6 2.3 Tier System and the Tier A:B Ratio TSX categorizes listed securities according to tiers based on the level of trading activity in the securities. Securities that fall into the Tier A category are the most actively traded securities based on the security’s average daily value (“ADV”) traded on TSX in the previous 12 month period, calculated quarterly. The Tier B category covers securities that, on average, trade less actively. The tiers are further divided into sub-tiers, which are also based on levels of trading activity. Table 1 – Tier Classification of Securities Tier Sub-tier Description A 1 ADV = or > $50 million A 2 ADV of $10 to < 50 million A 3 ADV of $1 to < 10 million B 1 ADV < $1 million. The security list is further divided into deciles according to ADV, with B1 category having the highest ADV and B10 having the lowest ADV B 2 B 3 B 4 B 5 B 6 B 7 B 8 B 9 B 10 TSX allocates securities to firms in a manner that maintains, to a reasonable degree possible, a minimum ratio of Tier B securities for each Tier A. ETF securities are excluded from this calculation. The applicable ratio is adjusted periodically based on the ratio of the total number of Tier A securities to Tier B securities traded on the TSX. This ratio is important to ensure coverage for all TSX-listed securities while also maintaining a fair allocation of securities across Market Makers. 2.4 Concentration Limits Additionally, in order to maintain fair allocation of securities across Market Makers and to mitigate against any over-reliance on any one Market Maker, no Market Maker may have greater than a specified percentage of security assignments within any given tier classification (A1, A2, A3 and B) unless special circumstances apply for which TSX retains ultimate discretion. The current maximum concentration per tier is 35% and is measured across all assignments of each firm.
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