Nasdaq CX2 and CXD Subscriber Manual

Purpose This document explains the policies, procedures, and technology for Nasdaq CX2 (CX2) and Nasdaq CXD (CXD). This Subscriber Manual will be updated from time to time by way of amendments posted on the Nasdaq CXC Limited (NCXL) website which should be consulted at http://business.nasdaq.com/trade/Nasdaq-CX/Overview. Overview CX2 is a lit trading book offering subscribers the benefits of order attribution and price-broker-time execution priority matching logic. CXD is a dark trading book offering subscribers opportunities for price improvement and decreased information leakage. Both trading books operate completely independently of one another and of Nasdaq CXC (CXC).

Market Overview Market Type

Market Operation

Securities

Market Data

Order Entry

Traded Alternative

CX2 – a continuous

TSX and

Both CX2 and CXD market

Industry-standard FIX protocol

Trading

auction market

TSX-V listed

data feeds are disseminated

order entry via third-party and

System

offering on-exchange

securities

electronically

proprietary execution

(ATS)

internalization

either directly or through

management systems.

opportunities through

third party vendors.

• Advanced order types

broker preferencing for attributed orders

• Low latency, high volume The CX2 market data feed offers full depth of book

CXD – a continuous

(price/volume) as well as

auction dark market

trade data.

message processing • Intelligent Order Book

offering subscribers price improvement

The CXD market data feed

opportunities

only publishes trade data.

How to Subscribe Subscriber Eligibility Subscribers must be members in good standing of the Investment Industry Regulatory Organization of Canada (IIROC) with the ability to clear trades on a continuous net settlement (CNS) basis with the Canadian Depository for Securities (CDS). If a subscriber ceases to be a member of IIROC, it shall also cease to be a subscriber. If a subscriber has its membership privileges suspended by IIROC, its status as a subscriber will also be suspended. In addition, as outlined in the CX2 and CXD Subscription Agreements, subscribers must also meet and continue to meet NCXL’s approval criteria (Approval Criteria) in order to

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maintain their status as a subscriber in good standing. The latest version of Approval Criteria is provided below. For updates to Approval Criteria please check the NCXL website. NCXL Approval Criteria for Subscribers, Data Vendors and Sponsored Participants 1. Subscribers must be registered in all Canadian jurisdictions in which they do business and in good standing with IIROC. 2. Subscribers must execute CX2’s Subscription Agreement before CX2 will execute any order to buy or sell securities from such subscriber. 3. Subscribers must execute CXD’s Subscription Agreement before CXD will accept any orders to buy or sell securities from such subscriber. 4. Subscriber must provide NCXL information about such subscriber’s clearing arrangements, including the identification of such subscriber’s clearing broker. 5. Subscriber must conduct its trading activities in compliance with the Universal Market Integrity Rules (UMIR) and any other order or direction made by IIROC. 6. Subscribers, Data Vendors and Sponsored Participants must make timely payment of all fees charged by NCXL for market data and other fees charged for Services. (as defined in the CX2 and CXD Subscription Agreements). 7. Subscribers, Data Vendors and Sponsored Participants must receive written pre-approval from NCXL for any data re-distribution by such Subscriber, Data Vendor, or Sponsored Participant to any third party. 8. Subscribers, Data Vendors and Sponsored Participants must provide monthly notification to NCXL of the number of professional and non-professional market data users. 9. Subscribers, Data Vendors and Sponsored Participants must furnish promptly to NCXL any information required by NCXL to confirm the accuracy of the reported number of users of each category receiving data through such Subscriber, Data Vendor, or Sponsored Participant NCXL may from time to time modify these criteria as it deems necessary and any such modifications will be posted on the NCXL website. To facilitate the subscription process, existing NCXL subscribers can elect to sign a representation to maintain the existing terms and conditions of their current CXC or CX2 subscriber agreements with respect to their access to CXD. New CXD subscribers that are not currently CXC or CX2 subscribers must sign the CXD subscriber agreement in accordance with National Instrument 21-101. Available Documents The following documents must be reviewed and/or signed by Subscribers:  CX2 Subscription Agreement – contract between NCXL and Subscribers for access to CX2 trading book  CXD Subscription Agreement – contract between NCXL and Subscribers for access to CXD trading book  CX2 and CXD Subscriber Manual – general policies and procedures on CX2 and CXD (this document)  NCXL Connectivity Guide – connectivity options and bandwidth recommendations

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The following document must be reviewed and signed by vendors:  CX2 Vendor Agreement – contract between CX2 and vendors (covers order entry and market data)  CXD Vendor Agreement – contract between CXD and vendors (covers order entry and market data) The following technical specifications are also available for order routing and market data connectivity:  NCXL FIX Specification – orders using FIX format.  NCXL CX2MMD Specification – CX2 direct multicast market data information.  NCXL CXDMMD Specification – CXD direct multicast market data information. The following Chi-X Canada Market Data Agreements are also available for market data customers:  NCXL Market Data Use Agreement – for NCXL market data customers using NCXL market data for internal use only.  NCXL Data Distribution Agreement – for NCXL market data customers who distribute NCXL Market Data to third parties. Please contact NCXL Canada (888) 310-1560 for more information about becoming a subscriber.

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NCXL Trading Books

Access

Nasdaq CXC Data Centre

CXD

CX2

Vendors

Nasdaq CXC Access Network

Outbound Gateway

CXC FIX Gateway Outbound Gateway

Participants

Outbound Gateway

TSX Outbound Gateway

SOR

Outbound Gateway

Alpha Aequitas

Outbound Gateway

ATS

CX2, CXD and CXC operate independently of one another. After a CX2 or CXD Subscription Agreement has been singed, a CX2 and CXD subscriber may elect to establish a direct connection to CX2 or CXD or, as a CXC subscriber, they can access the CX2 or CXD trading books through their existing CXC FIX Sessions or through CXC’s Smart Order Router. Once a connection has been established, access to either the CX2 or CXD trading book is controlled by NCXL’s Operations group by Trader ID. Subscribers are required to request technical access to each trading book by email.

Order Entry Interface All orders entered and/or modified or cancelled by NCXL subscribers are entered using the Financial Information eXchange (FIX) protocol. FIX allows subscribers and their software developers to integrate the CX2 and CXD trading books into their proprietary trading systems which can be used to build customized front end order entry platform. All orders are entered via FIX using the NCXL FIX specification which supports all Canadian-specific and UMIR required fields. The latest version of the NCXL FIX specification can be found on the NCXL website.

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FIX Order Entry Bandwidth Recommendations: Bandwidth recommendations for submitting orders via FIX are made by monitoring the aggregate volume of subscriber order flow and making future estimates. The following table shows the maximum number of inbound orders (and/or cancels) per second that can be handled, with no buffering or delay, with different capacity connections:

Order Protocol

Connection Bandwidth Examples 64kb 128kb

FIX Message Capacity

Standard

High Frequency

Market Data Interface CX2 and CXD Market Data is available in multicast protocol.

