20 If Market Makers are not performing to target on their assignments of related instruments (e.g., preferred shares, warrants, rights), then they may be considered to be underperforming on the root security and the Market Makers risk losing the assignments of the whole stock group. Table 3 – Impact of Underperformance to Market Makers on Assignments Month Impact to Market Maker 1st month of Underperformance Monthly credits for that security revoked for that month, Market Maker rates as per TSX’s fee schedule still apply. 2nd month of Underperformance Monthly credits for that security revoked for that month, Market Maker rates as per TSX’s fee schedule still apply. 3rd month of Underperformance Monthly credits for that security revoked for that month, Market Maker rates as per TSX’s fee schedule still apply. The security enters the next month’s bidding process (i.e., the 4th month) if both Market Makers are underperforming. Otherwise, the single Market Maker is replaced as detailed in 2.7.2 Single Market Maker Replacement. 4th month (bidding month) Security enters bidding process if both Market Makers are underperforming. In this case, the Market Makers may not re-bid on the security that is up for rebidding as a result of their underperformance. The existing Market Makers are removed from the assignment at the end of the 4th month. 5th month (start of new assignment) The new Market Makers who win the assignment, assume the assignment on the first business day of the month immediately following the bidding month (i.e., the 5th month). Replaced single Market Makers are also effective as of the day of replacement. If through underperformance, a Market Maker has had one or more securities of responsibility reassigned and begins to have a disproportionate ratio of Tier A and Tier B securities, TSX reserves the discretion to also reassign one or more Tier A securities assigned to that firm. If a Market Maker exceeds the Reassignment Threshold, such firm is not permitted to bid in any bidding cycles for the following 3 month period (the “3-Month Exclusion Period”). If immediately following the 3-Month Exclusion Period, the Market Maker has again exceeded the Reassignment Threshold (a “Subject Firm”), such Subject Firm is not permitted to bid in any bidding cycles for the following month (a “1-Month Exclusion Period”). Subject Firms may continue to be subject to 1-Month-Exclusion Periods until such time as they have not exceeded the Reassignment Threshold in a consecutive 3 month period. For purposes of this Section 3.2.4, the Reassignment Threshold means the lesser of: 15 security reassignments and 15% security reassignments, in each case, due to underperformance in any consecutive 3 month period. The percentage of security reassignments is calculated as follows: % Reassignments = Total # security reassignments in past 3 months / Sum of total # common security assignments in past 3 months where there was at least 1 security reassignment in that month
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