Blackrock Asset Management Canada Limited and Blackrock Financial Management, Inc. – s. 80 of the CFA

Headnote

Section 80 of the Commodity Futures Act (Ontario) -- Relief from the adviser registration requirement of paragraph 22(1 )(b) of the CFA granted to a sub-adviser headquartered in a foreign jurisdiction in respect of advice regarding trades in commodity futures contracts and commodity futures options, subject to certain terms and conditions -- Relief mirrors exemption available in section 8.26.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations made under the Securities Act (Ontario) -- Relief is subject to a sunset clause.

Applicable Legislative Provisions

Commodity Futures Act, R.S.O. 1990, c. C.20, as am., ss. 1(1), 22(1)(b) and 80.

Securities Act, R.S.O. 1990, c. S.5, as am., s. 25(3).

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 8.26.1.

Ontario Securities Commission Rule 35-502 Non-Resident Advisers, s. 7.11

January 10, 2020

IN THE MATTER OF THE COMMODITY FUTURES ACT, R.S.O. 1990, CHAPTER C. 20, AS AMENDED (the CFA) AND IN THE MATTER OF BLACKROCK ASSET MANAGEMENT CANADA LIMITED AND BLACKROCK FINANCIAL MANAGEMENT, INC.

ORDER (Section 80 of the CFA)

UPON the application (the Application) of BlackRock Asset Management Canada Limited (BlackRock Canada or the Principal Adviser) and BlackRock Financial Management, Inc. (the Sub-Adviser) to the Ontario Securities Commission (the Commission) for an order, pursuant to section 80 of the CFA, that the Sub-Adviser and any individuals engaging in, or holding themselves out as engaging in, the business of advising others when acting on behalf of the Sub-Adviser in respect of the Sub-Advisory Services (as defined below) (the Representatives), be exempt, for a specified period of time, from the adviser registration requirements of paragraph 22(1)(b) of the CFA when acting as a sub-adviser to the Principal Adviser in respect of the Clients (as defined below) regarding commodity futures contracts and commodity futures options (collectively, the Contracts) traded on commodity futures exchanges and cleared through clearing corporations (the Relief Sought);

AND UPON considering the Application and the recommendation of staff of the Commission;

AND UPON the Principal Adviser and the Sub-Adviser having represented to the Commission that:

1. BlackRock Canada is a corporation amalgamated under the laws of Ontario, with its head office located in Toronto, Ontario, Canada.

2. BlackRock Canada is registered as a portfolio manager, investment fund manager and exempt market dealer in each of the provinces and territories of Canada and as a commodity trading manager under the CFA in Ontario and as an adviser under the Commodity Futures Act (Manitoba) in Manitoba.

3. BlackRock Canada is a wholly owned subsidiary of BlackRock Inc., a publicly traded company.

4. The Sub-Adviser is a corporation incorporated under the laws of Delaware, with its head office located in New York, United States.

5. The Sub-Adviser is also a wholly-owned subsidiary of BlackRock, Inc.

6. The Sub-Adviser and the Principal Adviser are each controlled by BlackRock, Inc. and are therefore affiliates, as defined in the Securities Act (Ontario) (the OSA).

7. The Sub-Adviser is registered as an investment adviser with the United States Securities and Exchange Commission, its primary regulator. The Sub-Adviser is also registered in the United States with the Commodity Futures Trading Commission as a commodity trading operator and commodity trading adviser and is a member of the National Futures Association.

8. The Sub-Adviser is registered in a category of registration under the commodity futures or other applicable legislation of the United States that permit it to carry on the activities in the United States that registration as an adviser under the CFA would permit it to carry on in Ontario. As such, the Sub-Adviser is authorized and permitted to carry on the Sub-Advisory Services (as defined below) in the United States.

9. The Sub-Adviser is not registered in any capacity under the CFA or the OSA, nor is the Sub-Adviser registered in any capacity under the securities law, commodity futures law, or derivatives law of any other jurisdiction of Canada.

