August 15, 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 PURPOSE INVESTMENTS INC. (Purpose) and its affiliates (collectively, the Filer)
AND
IN THE MATTER OF PURPOSE RBC (RY) YIELD SHARES ETF PURPOSE TD (TD) YIELD SHARES ETF PURPOSE SHOPIFY (SHOP) YIELD SHARES ETF PURPOSE ENBRIDGE (ENB) YIELD SHARES ETF PURPOSE CANADIAN NATURAL RESOURCES (CNQ) YIELD SHARES ETF PURPOSE SCOTIABANK (BNS) YIELD SHARES ETF PURPOSE CIBC (CM) YIELD SHARES ETF PURPOSE BMO (BMO) YIELD SHARES ETF PURPOSE DOLLARAMA (DOL) YIELD SHARES ETF PURPOSE TELUS (T) YIELD SHARES ETF PURPOSE COUCHE-TARD (ATD) YIELD SHARES ETF PURPOSE NATIONAL BANK (NA) YIELD SHARES ETF PURPOSE BROOKFIELD (BN) YIELD SHARES ETF PURPOSE CANADIAN NATIONAL RAILWAY (CNR) YIELD SHARES ETF PURPOSE MANULIFE (MFC) YIELD SHARES ETF (the Proposed ETFs) and similar future ETFs managed by the Filer (the Future ETFs, together with the Proposed ETFs, the ETFs)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the ETFs for exemptive relief from subsections 2.1(1) and 2.1(1.1) of National Instrument 81-102 Investment Funds (NI 81-102) (the Concentration Restriction) to permit each ETF to invest in excess of the Concentration Restriction in accordance with its fundamental investment objective of seeking to provide: (a) long-term capital appreciation through purchasing and holding the Exchange (as defined below)-listed and traded equity securities of the single Canadian (CAD) Public Issuer (as defined below) specified in the ETF’s investment objectives (referred to below as the Portfolio Securities and the Specified CAD Public Issuer, respectively), including, in the case of ETFs that are alternative mutual funds, by using leverage in accordance with NI 81-102 through cash borrowing for purchasing the Portfolio Securities; and (b) distributions by writing covered call options and/or cash covered put options on a portion of the ETF’s portfolio (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 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 Canadian Jurisdictions).
Interpretation
Terms defined in National Instrument 14-101 Definitions (NI 14-101), National Instrument 41-101 General Prospectus Requirements (NI 41-101) or in NI 81-102 have the same meaning if used in this decision unless otherwise defined herein:
Designated Broker means a registered dealer that has entered, or intends to enter, into an agreement with the Filer to perform certain duties in relation to the ETF, including the posting of a liquid two-way market for the trading of the ETF Securities on an Exchange or another Marketplace.
ETF Security means an exchange-traded unit or share of an ETF listed on an Exchange.
Exchange means a “recognized exchange” as defined in National Instrument 21-101 Marketplace Operations (NI 21-101).
Marketplace means a “marketplace” as defined in NI 21-101 that is located in Canada.
Canadian (CAD) Public Issuer means a public company: (i) that is incorporated in Canada; (ii) whose Portfolio Securities are listed on an Exchange; (iii) that has an average market capitalization in excess of CAD $20 billion in the month before the date that the ETF Securities of the relevant ETF are listed on an Exchange; and (iv) whose Portfolio Securities have an average daily trading volume in the month before the date that the ETF Securities of the relevant ETF are listed on an Exchange in excess of CAD $75 million (collectively, the CAD Public Issuer Requirements).
Securityholders means beneficial or registered holders of ETF Securities.
Representations
This decision is based on the following facts represented by the Filer:
The Filer and the ETFs
Purpose is a corporation incorporated under the laws of the Province of Ontario, with its head office located at 130 Adelaide St. West, Suite 3100, Toronto, Ontario.
Purpose is registered as (a) an investment fund manager, exempt market dealer, portfolio manager and commodity trading manager in the province of Ontario, (b) an investment fund manager and exempt market dealer in the provinces of Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island and Saskatchewan, and (c) an investment fund manager, exempt market dealer and portfolio manager in British Columbia and Quebec.
The Filer will be the registered investment fund manager and registered portfolio manager of the ETFs. The Filer will apply to list the ETF Securities on an Exchange.
