TD Waterhouse Canada Inc.

Decision

Headnote

Large investment dealer with three separate operating divisions each headed by a de facto co-CEOs exempted from requirements to register a single ultimate designated person (UDP) permitted to register three UDPs, one for each operating division.

Statutes Cited

National Instrument 31-103 Registration Requirements and Exemptions, s. 11.2.

January 19, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

TD WATERHOUSE CANADA INC.

(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption from the requirement contained in section 11.2 of NI 31-103 to designate an individual to be the UDP and permit the Filer to designate and register three individuals as UDP in respect of several distinct lines of securities business of the Filer (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in all of the jurisdictions in Canada outside of Ontario (the Non-principal Jurisdictions, or collectively with the Jurisdiction, the Filing Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is registered under the securities legislation of the principal regulator (the Legislation) in the category of investment dealer, is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and has its head office in Ontario.

2. The Filer is also registered as an investment dealer in each of the Non-principal Jurisdictions.

3. The Filer is not, to the best of its knowledge, in default of the securities legislation of any of the Filing Jurisdictions.

4. The Filer's business is structured as follows:

(a) There are several distinct lines of securities business as follows:

(i) discount brokerage,

(ii) institutional services,

(iii) financial planning, and

(iv) private investment advice.

(b) Discount brokerage and institutional services (i.e. carrying broker activities) are referred to collectively and solely for the purposes of this application as the Defined Service Brokerage Businesses.

(c) Financial planning offers a broad range of financial planning services (e.g. estate planning, tax planning. and investments (primarily mutual funds)) to retail clients and is referred to in this application as the Financial Planning Business.

(d) Private investment advice is the full service brokerage group for retail clients and is referred to in this application as the Full Service Brokerage Business.

(e) Currently, each of the Defined Service Brokerage Businesses, Financial Planning Business and Full Service Brokerage Business reports to a different person.

(f) The Defined Service Brokerage Businesses report to the person at the Filer with the title of Chairman, Chief Executive Officer, President, Discount Brokerage and Institutional Services (the Head of Defined Service Brokerage Businesses).

(g) The Financial Planning Business reports to the person at the Filer with the title of Senior Vice President, Financial Planning (the Head of Financial Planning Business).

(h) The Full Service Brokerage Business reports to the person at the Filer with the title of President and National Sales Manager, Private Investment Advice Division (the Head of Full Service Brokerage Business).

(i) Each of the Head of Defined Service Brokerage Businesses, the Head of Financial Planning Business and the Head of Full Service Brokerage Business, while having different titles, has the role that is the equivalent of chief executive officer (CEO) in respect of the lines of business for which they are responsible. This means that each fulfills the following role for his or her respective lines of business:

• runs the business lines,

• has accountability for the operations and financial performance of the business lines,

• provides clear leadership and sets the tone at the top for the business lines,

• is the person that the executive management within the business lines reports to,

• prepares the objectives, strategy and plans, and implements these, for the business lines,

• has accountability for reporting to the Board of Directors with respect to the business lines, and

• is responsible for the business lines' organizational structure and succession planning.

(j) Notwithstanding their titles, there is no line of reporting between the Head of Defined Service Brokerage Businesses, the Head of Financial Planning Business and the Head of Full Service Brokerage Business and each reports directly to the Board of Directors of the Filer and to the person with the title of Group Head, Wealth Management, Direct Channels, and Corporate Shared Services of TD Bank Financial Group.

5. As measured by the number of trades executed on The Toronto Stock Exchange, TD Waterhouse is among the largest securities brokerages in Canada.

UDP Requirement

1. NI 31-103 was implemented on September 28, 2009 (the Implementation Date).

2. Under section 11.2 of NI 31-103, a registered firm is required to designate an individual to be the UDP (the UDP Requirement) and the UDP must be the chief executive officer, or the equivalent, of the registered firm.

3. Prior to the implementation of NI 31-103, there was no requirement under the securities legislation of any Filing Jurisdiction for an investment dealer to designate an individual, and have him or her registered, as a UDP.

4. Prior to the implementation of NI 31-103, under IIROC Rules, there was a requirement for a member to have a UDP which had to be one of the member's senior management. IIROC Rule 38 required a member to appoint a senior management person to the UDP position but did not require the person to be approved by IIROC.

5. Prior to the implementation of NI 31-103, the Filer was permitted by IIROC to have multiple individuals in the position of UDP and the Filer has had multiple UDPs for many years.

6. If the Exemption Sought is granted, the Filer intends to have three UDPs.

7. In conjunction with the implementation of NI 31-103, IIROC amended its rules with respect to its requirements for a UDP to be more consistent with the requirements in NI 31-103. IIROC Rule 38.5 now reads:

"A Dealer Member must designate an individual who is approved under the Corporation's rules in the category of Ultimate Designated Person and who shall be responsible to the Corporation for the conduct of the firm and the supervision of its employees and to perform the functions described in paragraph (c)."

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

(i) each UDP fulfils the responsibilities set out in section 5.1 of NI 31-103, or any successor provision, in respect of the business lines of the Filer for which he or she is appointed as UDP; and

(ii) the Filer permits each UDP to directly access the Filer's board of directors, or individuals acting in a similar capacity for the Filer, at such times as each UDP may consider necessary or advisable in view of his or her responsibilities.

"Erez Blumberger"
Deputy Director, Registrant Regulation
Ontario Securities Commission