TSX Market Making Program Guide

TSX Market Making Program Guide Responsibilities of Market Makers TMX Group Page 25 2) From a DEA client (unless the DEA client is a broker acting as an “agent” for retail client order flow); 3) Generated by a computer algorithm; 4) From a customer who is involved in trading the markets directly on an active and continuous daily basis; or 5) From a U.S. broker-dealer (“U.S. dealer”) except when acting on behalf of a client of a U.S. dealer. Currently, the specified MGF-Eligible Order Size is the sum of the best ask (bid) size displayed on TSX plus the size of the MGF. Orders that meet any or all of the conditions specified above are not considered MGF-eligible and must be marked as such. If the larger (parent) order size is not checked, smaller orders split from that parent order are not MGF-eligible and must be marked as such. The parent order, if sent to TSX in its entirety, may be MGF-eligible and is subject to a TSX MGF order size check, whereby the buy (sell) order size must be less than or equal to the MGF-Eligible Order Size for that security at the time the order is received by TSX to receive a MGF fill. Market participants can bypass this TSX MGF size check by marking each MGF-eligible order to indicate that the parent order has been checked for compliance with the MGF-Eligible Order Size prior to sending the order to TSX. TSX regularly conducts reviews of MGF order usage to verify and enforce correct usage. 3.4.3 Allocation of MGF Fills MGF-eligible orders may receive a fill up to the Total MGF size for that security if the CLOB does not have sufficient visible liquidity at the NBBO. MGF orders receiving a fill are allocated between each assigned Market Maker according to a pro-rata allocation based on each Market Maker’s individual MGF size contribution to the Total MGF size, rounded to the nearest board lot. For example, assume the following scenario:  500 shares available in the CLOB  Total MGF = 2500 comprised of: o Market Maker 1’s MGF = 1000 (40% of the Total MGF) o Market Maker 2’s MGF = 1500 (60% of the Total MGF)  An incoming MGF-eligible order for 2500 arrives: o 500 shares are filled by orders in the CLOB, leaving a balance of 2000 shares o 800 shares are allocated to the Market Maker 1 as a MGF fill (40% of 2000 shares) o 1200 shares are allocated to the Market Maker 2 as a MGF fill (60% of 2000 shares)