5 For an application to be approved, a Participating Organization must demonstrate that it is capable of performing market making activity that is acceptable to the TSX as well as demonstrate that it has sufficient trading desk and operations area support staff. This may include having sufficient technology and system capabilities that will permit it to properly carry out its market making responsibilities. A Participating Organization that has been approved by TSX to act as Market Maker must execute a TSX Market Maker Agreement. 2.2 Assignment of Securities There are two Market Maker assignments available for each corporate security. A Market Maker is never assigned both assignments in respect of a security. ETFs have only one Market Maker assignment. Market Makers for ETFs are typically endorsed by issuers in relation to their Designated Broker agreements. There are several methods for assigning securities to Market Makers: 1. Security specific assignments apply when new security assignments become available. These circumstances include but are not limited to: a new listing, a Market Maker voluntarily relinquishing a security of responsibility, or due to underperformance of a Market Maker(s). Security specific assignments are made through the competitive bidding process described under the “Competitive Bidding Process” section. 2. Competitive rebalance of assignments may occur from time to time on Market Maker assignments at the discretion of TSX. The purpose of this rebalancing process is to balance the allocation of securities across Market Makers while serving to update performance obligations in accordance with changing market conditions. Note that this process is not necessarily intended to equalize the number of security assignments per firm. Competitive rebalance assignments are made through the same competitive bidding process described under the “Competitive Bidding Process” section. 3. Other assignment methods: a. Related Instrument Assignments - Certain securities may be classified by the TSX as related instrument assignments which may be directly allocated in accordance with a root security. Related instruments include rights, warrants, subscription receipts, preferred shares, US dollar equivalents or multiple classes of common shares (i.e., classes of with different voting rights, Canadian vs. US resident eligibility), when issued, or essentially any derived product based upon an existing issuer. Debentures and notes are not assigned to Market Makers. b. Non-Voluntary Assignments - In cases where no eligible competitive bids are submitted on a security, TSX assigns such security to the next Marker Makers based on a round robin allocation method (whereby assignments are made to all eligible Marker Makers in sequence, with the intention that non-voluntary assignments be equally allocated among firms). Market Makers must act in accordance with applicable requirements for all assigned securities of responsibility. c. Temporary Assignments - Market Makers may be required to assume temporary responsibility for newly listed securities and other security assignments that become available, until such time that those specific securities are permanently assigned to a Market Maker(s).
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