Securities regulations in Canada require all dealers and advisers to comply with certain rules in relation to conflicts of interest, particularly with respect to the disclosure of information in that regard.

The purpose of this document is to inform you about how we identify and respond to conflicts of interest in order to minimize their impact.

We consider a conflict of interest to be any circumstance where the interests of different parties, such as the interests of a client and those of NBDB, are inconsistent or divergent. We take reasonable steps to identify all existing material conflicts of interest, and those we would reasonably expect to arise. We then assess the level of risk associated with each conflict. We avoid any situation that would entail a serious conflict of interest or represent too high a risk for clients or market integrity. In any other situation entailing a conflict of interest, we ensure that appropriate measures are implemented to control the conflict of interest effectively.

Conflict of Interest Situations

The situations in which NBDB could be in a conflict of interest, and the way in which NBDB intends to respond to such conflicts, are described herein below. Where not avoided, any existing or potential material conflict of interest situations and any future material conflict of interest situations will be disclosed to you as they arise.

Related Issuer

An individual or company is considered a “related issuer” to NBDB if, through the ownership of, or direction or control over voting securities or otherwise, i) this person or company is a influential securityholder of NBDB; ii) NBDB is a influential securityholder of that person or company, or iii) each of them is a related issuer of the same third person or company.

An issuer distributing securities is a “connected issuer” to NBDB if the relationship between this issuer and NBDB, a related issuer of NBDB or the directors, officers or partners of NBDB or a related issuers of NBDB, may lead a reasonable prospective purchaser of the securities of the connected issuer to question NBDB's independence from the issuer with respect to the distribution of the securities of this issuer.

Relationships with Parties Related or Connected to NBDB

As of December 7, 2012, the list of related issuers of NBDB considered reporting issuers under Canadian securities legislation is as described herein below. A concise statement of the relationship between NBDB and each related issuer is also provided:

National Bank of Canada: National Bank of Canada is a bank incorporated under the Bank Act (Canada) and is a reporting issuer that holds indirectly 100% of the voting and equity shares of NBDB.

Canadian Credit Card Trust: This trust is a trust whose administrator is National Bank of Canada and whose securities are publicly distributed. Consequently, Canadian Credit Card Trust is deemed to be a related issuer.

NBC Asset Trust: This trust is a closed-end trust whose voting units are held by National Bank of Canada. Consequently, NBC Asset Trust is deemed to be a related issuer.

NBC Capital Trust: This trust is an open-end trust whose voting units are held by National Bank of Canada. Consequently, NBC Capital Trust is deemed to be a related issuer.

Fiera Capital Corporation: Fiera Capital Corporation is a portfolio manager of which 35% of the issued and outstanding shares are indirectly held by National Bank of Canada.

Jarislowsky Fraser Funds: National Bank Securities Inc. an indirectly wholly-owned subsidiary of National Bank of Canada, is the manager of the Jarislowsky Fraser Funds.

Horizons AlphaPro Exchange Traded Funds: NBF International Holdings Inc., an indirectly wholly-owned subsidiary of National Bank of Canada, holds voting securities of AlphaPro Management Inc., manager and trustee of these Funds.

National Bank Securities Mutual Funds (including the National Bank Funds, the Altamira Funds, the Omega Funds and the Westwood Funds): National Bank Securities Inc., an indirectly wholly-owned subsidiary of National Bank of Canada, is the manager of all National Bank Securities Mutual Funds, namely Altamira Dividend Fund Inc. and Altafund Investment Corp., two mutual fund corporations. Fiera Capital Corporation is the portfolio manager of most of National Bank Securities Mutual Funds (with the exception of certain Omega Funds). National Bank Strategic Yield Class is a class of shares of National Bank Funds Corporation, a mutual fund corporation indirectly controlled by National Bank of Canada.

TMX Group Limited: National Bank Financial & Co. Inc., an affiliate of National Bank Direct Brokerage Inc. owns or controls an equity interest in TMX Group Limited in excess of 5% of the issued and outstanding equity securities thereof and has a nominee director serving on the board. In addition, National Bank Direct Brokerage Inc. is an indirect wholly owned subsidiary of the National Bank of Canada.  From time to time the National Bank of Canada may enter into lending or financial arrangements with companies that are the subject of National Bank Financial Inc. research Reports or that are recommended. At the date of this report, National Bank of Canada is a lender to TMX Group Limited under its credit facilities. As such, National Bank Direct Brokerage Inc. may be considered to have an economic interest in TMX Group Limited.

