TSX Market Making Program Guide Table of Contents TMX Group Page 2 Table of Contents Table of Contents....................................................................................................................... 2 Chapter 1 Introduction ........................................................................................................... 4 Chapter 2 Entering the Program ............................................................................................ 5 2.1 Approval Process.......................................................................................................... 5 2.2 Assignment of Securities .............................................................................................. 5 2.3 Tier System and the Tier A:B Ratio .............................................................................. 6 2.4 Concentration Limits ..................................................................................................... 7 2.5 Minimum Assignments.................................................................................................. 7 2.6 Competitive Bidding Process ........................................................................................ 7 2.7 Bidding Process ............................................................................................................ 7 2.7.1 New Listings and Stock Underperformance Reallocations .................................... 7 2.7.2 Single Market Maker Replacement ...................................................................... 10 Chapter 3 Responsibilities of Market Makers ........................................................................11 3.1 ETFs............................................................................................................................ 11 3.1.1 Performance Obligations - ETFs.......................................................................... 11 3.1.2 Underperformance – ETFs................................................................................... 12 3.1.3 ETF – Monthly Tier B Credits and Tier A Bonus Incentive Pool .......................... 12 3.2 Corporate Equities ...................................................................................................... 13 3.2.1 Performance Obligations - Stock Level................................................................ 13 3.2.2 Measurement of Each Market Maker’s Contribution to Stock Level Performance Obligations ....................................................................................................................... 16 3.2.3 Underperformance by a Single Market Maker ..................................................... 20 3.2.4 Underperformance - Overall Stock Level ............................................................. 21 3.3 Adjustments to Corporate Equities Performance Obligations .................................... 22 3.3.1 Voluntary Rebid.................................................................................................... 22 3.3.2 Automatic Adjustments ........................................................................................ 23 3.3.3 TMX-initiated stock level targets .......................................................................... 23 3.4 MGF Facility................................................................................................................ 24 3.4.1 MGF Sizes ............................................................................................................ 24 3.4.2 MGF Eligibility ...................................................................................................... 24 3.4.3 Allocation of MGF Fills ......................................................................................... 25 3.5 Participation ................................................................................................................ 26 3.5.1 Allocation of Participation Fills ............................................................................. 26 3.5.2 Participation Option .............................................................................................. 27 3.5.3 Participation Anti-wash ......................................................................................... 28 3.6 Odd Lot Facility ........................................................................................................... 28 3.7 Assistance to Issuers and Other Market Participants ................................................. 29 3.8 Gatekeeper Role......................................................................................................... 29 3.9 Designated Market Maker Contact ............................................................................. 29 3.10 Responsible Designated Trader ............................................................................... 30 3.11 Market Maker Fees ................................................................................................... 30 3.12 Exemption from Market Making Responsibilities ...................................................... 30 3.12.1 Expiring Rights and Warrants ............................................................................ 30 3.12.2 Special Circumstances and Unusual Situations ................................................ 30 Chapter 4 Exiting the Program..............................................................................................31 4.1 Release of Securities .................................................................................................. 31 4.2 Voluntary Exit from the TSX Market Maker Program ................................................. 31 4.3 TSX Termination of a Market Maker ........................................................................... 31 Appendix A - Performance Guidelines ......................................................................................32
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