CX2MMD and CXDMMD Market Data Interface CX2MMD is the CX2 trading book’s real-time multicast market data feed delivering UDP multicast packet streams which are published over the CX2 multicast market data network. Multiple data streams are published over this network for resiliency and redundancy purposes. All streams carry identical content about CX2 trading book market data. By subscribing to these data streams, market data customers receive the latest market data updates from the CX2 trading book including all messages, orders and trades. CXDMMD is the CXD trading book’s real-time multicast market data feed. Similar to the CX2MMD, multiple data streams are published over this network for resiliency and redundancy purposes. All streams carry identical content about CXD trading book market data. As a dark market only information about trades are reported in this feed. The multicast message recovery service offers message recovery to market data customers. Market data customers can connect to a designated MMRS server and request past message retransmission. The recovery process is implemented via a TCP connection established by a request sent by the market data customers to the MMRS server. CX2MMD and CXDMMD Market Data Bandwidth Recommendations The following table shows the minimum recommended connection bandwidth requirements for each market data interface: Market Data Protocol CX2MMD

Recommended Connection Bandwidth 10Mb

CXDMMD

2Mb

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As trading volumes grow on the CX2 and CXD trading books the volume of quote messages will also grow and consequently the CX2MMD and CXDMMD market data feeds bandwidth requirements will increase. NCXL actively monitors the number of quote messages that are being generated by each trading book. Should the situation arise, NCXL will provide subscribers notification of any changes that are needed to be made in the CX2MMD and CXDMMD bandwidth requirement.

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Trading

Trading Hours The CX2 lit book is open for trading from 8:30 a.m. and 5:00 p.m. (EST). The CXD dark trading book is open from 9:30 a.m. to 4:00 p.m. (EST) on all business days.

Eligible Securities CX2 and CXD offer trading in all Toronto Stock Exchange listed securities and TSX-Venture listed securities. Minimum Price Increment The CX2 and CXD trading books allow orders to only be entered in the minimum tick increments allowed by UMIR. These increments are as follows:  

For stocks with a price >= $.50 a minimum price increment of $.01 CAD For stocks with a price < $.50 a minimum price increment of $.005 CAD

Minimum Price Improvement Dark orders that do not meet the minimum size requirements (as defined by UMIR)1 entered on either the CX2 or CXD trading books must provide incoming orders minimum price improvement (also defined by UMIR) which is one price increment or a half price increment if the bid ask spread is at a minimum. Dark orders that meet the minimum size requirements may trade at the protected best bid and offer. Board Lot Sizes The CX2 and CXD trading books permit orders to be entered in Board Lots that are defined as Standard Trading Units (defined by UMIR)2 which are determined by the previous day’s Last Sale Price (LSP) (also defined by UMIR)3. Odd Lot and Mixed Lot orders are accepted and handled by the CX2 Odd Lot facility as described in the CX2 Odd Lot Facility section of this Subscriber Manual.

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The minimum size requirements defined by UMIR where price improvement is not required is an order that is more than 50 standard trading units or has a value of more than $100,000. 2 UMIR defines a Standard Trading Unit for any equity or similar security to be: 1,000 units of a security trading at less than $0.10 per unit, 500 units of a security trading at $0.10 or more per unit and less than $1.00 per unit, and 100 units of a security trading at $1.00 or more per unit. 3 Last sale price means the last sale of at least one standard trading unit of a particular security displayed in a consolidated display but does not include the price of a sale resulting from and order that is: a Basis Order, a Call Market Order, a Closing Market Order, a Special Terms Order unless the Special Terms Order has executed with an order or orders other than a Special Terms Order or a Volume-Weighted Average Price Order.

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Trading Halts In the event of a regulatory halt, IIROC will provide NCXL direction to halt trading for a security. During a halt, neither CX2 nor CXD will accept new orders or modifications to existing orders. Cancellation of orders is permitted. Marketplace Thresholds NCXL supports marketplace thresholds in accordance with IIROC guidance for both trading books which will reject an order that exceeds either the national last sale price or the one minute national last sale price. For more information on Marketplace Thresholds please see the Marketplace Thresholds section of this Subscriber Manual. Trade Amendments and Cancellations NCXL will cancel or amend a trade at the direction of IIROC or when two counterparties of the trade agree to have the trade be cancelled. In addition, NCXL can cancel a trade that is the result of a system error or malfunction with the consent of IIROC.

Order Handling Instructions CX2 Order Attribution Orders posted in the CX2 trading book and any resulting trades are attributed by default. Subscribers may elect to have their orders be entered without attribution by selecting the anonymous order marker. All attributed orders are eligible for broker preferencing automatically whereas anonymous orders are not. Subscribers may not opt-out of broker preferencing for attributed orders or opt-in for anonymous orders. CXD Order Attribution As a dark trading book, orders entered on CXD are not displayed. Similar to the CX2 trading book, orders entered in the CXD trading book are attributed by default and are eligible for broker preferencing. Subscribers may opt-out of having their trades being attributed by selecting the anonymous order marker. CX2 and CXD Priority Matching All orders follow the following sequence of execution priority; price/broker/time.

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Price Priority Example Broker ID # Priority P1 P2 P3

09 07 05

Size 300 100 100

Bid 10.00 9.99 9.98

Offer 10.01 10.02 10.03

Size 500 600 100

Broker ID # 85 63 07

The buy order for 300 shares by 09 has execution priority because it is the highest price bid. Likewise, the sell order for 500 shares by 85 has execution priority because it is the lowest price offer.

Time Priority Example Priority P1 P2 P3

Broker ID # 09 07 05

Size 300 100 100

Arrival Time 9:30:01 9:31:00 9:32:00

Bid 10.00 10.00 10.00

Where two orders are posted at the same price, the order that was entered first has execution priority. In this example, the buy order for 300 shares entered at 9:30:01 has execution priority because it was entered before the other two orders for 100 shares each at the same price. Broker Priority Example Priority P1 P2 P3

Broker ID # 09 07 05

Size 300 100 100

Arrival Time 9:31:00 9:31:00 9:31:00

Bid 10.00 10.00 10.00

This snapshot of the bid side of the protected market is identical to the example above where the buy order of 300 shares has execution priority. However, broker priority allows for a contra-side sell order entered by a subscriber to execute against a buy order entered by that same subscriber first. In this example, if a sell order is entered at 10.00 by either broker #07 or broker #05, it will first match with the buy order entered by the same subscriber before proceeding to execute with other orders in priority. The following shows broker priority when broker #07 enters a sell order for 100 shares at 10.00. All lit orders are eligible for broker preferencing automatically whereas anonymous orders are not. Next Order:

07 sell order for 100 shares.