Hexavest GTAA Fund L.P. (established in Quebec under the name Fonds Hexavest AATG): National Bank of Canada holds 50% of voting and participating shares of Innocap Investment Management Inc. Innocap Investment Management Inc. holds 100% of voting and participating shares of Innocap GTAA GP Inc., which acts as general partner of this fund. Innocap Investment Management Inc. is the investment manager of Hexavest GTAA Fund LP.

Innocap Casgrain Bond Fund L.P. (established in Quebec under the name Fonds d'obligations Innocap Casgrain): National Bank of Canada holds 50% of voting and participating shares of Innocap Investment Management Inc. Innocap Investment Management Inc. holds 100% of voting and participating shares of Innocap CBF GP Inc. (established in Québec under the name Commandité Innocap CBF), which acts as general partner of this fund. Innocap Investment Management Inc. is the investment manager of Innocap Casgrain Bond Fund LP.

Innocap Fund SICAV p.l.c.: Innocap Global Investment Management Ltd, a wholly owned subsidiary of National Bank of Canada, acts as the Investment Manager of Innocap Fund SICAV p.l.c. Innocap Investment Management Inc. is held at 50% by National Bank of Canada and acts as the Investment Advisor of Innocap Global Investment Management Ltd.

Innocap Perseus Fund L.P. (established in Quebec under the name Fonds Innocap Perseus): National Bank of Canada holds 50% of voting and participating shares of Innocap Investment Management Inc. Innocap Investment Management Inc. holds 100% of voting and participating shares of Innocap PRS GP Inc. (established in Québec under the name Commandité Innocap PRS), which acts as general partner of this fund. Innocap Investment Management Inc. is the investment manager of Innocap Perseus Fund LP.

Innocap Sigma Alpha GM+ Fund L.P. (established in Quebec under the name Fonds Innocap Sigma Alpha GM+): National Bank of Canada holds 50% of voting and participating shares of Innocap Investment Management Inc. Innocap Investment Management Inc. holds 100% of voting and participating shares of Innocap SAGM GP Inc. (established in Québec under the name Commandité Innocap SAGM), which acts as general partner of this fund. Innocap Investment Management Inc. is the investment manager of Innocap Sigma Alpha GM+ Fund L.P.

NBCAI Credit Dislocation Fund L.P. (established in Quebec under the name BNC GA Fonds Crédit Dislocation): National Bank of Canada holds 50% of voting and participating shares of Innocap Investment Management Inc. Innocap Investment Management Inc. holds 100% of voting and participating shares of Innocap CDF GP Inc. (established in Québec under the name Commandité Innocap CDF), which acts as general partner of the fund. Innocap Investment Management Inc. is the investment manager of NBC AI Credit Dislocation Fund LP. NBC Alternative Investments Inc., a wholly owned subsidiary of National Bank of Canada, is the sub-advisor of this fund.

NBCG Fund SICAV p.l.c.: Innocap Global Investment Management Ltd, a wholly owned subsidiary of National Bank of Canada acts as the Investment Manager of NBCG Fund SICAV p.l.c.. Innocap Investment Management Inc. is held at 50% by National Bank of Canada and acts as the Investment Advisor of Innocap Global Investment Management Ltd.

Meritage Portfolios: National Bank Securities Inc., an indirectly wholly-owned subsidiary of National Bank of Canada, is the manager of the Meritage Portfolios. National Bank Trust Inc., a wholly-owned subsidiary of National Bank of Canada, is the portfolio manager of all Meritage Portfolios.

Renaissance Capital Manitoba Venture Fund Limited Partnership (RCMVFLP): National Bank Financial & Co. Inc., an indirectly wholly-owned subsidiary of National Bank of Canada, holds 50% of the voting shares of Renaissance Capital Inc., which is the general partner of RCMVFLP.

In the course of carrying out its business activities as securities dealer, NBDB may from time to time engage in the following activities in respect of National Bank or other related issuers of NBDB, and in the context of a distribution, in respect of the securities of National Bank and other connected issuers of NBDB:

• Sell such securities to or on behalf of clients of NBDB;
• Purchase such securities from or on behalf of clients of NBDB;
• Offer for sale securities, goods and services which include securities, goods or services issued or provided by National Bank of Canada or another related issuer, or cooperate with National Bank of Canada or another related issuer in the joint offering for the sale or purchase of securities, and goods or services.

