an algorithm to matchbuy and sell orders, and advises the matched buyer and sellerthat the order has been executed (the "Retail Marketplace"). Bytheir agreements, the buyers and sellers are bound by the result.They are then responsible for contacting each other to arrangefor clearing and settlement.

5.The Marketplace may be considered to be a stock exchange or exchangebecause the Retail Marketplace provides, through one or more subscribers,a guarantee of a two-sided market for a security on a continuousor reasonably continuous basis.

6.The Marketplace also enables institutional customers or registereddealers to execute trades anonymously with other registered dealersor institutional customers (the "Institutional Marketplace").Once there are two sides to a trade, to maintain anonymity, CBIDwill generally act as the counterparty for all transactions executedon the Institutional Marketplace and the transactions will becleared and settled on behalf of CBID through its clearing broker.In certain circumstances, CBID can step away and the ultimatebuyer and seller may be disclosed and be required to arrange forclearing and settlement directly. A non-anonymous request forquote feature with name give-up (i.e. non-anonymous) transactionsand firm or subject (i.e. non-firm) two-sided quotes may alsobe added to this offering in the future.

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:

1.the Original Decision is hereby revoked;

2.in connection with the Marketplace, CBID is exempt from the requirementto be recognized as a stock exchange or an exchange provided that:

(a)CBID complies with and is subject to the ATS Rules as if CBIDis an ATS except that CBID is not required to comply with:

(i)subsection 6.6(b) of NI 21-101 relating to advance notice of providingguarantees of a two-sided market;

(ii)section 6.7 of NI 21-101, to the extent that it purports to relateto any period prior to April 1, 2002;

(iii)sections 8.1, 8.2 and 10.1 of NI 21-101 until December 1, 2002;

(iv)subsection 9.2(1) of NI 21-101, in respect of any security until30 days after such time as a principal market has been identifiedin a notice of the securities regulatory authority or a publicationof the information processor in accordance with section 9.3 ofNI 21-101 or the principal market previously identified becomessubject to subsection 8.1(1) of NI 21-101;

(v)subsections 9.2(1) and 9.4(2) of NI 21-101, to the extent thatthe applicable principal market or other marketplace is not itselfsubject to subsection 8.1(1) of NI 21-101; and

(vi)section 12.2 of NI 21-101 to the extent that it purports to relateto any period prior to April 1, 2002; and

(b)if CBID intends to carry on stock exchange or exchange activitieslisted in subsections 6.6(a), (c) and (d) in NI 21-101 or meetsthe thresholds in subsection 6.7(1) of NI 21-101, CBID will notifythe securities regulatory authorities in accordance with the timeframesprovided in the sections; and

3.in connection with the Marketplace, CBID is exempt from the followingrequirements in a Jurisdiction provided that it is registeredas an investment dealer or the equivalent in the Jurisdiction:

(a)monthly or quarterly statements of account requirements in respectof customers that are registered dealers; and

(b)compliance officer review of new account, trading and advice requirementsin respect of customers who are registered dealers.

March22, 2002.

"PaulM. Moore"   "H. Lorne Morphy"
"Randee B. Pavalow"