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Priority P1 P2 P3

Broker ID # 09 07 05

Size 300 100 100

Arrival Time 9:31:00 9:31:00 9:31:00

Bid 10.00 10.00 10.00

Although broker #09 had time priority in the book, broker priority oversteps time priority for execution priority so that the buy order entered by 07 for 100 shares is executed first. Jitney orders will not participate in broker preferencing. CXD Trading in Accordance with IIROC Guidance on Dark Rule Framework Orders entered on the CXD trading book that do not meet the minimum size requirements (see section Trading above) must provide incoming orders with minimum price improvement which is one trading increment or a half price increment if the bid ask spread is at a minimum. Dark orders that meet the minimum size requirements may trade at the protected best bid and offer.

Example #1

IIROC Dark Rule Framework BID Size

PNBBO CXD

100

BID 10.10 10.12

ASK 10.15 10.15

Ask Size 100

Action:

A market order to sell 100 shares (does not meet IIROC’s minimum size requirement) is entered on CXD

Result:

The sell order executes against the buy order posted at 10.12 which is permitted because the 10.12 price is more than one full tick increment better than the Protected National Best Bid (PNBB).

Example #2

IIROC Dark Rule Framework BID Size

PNBBO CXD

100

BID 10.10 10.10

ASK 10.15 10.15

Ask Size 100

Action:

An IOC market order to buy 100 shares (does not meet IIROC’s minimum size requirement) is entered on CXD

Result:

The buy order is cancelled back to the subscriber as the order does not meet IIROC’s minimum size requirement and the 10.15 offer does not represent a full tick increment better than the Protected National Best Offer.

Example #3

IIROC Dark Rule Framework BID Size

BID

ASK

11

Ask Size

PNBBO CXD

100

10.12 10.125 (midpoint peg order)

10.13 10.13

Action:

A market order to sell 100 shares (does not meet IIROC’s minimum size requirement) is entered on CXD

Result:

The sell order executes against the midpoint buy order floating at 10.125 which is permitted because the spread is one tick wide and because 10.125 provides price improvement over the Protected National Best Bid and Offer (PNBBO).

Example #4

IIROC Dark Rule Framework BID Size

PNBBO CXD

100

BID 10.10 10.10

ASK 10.15 10.15

Ask Size 100

Action:

A market order to sell 5100 shares (meets IIROC’s minimum size requirement) is entered on CXD

Result:

The sell order executes at 10.10 or the PNBB because the size of the order meets the minimum size requirement.

Dynamic Order Re-pricing and the Order Protection Rule The Order Protection Rule (OPR) requires all visible, immediately accessible, better-priced protected limit orders to be filled before other protected limit orders at inferior prices, regardless of the marketplace where the order is entered. The purpose of OPR is to ensure that if a protected order is entered on a protected marketplace with the best price, it will be executed ahead of inferior priced orders irrespective of which protected marketplace the order is posted. OPR requires all marketplaces recognized or approved under National Instrument 21-101 to establish, maintain, and enforce, written policies and procedures that are reasonably designed to prevent trade-throughs on that marketplace. NCXL consumes external market data feeds from all protected marketplaces directly. External market data feeds from protected marketplaces are consolidated with market data from the CX2 and CXD trading books to provide the CX2 and CXD matching engines with real-time market price information for the purpose of re-pricing orders that would otherwise trade-through. In addition, the matching engine also facilitates subscriber compliance in not intentionally locking or crossing a market on CX2 in accordance with National Instrument 23-101 (NI 23-101). In accordance with NCXL’s Order Protection Rule Policies and Procedures, when an order is received directly by either the CX2 or CXD trading book, it compares the PNBBO for trade-through obligations and will reasonably prevent a trade through on its marketplace by re-pricing the order. Subscribers wishing to take direct responsibility for demonstrating they have complied with OPR may override this mechanism on CX2 by entering a NCSO order which is designated as a Directed Action Order (DAO) order for OPR purposes.

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The system will not reject orders because of trade-through. Should an order be entered at a price that would result in a trade-through or a locked or crossed market, the system will automatically re-price the order as shown in the examples below. In the case of an IOC or FOK order, the order will be cancelled back to the subscriber if it is not executed as per the IOC or FOK instructions. Orders that are entered on either the CX2 or CXD trading books that cross the PNBBO and would either trade-through or quote-through a better priced protected order will be automatically re-priced to prevent a trade-through or a crossed market from occurring. In addition, orders that are entered at the PNBBO that would lock the market will also be re-priced on CX2.4 When an order is re-priced, its price priority after each re-pricing is determined by the price level to which it has been re-priced, while its time priority is determined by the time each re-pricing occurs. When re-pricing multiple orders to the same price level, the time sequence for the re-pricing will be determined by each order’s original timestamp or by the timestamp associated with the last re-pricing, whichever is more recent. Where an order would not result in a trade-through or result in a locked or crossed market, it will execute against orders posted in the CX2 trading book if directed to CX2 or the CXD trading book if directed to CXD at or within the PNBBO.

Example #1 - Trade-Through Prevention (ILLUSTRATIVE)

PNBBO CX2 Book Quote

BID 10.10 10.09

ASK 10.13 10.14

Given the market conditions noted above, aggressively priced Buy and Sell orders will be repriced as described below. A SELL order entered at a price lower than the protected national best bid (PNBB) will be repriced to equal the PNBB plus a trading increment 5 as follows:

SELL Limit SELL Market

Original Price 10.09 None (MKT)

Order Re-price 10.11 10.11

A BUY order entered as either a limit or market order at a price greater than the protected national best offer (PNBO( will be re-priced to equal the PNBO minus a trading increment6 as follows:

BUY Limit

Order Price 10.14

Order Re-price 10.12

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In the case of CXD because it is a dark trading book, an order may lock the market and not be re-priced. In the case of CXD this order will be dark and will be re-priced to equal the PBB. 6 In the case of CXD this order will be dark and will be re-priced to equal the PBO. 5

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BUY Market None (Mkt) 10.12 Both orders will be placed in time priority behind all other orders to BUY at 10.12. In circumstances where the prevailing market conditions change after a re-priced order has already been entered into the CX2 trading book, the matching engine performs dynamic, virtually instantaneous, realtime re-pricing in reaction to market data ensuring that the order has maximum execution potential within the constraints of the customers original order instructions. Note: Dynamic order re-pricing is only available between 9:30 a.m. to 4:00 p.m. (Eastern Time). Example #2 - Dynamic Order Re-pricing: Market Order (ILLUSTRATIVE)

PNBBO CX2 Book Quote

BUY Market

BID 10.10 10.10

ASK 10.13 10.14

Original Order Price

Order Reprice

None (MKT)

10.12 (MKT)

MKT instruction is retained in memory in the matching engine

The buy market order is re-priced to 10.12, preventing a trade-through and a locked market. However, the original instruction of MKT is retained in memory in the matching engine. As a result, the order price will float with the PNBO adjusted by a trading increment until the order is cancelled or becomes eligible for execution on terms that would not violate trade-through obligations.

