Global X Investments Canada Inc. et al.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from paragraphs 2.5(2)(a.1) and (c) of NI 81-102 to permit exchange-traded alternative mutual funds to invest in US-listed bitcoin exchange-traded product -- Investment in US-listed exchange traded product would not result in fund having exposure to assets or investment strategies that they would not be permitted to seek through direct investment -- Funds to benefit from an efficient and cost-effective alternative to investing in bitcoin directly.

Relief granted from fund multi-layering restriction in paragraph 2.5(2)(b) of NI 81-102 to permit exchange-traded alternative mutual fund to invest in another exchange-traded alternative mutual fund under common management that holds more than 10% of its net assets in securities of other investment funds -- Top fund proposing to invest in middle fund rather than directly in bottom funds in order to gain exposure to the middle fund's covered call writing strategy and eliminate the need to employ its own covered call writing strategy -- Relief subject to conditions.

Applicable Legislative Provisions

National Instrument 81-102 Investment Funds, ss. 2.5(2)(a.1), (b) and (c), and 19.1.

June 16, 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)

AND

IN THE MATTER OF
GLOBAL X BITCOIN COVERED CALL ETF
(BCCC)
AND
GLOBAL X ENHANCED BITCOIN COVERED CALL ETF
(BCCL, and together with BCCC, the Funds)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Funds for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption from the following:

a. paragraph 2.5(2)(a.1) of National Instrument 81-102 Investment Funds (NI 81-102) to permit the Funds to purchase securities (IBIT Shares) of iShares® Bitcoin Trust ETF (IBIT) even though IBIT is not subject to NI 81-102 and does not comply with the provisions of NI 81-102 applicable to an alternative mutual fund;

b. paragraph 2.5(2)(c) of NI 81-102 to permit the Funds to purchase IBIT Shares even though IBIT is not a reporting issuer in a Jurisdiction (together with the relief under paragraph (a), the IBIT Relief); and

c. paragraph 2.5(2)(b) of NI 81-102 to permit BCCL to invest in BCCC even though BCCC may hold more than 10% of its NAV in IBIT Shares or securities of other Underlying Funds (as defined below) (the Three-Tier Relief),

(collectively, the Exemption Sought).

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

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

(b) the Filer has provided notice that section 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. The Filer's head office is located in Toronto, Ontario.

2. The Filer 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. The Filer is the investment fund manager and portfolio manager of the Funds.

3. The Filer is not in default of securities legislation in any of the Jurisdictions.

The Funds

4. The Funds are each open-ended exchange-traded mutual funds that are "alternative mutual funds" (as defined in NI 81-102) subject to NI 81-102 and are trusts governed by the laws of the Province of Ontario.

5. The Funds distribute their securities pursuant to a long form prospectus prepared and filed in accordance with National Instrument 41-101 -- General Prospectus Requirements and Form 41-101F2 -- Information Required in an Investment Fund Prospectus, subject to any exemptions therefrom that have been, or may in the future be, granted by the applicable securities regulatory authorities.

6. The Funds are subject to and governed by NI 81-102, subject to any exemptions therefrom that have been, or may in the future be, granted by the applicable securities regulatory authorities.

7. The Funds are reporting issuers under the laws of the Jurisdictions and are not in default of securities legislation in any of the Jurisdictions.

8. Units of the Funds (the Units) are listed on a stock exchange recognized by the OSC.

9. The fundamental investment objective of BCCC is to seek to provide, to the extent possible and net of expenses: (a) exposure to the performance of bitcoin; and (b) distributions of call option premiums, at least monthly. To mitigate downside risk and generate premiums, BCCC employs a dynamic covered call option writing program. The fundamental investment objective of BCCL is to seek to provide, to the extent possible and net of expenses: (a) exposure to the performance of bitcoin; and (b) high distributions of call option premiums, at least monthly. To mitigate downside risk and generate premiums, BCCL is exposed to a dynamic covered call option writing program. BCCL employs leverage through cash borrowing and generally endeavours to maintain a leverage ratio of approximately 125%. Currently, it is anticipated that BCCL will seek to achieve its investment objective by investing substantially all of its net asset value (NAV), on a leveraged basis, in units of BCCC, and BCCC is expected, at any given time, to invest all or substantially all of its assets in securities issued by other funds that invest directly in bitcoin, including IBIT (the Underlying Funds).

