Securities Law & Instruments


Mutual Reliance Review System for ExemptiveRelief Applications - Exemption pursuant to section 15.1 ofNational Instrument 21-101 Marketplace Operation and section12.1 of National Instrument 23-101 Trading Rules from the requirementto comply with subsection 9.2(1) of National Instrument 21-101Marketplace Operation and sections 8.1, 8.3 and 8.4 of NationalInstrument 23-101 Trading Rules.













WHEREAS the local securities regulatoryauthority or regulator in each of the Provinces of Ontario,Quebec and British Columbia (each, a "Decision Maker")has received an application (the "Application") fromArchipelago Canada Inc. ("Archipelago Canada") fora decision under section 15.1 of National Instrument 21-101Marketplace Operation ("NI 21-101") and section 12.1of National Instrument 23-101 Trading Rules ("NI 23-101")granting Archipelago Canada:

(a) an exemption from subsection 9.2(1)of NI 21-101 to relieve Archipelago Canada from the marketintegration requirements;

(b) an exemption from sections 8.1 and 8.3of NI 23-101 to relieve Archipelago Canada from the requirementto enter into an agreement with a regulation service provider;and

(c) an exemption from sections 8.1 and 8.4of NI 23-101 to relieve Archipelago Canada from the requirementto enter into the prescribed agreement with its subscribers.

AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal jurisdictionfor this Application;

AND WHEREAS Archipelago Canada has representedto the Decision Makers as follows.

1. Archipelago Canada is a private corporationformed under the laws of New Brunswick and is a wholly-ownedsubsidiary of Archipelago Holdings L.L.C. ("ArchipelagoHoldings"), a limited liability company organized underthe laws of the State of Delaware with its registered officein Chicago.

2. Archipelago Canada is a marketplace andalternative trading system ("ATS") as defined inNI 21-101. It is registered as an investment dealer in Ontario,has applied for an exemption from subsection 6.1(a) of NI21-101 by the Decision Makers in British Columbia and Quebecand has pending applications for registration as a dealerin the Provinces of British Columbia and Quebec. ArchipelagoCanada is a member of the Investment Dealers Association (the"IDA")

3. Archipelago Canada is an affiliate of ArchipelagoSecurities, L.L.C ("Archipelago Securities"), thesponsor of an electronic communications network (the "ArchipelagoECN") in the United States. Archipelago Securities isa registered broker-dealer with the Securities and ExchangeCommission ("SEC") under the Securities ExchangeAct of 1934, is a member in good standing of the NationalAssociation of Securities Dealers in the United States ("NASD")and is an ATS under Regulation ATS in the United States.

4. Archipelago Canada provides subscribersin Canada with access to the Archipelago ECN. The ArchipelagoECN executes trades of Nasdaq National Market Securities andNasdaq SmallCap securities or routes orders to Nasdaq or otherATSs.

5. The Archipelago ECN currently accepts assubscribers in Canada only entities that are registered asinvestment dealers in Ontario, Quebec and British Columbia("Canadian Dealers"). Archipelago Canada intendsto accept institutions that qualify as "acceptable institutions"and "acceptable counterparties" as defined in theJoint Regulatory and Financial Questionnaire of the IDA ("CanadianInstitutions").

6. Archipelago Canada is an affiliate of WaveSecurities L.L.C. ("Wave"). Wave is a registeredbroker-dealer under the Securities Exchange Act of 1934 andis a member in good standing of the NASD. Wave is registeredas an international dealer in Ontario.

7. Wave, under a service agreement with ArchipelagoCanada, provides, directly and through its arrangements withthird party service providers, certain operating, clearing,settlement and execution services and books and records servicesto Archipelago Canada in connection with the operation ofthe Archipelago ECN for subscribers in Canada.

8. The third party service providers providingclearing, settlement and execution services are currentlyregistered and will always be registered as InternationalDealers in Ontario.

9. The Archipelago ECN provides order andtrade information to Nasdaq as its exclusive securities informationprocessor in compliance with the requirements of Rule 11Aunder the Securities Exchange Act of 1934.

10. The Archipelago ECN is connected to theNasdaq and all other registered ATSs in the United Statestrading Nasdaq stocks directly or through SelectNet and SuperSoes,in accordance with section 3 of Regulation ATS under the SecuritiesExchange Act of 1934.

11. All subscribers to the Archipelago ECNare required to agree to comply with United States tradingrules and securities laws requirements. Canadian subscribersare also required to comply with applicable requirements ofCanadian securities legislation.

12. The Archipelago ECN is subject to regulatoryoversight by the NASD-Regulation ("NASD-R") andthe SEC in the United States.

13. All subscribers in Ontario and BritishColumbia to Archipelago ECN have confirmed to ArchipelagoCanada that they have the ability to see and directly accessquotes from the Toronto Stock Exchange ("TSX").

14. Section 8.1 of NI 23-101 prohibits anATS from executing a subscriber's order unless the ATS hasexecuted and is subject to the written agreements in sections8.3 and 8.4 of NI 23-101.

15. Archipelago Canada has requested an exemptionfrom section 8.3 of NI 23-101 which requires an ATS to enterinto an agreement with a regulation services provider.

16. Subsection 9.2(1) of NI 21-101 requiresa marketplace subject to 7.1(1) to have an electronic connectionto the principal market for each security traded on that marketplace.

17. Subsection 9.2(1) of NI 21-101 is notcurrently in force in the Province of Quebec.

AND WHEREAS pursuant to the System, thisMRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

AND WHEREAS each of the Decision Makersis satisfied that the test contained in NI 21-101 and NI 23-101provides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers,except the Decision Maker in Quebec, is that Archipelago Canadais:

(a) exempt from subsection 9.2(1) of NI21-101, provided that all present and future subscribersresident in Provinces of Canada other than Quebec have confirmedto Archipelago Canada that they have direct access to quoteson the TSX;

AND THE DECISION of the Decision Makersis that Archipelago Canada is:

(b) exempt from sections 8.1 and 8.3 ofNI 23-101 with respect to foreign exchange- traded securitiesand exchange-traded securities that are inter-listed onNasdaq, provided that the securities are executedon a marketplace that is subject to regulatory oversightby the SEC or the NASD-R; and

(c) exempt from section 8.4 of NI 23-101with respect to foreign exchange-traded securities and exchange-tradedsecurities that are inter-listed on Nasdaq, providedthat Archipelago Canada includes as part of its agreementwith its subscribers an acknowledgement by subscribers thatorders executed on, or routed by the Archipelago ECN toNasdaq or other ATSs, will not be regulated by a regulationservices provider but by the regulatory body in the jurisdictionto which the order is executed or routed.

October 7, 2002.

"Randee B. Pavalow"