It is the policy of NBDB to comply fully with all applicable securities legislation and to make all required disclosures where acting as advisor, dealer or underwriter in respect of the securities of National Bank of Canada and other related or connected issuers of NBDB, particularly in the following situations:

• In the context of the purchase or sale of securities of a related issuer, or in the course of a distribution, in respect of securities of a connected issuer, NBDB will have to inform the client in writing of the relationship or connection between NBDB and the issuer of the securities; and
• Where NBDB purchases securities from or sells securities to a subsidiary or affiliate, the dealing will be done on the basis that the transaction price for a given security together with the brokerage commission applicable to such trade, is as good as or better than that offered by an unaffiliated third party broker in an arms-length transaction.

As part of its business activities as investment dealer, NBDB may also be called upon to act as agent or principal at the time of buying or selling for or on behalf of its clients. In such instances, the services provided by NBDB in the normal course of business will be provided in accordance with its normal practices and procedures as well as the relevant legislation or regulations.

Related Dealers and Advisors

NBDB affiliation with National Bank of Canada and its subsidiaries makes it necessary to put in place certain policies aimed at dealing with any potential conflicts of interest and ensuring that the best interest of NBDB's clients are preserved. NBDB is duly registered as an investment dealer which gives no advice nor does it make any recommendations with respect to investments. Furthermore, National Bank of Canada, of which NBDB is indirectly wholly-owned subsidiary, is also the principal shareholder of the following dealers and advisors:

NBC Alternative Investments Inc.
CABN Investments Inc.
NBF Securities (USA) Corp. - in United States only
National Bank Financial Inc
National Bank Financial Ltd.
Innocap Investment Management Inc.
Natcan Investment Management Inc.
Innocap Global Investment Management Ltd. - in Malta only
National Bank of Canada Financial Inc. - in United States only
NBCN Inc.
NBF International S.A. - in Switzerland only
National Bank Securities Inc.
Natcan Trust Company
National Bank Trust Inc.
Fiera Capital Corporation
Fiera Sceptre Funds Inc.
Maple Futures Corp.
Maple Securities Canada Limited
Maple Securities U.S.A. Inc. - in United States only
Maple Securities (U.K.) Limited - in United Kingdom only
PI Financial Corp.
PI Financial (US) Corp. - in United States only

NBDB is therefore related to the above-mentioned dealers and advisors. Although there may be overlaps among the directors and officers of these companies, all of these companies are operated as separate legal entities.

These entities may, from time to time, cooperate in offering products and services for the benefit of our clients. It should be understood that in such cases, there is no exchange of client information among these companies without a client's express prior written consent or unless the information is reasonably necessary in order to provide a specific product or service.

NBDB may obtain from or provide to the above-mentioned dealers or advisors management, administrative, referral and/or other services in connection with its ongoing business activities or the ongoing business activities of these other companies or transactions completed by it or these other companies. These relationships are subject to certain legislative and industry regulatory requirements which impose restrictions on dealing between related dealers or advisors intended to minimize the potential for conflict of interest resulting from these relationships. NBDB has also adopted internal policies and procedures which supplement these requirements, including its policies on confidentiality of information.

Other Company Related to National Bank Direct Brokerage

Alpha Trading Systems Limited Partnership (also known in this document as Alpha LP) owns Alpha Exchange Inc., which is a stock exchange in Canada for the trading of securities.

The general partner of Alpha LP is Alpha Trading Systems Inc., and its limited partner is TMX Group Limited (formerly Maple Group Acquisition Corporation).

National Bank Financial & Co. Inc., an affiliate of NBDB, owns or controls an equity interest in TMX Group Limited and has a nominee director serving on the board.

We may execute transactions on your behalf on Alpha Exchange Inc. and may enter orders into Alpha Exchange Inc.'s order book which cannot be immediately completed.

We are subject to a number of regulatory obligations, including the requirement to diligently pursue the best price and best execution of each client order on the marketplace. These obligations override any direct or indirect interest NBDB has in the above mentioned companies.

Other Situations that Could Create or be Perceived as Conflicts of Interest for National Bank Direct Brokerage or its Employees

NBDB, its management, employees, representatives and officers could, as part of their duties, find themselves in situations where their personal interests are in conflict with those of a client.

