GFI Swaps Exchange LLC et al.

Headnote

Subsection 144(1) of the Securities Act (Ontario), section 15.1 of NI 21-101, section 12.1 of NI 23-101 and section 10 of NI 23-103 -- Application for: (i) an order varying the Commission's orders exempting swap execution facilities carrying on business in Ontario from the requirement to be recognized as exchanges, and (ii) an exemption from the requirements of NI 21-101, NI 23-101 and NI 23-103 in their entirety -- Applicants granted registered with the United States Securities and Exchange Commission as security-based swap execution facilities -- Variation required to permit the applicants to trade in security-based swaps -- Exemption requested from the marketplace rules -- Requested order granted.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 144(1).

National Instrument 21-101 Marketplace Operation, s. 15.1.

National Instrument 23-101 Trading Rules, s. 12.1.

National Instrument 23-103 Electronic Trading and Direct Electronic Access to Marketplaces, s. 10.

IN THE MATTER OF
THE SECURITIES ACT, R.S.O. 1990,
CHAPTER S.5 AS AMENDED
(the Act)

AND

IN THE MATTER OF
GFI SWAPS EXCHANGE LLC (GFI),
ICE SWAP TRADE, LLC (ICE Swap),
tpSEF INC. (tpSEF),
TW SEF LLC (TW SEF)

ORDER

WHEREAS each of GFI, ICE Swap, tpSEF and TW SEF (each an Applicant; collectively, the Applicants) operates a swap execution facility (SEF) in the United States pursuant to registration granted by the United States Commodity Futures Trading Commission (CFTC);

AND WHEREAS the Commission has issued orders pursuant to section 147 of the Act exempting each Applicant from the requirement to be recognized as an exchange under subsection 21(1) of the Act (each an Exemption Order);

AND WHEREAS each Exemption Order contains a condition in section 9 of Schedule "A" that the Applicant will not provide access to a participant in Ontario to trading in products other than swaps, as defined in section 1a(47) of the United States Commodity Exchange Act (and for greater certainty, excluding security-based swaps), without prior Commission approval;

AND WHEREAS each Applicant has made an application to the Commission:

(i) under subsection 144(1) of the Act, for an order varying each Applicant's Exemption Order to allow the Applicant to provide direct access to participants in Ontario to trade in security-based swaps (SBS), pursuant to its registration as a security-based swap execution facility (SBSEF) with the United States Securities and Exchange Commission (SEC); and

(ii) for an exemption from the requirements in National Instrument 21-101 Marketplace Operation (NI 21-101) pursuant to section 15.1(1) of NI 21-101, the requirements in National Instrument 23-101 Trading Rules (NI 23-101) pursuant to section 12.1 of NI 23-101, and the requirements in National Instrument 23-101 Electronic Trading and Direct Electronic Access to Marketplaces (NI 23-103; together with NI 21-101 and NI 23-101, the Marketplace Rules) pursuant to section 10 of NI 23-103;

AND WHEREAS each Applicant has represented to the Commission that:

1. The Applicant continues to comply with the ongoing requirements applicable to it as a SEF registered with the CFTC;

2. On January 29, 2025, the Applicant obtained registration with the SEC to operate a SBSEF;

3. The Applicant proposes to provide direct access to participants in Ontario to trade in SBS pursuant to its SBSEF registration with the SEC;

4. The Applicant continues to satisfy all the criteria for exemption as described in Appendix 1 to Schedule "A" of its Exemption Order;

AND WHEREAS the Commission has determined that it would not be prejudicial to the public interest to vary each Applicant's Exemption Order to permit each Applicant to provide direct access to participants in Ontario to trade in SBS pursuant to its SBSEF registration;

AND WHEREAS the Commission has determined that it would not be prejudicial to the public interest to also exempt each Applicant from the Marketplace Rules because each Applicant has been exempted from the requirement to be recognized as an exchange;

IT IS HEREBY ORDERED by the Commission that:

(i) pursuant to section 147 of the Act, each applicant continues to be exempt from recognition as an exchange under subsection 21(1) of the Act;

(ii) pursuant to section 144 of the Act, that the Exemption Order for each Applicant is varied to allow the Applicant to provide direct access to participants in Ontario to trade in SBS by:

a. replacing the words "provided that the Applicant complies with the terms and conditions contained in Schedule "A."" with "provided that the Applicant complies with the terms and conditions contained in Schedules "A" and "B."",

b. amending Schedule "A" of each Applicant's Exemption Order to add the words "(FOR TRADES IN SWAPS PURSUANT TO CFTC SEF REGISTRATION)" after "TERMS AND CONDITIONS";

c. adding the text of Appendix A of this order as Schedule "B" of each Applicant's Exemption Order, and,

(iii) pursuant to sections 15.1(1) of NI 21-101, 12.1 of NI 23-101 and 10 of NI 23-103, each Applicant is exempt from the Marketplace Rules.

DATED May 29, 2025

APPENDIX A

SCHEDULE "B"

TERMS AND CONDITIONS

(FOR TRADES IN SBS PURSUANT TO SBSEF REGISTRATION)

Meeting Criteria for Exemption

1. The Applicant will continue to meet the criteria for exemption included in Appendix 1 to Schedule "A".

Regulation and Oversight of the Applicant

2. The Applicant will maintain its registration as a security-based swap execution facility (SBSEF) with the Securities and Exchange Commission (SEC) and will continue to be subject to the regulatory oversight of the SEC.