Updated PNBBO CX2 Book Quote

BID

ASK

10.12 10.12 (MKT)

10.13 10.14

Spread narrows because CX2 is the new inside bid

Following a quote refresh the prevailing market conditions change and the PNBO updates to 10.14. The market buy order would not cause a trade-through if executed against the 10.14 sell order on CX2. As a result the market order becomes eligible for execution and a match occurs at 10.14.

Updated PNBBO CX2 Book Quote

BID 10.12 10.14 (MKT)

ASK 10.14 10.14

Execution occurs at 10.14

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Note: Dynamic order re-pricing is only available between 9:30 a.m. to 4:00 p.m. (Eastern Time). Before 9:30 a.m. and after 4:00 p.m. (Eastern Time), orders will be re-priced only once and then remain static. In this circumstance, the order must be modified or cancelled and replaced in order to change the price.

Example#3 - Dynamic Order Re-pricing: Limit Order (ILLUSTRATIVE)

PNBBO CX2 Book Quote

BID 10.10 10.09

ASK 10.13 10.15

Original Order Price

BUY Limit

10.14

Order Re-price

10.12 (10.14)

10.14 limit instruction is retained in memory in the matching engine

The buy limit order is re-priced to 10.12 in order to prevent a trade-through. However, the original instruction of a 10.14 limit is retained in the memory of the matching engine. In this circumstance, the order price will float with the PNBO adjusted by a trading increment until the order is cancelled or becomes eligible for execution that would not violate trade-through, up to the original limit price. BID

Updated PNBBO CX2 Book Quote

ASK

10.12 10.12 (10.14)

10.13 10.15

Spread narrows because CX2 is the new inside bid

Following a quote refresh the prevailing market conditions change and the PNBO updates to 10.15. There is a sell order on CX2 at 10.15 but the limit buy order would not be eligible for execution because it is capped at the original 10.14 limit instruction.

Updated PNBBO

CX2 Book Quote

BID 10.14

ASK 10.15

10.14

10.15

15

10.14 limit top is reached and enforced – no execution

Note: Dynamic order re-pricing is only available between 9:30 a.m. to 4:00 p.m. (Eastern Time). Before 9:30 a.m. and after 4:00 p.m. (Eastern Time), orders will be re-priced only once and then remain static. In this circumstance, the order must be modified or cancelled and replaced in order to change the price. Please refer to the NCXL FIX specification for detailed descriptions of how order types are implemented.

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CX2 TRADING BOOK ORDER TYPES Traditional Order Types Market Order An order to buy or sell a security at the best available price on the CX2 trading book but will not trade at a price outside the PNBBO. Limit Order An order to buy or sell a security at a price equal to, or better than, the specified limit price. Short Sell Order An order to sell a security that the seller does not own (either directly or through an agent or trustee) at the time of the order. Short-marking Exempt Order An order by an account to buy or sell a security that meets the definition of a short-marking exempt as defined by UMIR.7 Specialized Order Types Bypass Order A Bypass order marker indicates that the user does not want the order to interact with undisplayed orders or undisplayed portions of iceberg or X-berg orders on the CX2 trading book. Orders marked with the Bypass marker are treated as Immediate-or-cancel (IOC).

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A short marking exempt order means an order for the purchase or sale of a security from an account that is a) An arbitrage account b) The account of a person with Marketplace Trading Obligations in respect of a security for which that person has obligations: c) A client, non-client or principal account: a. For which order generation and entry is fully automated and b. Which, in the ordinary course, does not have, at the end of each trading day, more than a nominal position, whether short or long, in a particular security; or d) A principal account that has acquired during a trading day a position in a particular security in a transaction with a client that is unwound during the balance of the trading day such that, in the ordinary course, the account does not have, at the end of each trading day, more than a nominal position, whether short or long, in a particular security.

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Nasdaq CX2 Sweep Order™ (NCSO) The NCSO order marker indicates that the user has already checked the quotes of all other markets before routing the order to the CX2 trading book. NCSO orders are not re-priced by the CX2 system. NCSO orders will trade with the best priced contra-side order(s) without consideration of prices on other marketplaces. The NCSO is designated as a Direct Action Order (DAO) for OPR purposes as it permits a subscriber to opt out of NCXL’s OPR solution and take on direct responsibility for preventing trade throughs. Post Only Order An order that will post in the CX2 trading book with the intention of liquidity provision. If a displayed post-only order upon entry would result in a trade, the order will be re-priced one tick increment more passively and booked. This order will not interact with hidden liquidity. Post-only orders may be combined with any other order type including non-displayed orders. Two contra side post-only non-displayed orders eligible to match will not execute. Instead, both orders will maintain their price until executing against an active order. In addition, no execution will take place between a resting dark limit order and an incoming contra order marked post only with the same price as the resting order. Instead, both orders will sit in the booked at the locked price unless a subsequent amendment or automated re-pricing of the first resting dark order causes that order to become active and executable against the contra resting dark post only order. Iceberg/Reserve Order An order where a customer determines the number of shares to be displayed, 8 while the remaining shares are hidden in reserve. When the visible portion is fully executed, a new visible displayed size is refreshed, drawing from the amount of the reserve. New displayed sizes will refresh until the amount of the reserve is less than the displayed amount. At that point, the remaining reserve quantity will be displayed. An example of how priority is determined for Iceberg orders is provided below:

Example – Display Priority, Reserve/ Iceberg In the example below, the displayed buy order share sizes of 100, 200, and 100, respectively, will be executed against matching sell orders based on time priority. The reserve quantities of 900 and 300 will not become eligible for matching until all displayed shares at that price level have been exhausted. In the circumstance where all visible orders and visible portions of iceberg order are displaced, the hidden portion of multiple iceberg or X-Berg (see below) orders will execute in order following price/time priority. Hidden portions of iceberg or X-Berg orders will execute before any fully hidden order. Display 100 200 100

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Reserve (900) (300) 0

Arrival Time 9:30:00 9:31:00 9:35:00

Bid 10.00 10.00 10.00

The displayed quantity must be equal to or greater than one standard trading unit (STU) or such greater size as designated by IIROC.

