Statement of Principles on Conflicts of Interest

Desjardins Securities is an investment dealer registered in the provinces of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Québec and Saskatchewan.

It is important to Desjardins Securities that its clients be informed of existing or potential conflicts of interest which could arise in the course of its activities. A conflict of interest arises when the interests of different persons, e.g. those of a client and those of Desjardins Securities or one of its representatives (directors, officers, partners, employees, agents) are incompatible or divergent.

Desjardins Securities takes reasonable measures to identify any material conflicts of interest that exist or that it can reasonably expect to arise. It assesses the level of risk associated with each conflict and avoids any circumstances that involve a serious conflict of interest or that present too great a risk for its clients and any situation that may materially compromise market integrity. In any other conflict of interest situation, Desjardins Securities ensures that appropriate measures are put in place to effectively control the conflict.

The activities of Desjardins Securities and its representatives are governed by a Code of Professional Conduct and by a Compliance Handbook.

“Desjardins Capital Markets” is a trade name used by Desjardins Securities. It is also used by Desjardins Securities International Inc. and Caisse centrale Desjardins, wholly owned subsidiaries of Desjardins Group.

“Desjardins Wealth Management, Securities” is a trade name used by Desjardins Securities to offer its full-service securities brokerage services, and “Desjardins Online Brokerage” is a trade name used by Desjardins Securities for its discount brokerage services.

Desjardins Securities hereby informs you of the nature and scope of the conflicts of interest that could affect the services it offers you.

Issuers related or connected to Desjardins Securities

Desjardins Securities is a wholly owned subsidiary of Desjardins Financial Holding Inc. , which itself is an indirectly owned subsidiary of the Fédération des caisses Desjardins du Québec (hereinafter the “Fédération”). The entities listed below may be considered issuers related or connected to Desjardins Securities:

Caisse centrale Desjardins

Cooperative that belongs to the Desjardins caisses, Caisse centrale Desjardins is the treasurer of Desjardins Group and acts as its financial agent in the Canadian and international markets.
It offers financing, banking and international services to institutions and to large and medium-sized businesses.

Caisses Desjardins

Members of the Fédération des caisses Desjardins du Québec (the Fédération) and and the Fédération des caisses populaires de l’Ontario Inc.

Capital Desjardins Inc.

Wholly owned subsidiary of the Fédération, Capital Desjardins’ purpose is to offer its own securities in the financial markets and to invest the proceeds in securities issued by Desjardins caisses.

Capital régional et coopératif Desjardins Inc. (CRCD)

Investment fund whose portfolio manager is Desjardins Venture Capital Inc. (which itself is a wholly owned subsidiary of the Fédération), CRCD raises development capital by means of public offerings and injects these funds into cooperatives and small and medium-sized businesses.

Desjardins ETF

Family of exchange-traded mutual funds for which the trustee is Desjardins Trust Inc., which is a wholly owned subsidiary of the Fédération.
Desjardins Global Asset Management Inc., a wholly owned subsidiary of Desjardins Financial Corporation Inc., which itself is an indirectly wholly owned subsidiary of the Fédération, is the management company and the portfolio manager of the Desjardins ETF.

Desjardins Funds

Family of mutual funds for which the trustee and custodian is Desjardins Trust Inc., which is an indirectly wholly owned subsidiary of the Fédération.
Desjardins Investments Inc., a wholly owned subsidiary of Desjardins Financial Security Life Assurance Company, which itself is an indirectly wholly owned subsidiary of the Fédération, is the management company and sponsor of Desjardins Funds.
Desjardins Global Asset Management Inc. (DGAM) is their portfolio manager. DGAM is a wholly owned subsidiary of Desjardins Financial Corporation Inc., which itself is a wholly owned subsidiary of the Fédération.

Desjardins Investment Management Inc. (DIM)

Wholly owned subsidiary of the Fédération and registered as a portfolio manager in Québec, Alberta, Ontario, British Columbia and New Brunswick. Also registered in Québec and Ontario as an investment fund manager as part of the management of DIM Private Funds, which are available in provinces where DIM is registered as a portfolio manager. DIM offers discretionary portfolio management services and equity and/or private funds mandates to its clients.

Desjardins Trust Inc.

Indirectly wholly owned subsidiary of the Fédération, this company is a trust institution of Desjardins Group.

Fiera Capital Corporation

Public company in which Desjardins Financial Holding Inc., an indirectly wholly owned subsidiary of the Fédération, has a significant indirect interest.