NBDB has a Code of Professional Conduct, a Compliance Manual and internal policies to deal with situations related to its activities. Among other stipulations, they reiterate that NBDB and its employees must never favour their own interests to the detriment of their responsibilities towards clients. These documents set out the basic guiding principles for the conduct of NBDB and its employees:

a) Confidential information : It is forbidden for NBDB employees to use confidential information acquired as part of their duties, or to exploit a situation for the purposes of obtaining a personal advantage of any kind. An NBDB employee is therefore not authorized to use information on clients, transactions or NBDB client accounts for his personal benefit or that of a third party;

b) Gifts, entertainment and compensation : It is forbidden for NBDB employees to accept gifts, entertainment or any form of compensation that could influence decisions to be taken as part of their duties. To avoid any conflict of interest situations, NBDB employees may not, as part of their duties, receive any other form of compensation than that paid by NBDB without the prior written authorization of NBDB. NBDB ensures that its employee compensation practices do not conflict with their obligations to clients;

c) External activities : NBDB has a policy governing the external activities of its employees, whereby it is forbidden for NBDB employees to engage in activities that could interfere or conflict with their duties at NBDB. The purpose of this policy is to detect, and, where applicable, oversee, disclose or prohibit such external activities. NBDB will not permit any of its employees to engage in activities outside the scope of their duties, including, but not limited to, serving as director of a company, without first ensuring that such activities do not compromise the interests of his clients.

d) Client priority rule : NBDB employees must offer top-quality service to NBDB clients and cannot give priority to their personal interests to the detriment of those of NBDB clients. For example, employees' brokerage accounts shall be monitored and subject to other exceptional measures, to ensure that serving the client remains employees' priority, as opposed to their own personal interests.

e) Client order priority : The interests of clients must always be given priority over those of NBCN and its employees.  For this reason and to avoid conflicts of interest, between two orders for the same security at the same price (or a better price), the order coming from a client is always executed prior to the one from NBCN or one of its employees.

f) Policy respecting errors : A policy has been established to supervise trading errors made by employees. Employees may not correct their own errors and must forward them to their immediate supervisor to be analyzed and handled.

g) Referrals : On occasion, clients may be referred by third parties to NBDB for the purpose of obtaining the products and services offered by NBDB. When such referrals involve a referral commission, they must comply with the existing regulations and be subject to the required disclosures to clients so referred. Such disclosures allow the clients concerned to make an informed decision with respect to the referral and to assess any potential conflicts of interest.

h) Research analyst activities : NBDB offers its clients research reports from external suppliers and companies affiliated with NBDB. Companies covered by the research made available to NBDB clients may have other business relationships with the companies that provide these research reports.

When the companies that provide these research reports are affiliated with NBDB, they make sure that conflict of interest situations are properly monitored and subjected to the appropriate disclosures.

i) Underwriter and market maker or other advisory role : NBDB may offer its clients securities for which a company affiliated with NBDB may act as market maker, underwriter, financial advisor or other. In some cases, the interests of the parties involved can differ from the interests of NBDB clients. The various roles which the companies affiliated with NBDB can play are governed by regulations.

j) Allocation of securities: NBDB has a policy regarding the allocation of securities among its clients, when demand for securities exceeds the number available at NBDB. This policy is intended to ensure a fair distribution of these securities among NBDB clients. In some cases, no NBDB clients can acquire any of these securities, which are available in limited quantities.

k) Compensation

• In some cases, issuers of securities or other related parties may compensate NBDB based on the purchase of their securities by NBDB clients, such as trailing commissions for mutual funds.
• In some instances, NBDB may be compensated indirectly, e.g., for transactions involving a foreign currency exchange, in which NBDB receives compensation based on the difference between the price clients pay for the currency and the price NBDB pays for the same currency or on the difference in interest rates between the one obtained by NBDB on the funds invested versus the interest rate paid to clients.
• In some cases, certain companies affiliated with NBDB may receive compensation based on the markets on which the transactions of NBDB clients are carried out. The conditions under which NBDB client transactions are carried out are subject to regulations applicable to NBDB and its affiliated companies.
• NBDB or its affiliated companies may receive compensation for the purchase or sale of certain over-the-counter products. This compensation is based on the gross-up or mark-down applied by NBDB or its affiliated companies to the price paid by the client when purchasing securities or to him when selling securities.

Other conflicts of interest

From time to time, other important conflict of interest situations may arise. NBDB undertakes to continue taking the necessary steps to identify and address to such situations fairly and reasonably, in keeping with the standards of care to which it is subject in its relationships with its clients. This NBDB document regarding conflict of interest situations will be updated in the event that the situation regarding major conflicts of interests changes.