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The X-berg An order that is similar to an Iceberg order. However, instead of the displayed size being the same every time the order is refreshed, the displayed quantity is chosen at random by the system within a prespecified range set by the customer. A customer sets the amount of shares to be displayed and the amount of shares to held in reserve when first entering the order. An example is as follows:

Example – X-berg Quantity 50000

Price 10.00

Display Quantity 1000

Reserve 49000

Random Refresh Range +/- 500

Possible Display QTY Refreshes (STU = 100) 1500 Random (Maximum 1000 + 500) 1400 Random 1300 Random 1200 Random 1100 Random 1000 Random (Original Display Quantity) 900 Random 800 Random 700 Random 600 Random 500 Random (Minimum 1000 – 500) Similar to the iceberg order outlined above, the hidden portion of multiple iceberg or X-Berg orders will execute in order following price/time priority. Hidden portions of iceberg or X-Berg orders will execute before any fully hidden order. Crosses Intentional Cross The simultaneous entry of both an order to buy and sell the same amount of a security at the same price entered by the same subscriber. Intentional crosses are not eligible for broker-preferencing so there is no possibility of cross interference. In accordance with IIROC guidance, the CX2 trading book accepts better priced intentional crosses including those entered with a price of a half trading increment. Internal Cross An intentional cross between two accounts that are managed by a single firm acting as a portfolio manager with discretionary authority in managing the investment portfolio. Similar to intentional crosses, internal crosses are not eligible for broker preferencing.

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Basis Cross A cross of at least 80% of the component share weighting of the basket of securities, index participation unit, or derivative instrument that is the subject of the basis trade. In accordance with UMIR, the subscriber shall report details of the transaction to IIROC prior to execution. VWAP Cross A VWAP cross is a cross of a security at the volume weighted average price of multiple trades on a marketplace or on a combination of marketplaces over a specified time period. The volume weighted average price is the ratio of value traded to total volume. In accordance with UMIR, where applicable, the Subscriber shall report details of the transaction to IIROC prior to execution. Contingent Cross A cross resulting from a paired order placed by a Participant on behalf of a client to execute an order on a security that is contingent on the execution of a second order placed by the same client for an offsetting volume of a related security as defined in UMIR. Peg Order Types Primary Peg A buy or sell order that will peg to the passive side of the PNBBO. Primary Peg orders can be entered as either displayed or non-displayed in the CX2 trading book. Subscribers have the option of entering a limit price with the order at which price the order will stay if the PNBBO moves above or below the limit price. Mid-Peg A Mid-Peg order is described below under CX2 Non-displayed Orders Market Peg A Market Peg buy/sell order will peg to the best protected ask/bid adjusted by a trading increment as defined by UMIR. In order to prevent locked markets, Market Peg orders will execute at the best protected ask/bid adjusted by a penny for securities priced equal to or greater than $.50 and by a half-penny ($.005) for securities priced less than $.50 Market Peg orders can be entered as either displayed or non-displayed in the CX2 trading book. Subscribers have the option of entering a limit price with the order. When the PNBBO is locked, no pegged order executions are permitted.

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Peg Offset An increment/decrement offset of the peg price that allows a pegged order to become more passive/aggressive than the quote to which it is pegged. Peg offsets are not permitted to be added to Mid-Peg orders. Example: a Primary Peg with a +$0.01 offset will peg to the PNBB price plus one cent.

Pegged Order Handling Between 8:30 a.m. and 9:30 a.m. Pegged orders are accepted by the system but held until 9:30 a.m. when the orders are booked and become eligible to trade. From 4:00 p.m. to 5:00 p.m. All pegged orders entered after 4:00 p.m. are rejected. Any pegged order that has been entered in the book before 4:00 p.m. are cancelled. CX2 Non-displayed Orders Minimum Quantity A Minimum Quantity order, such as All-or-None (AON), is an order that will only execute if there is sufficient demand or supply for the entire order. These orders are not displayed in the CX2 trading book. Mid-Peg Order The Mid-Peg order is a non-displayed order that floats at the midpoint of the PNBBO which is calculated and updated in real-time by the CX2 system. Unique to this order type, when the PNBBO spread is an odd increment, Mid-Peg orders will execute at half-penny prices. Mid-Peg orders provide subscribers the option to enter a limit price with the order which can be either a full or half-tick increment. Limit prices entered with Mid-Peg orders have no impact on an order’s priority standing. A limit price only determines whether or not an order is eligible to trade at a particular price point. The Mid-Peg order is an ideal tool for subscribers to reduce market impact and to be offered price improvement opportunities. Adding a pegged offset is not permitted for Mid-Peg orders. When the PNBBO is locked, no Mid-Peg executions are permitted. Hidden Order A non-displayed limit order that adheres to the same execution priority conditions as other non-displayed order types. Execution priority Non-displayed orders always execute after lit orders at the same price on the CX2 trading book. The hidden portion of an Iceberg or X-berg order is given execution priority after all lit orders have been

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displaced, followed by fully-hidden orders that are then executed in price/broker/time priority. Price priority for a re-priced non-displayed order is not affected by an underlying limit price. Time priority for a non-displayed order that is re-priced is determined by the time that each re-pricing occurs. When repricing multiple non-displayed orders to the same price level, the time sequence for the re-pricing will be determined by each order’s original timestamp or by the timestamp associated with the last re-pricing,

whichever is most recent. Time in Force Conditions Immediate or Cancel (IOC) – An IOC order is one in which any portion of the order that is not filled immediately is cancelled. Fill or Kill (FOK) – A FOK order must execute as a complete order as soon as it becomes available on the market, otherwise the order is cancelled. DAY – A Day Order will remain live on the CX2 trading book for the duration of the trading day or until cancelled by the Subscriber. At the end of the CX2 trading day (5:00 pm Eastern Time) all outstanding, unfilled Day orders will be cancelled. Good til Date (GTD) – A GTD order expires at the earlier of a specified Expire Time or the end of the CX2 trading day. At the end of the CX2 trading day (5:00 pm Eastern Time) all outstanding, unfilled Day orders will be cancelled. Good til Cancelled (GTC) – A GTC order will be cancelled at the end of the CX2 trading day.

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CXD TRADING BOOK ORDER TYPES Traditional Order Types Market Order An order to buy or sell a security at the best available price on the CXD trading book but will not trade at a price outside the PNBBO. Limit Order An order to buy or sell a security at a price equal to, or better than, the specified limit price. Short Sell Order An order to sell a security that the seller does not own (either directly or through an agent or trustee) at the time of the order. Short-marking Exempt Order An order by an account to buy or sell a security that meets the definition of a short-marking exempt as defined by UMIR.9

Specialized Order Types Post-Only Order An order that will post in the CXD order book with the intention to provide liquidity. Two contra-side postonly non-displayed orders eligible to match will not execute. Instead, both orders will maintain their price until executing against an active order. In addition, no execution will take place between a resting dark limit order and an incoming contra-order marked post-only with the same price as the resting order. Instead, both orders will sit in the booked at the locked price unless a subsequent amendment or automated re-pricing of the first resting dark order causes that order to become active and executable against the contra-resting dark post only order. Minimum Quantity A Minimum Quantity order, such as All-or-None (AON), is an order that will only execute if there is sufficient demand or supply for the entire order.