Fiera Capital Mutual Funds

Family of mutual funds for which Fiera Capital Corporation, a company in which Financial Holding Inc., an indirectly wholly owned subsidiary of the Fédération, has a significant indirect interest, is the manager and the promoter. Fiera Capital Corporation is a registered portfolio manager and acts in this capacity for the Fiera Capital Mutual Funds.

Meritas SRI Funds and OceanRock Funds

Family of mutual funds for which OceanRock Investments Inc., a company in which Desjardins Financial Holding Inc., an indirectly wholly owned subsidiary of the Fédération, has a significant indirect interest, is the manager and the promoter. OceanRock Investments Inc. is a registered portfolio manager and acts in this capacity for the Meritas SRI Funds and OceanRock Funds. OceanRock Investments Inc. also acts as the trustee of the Funds.

NEI Funds

Family of mutual funds for which Northwest & Ethical Investments L.P. is the trustee and administrator.
Northwest & Ethical Investments L.P. also acts as portfolio manager for specific funds.
The Fédération has a 50% interest in Northwest & Ethical Investments L.P. through its subsidiary Desjardins Financial Holding Inc.
Desjardins Trust Inc. is the custodian of these funds.

Zag Bank

Chartered bank offering a suite of financial products through mobile and online applications, this company is an indirectly wholly owned subsidiary of the Fédération.

As part of its business activities, Desjardins Securities may buy or sell the securities of such issuers on behalf of its clients, exercise its discretionary power to buy or sell such securities pursuant to discretionary management agreements, or make recommendations in respect of such securities. Desjardins Securities shall do so in accordance with the regulations applicable to such transactions and always in the best interest of its clients.

Desjardins Securities may also, as part of its business activities, be called upon to act as an underwriter or as a member of a selling group for the sale of the securities of such issuers. Its other divisions may at the same time recommend such securities. Desjardins Securities shall do so in accordance with the regulations applicable to such transactions and always in the best interest of its clients.

Issuers unrelated to Desjardins Securities

Conflicts may also arise in the relationships between Desjardins Securities and other issuers that are neither related nor connected to it, for example, trusts, partnerships, special purpose vehicles, or conduits that issue asset-backed commercial paper.

In such a situation, the practices and procedures in force and in accordance with regulations will be applied.

Other companies related to Desjardins Securities

Desjardins Group

The complete organization chart of the companies belonging to Desjardins Group is available on the Internet at: http://www.desjardins.com/ca/about-us/desjardins/governance-democracy/structure/group-organization-chart/index.jsp

Relations between Desjardins Securities and other Desjardins Group entities

Desjardins Securities is a separate entity from the Fédération des caisses Desjardins du Québec, the Fédération des caisses populaires de l’Ontario Inc., and their caisses. In some cases, the premises of those entities are at the same address and in the same offices. Desjardins Securities representatives perform their duties solely on behalf of Desjardins Securities.

Moreover, securities bought through Desjardins Securities have the following features:

• they are not guaranteed by a deposit insurer;
• they are not guaranteed by the caisses;
• their value may fluctuate.

Desjardins Securities Financial Services Inc.

Desjardins Securities incorporated a wholly owned subsidiary, Desjardins Securities Financial Services Inc. (DSFS) which is registered with the Autorité des marchés financiers (AMF) as a financial services firm and with the Financial Services Commission of Ontario (FSCO) as an insurance agency, so that some of its representatives can distribute life and health insurance.

Desjardins Securities / BODIAM Inc.

Desjardins Securities partnered with Bodiam Financial Inc. to create an entity in which each has a 50% stake. Its sector of activity is structured financing and asset-backed securities (securitization).

Desjardins Securities International Inc.

Desjardins Securities International Inc. is a wholly owned subsidiary of Desjardins Securities. Desjardins Securities International Inc. operates as a broker/dealer for American institutional clients in 30 jurisdictions in the United States and is registered with the Financial Industry Regulatory Authority, the Securities and Exchange Commission, and the Securities Investor Protection Corporation.

8031843 Canada Inc.

Wholly-owned subsidiary of Desjardins Securities Inc., 8031843 Canada Inc. was formed for the purpose of acquiring the direct access trading platforms and technology services of Nexa Technologies Inc. Nexa Technologies Inc. was the principal supplier of trading platforms for Desjardins Online Brokerage.

Desjardins Financial Security Investments Inc.

Desjardins Financial Security Investments Inc. (DFSI) is a wholly owned subsidiary of the Fédération. In Québec, DFSI operates under the business name “SFL Investments” and is registered with AMF, particularly, as a mutual fund dealer, an exempt market dealer and a restricted dealer. DFSI is also authorized to pursue insurance activities. It is registered with AMF as a firm in the insurance of persons and as a firm in the group insurance of persons. It is also registered as a firm in financial planning. DFSI holds also similar registrations in other Canadian provinces.

