Global X Investments Canada Inc.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- exchange traded alternative mutual funds granted exemption from the concentration restriction in subsection 2.1(1.1) of NI 81-102 to permit each fund to enter into purchase and/or specified derivatives transactions to obtain daily investment results that endeavour to correspond to 300% of the daily performance of an index, or 300% of the inverse of the daily performance of an index, in accordance with, and as limited by, its investment objective, subject to conditions.

Applicable Legislative Provisions

National Instrument 81-102 Investment Funds, ss. 2.1(1.1) and 19.1.

May 20, 2025

IN THE MATTER OF
THE SECURITIES LEGISLATION OF ONTARIO
(the Jurisdiction)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
GLOBAL X INVESTMENTS CANADA INC.
(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer, on behalf of BetaPro S&P 500 3x Daily Bull ETF (TSPX), BetaPro S&P 500 --3x Daily Bear ETF (SSPX), BetaPro Nasdaq-100 3x Daily Bull ETF (TQQQ) and BetaPro Nasdaq-100 --3x Daily Bear ETF (SQQQ), each an alternative mutual fund managed by the Filer or an affiliate of the Filer (each, an Existing Fund and, collectively, the Existing Funds), and any other alternative funds that are or will be managed by the Filer or an affiliate of the Filer, and that have investment objectives to seek daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to 300% of the daily performance of an Index, or 300% of the inverse of the daily performance of an Index (the Future Funds, and together with the Existing Funds, the Funds) for a decision (the Exemption Sought) under the securities legislation of the principal regulator (the Legislation) relieving the Funds from subsection 2.1(1.1) of National Instrument 81-102 Investment Funds (NI 81-102), in order to permit the Funds to purchase securities of an issuer, enter into a specified derivatives transaction or purchase an index participation unit even though, immediately after the transaction, more than 20% of the net asset value (NAV) of the Funds would be invested, directly or indirectly, in securities of any issuer (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for the application; and

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in all of the provinces and territories of Canada other than the Jurisdiction (together with the Jurisdiction, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102 and NI 81-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a corporation incorporated under the laws of Canada, with its head office located in Toronto, Ontario.

2. The Filer will be the promoter, trustee and manager of the Funds and is registered as a portfolio manager in Alberta, British Columbia, Ontario and Québec, an exempt market dealer in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Québec and Saskatchewan, a commodity trading manager and a commodity trading adviser in Ontario and an investment fund manager in each of Ontario, Québec and Newfoundland and Labrador.

3. The Filer or an affiliate or associate of the Filer is, or will be, the investment fund manager of the Funds.

The Funds

4. Each of the Funds will be an exchange traded mutual fund structured as a separate class of shares of Global X Canada ETF Corp., a mutual fund corporation established under the federal laws of Canada. Each Fund will launch with a single series.

5. Each Fund will be a separate investment fund having specific investment objectives and is specifically referable to a separate portfolio of investments.

6. Each Fund will also be an "alternative mutual fund", as such term is defined in NI 81-102.

7. The securities of each Fund will be offered pursuant to a long form prospectus (the Prospectus) and ETF Facts prepared and filed for each Fund in accordance with National Instrument 41-101 General Prospectus Requirements with the securities regulatory authority in each of the Jurisdictions.

8. Each Fund will be a reporting issuer under the laws of the Jurisdictions and subject to NI 81-102, subject to any exemptions therefrom that may be granted by the securities regulatory authorities.

9. Each Fund will be subject to National Instrument 81-107 Independent Review Committee for Investment Funds.

10. The securities of each of the Funds will (subject to satisfying the Toronto Stock Exchange's (the TSX) original listing requirements) be listed on the TSX or such other designated exchange in Canada.

11. The investment objective of each Existing Fund is set out in the table below:

FundInvestment Objective
BetaPro 3x S&P 500 Daily Leveraged Bull Alternative ETFTSPX seeks daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to three times (300%) the daily performance of an index that is designed to measure the performance of the large-cap market segment of the U.S. equity market (currently, the S&P 500® Index).
BetaPro --3x S&P 500 Daily Leveraged Bear Alternative ETFSSPX seeks daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to three times (300%) the inverse (opposite) of the daily performance of an index that is designed to measure the performance of the large-cap market segment of the U.S. equity market (currently, the S&P 500® Index).
BetaPro 3x Nasdaq-100 Daily Leveraged Bull Alternative ETFTQQQ seeks daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to three times (300%) the daily performance of an index that includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq stock market (currently, the Nasdaq-100® Index).
BetaPro --3x Nasdaq-100 Daily Leveraged Bear Alternative ETFSQQQ seeks daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to three times (300%) the inverse (opposite) of the daily performance of an index that includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq stock market (currently, the Nasdaq-100® Index).

