5522. Margin requirements for underwriting commitments where expressions of interest from exempt purchasers have been affirmed

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    1. Where a Dealer Member has a commitment in respect of a new issue of securities or a secondary issue of securities and the Dealer Member has determined through obtaining appropriate documentation:

      1. that the allocation between retail and exempt purchasers has been finalized,

      2. that expressions of interest received from the entire allotment to exempt purchasers have been verbally affirmed but not yet ticketed,

      3. that there is unlikely to be a significant renege rate on the expressions of interest received from exempt purchasers, and

      4. that the Dealer Member is not significantly leveraging its underwriting activities through the use of the margin requirement reduction provided on that portion of the commitment where expressions of interest have been received from exempt purchasers,

      5. the minimum Dealer Member inventory margin requirement for the portion of the commitment allocated to exempt purchasers is calculated in accordance with subsections 5522(2) through 5522(6).

    2. New issue letter has not been obtained and no out clauses in effect - Where the commitment is not subject to a market out clause or a disaster out clause (by the exclusion of these clauses from the related underwriting agreement) and a new issue letter has not been obtained or has expired, the margin required from the date that the expressions of interest received from the entire allotment to exempt purchasers have been verbally affirmed but not yet ticketed until the date the sales are contracted is:

      1. where the current market value of the commitment is at or above 90% of new issue value (90% x issue price x number of shares), 20% of normal new issue margin,

      2. where the current market value of the commitment is at or above 80% but below 90% of new issue value (80% x issue price x number of shares), 40% of normal new issue margin, and

      3. otherwise, normal new issue margin.

    3. New issue letter has not been obtained and disaster out clause in effect - Where the commitment is subject to a disaster out clause (by reference in the commitment to such clause being included in the underwriting agreement) and the disaster out clause has not expired and a new issue letter has not been obtained or has expired, the margin required is the lesser of:

      1. the margin required in subsection 5522(2), and

      2. the margin required in subsection 5520(3).

    4. New issue letter has not been obtained and market out clause in effect - Where the commitment is subject to a market out clause (by the inclusion of this clause in the related underwriting agreement) and the market out clause has not expired and a new issue letter has not been obtained or has expired, the margin required is the same as in subsection 5520(4).

    5. New issue letter has not been obtained and disaster out clause and market out clause in effect - Where the commitment is subject to a disaster out clause and a market out clause (by the inclusion of these clauses in the related underwriting agreement) and the market out clause has not expired and a new issue letter has not been obtained or has expired, the margin required is the same as in subsection 5520(5).

    6. New issue letter has been obtained - Where a new issue letter has been obtained and the new issue letter has not expired, the margin required is the same as in section 5521.

    There is no history log for this rule.

    There is no history log for this rule.