3. The Applicant will continue to comply with the ongoing requirements applicable to it as a SBSEF registered with the SEC.

4. The Applicant must do everything within its control, which includes cooperating with the Commission as needed, to carry out its activities as an exchange exempted from recognition under subsection 21(1) of the Act in compliance with Ontario securities law.

Access

5. The Applicant will not provide direct access to a participant in Ontario (Ontario User) unless the Ontario User is appropriately registered as applicable under Ontario securities laws or is exempt from or not subject to those requirements, and qualifies as an "eligible contract participant" under the United States Securities Exchange Act of 1934, as amended (1934 Act).

6. For each Ontario User provided direct access to its SBSEF, the Applicant will require, as part of its application documentation or continued access to the SBSEF, the Ontario User to represent that it is appropriately registered as applicable under Ontario securities laws or is exempt from or not subject to those requirements.

7. The Applicant may reasonably rely on a written representation from the Ontario User that specifies either that it is appropriately registered as applicable under Ontario securities laws or is exempt from or not subject to those requirements, provided the Applicant notifies such Ontario User that this representation is deemed to be repeated each time it enters an order, request for quote or response to a request for quote on the Applicant.

8. The Applicant will require Ontario Users to notify the Applicant if their registration as applicable under Ontario securities laws has been revoked, suspended, or amended by the Commission or if they are no longer exempt from or become subject to those requirements and, following notice from the Ontario User and subject to applicable laws, the Applicant will promptly restrict the Ontario User's access to the Applicant if the Ontario User is no longer appropriately registered or exempt from those requirements.

Trading by Ontario Users

9. Despite section 9 of Schedule "A", the Applicant may provide access to Ontario Users to trade in security-based swaps as defined in section 3(a)(68) of the 1934 Act.

Submission to Jurisdiction and Agent for Service

10. With respect to a proceeding brought by the Commission arising out of, related to, concerning or in any other manner connected with the Commission's regulation and oversight of the activities of the Applicant in Ontario, the Applicant will submit to the non-exclusive jurisdiction of (i) the courts and administrative tribunals of Ontario and (ii) an administrative proceeding in Ontario.

11. The Applicant will submit to the Commission a valid and binding appointment of an agent for service in Ontario upon whom the Commission may serve a notice, pleading, subpoena, summons or other process in any action, investigation or administrative, criminal, quasi-criminal, penal or other proceeding arising out of, related to, concerning or in any other manner connected with the Commission's regulation and oversight of the Applicant's activities in Ontario.

Prompt Reporting

12. The Applicant will notify staff of the Commission promptly of:

(a) any authorization to carry on business granted by the SEC is revoked or suspended or made subject to terms or conditions on the Applicant's operations;

(b) the Applicant institutes a petition for a judgment of bankruptcy or insolvency or similar relief, or to wind up or liquidate the Applicant or has a proceeding for any such petition instituted against it;

(c) a receiver is appointed for the Applicant or the Applicant makes any voluntary arrangement with creditors;

(d) the Applicant's marketplace is not in compliance with this order or with any applicable requirements, laws or regulations of the SEC where it is required to report such non-compliance to the SEC;

(e) any known investigations of, or disciplinary action against, the Applicant by the SEC or any other regulatory authority to which it is subject; and

(f) the Applicant makes any material change to the eligibility criteria for Ontario Users.

Semi-Annual Reporting

13. The Applicant will maintain the following updated information and submit such information in a manner and form acceptable to the Commission on a semi-annual basis (by July 31 for the first half of the calendar year and by January 31 of the following year for the second half), and at any time promptly upon the request of staff of the Commission:

(a) a current list of all Ontario Users and whether the Ontario User is registered under Ontario securities laws or is exempt from or not subject to registration, and, to the extent known by the Applicant, other persons or companies located in Ontario trading as customers of participants (Other Ontario Participants);

(b) the legal entity identifier assigned to each Ontario User, and, to the extent known by the Applicant, to Other Ontario Participants in accordance with the standards set by the Global Legal Entity Identifier System;

(c) a list of all Ontario Users against whom disciplinary action has been taken since the previous report by the Applicant or its RSP acting on its behalf, or, to the best of the Applicant's knowledge, by the SEC with respect to such Ontario Users' activities on the Applicant and the aggregate number of disciplinary actions taken against all participants since the previous report by the Applicant or its RSP acting on its behalf;

(d) a list of all active investigations since the previous report by the Applicant or its RSP acting on its behalf relating to Ontario Users and the aggregate number of active investigations since the previous report relating to all participants undertaken by the Applicant;

(e) a list of all Ontario applicants for status as a participant who were denied such status or access to the Applicant since the previous report, together with the reasons for each such denial; and

(f) for each product,

(i) the total trading volume and value originating from Ontario Users, and, to the extent known by the Applicant, from Other Ontario Participants, presented on a per Ontario User or per Other Ontario Participant basis; and

(ii) the proportion of worldwide trading volume and value on the Applicant conducted by Ontario Users, and, to the extent known by the Applicant, by Other Ontario Participants, presented in the aggregate for such Ontario Users and Other Ontario Participants; provided in the required format.

Information Sharing

14. The Applicant will provide and, if applicable, cause its regulatory services provider (RSP) to provide such information as may be requested from time to time by, and otherwise cooperate with, the Commission or its staff, subject to any applicable privacy or other laws (including solicitor-client privilege) governing the sharing of information and the protection of personal information.