QTrade Securities Inc.

Desjardins Financial Holding Inc., an indirectly wholly owned subsidiary of the Fédération, indirectly holds a significant interest in QTrade Securities Inc. (QSI). QSI is a company registered with the Canadian Securities Administrators as an investment dealer and a derivatives broker.

QTrade Asset Management Inc.

Desjardins Financial Holding Inc., an indirectly wholly owned subsidiary of the Fédération, indirectly holds a significant interest in QTrade Asset Management Inc. (QAM). QAM is a company registered with the Canadian Securities Administrators as a mutual fund dealer and an exempt market dealer.

OceanRock Investments Inc.

Desjardins Financial Holding Inc., an indirectly wholly owned subsidiary of the Fédération, indirectly holds a significant interest in OceanRock Investments Inc. (Ocean) Ocean is a company registered with the Canadian Securities Administrators as a portfolio manager and an exempt market dealer.

QTrade Insurance Solutions Inc.

Desjardins Financial Holding Inc., an indirectly wholly owned subsidiary of the Fédération, indirectly holds a significant interest in QTrade Insurance Solutions Inc. (QTIS). QTIS acts as an insurance broker in some Canadian provinces.

Activities of Desjardins Securities

As part of its business activities, Desjardins Securities may act in various capacities in respect of an issuer.

Desjardins Securities may, for a fee, act as a corporate financing wealth manager, an underwriter, or a member of a selling group in respect of issuers.

Desjardins Securities may express opinions or issue research reports with recommendations on issuers.

Desjardins Securities may buy or sell the securities of an issuer on behalf of its clients, exercise its discretionary power to buy or sell such securities pursuant to discretionary management agreements, or make recommendations in respect of such securities.

Such securities may on occasion be owned or traded by Desjardins Securities and its representatives.

Desjardins Securities may act as a market maker.

Desjardins Securities has put in place all appropriate measures to effectively control existing or potential conflicts of interest that may arise in the course of its activities. The relationships between the different divisions of Desjardins Securities are subject to specific and effective policies and procedures, which are based on the regulations in force.

The activities of the research division of Desjardins Securities, which expresses opinions and issues research reports with recommendations on issuers, are subject to policies on disclosure of potential conflicts of interest. The complete list of company-specific disclosures may be consulted on the Internet at:

http://www.desjardins-securities.ca/Disclosures/English.aspx - External link. This link will open in a new window.

Desjardins Securities is called upon to act as a principal or as an agent when it buys or sells for or on behalf of its clients.

As part of the management of its clients’ discretionary accounts, Desjardins Securities may buy or sell or make recommendations in respect of:

(i) securities of an issuer which it or a person of its group owns;

(ii) securities for which it or a person of its group participates in the offering;

(iii) securities of a related or connected issuer;

(iv) securities of an issuer that has as an employee, agent, partner, director or officer an employee, agent, partner, director or officer of Desjardins Securities or of Desjardins.

Desjardins Securities will do so in accordance with the regulations applicable to such transactions and always in the best interest of its clients.

In the case described in point (iv) above, Desjardins Securities will not make any transaction involving such issuer, unless the client concerned has been informed of this fact beforehand and has expressly authorized such transaction in writing.

Desjardins Securities ensures that fair and reasonable policies exist and are implemented for the management of conflicts of interest specific to portfolio management activities, such as fair allocation of securities, soft-dollar payments, proxy voting, compensation and expense allocation practices, error correction, confidentiality of information, trade allocation and best execution.

Desjardins Securities representatives may, in the normal course of their duties, find themselves in situations where their personal interests conflict with those of one or more clients of Desjardins Securities.

Under the Code of Professional Conduct and the Compliance Handbook of Desjardins Securities, the interests of clients take precedence over those of Desjardins Securities and its representatives as a matter of basic principle.

The Code of Professional Conduct and the Compliance Handbook of Desjardins Securities set forth standards that guide the conduct of its representatives. These standards prohibit them from:

• using confidential information acquired in the course of or in connection with their duties, or exploiting a situation, for the purpose of obtaining an advantage of any kind;
• accepting or giving gifts, entertainment and compensation that could influence decisions to be taken in the course of performing their duties;
• engaging in outside activities that could interfere or conflict with their duties at Desjardins Securities;
• entering into financial transactions on a personal basis with clients of Desjardins Securities;
• giving trade orders which they know conflict with the interests of clients of Desjardins Securities;
• engaging in any activity or holding an interest in any business or participating in any partnership that may hinder or appear to hinder their independence of judgment in the best interest of clients of Desjardins Securities.