10. Each of the Underlying Funds, other than IBIT, is an open-ended mutual fund that is a reporting issuer in Canada and is subject to the provisions of NI 81-102 and National Instrument 81-106 -- Investment Fund Continuous Disclosure (NI 81-106). Each of the Underlying Funds, other than IBIT, is listed on a stock exchange recognized by the OSC.

11. Each Underlying Fund, other than IBIT, is managed by a third-party investment fund manager registered in Canada.

12. Each Underlying Fund invests all or substantially all of its assets directly in bitcoin.

Overview of IBIT

13. IBIT is a Delaware statutory trust that issues IBIT Shares representing fractional undivided beneficial interests in its net assets.

14. IBIT is governed by the provisions of a Second Amended and Restated Trust Agreement (the Trust Agreement) executed as of December 28, 2023, as amended from time to time, by the Sponsor, the Trustee and the Delaware Trustee (each as defined below).

15. IBIT seeks to reflect generally the performance of the price of bitcoin, before payment of IBIT's expenses and liabilities, by investing directly in bitcoin. The assets of IBIT consist solely of bitcoin and cash.

16. IBIT Shares are distributed in the United States pursuant to a prospectus dated August 8, 2024, as amended and supplemented from time to time, that is part of a registration statement on Form S-1 under the United States Securities Act of 1933 (the '33 Act) that was filed in respect of IBIT with the United States Securities and Exchange Commission (the SEC).

17. IBIT Shares are listed and traded on The Nasdaq Stock Market LLC (Nasdaq) under the ticker symbol "IBIT". IBIT has net assets in excess of USD$48.4 billion as of March 20, 2025.

18. IBIT issues IBIT Shares on a continuous basis. IBIT issues and redeems IBIT Shares only in blocks of a specific number of IBIT Shares (called a Basket), or integral multiples thereof, based on the quantity of bitcoin attributable to each IBIT Share (net of accrued but unpaid renumeration due to the Sponsor and any accrued but unpaid expenses or liabilities). IBIT may change the number of IBIT Shares in a Basket. These transactions take place in exchange for cash.

19. Baskets are offered continuously by IBIT at the NAV per IBIT Share multiplied by the Shares in a Basket. Only registered broker-dealers that become authorized participants by entering into a contract with the Sponsor and the Trustee (Authorized Participants) may purchase or redeem Baskets. Authorized Participants deliver only cash to create IBIT Shares and receive only cash when redeeming IBIT Shares.

20. IBIT is an "investment fund" within the meaning of applicable Canadian securities legislation. IBIT is not registered, and is not required to be registered, as an "investment company" under the United States Investment Company Act of 1940, as amended (the '40 Act).

21. The sponsor (the Sponsor) of IBIT is iShares Delaware Trust Sponsor LLC, a Delaware limited liability company and an indirect subsidiary of BlackRock, Inc. (Blackrock).

22. The Sponsor arranged for the creation of IBIT, the registration of the IBIT Shares for their public offering in the United States and the listing of the IBIT Shares on the Nasdaq. The Sponsor has certain marketing and administrative duties in respect of IBIT and is responsible for the oversight and overall management of IBIT but has delegated day-to-day administration of IBIT to the Trustee (as defined below) under the Trust Agreement.

23. The trustee (the Trustee) of IBIT is BlackRock Fund Advisors, an indirect, wholly-owned subsidiary of BlackRock.

24. The Trustee is responsible for the day-to-day administration of IBIT. The Trustee has delegated certain day-to-day responsibilities to the Trust Administrator (as defined below).

25. The Bank of New York Mellon serves as the trust administrator (Trust Administrator) of IBIT. The Trust Administrator has been engaged to provide certain administrative services, including, but not limited to, arranging for the computation of the NAV of IBIT; preparing IBIT's financial statements and annual and quarterly reports; and recording payment of fees and expenses on behalf of IBIT. The Bank of New York Mellon is also the custodian for IBIT's cash holdings.