10. The Sub-Adviser is currently relying on the exemption from the requirement to register as an investment fund manager under the OSA pursuant to section 4 of Multilateral Instrument 32-102 Registration Exemptions for Non-Resident Investment Fund Managers in Ontario, Quebec and Newfoundland & Labrador. The Sub-Adviser is also relying on the exemption from the requirement to register as an adviser under the OSA pursuant to section 8.26 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) in all provinces and territories of Canada. However, in Ontario, and with respect to its relationship with the Principal Adviser, the Sub-Adviser also relies on the exemption from the requirement to register as an adviser (the "international sub-adviser" exemption) under the OSA pursuant to section 8.26.1 of NI 31-103.

11. The Sub-Adviser engages in the business of an adviser in respect of Contracts in the United States.

12. The Sub-Adviser is not a resident of any province or territory of Canada.

13. The Principal Adviser and Sub-Adviser are not in default of securities legislation, commodity futures legislation or derivatives legislation in any jurisdiction of Canada.

14. The Sub-Adviser is in in compliance in all material respects with the securities laws, commodity futures laws and derivatives laws in the United States.

15. The Principal Adviser provides, or may provide, investment advice and/or discretionary portfolio management services in Ontario to the following clients (each referred to individually as a Client and collectively as the Clients):

(a) investment funds, the securities of which are qualified by prospectus for distribution to the public in Ontario and/or certain other provinces and territories of Canada (the Investment Funds);

(b) pooled funds, the securities of which are sold on a private placement basis in Ontario and/or certain other provinces and territories of Canada pursuant to prospectus exemptions contained in National Instrument 45-106 Prospectus Exemptions (the Pooled Funds);

(c) clients resident in Ontario who have entered into investment management agreements with the Principal Adviser to establish managed accounts (the Managed Account Clients); and

(d) other Investment Funds, Pooled Funds and Managed Account Clients that may be established or retained in the future in respect of which the Principal Adviser will engage the Sub-Adviser to provide portfolio advisory services (the Future Clients).

16. Certain of the Clients may, as part of their investment program, invest in Contracts. The Principal Adviser acts as a commodity trading manager in respect of certain Clients.

17. In connection with the Principal Adviser acting as an adviser to Clients in respect of the purchase or sale of Contracts, the Principal Adviser, pursuant to a written agreement made between the Principal Adviser and the Sub-Adviser, will retain the Sub-Adviser to act as a sub-adviser to the Principal Adviser in respect of Contracts in which that Sub-Adviser has experience and expertise by exercising discretionary investment authority on behalf of the Principal Adviser, in respect of all or a portion of the assets of the investment portfolio of the respective Client, including discretionary authority to buy or sell Contracts for the Client (the Sub-Advisory Services), provided that such investments are consistent with the investment objectives and strategies of the applicable Client.

18. Paragraph 22(1)(b) of the CFA prohibits a person or company from acting as an adviser unless the person or company is registered as an adviser under the CFA, or is registered as a representative or as partner or an officer of a registered adviser and is acting on behalf of a registered adviser.

19. By providing the Sub-Advisory Services, the Sub-Adviser and its Representatives will be engaging in, or holding themselves out as engaging in, the business of advising others in respect of Contracts and, in the absence of being granted the Relief Sought, would be required to register as an adviser or a representative of an adviser, as the case may be, under the CFA.

20. There is presently no rule or regulation under the CFA that provides an exemption from the adviser registration requirement in paragraph 22(1)(b) of the CFA that is similar to the exemption from the adviser registration requirement in subsection 25(3) of the OSA provided under section 8.26.1 of NI 31-103.

21. The relationship among the Principal Adviser, the Sub-Adviser and any Client will be consistent with the requirements of section 8.26.1 of NI 31-103.

22. The Sub-Adviser will only provide the Sub-Advisory Services to the Principal Adviser as long as the Principal Adviser is, and remains, registered under the CFA as an adviser in the category of commodity trading manager.

