TSX Market Making Program Guide Responsibilities of Market Makers TMX Group Page 21 3.2.4 Underperformance - Overall Stock Level A failing result in any of a stock’s five Performance Obligations is deemed as an underperforming month on that stock for both assigned Market Makers, provided that the assigned Market Maker has a Contribution Score of less than 80%. If a Market Maker assigned to the underperforming stock has a Contribution Score of 80% or greater, then that stock is not deemed as an underperforming month for that Market Maker. ** **Notwithstanding the above, TSX will monitor all assignments for stock level underperformance. Should TSX determine that a particular symbol underperforms consistently, regardless of a MM’s Contribution Score, TSX may take such action as deemed appropriate to maintain symbol performance including removal of either or both assigned MMs. If Market Makers are not performing to target on their assignments of related instruments (e.g., preferred shares, warrants, rights), then they may be considered to be underperforming on the root security and the Market Makers risk losing the assignments of the whole stock group. Table 3 - Impact of Underperformance to Market Makers on Assignments Month Impact to Market Maker 1st month of Underperformance Monthly credits for that security revoked for that month, Market Maker rates as per TSX’s fee schedule still apply. 2nd month of Underperformance Monthly credits for that security revoked for that month, Market Maker rates as per TSX’s fee schedule still apply. 3rd month of Underperformance Monthly credits for that security revoked for that month, Market Maker rates as per TSX’s fee schedule still apply. The security enters the next month’s bidding process (i.e., the 4th month) if both Market Makers are underperforming. Otherwise, the single Market Maker is replaced as detailed in 2.7.2 Single Market Maker Replacement. 4th month (bidding month) Security enters bidding process if both Market Makers are underperforming. In this case, the Market Makers may not re-bid on the security that is up for rebidding as a result of their underperformance. The existing Market Makers are removed from the assignment at the end of the 4th month. 5th month (start of new assignment) The new Market Makers who win the assignment, assume the assignment on the first business day of the month immediately following the bidding month (i.e., the 5th month). Replaced single Market Makers are also effective as of the day of replacement. If through underperformance, a Market Maker has had one or more securities of responsibility reassigned and begins to have a disproportionate ratio of Tier A and Tier B securities, TSX reserves the discretion to also reassign one or more Tier A securities assigned to that firm. If a Market Maker exceeds the Reassignment Threshold, such firm is not permitted to bid in any bidding cycles for the following 3 month period (the “3-Month Exclusion Period”).
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