9

See footnote 5 above for the definition of a short marketing exempt account.

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Crosses Intentional Cross The simultaneous entry of both an order to buy and sell the same amount of a security at the same price entered by the same subscriber. Intentional crosses are not eligible for broker preferencing so there is no possibility of cross interference. In accordance with IIROC guidance, the CXD trading book will accept better priced intentional crosses including those entered with a price of one half trading increment. Internal Cross An intentional cross between two accounts that are managed by a single firm acting as a portfolio manager with discretionary authority in managing the investment portfolio. Similar to intentional crosses, internal crosses are not eligible for broker preferencing. Basis Cross A cross of at least 80% of the component share weighting of the basket of securities, index participation unit, or derivative instrument that is the subject of the basis trade. In accordance with UMIR, prior to execution, the subscriber shall report details of the transaction to IIROC. VWAP Cross A cross of a security at the volume weighted average price of multiple trades on a marketplace or on a combination of marketplaces over a specified time period. The volume weighted average price is the ratio of value traded to total volume. In accordance with UMIR, where applicable, prior to execution, the subscriber shall report details of the transaction to IIROC. Contingent Cross A cross resulting from a paired order placed by a subscriber on behalf of a client to execute an order on a security that is contingent on the execution of a second order placed by the same client for an offsetting volume of a related security as defined in UMIR. 10

Pegged Order Types Primary Peg A buy or sell order that will peg to the passive side of the PNBBO. Subscribers have the option of entering a limit price with the order at which price the order will stay if the PNBBO moves above or below the limit price. Mid-Peg 10

See footnote 7 above for the definition of a related security.

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The CXD Mid-Peg order floats at the midpoint of the PNBBO which is calculated and updated in real-time by the CXD system. Unique to this order type, when the PNBBO spread is an odd increment, Mid-Peg orders will execute at half-penny prices. Mid-Peg orders provide subscribers the option to enter a limit price with the order which can be either a full or half-tick increment. Limit prices entered with Mid-Peg orders have no impact on an order’s priority standing. A limit price only determines whether or not an order is eligible to trade at a particular price point. The Mid-Peg order is an ideal tool for subscribers to reduce market impact and to be offered price improvement opportunities. Adding a pegged offset is not permitted for Mid-Peg orders. When the PNBBO is locked, no Mid-Peg executions will be permitted. Market Peg A Market Peg buy/sell order will peg to the best protected ask/bid adjusted by a trading increment as defined by UMIR. Subscribers have the option of entering a limit price with the order. When the PNBBO is locked, no pegged order executions are permitted. Peg Offset An increment/decrement offset of the peg price that allows a pegged order to become more passive/aggressive than the quote to which it is pegged. Peg offsets are not permitted to be added to Mid-Peg orders. Example: a Primary Peg with a +$0.01 offset will peg to the PNBB price plus one cent.

Minimum Price Improvement Order A Minimum Price Improvement order is a primary peg order with an offset that is one tick increment more aggressive than the PNBBO or will trade at the midpoint of the PNBBO if the spread is one tick wide. This order is designed to assist subscribers in capturing the largest amount of the bid/ask spread.

Pegged Order Handling Between 8:30 a.m. and 9:30 a.m. Pegged orders are accepted by the system but held until 9:30 a.m. when the orders are booked and become eligible to trade. From 4:00 p.m. to 5:00 p.m. All pegged orders entered after 4:00 p.m. will be rejected. Any pegged order that has been entered in the book before 4:00 p.m. will be cancelled.

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Time in Force Conditions Immediate or Cancel (IOC) – An IOC order is one in which any portion of the order that is not filled immediately is cancelled. Fill or Kill (FOK) – A FOK order must execute as a complete order as soon as it becomes available on the market, otherwise the order is cancelled. DAY – A Day Order will remain live on the CXD trading book for the duration of the trading day or until cancelled by the Subscriber. At the end of the CXD trading day (4:00 pm Eastern Time) all outstanding, unfilled Day orders will be cancelled. Good til Date (GTD) – A GTD order expires at the earlier of a specified Expire Time or the end of the CXD trading day. At the end of the CXD trading day (4:00 pm Eastern Time) all outstanding, unfilled Day orders will be cancelled. Good til Cancelled (GTC) – A GTC order will be cancelled at the end of the CXD trading day.

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CX2 Trading Book Odd Lot Trading Facility Definitions

Board Lot (also known as Standard Trading Unit as defined by UMIR)   

$1 or above = 100 shares $0.10 to $0.99 = 500 shares $0.005 to $0.095 = 1000 shares

Odd Lot

An order for a total volume less than one Standard Trading Unit or Board Lot

Mixed Lot

An order containing at least one Board Lot and an Odd Lot

CX2 Trading Book Auto-Execution Odd Lot Trading Facility The CX2 trading book Auto Execution Odd Lot Trading Facility (Odd Lot Facility) enables NCXL subscribers to trade odd lot orders (see above for the definition of odd lot order sizes) with guaranteed fills for orders that are marked IOC and are immediately marketable against the PNBBO. Nasdaq CX2 Odd Lot Dealers (OLDs) meet their responsibility for guaranteeing executions against incoming IOC marketable Odd Lot orders on the passive side of the PNBBO through orders generated automatically by the trading system (auto-execution). Odd Lot orders that are not immediately marketable or not marked IOC are rejected. When a match occurs, NCXL will send an unsolicited trade report to the dealer and an execution message to the incoming participant. Odd Lot execution messages are included in the CX2MMD market data feed and provided to the TMX Information Processor in accordance with NI 21-101. CX2 Trading Book Auto-Execution Odd Lot Trading Facility Characteristics and Behaviors: 1. 2. 3. 4. 5.

6. 7.

Auto-execution will only be available between 9:30 a.m. and 4:00 p.m. (EST). Odd Lot orders (marketable or otherwise) that are entered outside of these times will be rejected. Mixed Lot orders marked IOC that are directed to CX2 will be accepted. Only Odd Lot orders marked IOC are eligible for auto-execution. Odd Lot executions will not be allowed when a security is in a locked or crossed market condition. Odd Lot orders entered when the market is locked or crossed will be rejected. In accordance with UMIR Rule 2.1, subscribers are not permitted to send two or more orders that would trigger auto-execution by OLDs that would not have triggered if the orders had been entered on CX2 as a single order entered or at the same time. Subscribers may not enter the odd lot portion of a mixed lot order immediately prior to entering the board lot portion. The following types of activity may be viewed as an indication of unfair trading: a. Unbundling Round Lots for the purpose of entering Odd Lot orders. b. Other types of trading activity that is not consistent with traditional Odd Lot investment activity. c. Effecting pre-arranged wash sales in Odd Lots, where an Odd Lot Dealer sends marketable odd lot orders to securities that the OLD has been assigned and will create a wash trade against the system generated auto execution.