Desjardins Securities representatives must disclose to the clients concerned any conflict of interest and any personal interest in a security or other investment that can be expected to affect their capacity to advise them objectively and impartially.

Desjardins Securities representatives must disclose to their employer any situation that can be reasonably expected to hinder them in the performance of their duties or in their capacity to give objective and impartial advice.

Desjardins Securities ensures that its employee compensation practices are not inconsistent with its obligations to its clients.

Referral Arrangements

In the course of its activities, Desjardins Securities has entered into fee-sharing agreements with the following business partners:

• member caisses of the Fédération des caisses Desjardins du Québec;
• member caisses of the Fédération des caisses populaires de l’Ontario;
• L’Alliance des caisses populaires de l’Ontario;
• Desjardins Securities Financial Services Inc. (DSFS);
• Desjardins Financial Security Investments Inc. (DFSI).

These business partners are members of the same financial group, Desjardins Group. The above-mentioned caisses offer banking services. DSFS and DFSI are authorized to engage in insurance activities.

1. Client referrals to Desjardins Securities by member caisses of the Fédération des caisses Desjardins du Québec, member caisses of the Fédération des caisses populaires de l’Ontario and l’Alliance des caisses populaires de l’Ontario

a) In consideration for client referrals to the Full-Service Brokerage division of Desjardins Securities, the caisses receive, as intermediaries, compensation based on the revenues generated in referred accounts, according to the percentages indicated in the table below.

The term "generated income" includes gross fees, gross income on maintaining outstanding funds and gross commissions from all Desjardins Securities’ accounts of the referred member (Full-service Brokerage division).

Regarding the Discretionary management Service Program at Desjardins Securities, compensation is based on net fees.

Regarding members referred to the Advisory Branch, compensation is based on a recurring rate of 24 % of the generated revenues.

b) In consideration for client referrals to Desjardins Online Brokerage, for the brokerage platform Disnat Classic, the caisses receive, as intermediaries, compensation based on all gross commissions generated on each transaction, including those from bank transfers and other brokers, on all accounts of the referred member, according to the percentages indicated in the table below.

c) In consideration for client referrals to Desjardins Online Brokerage, for the brokerage platform Disnat Direct, the caisses receive, as intermediaries, compensation based on the gross commissions generated on each transaction, including those from bank transfers and other brokers, on all accounts of the referred member, according to the percentages indicated in the table below.

* No compensation will be received by the caisses after the second year for accounts help by a referred member to Disnat Direct.

2. Client referrals to Desjardins Securities by DFSI

a) In consideration for client referrals to the Full-Service Brokerage division, DFSI receives, as intermediary, compensation based on the net commissions generated on each transaction according to the percentages indicated in the table below.

b) In consideration for client referrals to Desjardins Online Brokerage, brokerage platform Disnat Classic DSFI receives, as intermediary, compensation based on the gross commissions generated on each transaction, including those from bank transfers and other brokers, according to the percentages indicated in the table below.

* Accounts generating at least 3 transactions during the first year.

c) In consideration for client referrals to Desjardins Online Brokerage, for the brokerage platform Disnat Direct, DSFI receives, as intermediary, compensation based on the gross commissions generated on each transaction according to the percentages indicated in the table below.

3. Client referrals to DSFS to Desjardins Securities

In consideration of client referrals to DSFS, the Full-Service Brokerage division, receives, as intermediary, compensation corresponding to 30% of insurance premiums, both at the time of the subscription and of the renewal.

Other referral arrangements

Desjardins Securities may enter into arrangements whereby it pays or receives compensation for client referrals. The following information is communicated to the client in writing before the opening of the account orthe provision of services:

• the name of each party to the referral arrangement;
• the purpose and material terms of the referral arrangement, including the nature of the services to be provided by each party;
• any conflicts of interest resulting from the relationship between the parties to the referral arrangement and from any other element of the referral arrangement;
• the method of calculating the referral fee and, to the extent possible, the amount of the fee;
• the category of registration of each registrant that is a party to the agreement, with a description of the activities that the registrant is authorized to engage in under that category and, giving consideration to the nature of the referral, the activities that the registrant is not permitted to engage in;
• if a referral is made to a registrant, a statement that all activity requiring registration resulting from the referral arrangement will be provided by the registrant receiving the referral;
• any other information that a reasonable client would consider important in evaluating the referral arrangement.

If there is a change to the information set out above, Desjardins Securities must ensure that written disclosure of that change is provided to each client affected by the change as soon as possible and no later than the thirtieth day before the date on which a referral fee is next paid or received.

This Statement of Principles on Conflicts of Interest will be updated if new conflict of interest situations arise.