26. Coinbase Custody Trust Company, LLC (the Bitcoin Custodian) is the custodian for IBIT's bitcoin holdings. The Bitcoin Custodian has represented that it is a fiduciary under Section 100 of the New York Banking Law and a qualified custodian for purposes of Rule 206(4)-2(d)(6) under the '40 Act.

27. The Bitcoin Custodian satisfies the criteria for a sub-custodian for assets held outside Canada in Section 6.3 of NI 81-102.

Reasons for Exemption Sought

28. Absent the Exemption Sought, an investment by a Fund of up to 100% of its NAV in IBIT Shares would be prohibited by:

a. paragraph 2.5(2)(a.1) of NI 81-102 because IBIT is not subject to NI 81-102 and does not comply with the provisions of NI 81-102 applicable to an alternative mutual fund or a non-redeemable investment fund; and

b. paragraph 2.5(2)(c) of NI 81-102 because IBIT is not a reporting issuer in any Jurisdiction.

29. An investment by a Fund in IBIT Shares would not qualify for the exceptions in paragraph 2.5(3)(a) or paragraph 2.1(2)(e) of NI 81-102.

30. Absent the Exemption Sought, an investment by BCCL in BCCC would be prohibited by paragraph 2.5(2)(b) of NI 81-102 because BCCC is expected to hold more than 10% of its NAV in securities of other investment funds. An investment by BCCL in BCCC would not qualify for the exemptions in paragraph 2.5(4) of NI 81-102 from the multi-tiering restriction in paragraph 2.5(2)(b) of NI 81-102.

31. The Exemption Sought is therefore needed for (i) each Fund to be permitted to invest up to 100% of its NAV in IBIT Shares in furtherance of its investment objectives; and (ii) BCCL to be permitted to invest in BCCC.

The IBIT Relief

32. IBIT's investment objectives and strategies are consistent with the investment restrictions in NI 81-102. A Fund's investment in IBIT Shares will not cause such Fund to indirectly invest in assets or have access to investment strategies that it would be prohibited to have directly. There are currently several Canadian public investment funds that directly invest in bitcoin in a manner similar to IBIT.

33. IBIT is regulated by the SEC as a reporting issuer under the '33 Act. IBIT Shares are registered with the SEC under the '33 Act and are offered in the primary market in a manner similar to the Funds pursuant to a prospectus filed with the SEC which discloses a description of IBIT's properties and business, a description of the IBIT Shares being offered for sale, information about the management of IBIT and financial statements certified by independent accountants, similar to the disclosure requirements under NI 41-101 and Form 41-101F2.

34. IBIT prepares key investor information documents which provide disclosure that is substantially similar to the disclosure required to be included in the ETF facts document required by Form 41-101F4 Information Required in an ETF Facts Document.

35. IBIT is subject to continuous disclosure obligations which are substantially similar to the disclosure obligations under NI 81-106. IBIT is required to update information of material significance in its prospectus, to prepare management reports and an unaudited set of financial statements at least quarterly, and to prepare management reports and an audited set of financial statements annually.

36. IBIT operates in a manner that is substantially similar to an exchange traded fund in Canada.

37. IBIT Shares are listed and traded on the Nasdaq, a National Securities Exchange (as defined in the United States Securities Exchange Act of 1934) in the United States.

38. The investment in IBIT Shares by a Fund is an efficient and cost-effective alternative to investing in bitcoin directly. The investment objectives, investment strategies, investment restrictions and risk factors applicable to the Funds and IBIT are substantially the same, other than the use of leverage and a covered call option strategy by the Funds. IBIT's investment objectives and strategies are consistent with the investment restrictions in NI 81-102.

39. The Filer will review IBIT's ongoing filings to ensure that IBIT is being managed in a manner consistent with the investment restrictions in NI 81-102.

40. The Funds' prospectus provides appropriate disclosure about the Funds' investment in IBIT, including risk factors associated therewith and the particulars of the Exemption Sought.

41. A Fund's investment in IBIT Shares will otherwise comply with the investment restrictions in Part 2 of NI 81-102, except to the extent any discretionary relief has been granted to the Funds therefrom.

42. An investment by a Fund in IBIT Shares will represent the business judgment of responsible persons uninfluenced by considerations other than the best interests of such Fund.