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d. Entering orders into the CLOB for the purpose of affecting the execution price of the Odd Lot trades.

How It Works Example #1

Auto-Execution for a Marketable Buy Order BID 10.10

PNBBO

ASK 10.13

Odd Lot Order Volume Price BUY 9 10.13 Action: An Odd Lot IOC buy order is entered at the PNBO (10.13) Result: Auto-Execution

Example #2

Auto-Execution for a Marketable Sell Order BID 10.10

PNBBO

ASK 10.13

Odd Lot Order Volume Price Sell 21 10.10 Action: An Odd Lot IOC sell order is entered at the PNBB (10.10) Result: Auto-Execution

Example #3

Non-Marketable Buy Order BID 10.10

PNBBO

ASK 10.13

Odd Lot Order Volume Price Buy 9 10.12 Action: An Odd Lot IOC buy order is entered with a limit price of 10.12 Result: Rejection

Example #4

Marketable Mixed Lot Sell Order

PNBBO

BID 10.10

ASK 10.13

Odd Lot Order

Volume

Price

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Sell 121 10.10 Action: A Mixed Lot IOC sell order is entered with a limit price of 10.10 Result: Auto-Execution of odd lot portion and execution against available liquidity at 10.10 with any remaining unexecuted portion canceled.

Example #5

PNBBO

Marketable Odd Lot Buy Order During a Locked Market BID 10.11

ASK 10.11

Odd Lot Order Volume Price Buy 9 10.11 Action: An Odd Lot IOC buy order is entered with a limit price of 10.11 when the market is locked Result: Rejection

Example #6

PNBBO

Marketable Odd Lot Sell Order During a Crossed Market BID 10.12

ASK 10.11

Odd Lot Order Volume Price Buy 9 10.11 Action: An Odd Lot IOC sell order is entered with a limit price of 10.11 when the market is crossed Result: Rejection

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CX2 ODD Lot Dealers NCXL subscribers that are interested in serving as CX2 Odd Lot Dealers can be designated as such at the discretion of NCXL. In order to be eligible to be an Odd Lot Dealer (OLD) a NCXL subscriber must fulfill the following criteria:     

Execute the CX2 Odd Lot Addendum to the CX2 Subscriber Agreement; Have policies and procedures in place to ensure compliance with UMIR and other regulatory requirements; Have policies and procedures in place to monitor its’ conduct for compliance with its OLD obligations; Carry out all Odd Lot Obligations in compliance with UMIR and other regulatory requirements; Have necessary resources (both training and technology) to carry out obligations;

CX2 OLD provide an automatic immediate fill for incoming marketable IOC odd lot orders at the best visible protected price in Canada. Responsibilities of CX2 Odd Lot Dealers Where NCXL allocates listed securities to an OLD (Securities of Assignment) the OLD will be responsible for guaranteeing automatic immediate fills for incoming marketable IOC odd lot orders through orders generated automatically by the trading system. (1) Inventory of securities traded in Odd Lots is considered the property and the responsibility of the Odd Lot Dealer. (2) The OLD may assign one or more of its own Approved Trader employee(s) as its Odd Lot Trader(s). The OLD may assign the performance of their responsibilities for trading in their Assigned Securities to DEA Eligible Clients (as defined in NI 23-103) or Approved Traders of DMA Eligible Clients. (3) Each OLD may be assigned and maintain a number of securities in their Odd Lot inventory. (4) New subscribers will be invited to apply to participate in Odd Lot Trading of said securities at the discretion of NCXL. (5) If an OLD is requested by NCXL to withdraw from the pool of OLDs, NCXL will provide the OLD with no less than 30 days-notice before NCXL reassigns the odd lot inventory to another OLD or to a new subscriber. (6) If an OLD wishes to give up its Securities of Assignment it must give NCXL not less than 30 days notice of its intention to withdraw its services. (7) The method of allocating and/or reallocating Odd Lot securities between OLD will be determined by NCXL.

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(8) A name change and/or symbol change of an issue will not be considered, for purposes of odd lot inventory allocation, as a new security. Assignment of Securities to CX2 Odd Lot Dealers Scope The Odd Lot Facility will cover all listed equity securities available to trade on CX2. Only one OLD will be assigned responsibility for each security. Procedure for Assignment The following procedure will be used to assign securities to OLD. (1) Request Period – all OLDs will be asked to submit requests for securities that they are interested in being assigned responsibility. If only one OLD indicates interest in a security, it will then be assigned to that OLD. If more than one OLD indicate interested in a security then it will be randomly assigned following the process outlined in step 2 below between the number of interested OLDs. (2) Assignment of Remaining Securities - other remaining securities not assigned in step one will be grouped into three categories based on the liquidity features of each security. Each liquidity category will then randomly assigned between all interested OLD. Exchanging Securities of Assignment OLDs are free to exchange a security that has been assigned to it upon agreement of the other party and approval by NCXL. Notification must be made to NCXL and approval secured before an exchange can take place between two OLDs. Releasing a Security of Assignment Should an OLD desire not to act as an OLD for a security that has been assigned to it, it may notify NCXL of this intention. NCXL will send requests for interest to all eligible OLDs for the security in question. If only one OLD indicates interest in assuming responsibility for this security it will be re-assigned. If more than one OLD indicates interest then it will be randomly assigned between the number of interested OLDs. If no indication of interest is received, then no reassignment will take place and the security will continue to remain under the responsibility of the original OLD.

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Nasdaq CXC Risk Management Suite CX2 and CXD Trading Books Each feature of the Chi-Controls Risk Management Suite outlined below is available for each of the CX2 and CXD trading books.

Cancel on Disconnect Subscribers have the option to have all open orders cancelled in the event the FIX session between NCXL and the client is disconnected

No-Self Cross This feature is enabled on an order-by-order basis through the use of two FIX tags; the first denotes a participant generated key to prevent orders with the same key value from trading against each other, the second informs the system which version of the No-Self Cross should be applied. Subscribers can choose from one of the following implementation options:  Cancel the Active order;  Cancel the Passive order;  If the orders are different in share quantity, reduce the larger order and cancel the other one; and  Send a fill to both orders but not shown as a trade on the public market data feed *Please note that although orders are not shown as a trade on the public market data feed, the fill reports will be reported to IIROC in a standardized form via a real-time regulatory feed. The unique key provided by a subscriber for this fourth implementation option is intended for use only on buy and sell orders for accounts that may result in trades where there is no change in beneficial or economic ownership.