The Filer and the Proposed ETFs are not in default of securities legislation in any of the Canadian Jurisdictions.
Each Proposed ETF will be an exchange traded mutual fund that is a separate class of shares of a mutual fund corporation governed by the laws of the Province of Ontario. Each Future ETF will be an exchange-traded mutual fund that is a trust, corporation or separate class of shares of a mutual fund corporation governed by the laws of a Canadian Jurisdiction.
Each Proposed ETF will be an open-ended alternative mutual fund (as defined in NI 81-102) and each Future ETF will be an open-ended non-alternative mutual fund or open-ended alternative mutual fund subject to NI 81-102.
The ETFs will be subject to NI 81-102, subject to any exemptions that may be granted by the applicable securities regulatory authorities.
The Filer will file a final long form prospectus in respect of each of the ETFs which will be prepared and filed in accordance with NI 41-101, subject to any exemptions that may be granted by the applicable securities regulatory authorities.
Each ETF will be a reporting issuer under the laws of one or more of the Canadian Jurisdictions.
ETF Securities will be (subject to satisfying the original listing requirements of the applicable Exchange) listed on an Exchange.
Designated Brokers will act as intermediaries between investors and the ETFs, performing a market-making function, including by standing in the market with bid and ask prices for the ETF Securities to maintain a liquid market for the ETF Securities. The majority of trading in ETF Securities will occur in the secondary market.
The fundamental investment objective of each ETF will be to seek to provide:
(a) long-term capital appreciation through purchasing and holding the Portfolio Securities of the Specified CAD Public Issuer, including, in the case of alternative mutual funds, by using leverage in accordance with NI 81-102 through cash borrowing to purchase Portfolio Securities; and
(b) distributions by writing covered call options and/or cash covered put options on a portion of the ETF’s portfolio.
- Specifically, the Portfolio Securities and the Specified CAD Public Issuer for each of the Proposed ETFs will be as follows:
ETF Name Portfolio Securities Specified CAD Public Issuer
Purpose RBC (RY) Yield Shares ETF Common shares Royal Bank of Canada
Purpose TD (TD) Yield Shares ETF Common shares The Toronto-Dominion Bank
Purpose Shopify (SHOP) Yield Shares ETF Class A subordinate voting shares Shopify Inc.
Purpose Enbridge (ENB) Yield Shares ETF Common shares Enbridge Inc.
Purpose Canadian Natural Resources (CNQ) Purpose ETF Common shares Canadian Natural Resources Limited
Purpose Scotiabank (BNS) Yield Shares ETF Common shares The Bank of Nova Scotia
Purpose CIBC (CM) Yield Shares ETF Common shares Canadian Imperial Bank of Commerce
Purpose BMO (BMO) Yield Shares ETF Common shares Bank of Montreal
Purpose Dollarama (DOL) Yield Shares ETF Common shares Dollarama Inc.
Purpose TELUS (T) Yield Shares ETF Common shares TELUS Corporation
Purpose Couche-Tard (ATD) Yield Shares ETF Common shares Alimentation Couche-Tard Inc.
Purpose National Bank (NA) Yield Shares ETF Common shares National Bank of Canada
Purpose Brookfield (BN) Yield Shares ETF Common shares Brookfield Corporation
Purpose Canadian National Railway (CNR) Yield Shares ETF Common shares Canadian National Railway Company
Purpose Manulife (MFC) Yield Shares ETF Common shares Manulife Financial Corporation
Each ETF will use a ticker symbol the Filer believes is unlikely to be confused with the ticker symbol for the Portfolio Securities and the Specified CAD Public Issuer for the ETF.
Distribution of ETF Securities (Distribution) will be conducted without the knowledge or consent of the Specified CAD Public Issuers and the Filer will as a general matter not have direct knowledge of or access to material information regarding the Specified CAD Public Issuers or Portfolio Securities other than publicly available information.