The S&P 500 Index, the Nasdaq-100 Index, and any permitted index for which a Fund has an investment objective to seek daily investment results that endeavour to correspond to three times, or three times the inverse of the daily performance of that index, are each referred to herein as an Index.

12. Each Fund will use leverage in order to seek to achieve its investment objective.

13. In order to ensure that a shareholder's risk is limited to the capital invested, and to achieve the target leverage ratio, each Fund will be rebalanced on each day that the principal exchange for the securities to which the Fund is exposed is open for trading, even if it is a day on which the TSX or Canadian banks are closed (Daily Rebalancing).

14. The Daily Rebalancing of the Fund portfolio is not expected to have a material impact on the concentration levels of the constituent securities in the portfolio of any Fund.

15. Each Fund will seek to achieve its investment objective by borrowing cash to invest in and hold a proportionate share of, or a sampling of the constituent securities of an Index in order to track approximately 3.0 times the performance of that Index or 3.0 times the inverse of the performance of that Index.

16. The investment objective and investment strategy of the Funds, as well as the risk factors associated therewith, including concentration risk and use of leverage, will be disclosed in the Prospectus of the Funds, as may be amended from time to time.

17. Since 2000, based on constituents' weights on quarterly rebalances, the maximum weighting of any single issuer in the S&P 500 Index represented 7.66% of the Index. On a leveraged basis of 300%, this maximum weighting would represent up to approximately 22.98% of the NAV of each of TSPX and SSPX.

18. Since 2003, the maximum weighting of any single issuer in the Nasdaq-100 Index represented 21.29% of the Index. On a leveraged basis of 300%, this maximum weighting would represent up to approximately 63.88% of the NAV of each of TQQQ and SQQQ.

19. The constituent issuers of the S&P 500 Index and the Nasdaq-100 Index are among the largest public issuers globally, having a market capitalization as of April 30, 2025 ranging from approximately USD $5.75 billion to approximately USD $3.19 trillion in the case of the S&P 500 Index, and USD$13.98 billion to approximately USD$3.19 trillion in the case of the Nasdaq-100 Index.

20. Given the composition of each Index and the proposed composition of each of the Funds' portfolios, it would be impossible for a Fund to achieve its investment objectives and pursue its investment strategies without obtaining the Exemption Sought.

21. The securities of the Funds will be highly liquid securities, as designated brokers act as intermediaries between investors and the Funds, standing in the market with bid and ask prices for the securities of the Funds to maintain a liquid market for the securities of the Funds. The majority of trading in securities of the Funds will occur in the secondary market.

22. In respect of the Funds, their strategies to acquire securities of an applicable constituent issuer of an Index will be transparent, passive and fully disclosed to investors. The Funds will not invest in securities other than the constituent securities of the applicable Index. Consequently, shareholders of the Funds will be fully aware of the risks involved with an investment in the securities of the Funds.

23. The Exemption Sought is sought to permit the Funds to purchase securities of the constituent issuers or enter into specified derivatives transactions in connection therewith such that, immediately after the transaction, more than 20 percent of its net assets would be invested in the equity securities of one constituent issuer for the purposes of determining compliance with subsection 2.1(1.1) of NI 81-102 (the Proposed Transactions).

24. In addition, the Funds have been structured as "alternative mutual funds" for purposes of NI 81-102, which is associated with investment funds that already permit higher levels of concentration under section 2.1 of NI 81-102.

25. Neither the Filer nor the Funds are in default of any of its obligations under securities legislation in any of the Jurisdictions.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted, provided that:

(a) the Proposed Transactions and investments in the constituent issuers of the applicable Index are in accordance with each Fund's investment objectives and investment strategies to seek daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to 300% of the daily performance of an Index, or 300% of the inverse of the daily performance of an Index;

(b) each Fund's Prospectus and investment strategies disclose that the Fund will obtain exposure to the constituent issuers of the applicable Index based on its investment objectives and Daily Rebalancing as described in paragraph 13 above; and

(c) each Fund includes in its Prospectus: (i) disclosure regarding the Exemption Sought under the heading "Exemptions and Approvals"; and (ii) a risk factor regarding the concentration of the Fund's investments in the constituent issuers of an Index and the risks associated therewith.

"Darren McKall" 
Manager, Investment Management Division 
Ontario Securities Commission

Application File #: 2025/0317
SEDAR+ File #: 06284680