Order Entry Parameters Price limits – Please see Marketplace Thresholds section below. Share limit – Subscribers are able to set the maximum number of shares permitted per order per security. If an order is entered which exceeds the share limit, the order will be rejected and sent back to the subscriber. Notional limit – Subscribers are able to set the maximum notional value per order per security. The notional value of a trade is calculated by the number of shares multiplied by the price of the security. If an order is entered which exceeds the notional limit the order will be rejected and sent back to the subscriber.

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Marketplace Thresholds Marketplace Thresholds operate as part of a multi-tiered approach to preventing erroneous orders and controlling short term, unexplained price volatility. In accordance with IIROC Guidance, NCXL supports controls to prevent orders from executing outside of certain price thresholds (Marketplace Thresholds) on all of its trading books. Orders are prevented from executing outside of two reference prices; the national last sale price (NLSP) and the national last sale price established at one-minute intervals (OMLSP) (each a Reference Price, taken together Reference Prices). Marketplace Thresholds are applicable during regular trading hours (9:30 a.m. and 4:00 p.m.) and apply to all orders including Direct Action Orders with the exception of a Basis Order, a Closing Price Order, a Special Terms Order, a Volume-Weighted Average Price Order, an Opening Order, a Market-on Close Order and an order that participates in an auction following the resumption of trading after a trading halt. IIROC has prescribed different threshold levels for different classes of securities. Please see IIROC Notice 15-0186 Guidance Notice on Marketplace Thresholds (August 25, 2015) and IIROC Notice 16-0138 Additional Guidance Respecting Single-Stock Circuit Breakers and Marketplace Thresholds (June 20, 2016) for a list of prescribed thresholds for each asset class. Subscribers should refer to any new IIROC Guidance as it becomes available and is amended from time to time. Nasdaq CXC Limited Marketplace Thresholds An order that is entered on any NCXL trading book a price that exceeds either Reference Price will be rejected upon entry. If a rejection occurs, the order will be returned to the subscriber with a message describing that reason for the rejection.11 An order can be rejected as a single order or as part of a series of orders. In addition, in the rare circumstance where an order is resting in the order book at a price that, if executed would exceed a Reference Price, the order will be repriced to within the threshold parameter based on the most recent Reference Price. Finally, a market order that is entered without a limit price will be assigned a limit price upon entry and will post any remaining shares at the price of the most conservative Reference Price adjusted for the applicable threshold level. For example, a buy order that is entered as a market order on a security that has a 10% thresholds will be assigned a price that is 110% of the lowest Reference Price. Examples of Marketplace Threshold Controls The following Reference Prices are used for all examples. NLSP

OMLSP

$10.00

$10.05

Example 1

Violation of the NLSP

Action:

Buy order entered at $11.02

11

Marketplace Threshold 10% from each Reference Price

The message included on the order rejection is “ORDER EXCEEDED MKTPLACE THRESHOLD.”

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Outcome:

Order is rejected because it exceeds the NLSP by greater than 10%. ($11.02 > 110% of $10.00 or $11.00)

Example 2

Violation of the OMLSP

Action: Outcome:

Sell order at $9.02 Order is rejected because it exceeds the OMLP by greater than 10%. ($9.02 < 90% of $10.05 or $9.045)

Example 3

Resting order repriced to prevent a potential trade outside the allowable threshold level

Action:

Resting buy order at $11.00. NLSP changes to $9.50

Outcome:

Resting order is re-priced to $10.45. ($10.45 = 110% of $9.50, or $10.45)

Example 4 –

Unpriced (market) order re-priced

Quantity 100 200 Action: Outcome:

BID

ASK 8.90 8.89

10.10 10.11

Quantity 500 2000

Sell order entered as a market order. Order Re-priced to $9.05. ($9.05 = 90% of $10.05).

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NLSP 10.00

OMLSP 10.05

Clearing and Settlement Clearing NCXL operate under the exchange clearing model. All trades that have executed on the CX2 or CXD trading books are reported to CDS at the end of the trading day in an end of day file. Information about trades includes price, purchaser, seller, and UMIR ID. This file is used by CDS to verify trade reporting by Canadian participants. Subscribers report all trades executed on a trading day to their custodians who in turn report all allocations to CDS. On the next trading day after the trade (T+1) NCXL subscribers review the CDS trade comparison reporting between all trades submitted to CDS by NCXL and each subscribers’ custodian. On the date of settlement CDS, via the CNS process, will debit/credit the subscriber custodians’ CDS ledger and bank account for the trades in addition to electronically transferring the securities from the seller to the buyer.

Regular Settlement NCXL only accepts single orders with standard settlement instructions where settlement occurs on the third trading day after the trade is executed (T+3) However, in the case where special direction for clearing and settlement is given by the listing exchange (as a result of an event such as de-listing, for example) NCXL will support trading in that symbol as long as the listing exchange also supports trading in that symbol. NCXL will make the appropriate adjustments to indicate the special clearing and settlement date (as agreed upon with CDS) that will be reflected in NCXL’s end of day trading file that is sent to CDS. NCXL will not trade symbols with same day cash settlements. Symbols with same day cash settlement will be halted on the system prior to the commencement of trading. Special Settlement Intentional Crosses Subscribers are able to enter intentional crosses with Non-Standard Orders12 that are subject to nonstandardized terms and conditions related to settlement that have not been set by the marketplace on which the security is listed. Non-Standard intentional crosses with special settlement instructions for same day cash settlement will be accepted and trade.

12

A Non-Standard Order is a defined term in National Instrument 23-101.

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NCXL Clearly Erroneous Trade Policy Definition - the execution of an order to buy, sell, or sell short a security, entered in error (e.g. in terms of price, quantity, side or symbol) at a price substantially away from, or inconsistent with, the prevailing market price for that security at the time of execution. NCXL reserves the right to initiate a review of a clearly erroneous trade, regardless of whether or not a Subscriber request has been submitted, if it determines in its sole discretion that circumstances warrant such a review. In such instances NCXL will notify the relevant subscriber trading contacts, as provided by the subscriber, via electronic mail or telephone as conditions warrant, that a trade will be reviewed pursuant to this policy. Market participants that are not relevant parties will not be notified that a trade is under review. NCXL designated principals, with the consent of IIROC will exercise their sole discretion under this policy to cancel or amend a trade, where needed, that is the result of a trading book system error or malfunction. Furthermore, NCXL will follow direction from IIROC to cancel, vary or correct a trade when IIROC instructs it to do so. In addition, NCXL will facilitate the cancellation or amendment of a trade when both counterparties to the trade agree to the trade cancellation or amendment. In this circumstance, notification will be made to IIROC. Decisions will be made in a timely fashion and in all cases a decision will be made no later than the close of business on the trading day of the occurrence which led to the review being initiated. NCXL will promptly notify the relevant parties and IIROC via electronic mail, and telephone as conditions warrant, of its decision to cancel a trade or trades. After NCXL processes the cancellation or amendment of any clearly erroneous trade, the trade is null and void.

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