Disclosure
- The prospectus of each ETF (the Prospectus) will disclose:
(a) the name of each ETF using the convention reflected in this decision for the Proposed ETFs;
(b) the investment objective and investment strategy of each ETF as well as the risk factors associated therewith, including concentration risk;
(c) the fact that the ETF has obtained the Exemption Sought to permit the purchase of the Portfolio Securities on the terms described in this decision;
(d) the ways in which, and the extent to which, purchasing and holding the ETF Securities can be expected to be different from directly purchasing and holding the Portfolio Securities and the factors influencing these differences (such as the ETF’s cash-borrowing and option-writing strategies), including in respect of performance, returns and securityholder rights;
(e) that the ETF’s investment in the Portfolio Securities will be a passive investment;
(f) the Filer’s specific policies and procedures for making proxy voting and tender decisions in respect of the Specified CAD Public Issuer and the expected outcomes for the ETF of such decisions in potential scenarios, such as merger or other restructuring of the Specified CAD Public Issuer, a sale of part or all of its business, or bankruptcy of the Specified CAD Public Issuer and other scenarios; and
(g) prominently, a statement substantially similar to the following:
Investors investing, or considering investment, in an ETF (which invests in a single underlying corporate issuer) should consider their ongoing obligations with respect to insider trading, insider reporting, and take-over bids under the Ontario Securities Act (the Act) or other relevant securities legislation and National Instruments and as explained in National Policies. Securities regulators may take the view that these provisions extend to the purchase and sale of securities of ETFs that invest in securities of a single issuer, including on a look-through basis.
For example:
Under section 76(1) of the Act, individuals or entities in a special relationship with an issuer are prohibited from purchasing or selling securities of that issuer with knowledge of a material fact or material change that has not been generally disclosed. Securities regulators may take the view that this prohibition extends to the purchase and sale of securities of ETFs that invest in securities of a single issuer;
Securities regulators may take the view that the insider reporting requirements in section 107 of the Act apply in respect of purchases of securities of ETFs that invest in securities of a single issuer; and
Where ETF units are redeemable for securities of the ETF’s single underlying issuer, securities regulators may consider those ETF units convertible securities under section 1.7 of National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104) that count, on a post conversion-basis in respect of the underlying issuer, towards the early warning reporting thresholds in Part 5 of NI 62-104.
Investors are strongly encouraged to seek advice including legal advice to fully understand their insider trading, insider reporting, and take-over bids obligations and how they relate to investment in these ETFs. Investors are reminded that they are required to comply with these obligations. Purchasing a single-issuer ETF is not equivalent to holding the securities of the underlying issuer directly; investors may not have the same rights and may be subject to additional risks, as further described in this prospectus.
In the manner similarly contemplated for equity linked notes under CSA Staff Notice 44-304 Linked Notes Distributed under Shelf Prospectus System (or SN 44-304), the Prospectus will provide only abbreviated disclosure in respect of the Portfolio Securities and the Specified CAD Public Issuer based on publicly available information.
The Filer intends to meet the full, true and plain disclosure requirement of the Legislation in connection with the ETF Securities without having responsibility for the accuracy of disclosure issued by the Specified CAD Public Issuer in respect of the Portfolio Securities.
As similarly contemplated for equity linked notes under SN 44-304, the Prospectus will direct investors to public disclosure made available by the Specified CAD Public Issuer in respect of the Portfolio Securities in accordance with applicable Canadian legislation. The Prospectus will also clarify that such disclosure and other information made publicly available about the Portfolio Securities and the Specified CAD Public Issuer on the Filer’s website and otherwise cannot be expected to contemplate the Distribution. The Prospectus will clearly state that the Filer is not the source of disclosure relating to the Portfolio Securities and the Specified CAD Public Issuer and will clearly disclaim the Filer’s responsibility both for verifying the accuracy of such disclosure and for updating such disclosure. To meet the full, true and plain disclosure requirement, the Prospectus will disclose that the Specified CAD Public Issuer will not receive a direct or indirect financing benefit from the Distribution.
Reasons for the Exemption Sought
The ETFs cannot pursue their fundamental investment objectives without the Exemption Sought.
The Filer submits that each ETF’s strategy to acquire Portfolio Securities will be transparent, passive and fully disclosed to investors. An ETF will not invest in securities other than Portfolio Securities.
