Application for an order, pursuant to section 218 of the Regulation, exempting the Applicant from the requirement in section 213 of the Regulation that the Applicant be incorporated, or otherwise formed or created, under the laws of Canada or a province or territory of Canada, for the Applicant to be registered under the Act as a dealer in the category of limited market dealer.
R.R.O. 1990, Regulation 1015, am. to O. Reg. 500/06, ss. 213, 218.
IN THE MATTER OF
THE SECURITIES ACT, R.S.O. 1990,
CHAPTER S.5, AS AMENDED (THE ACT)
IN THE MATTER OF
R.R.O. 1990, REGULATION 1015,
AS AMENDED (THE REGULATION)
IN THE MATTER OF
BLOOMBERG TRADEBOOK (BERMUDA) LTD.
(Section 218 of the Regulation)
UPON the application (the Application) of Bloomberg Tradebook (Bermuda) Ltd., (the Applicant) to the Ontario Securities Commission (the Commission) for an order, pursuant to section 218 of the Regulation, exempting the Applicant from the requirement in section 213 of the Regulation that the Applicant be incorporated, or otherwise formed or created, under the laws of Canada or a province or territory of Canada, in order for the Applicant to be registered under the Act as a dealer in the category of limited market dealer (LMD);
AND UPON considering the Application and the recommendation of staff of the Commission;
AND UPON the Applicant having represented to the Commission that:
1. The Applicant is a Bermuda company and is a wholly owned subsidiary of Bloomberg L.P. The head office of the Applicant is located in Hamilton, Bermuda.
2. The Applicant is registered under Section 87(2) of the Bermuda Investment Business Act 2003 to carry on investment business in or from Bermuda.
3. The Bloomberg Tradebook System is primarily an electronic order routing system that operates as an agency broker in equity securities. Users of the Bloomberg Tradebook System may enter orders for trades in securities which are routed for execution on exchanges and marketplaces around the world. The Bloomberg Tradebook System is offered in Canada by Bloomberg Tradebook Canada Company and is made available only to investment firms and institutional investors in Ontario, and not to individual investors. Bloomberg Tradebook Canada Company acts as the "introducing broker" and currently routes participants' orders for non-U.S. based equities to G-Trade Services Ltd.
4. The Applicant proposes to assume the order routing and trade execution functions currently performed by G-Trade Services Ltd. for orders in non-U.S. equity securities entered via the Bloomberg Tradebook System. In this capacity, the Applicant would, upon receipt of a user's order in non-U.S. equity securities, provide execution of such order with the assistance of an appropriately licensed local broker. In addition, the Applicant proposes to offer electronic pairing of clients' orders for non-U.S. equity securities with corresponding contra orders in non-U.S. equity securities entered via the Bloomberg Tradebook System. In each case, upon execution, the appropriately licensed local broker and a separate clearing broker, which may be an affiliate of the Applicant, will clear and settle the trade in accordance with local legal requirements.
5. The Applicant will not take custody of any client assets. The Applicant will not exercise any investment discretion in respect of client assets.
6. The Applicant intends to apply to the Commission for registration under the Act as a dealer in the category of LMD.
7. Section 213 of the Regulation provides that a registered dealer that is not an individual must be a company incorporated, or a person formed or created, under the laws of Canada or a province or territory of Canada.
8. The Applicant is not resident in Canada and does not require a separate Canadian company in order to carry out its proposed limited market dealer activities in Ontario. It is more efficient and cost-effective to carry out those activities through the existing company.
9. Without the relief requested the Applicant would not meet the requirements of the Regulation for registration as a dealer in the category of limited market dealer as it is not a company incorporated, or a person formed or created, under the laws of Canada or a province or territory of Canada.
AND UPON being satisfied that to make this order would not be prejudicial to the public interest;
IT IS ORDERED THAT, pursuant to section 218 of the Regulation, and in connection with the registration of the Applicant as a dealer under the Act in the category of a LMD, section 213 of the Regulation shall not apply to the Applicant for a period of three years, provided that:
1. The Applicant appoints an agent for service of process in Ontario.
2. The Applicant shall provide to each client resident in Ontario a statement in writing disclosing the non-resident status of the Applicant, the Applicant's jurisdiction of residence, the name and address of the agent for service of process of the Applicant in Ontario, and the nature of risks to clients that legal rights may not be enforceable.
3. The Applicant will not change its agent for service of process in Ontario without giving the Ontario Securities Commission 30 days' prior notice of such change by filing a new Submission to Jurisdiction and Appointment of Agent for Service of Process.
4. The Applicant and each of its registered officers irrevocably and unconditionally submits to the non-exclusive jurisdiction of the judicial, quasi-judicial, and administrative tribunals of Ontario and any administrative proceedings in Ontario, in any proceedings arising out of or related to or concerning its registration under the Act or its activities in Ontario as a registrant.
5. The Applicant will not have custody of securities, funds, and other assets of clients resident in Ontario.
6. The Applicant will inform the Director immediately upon the Applicant becoming aware:
(a) that it has ceased to be registered under the Bermuda Investment Business Act;
(b) of its registration (if any) in any other jurisdiction not being renewed or being suspended or revoked;
(c) that it is the subject of a regulatory proceeding or disciplinary action by any financial services or securities regulatory authority or self-regulatory authority;
(d) that the registration of its salespersons or officers who are registered in Ontario have not been renewed or have been suspended or revoked in any Canadian or foreign jurisdiction; or
(e) that any of its salespersons or officers who are registered in Ontario are the subject of a regulatory proceeding or disciplinary action by any financial services or securities regulatory authority or self-regulatory authority in any Canadian or foreign jurisdiction.
7. The Applicant will pay the increased compliance and case assessment costs of the Commission due to the Applicant's location outside Ontario, including the cost of hiring a third party to perform a compliance review on behalf of the Commission.
8. The Applicant will make its books and records outside Ontario, including electronic records, readily accessible in Ontario, and will produce physical records for the Commission within a reasonable time if requested.
9. If the laws of the jurisdiction in which the Applicant's books and records are located prohibit production of the books and records in Ontario without the consent of the relevant client the Applicant shall, upon a request by the Commission:
(a) so advise the Commission; and
(b) use its best efforts to obtain the client's consent to the production of the books and records.
10. The Applicant will, upon the Commission's request, provide a representative to assist the Commission in compliance and enforcement matters.
11. The Applicant and each of its registered officers will comply, at the Applicant's expense, with requests under the Commission's investigation powers and orders under the Act in relation to the Applicant's dealings with Ontario clients, including producing documents and witnesses in Ontario, submitting to audit or search and seizure process or consenting to an asset freeze, to the extent such powers would be enforceable against the Applicant if the Applicant were resident in Ontario.
12. If the laws of the Applicant's jurisdiction of residence that are otherwise applicable to the giving of evidence or production of documents prohibit the Applicant or the witnesses from giving the evidence without the consent or leave of the relevant client or any third party, including a court of competent jurisdiction, the Applicant shall:
(a) so advise the Commission; and
(b) use its best efforts to obtain the client's consent to the giving of the evidence.
13. The Applicant will maintain appropriate registration and regulatory organization membership, in the jurisdiction of its principal operations, and if required, in its jurisdiction of residence.
April 27, 2007
"Carol S. Perry"
"Margot C. Howard"