The Three-Tier Relief

43. The investment objectives, investment strategies, investment restrictions and risk factors applicable to BCCL and BCCC are substantially the same, except that BCCL employs leverage and therefore is subject to the risks associated with the use of leverage. BCCL is a leveraged version of BCCC and is managed and advised by the same portfolio management team.

44. An investment by BCCL in BCCC results in less operational risk because BCCL will only need to pledge securities of BCCC in respect of any cash borrowing (rather than in respect of cash borrowing and call option writing). It is more practical for the covered call option writing program to be conducted at the level of BCCC, instead of the level of each of BCCL and BCCC, which would be redundant.

45. When BCCL invests in BCCC, no management fees or incentive fees will be payable by either BCCL or BCCC that, to a reasonable person, would duplicate a fee payable by BCCL or BCCC for the same service.

46. No sales fees or redemption fees will be payable by BCCL in relation to purchases or redemptions of the units of BCCC in which it will invest. No sales fees or redemption fees will be payable by BCCC in relation to its purchases or redemptions of securities of any Underlying Fund that, to a reasonable person, would duplicate a fee payable by an investor in BCCC.

47. An investment in BCCC by BCCL should pose little investment risk to BCCL because:

a. BCCC is subject to NI 81-102, subject to any exemptions therefrom that may be granted by the securities regulatory authorities;

b. BCCC and BCCL are both managed by the Filer; and

c. BCCL's investment in securities of BCCC is otherwise made in compliance with all other requirements of section 2.5 of NI 81-102, except to the extent that discretionary relief has been granted from any such requirement.

48. An investment by BCCL in units of BCCC will represent the business judgement of responsible persons uninfluenced by considerations other than the best interests of each Fund.

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.

1. The decision of the principal regulator is that the IBIT Relief is granted, provided that:

(a) A Fund will only invest in IBIT Shares so long as IBIT continues to be a reporting issuer, and IBIT Shares continue to be distributed in the United States in accordance with all applicable SEC requirements;

(b) A Fund's investment in IBIT Shares is made in accordance with such Fund's investment objectives;

(c) A Fund will not invest in IBIT Shares if, at the time of acquisition, IBIT holds more than 10% of its NAV in securities of any other investment fund other than securities of a "money market fund" or a fund that issues "index participation units" as those terms are defined in NI 81-102;

(d) IBIT is managed in a manner that is consistent with the investment restrictions of sections 2.1, 2.2, 2.3 and 2.4 of NI 81-102, as such provisions apply to alternative mutual funds;

(e) A Fund's investment in IBIT Shares will otherwise remain consistent with the investment restrictions in Part 2 of NI 81-102, as they apply to alternative mutual funds, except to the extent discretionary relief from such requirements has been granted to each Fund; and

(f) The investment strategy section of the prospectus of each Fund will disclose in the next regularly scheduled renewal, or amendment if earlier, the fact that each Fund has obtained the IBIT Relief to permit investments in IBIT Shares on the terms described in this decision.

2. The decision of the principal regulator is that the Three-Tier Relief is granted, provided that:

(a) The investment by BCCL in securities of BCCC is in accordance with the investment objectives and strategies of BCCL to provide exposure to the performance of bitcoin and a covered call writing program by investing, on a leveraged basis, in exchange traded funds that provide direct or indirect exposure to bitcoin;

(b) The Filer is the investment fund manager and portfolio manager of each of BCCC and BCCL;

(c) BCCC complies with the terms of the IBIT Relief;

(d) No management fees or incentive fees are payable by BCCL or BCCC that would duplicate a fee payable by BCCL, BCCC, or an Underlying Fund for the same service;

(e) BCCL's investment in securities of BCCC is otherwise made in compliance with all other requirements of section 2.5 of NI 81-102, except to the extent that discretionary relief has been granted from any such requirement; and

(f) The investment strategy section of the prospectus of BCCL will disclose in the next regularly scheduled renewal, or amendment if earlier, the fact that BCCL has obtained the Three-Tier Relief to permit investments in BCCC on the terms described in this decision.

"Darren McKall"
Associate Vice President, Investment Management Division
Ontario Securities Commission

Application File #: 2025/0225
SEDAR+ File #: 6270583