January 22, 2026
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 HARVEST PORTFOLIOS GROUP INC. (the Filer)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of Harvest Premium Yield Canadian Bank ETF, Harvest Premium Yield Enhanced ETF and the other existing and future mutual funds managed by the Filer, or an affiliate of the Filer, that are subject to National Instrument 81-102 Investment Funds (NI 81-102) and are permitted by their investment objectives and investment strategies to invest in Exchange Traded Specified Derivatives (as defined herein) (each, a Harvest ETF and collectively, the Harvest ETFs) for a decision under the securities legislation of the Jurisdiction (the Legislation), for an exemption, pursuant to section 19.1 of NI 81-102, from:
(i) subsection 6.8(1) of NI 81-102, which restricts an investment fund from depositing portfolio assets as margin with a member of a regulated clearing agency or dealer that is a member of a self-regulatory organization that is a participating member of the Canadian Investor Protection Fund for a transaction in Canada involving certain specified derivatives in excess of 10% of the net asset value (NAV) of the investment fund at the time of deposit; and
(ii) paragraph 6.8(2)(c) of NI 81-102, which restricts an investment fund from depositing portfolio assets as margin with a member of a regulated clearing agency or dealer for a transaction outside of Canada involving certain specified derivatives in excess of 10% of the NAV of the investment fund as at the time of deposit;
to permit each Harvest ETF to deposit, as margin, portfolio assets of up to 35% of each Harvest ETF’s NAV as at the time of deposit with any one futures commission merchant in Canada or the United States (each a Dealer) and up to 70% of each Harvest ETF’s NAV at the time of deposit with all Dealers in the aggregate, for transactions involving standardized futures, clearing corporation options, options on futures, or cleared specified derivatives, such as cleared swaps, that are traded or cleared on or through a stock exchange or futures exchange, a recognized clearing agency, or a swap execution facility that is exempted from recognition as an exchange under subsection 21(1) of the Securities Act (Ontario) (together, Exchange Traded Specified Derivatives) (the Requested Relief).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(i) the Ontario Securities Commission is the principal regulator for this application; and
(ii) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (together with the Jurisdiction, the Canadian Jurisdictions).
Interpretation
Terms defined in NI 81-102, National Instrument 14-101 Definitions, and MI 11-102 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:
Each Harvest ETF is or will be an exchange traded alternative mutual fund (as defined in NI 81-102) governed by the laws of a Jurisdiction of Canada and a reporting issuer under the laws of the Jurisdictions.
Each Harvest ETF is or will be subject to NI 81-102, subject to any exemptions therefrom that may be granted by the securities regulatory authorities.
The units of the Harvest ETFs (the Units) are or will (subject to satisfying the Toronto Stock Exchange’s original listing requirements) be listed on the TSX.
No existing Harvest ETF is in default of securities legislation in any of the Jurisdictions.
The investment objective and investment strategies of each Harvest ETF permit or will permit the Harvest ETF to invest in Exchange Traded Specified Derivatives.
Harvest Premium Yield Canadian Bank ETF seeks to provide unitholders with (i) the opportunity for capital appreciation by investing, directly or indirectly, on a levered basis, in a portfolio of equity securities of Canadian banks; (ii) regular cash distributions; and (iii) lower overall volatility of portfolio returns than would otherwise be experienced by owning the securities held by Harvest Premium Yield Canadian Bank ETF, directly. To achieve lower overall volatility of portfolio returns and generate monthly premiums, Harvest Premium Yield Canadian Bank ETF will write covered call and/or covered put options on the equity securities held in its portfolio. The level of option writing may vary based on market volatility and other factors.
Harvest Premium Yield Enhanced ETF seeks to provide unitholders with (i) the opportunity for capital appreciation by investing, directly or indirectly, on a levered basis, in a portfolio of equity securities that are listed on a recognized North American stock exchange and have a market capitalization of at least US$10 billion at the time of investment; (ii) regular cash distributions; and (iii) lower overall volatility of portfolio returns than would otherwise be experienced by owning the equity securities directly. To achieve lower overall volatility of portfolio returns and generate monthly premiums, Harvest Premium Yield Enhanced ETF will write covered call and/or covered put options on the equity securities held in its portfolio. The level of option writing may vary based on market volatility and other factors.