23. As would be required under section 8.26.1 of NI 31-103:

(a) the obligations and duties of the Sub-Adviser will be set out in a written agreement with the Principal Adviser; and

(b) the Principal Adviser has entered into, or will enter into, a written contract with each Client, agreeing to be responsible for any loss that arises out of the failure of any Sub-Adviser:

(i) to exercise the powers and discharge the duties of its office honestly, in good faith and in the best interests of the Principal Adviser and each Client; or

(ii) to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances (together with (i), the Assumed Obligations).

24. The written agreement between the Principal Adviser and the Sub-Adviser will set out the obligations and duties of each party in connection with the Sub-Advisory Services and will permit the Principal Adviser to exercise the degree of supervision and control it is required to exercise over the Sub-Adviser in respect of the Sub-Advisory Services.

25. The Principal Adviser will deliver to the Clients all required reports and statements under applicable securities, commodity futures and derivatives legislation.

26. The prospectus or other offering document (in either case, the Offering Document) of each Client that is an Investment Fund or a Pooled Fund and for which the Principal Adviser engages the Sub-Adviser to provide the Sub-Advisory Services includes, or will include, the following disclosure (the Required Disclosure):

(a) a statement that the Principal Adviser is responsible for any loss that arises out of the failure of any Sub-Adviser to meet the Assumed Obligations; and

(b) a statement that there may be difficulty in enforcing any legal rights against the Sub-Adviser (or any of its Representatives) because the Sub-Adviser is resident outside of Canada and all or substantially all of its assets are situated outside of Canada.

27. The Required Disclosure will be provided in writing prior to the purchasing of any Contracts for each Client that is a Managed Account for which the Principal Adviser engages the Sub-Adviser to provide the Sub-Advisory Services.

AND UPON the Commission being of the opinion that to do so would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to section 80 of the CFA, that the Sub-Adviser and its Representatives are exempt from the adviser registration requirements of paragraph 22(1)(b) of the CFA when acting as a sub-adviser to the Principal Adviser in respect of the Sub-Advisory Services, provided that at the time that such activities are engaged in:

(a) the Principal Adviser is registered under the CFA as an adviser in the category of commodity trading manager;

(b) the Sub-Adviser's head office or principal place of business is in a jurisdiction outside of Canada;

(c) the Sub-Adviser is registered in a category of registration, or operates under an exemption from registration, under the commodity futures or other applicable legislation of the jurisdiction outside of Canada in which its head office or principal place of business is located, that permits it to carry on the activities in that jurisdiction that registration as an adviser under the CFA would permit it to carry on in Ontario;

(d) the Sub-Adviser engages in the business of an adviser in respect of Contracts in the jurisdiction outside of Canada in which its head office or principal place of business is located;

(e) the obligations and duties of the Sub-Adviser are set out in a written agreement with the Principal Adviser;

(f) the Principal Adviser has entered into a written agreement with each Client, agreeing to be responsible for any loss that arises out of any failure of the Sub-Adviser to meet the Assumed Obligations;

(g) the Offering Document of each Client that is an Investment Fund or a Pooled Fund and for which the Principal Adviser engages the Sub-Adviser to provide the Sub-Advisory Services includes the Required Disclosure; and

(h) the Required Disclosure is provided in writing prior to the purchasing of any Contracts for each Client that is a Managed Account for which the Principal Adviser engages the Sub-Adviser to provide the Sub-Advisory Services.

AND IT IS FURTHER ORDERED that this Order will terminate on the earliest of:

(a) the expiry of any transition period as may be provided by law, after the effective date of the repeal of the CFA;

(b) six months, or such other transition period as may be provided by law, after the coming into force of any amendment to Ontario commodity futures law (as defined in the CFA) or Ontario securities law (as defined in the OSA) that affects the ability of the Sub-Adviser to act as a sub-adviser to the Principal Adviser in respect of the Sub-Advisory Services; and

(c) five years after the date of this Order.

Dated this 10 day of January, 2020.

"Lawrence Haber"

Vice-Chair or Commissioner

Ontario Securities Commission

"Mary Anne De Monte-Whelan"

Vice-Chair or Commissioner

Ontario Securities Commission