The Filer submits that an ETF that relies on the Exemption Sought would be analogous to an investment fund that relies on the exception to the Concentration Restriction in subsection 2.1(2) of NI 81-102 for purchases of equity securities by a “fixed portfolio investment fund”, as defined in NI 81-102, in accordance with its investment objectives. The Filer submits that the only difference would be that the ETFs are in continuous distribution and the ETF Securities are redeemable on each trading day, accordingly, the ETFs will buy and sell Portfolio Securities as may be required in connection with subscription and redemption requests received by the ETF. However, the Filer submits that the existence of the ETF’s Designated Broker should mean that the ETF Securities (which are listed on an Exchange) will not trade at a discount to the net asset value (or NAV) per ETF Security which may more likely be the case for a “fixed portfolio investment fund”.
The Specified CAD Public Issuers will be among the largest public issuers in Canada. The Portfolio Securities will be some of the most liquid equity securities listed on the Toronto Stock Exchange and Cboe Canada Inc. and will be less likely to be subject to liquidity concerns than the securities of other issuers.
The Filer believes that any risks associated with an investment in only a single Specified CAD Public Issuer in reliance on the Exemption Sought will be mitigated by the fact that the Portfolio Securities are highly liquid and that there is a robust liquid options market for these securities.
Given the market price per Portfolio Security of certain of the Specified CAD Public Issuers, the ETFs would provide investors in certain of the ETFs with the ability to get access and obtain meaningful exposure to the Portfolio Securities given the ETF size.
The Filer submits that, in the case of any ETF which is an alternative mutual fund that uses leverage, as result of its role as an experienced portfolio manager and investment fund manager, it is in a position to borrow at more competitive rates than retail investors and accordingly that such ETFs would provide their investors with leveraged exposure to the Specified CAD Public Issuers at rates that are more competitive than retail investors would ordinarily be able to achieve on their own.
The Filer submits that, given professional advisors will oversee the ETFs’ writing of covered call options and/or cash covered put options on portfolio holdings, the ETFs will provide retail investors with exposure to an option writing strategy undertaken by a professional manager with experience writing options that will provide downside protection and limit the impact of potential losses on the Specified CAD Public Issuers in the event of market downturns. Something that the investors would likely not be able to achieve if investing directly.
Accordingly, the Filer believes that the ETFs will provide investors with a convenient, efficient and competitive product which provides investors with more than just exposure to a single Specified CAD Public Issuer.
The Filer does not expect that the trading of the ETF Securities of the ETFs (and the purchase and sale of the Portfolio Securities of the Specified CAD Public Issuers in connection therewith) will impact normal trading in the market for the public listed securities of the Specified CAD Public Issuers given (a) the market capitalization and liquidity of the public listed securities of the Specified CAD Public Issuers and (b) the market making activities performed by professional Designated Brokers on behalf of the ETFs in accordance with the market maker rules of the applicable Exchange which require Designated Brokers to maintain an orderly liquid market for trading in the ETF Securities of the ETFs.
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 is that the Exemption Sought is granted, provided that:
(a) but for the fact that ETF Securities may be subscribed for or redeemed on each trading day (i.e. the ETFs being in continuous distribution), each ETF otherwise meets the definition of “fixed portfolio investment fund” in NI 81-102;
(b) any purchase by an ETF of the Portfolio Securities is in accordance with the investment objectives of the ETF;
(c) at the time that the ETF Securities are listed on an Exchange, the Specified CAD Public Issuer and its Portfolio Securities satisfy the CAD Public Issuer Requirements;
(d) no ETF will purchase Portfolio Securities if the ETF would, as a result of such purchase, become an insider of the Specified CAD Public Issuer;
(e) each ETF’s prospectus contains the disclosure referred to in representations 16 through 19 above;
(f) the Filer will not permit an ETF to be used as a financing vehicle by a Specified CAD Public Issuer or to permit an indirect offering of Portfolio Securities into a jurisdiction of Canada;
(g) no ETF will inter-list in the United States of America or any other foreign marketplace; and
(h) no ETF will purchase securities of the Specified CAD Public Issuer, if immediately following such purchase, the ETF would hold securities of the Specified CAD Public Issuer in an amount exceeding 1% of the Specified CAD Public Issuer’s total market capitalization.
“Darren McKall”
Darren McKall
Associate Vice President, Investment Management Division
Ontario Securities Commission
Application #: 2025/0529
Sedar # : 06335234