Except to the extent that the Requested Relief is granted and other exemptive relief is applicable, the investment strategies of the Harvest ETFs are, or will be, limited to the investment practices permitted by NI 81-102.
The Filer or sub-adviser to the Harvest ETFs is, or will be, authorized to establish, maintain, change and close brokerage accounts on behalf of the Harvest ETFs. In order to facilitate transactions on behalf of the Harvest ETFs, the Filer, or sub-adviser to the Harvest ETFs, will establish one or more accounts (each an Account) with one or more Dealers.
Each Dealer in Canada is a member of the Canadian Investment Regulatory Organization and is registered in the applicable Canadian Jurisdictions as a futures commission merchant or equivalent.
Each Dealer in the United States (each a U.S. Dealer) is regulated by the Commodity Futures Trading Commission (the CFTC) and the National Futures Association (the NFA) in the United States and is required to segregate all assets held as margin on behalf of clients, including the Harvest ETFs. Each U.S. Dealer is subject to regulatory audit and must have insurance to guard against employee fraud. Each U.S. Dealer has a net worth, determined from its most recent audited financial statements, in excess of the equivalent of C$50 million. Each U.S. Dealer has an exchange assigned to it as its designated self-regulatory organization (the DSRO). As a member of a DSRO, each U.S. Dealer must meet capital requirements, comply with the conduct rules of the CFTC, NFA and its DSRO, and participate in an arbitration process with a complainant.
Each Dealer is a member of the exchanges, clearing agencies or swap execution facility through which the Exchange Traded Specified Derivatives are primarily traded. Each such exchange, clearing agency and swap execution facility is obliged to apply its surplus funds and the security deposits of its members to reimburse clients of failed members.
A Dealer will require, for each Account, that portfolio assets of the Harvest ETF be deposited with the Dealer as collateral for transactions in Exchange Traded Specified Derivatives (Margin). Margin represents the minimum initial amount of portfolio assets that must be deposited with a Dealer to initiate trading in specified derivatives transactions or to maintain the Dealer’s open position in standardized futures.
Levels of Margin are established at a Dealer’s discretion. At no time will more than 70% of the NAV of each Harvest ETF be deposited as Margin with all Dealers in the aggregate.
The records of each Dealer will show that the applicable Harvest ETF is the beneficial owner of the Margin, and evidence that, subject to the satisfaction of the Dealer’s applicable margin requirements, the applicable Harvest ETF will have the right to the return of the portfolio assets deposited as Margin with the Dealer, such assets being of the same issue as the deposited margin, including the same class and series, if applicable, and having the same current aggregate market value of the deposited margin at the time of such return.
Reasons for the Requested Relief
The use of Margin is an essential element of investing in Exchange Traded Specified Derivatives for the Harvest ETFs.
The Requested Relief would allow the Harvest ETFs to invest in Exchange Traded Specified Derivatives more extensively, which would allow the Harvest ETFs to pursue their investment strategies more efficiently and flexibly.
Opening Accounts and transacting with multiple Dealers acting as clearing brokers adds complexity and cost to the management of the Harvest ETFs. Using fewer Dealers acting as clearing brokers will considerably simplify the Harvest ETFs’ investments and operations and will reduce the cost of implementing each Harvest ETF’s strategy. Using fewer Dealers also simplifies compliance and risk management, as monitoring the data, controls and policies of a smaller number of Dealers is less complex.
The principal regulator is satisfied that it would not be prejudicial to the public interest to grant the Requested Relief.
Decision
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Requested Relief is granted provided that:
Each Harvest ETF will rely on this decision only with respect to investments in derivatives that are Exchange Traded Specified Derivatives;
Each Harvest ETF shall only use Margin such that the amount of Margin held by any one Dealer on behalf of the Harvest ETF does not exceed 35% of the net assets of the Harvest ETF, taken at market value as at the time of the deposit; and
Each Harvest ETF shall only use Margin such that the amount of Margin held by Dealers in aggregate on behalf of each Harvest ETF does not exceed 70% of the NAV of each Harvest ETF as at the time of the deposit.
"Darren McKall"
Darren McKall AVP, Investment Management Division Ontario Securities Commission
Application No. 2026/0005; SEDAR #6381603