Order Handling Procedures

In 2001, the Canadian Securities Administrators (“CSA”) gave approval for new marketplaces in Canada and in 2006 followed up with approval for the establishment of new marketplaces termed “Alternative Trading Systems” (“ATS”). An ATS provides an alternative marketplace in Canada for the trading of securities. Until the creation of the ATS alternatives, trading has been done on stock exchanges approved by the CSA, such as the Toronto Stock Exchange (“TSX”).

New ATS platforms commenced operation in 2006 and more are to follow in 2007. With the introduction of new trading platforms for equity securities, regulatory changes were introduced to accommodate trading procedures in what is now a “multiple marketplace environment”.

To meet the new regulations, we at National Bank Financial (“NBF”) have implemented emerging trading technologies and amended our policies and procedures for equity securities trading. NBF wishes to advise their clients of some conditions that could affect them in this new trading environment and relevant trade characteristics.

Hours of Operation for Trading in Listed Canadian Securities
NBF trading staff will be available for order execution between the hours of 9:30 a.m. and 4:00 p.m., Eastern Standard Time ("EST"), Monday through Friday, not including statutory Canadian holidays. Staff may be further available before and after these hours. NBF will not guarantee any order taking and/or trade execution outside of the hours noted above.

Designation of a Principal Marketplace
Market Regulation Services Inc. (“RS”) released Market Integrity Notice No. 2007-003 on February 28, 2007 – “Principal Market” Determination for 2007. As such NBF, has followed this guidance notice and for those securities listed on the Toronto Stock Exchange ("TSX") and trading on various other alternative marketplaces, the principal marketplace will be the TSX unless notified otherwise by NBF.

Best Market
Best market is defined as the market with the best bid (buy price) or offer (sell price) and/or best historical liquidity and/or where NBF feels the order has the highest probability of execution and is available for trade execution.

Trading Sessions and Order Handling
Orders may have three types of duration assigned to them:

• DAY - where the order will expire at the conclusion of the Extended Hours Trading session (i.e. 5pm).
  
  “Day Orders” received prior to the opening of the principal marketplace (9:30 a.m. EST) will not route to an alternative marketplace. Instead the order will route into the opening sequence of the principal marketplace. Day Orders entered into the primary marketplace will only be valid until the end of the Extended Hours Session of the Primary Marketplace (5:00 pm EST).

• GTC - where the expiry is a specific date defined by the client (not to exceed the NBF maximum of 30 days)
  
  Good Till Cancelled Orders ("GTC") are orders that the client wants to remain open until a specified date of expiry. If the order is not immediately executable on an any marketplace at the time of entry (on or after 9:30 a.m. EST) the order will be directed to the “best market” as defined in the day orders. Orders routed to the principal marketplace will remain until the order is either; filled, cancelled or expired.
  
  NBF policy will only allow the entry of orders with a 30-calendar-day maximum good-til-cancel date. It is the client's responsibility to ensure they know what the date of expiry will be and to contact their Investment Advisor/Registered Representative on the expiry date should they wish the order to be re-instated.

• GTD – where the order will expire on the default expiry date of the marketplace it was entered on

Marketplaces typically operate according to a schedule of trading sessions or market states. The following points are intended to clarify processing during these sessions.

Pre-open
During the pre-open session all Client orders submitted to NBF will be sent to the primary market, unless otherwise instructed by the client, to be included in the opening auction.

Opening
The primary market will conduct a single price opening auction that will execute, if possible, orders entered during the pre-open market.

Post-open
Once the primary market has completed its opening auction, any unfilled orders entered from the pre-open will remain in the primary market order book.

Orders submitted to NBF during the primary market’s pre-open state that are immediately tradable based on market conditions at the time of entry will be sent to the best market. If an order is not immediately tradable based on market conditions at the time of entry, by default it will be sent to the primary market.

Orders received after the opening of the principal marketplace, the order will be sent through automated trading technology to search for the "best market" at the time of entry. Any unfilled portion of the order will be directed to the principal marketplace until the order is either; filled, cancelled or expired.

Special Terms Orders
Special Terms Orders ("STO") are orders with specific terms that are not executable in the regular marketplace. STO orders will only post to the Special Terms Market of the principal marketplace, currently the TSX, unless they are immediately executable on an alternative marketplace at the time of entry and they will only be live between 9:30 a.m. and 4:00 p.m., at which time they expire.

All or None Retail Orders ("AON") are orders that must immediately be executed in full; no partial fills are to be executed or booked pending a complete fill. In a multiple martketplace environment, an AON order may not be executed due to limited volume on more than one marketplace. While the total volume on all marketplaces might complete the order, the AON terms apply only to the individual marketplace where entered. An AON order received prior to the opening of the principal marketplace at 9:30 a.m. EST) will not book to an alternative marketplace. Instead, the order will book into the opening sequence of the principal marketplace. If received after the opening of the principal marketplace, the order will be booked to the market with the "best market" at the time of entry assuming that the marketplace can support orders with special terms. If the “best marketplace” does not support a special terms market, the order will be directed to the TSX special terms market.

Institutional AON orders in the institutional environment are orders that must be executed for large block volume in full, and do not book to the marketplace. In this case, the client does not wish to trade in the marketplace potentially receiving partial fills or average prices. These orders will not book to a marketplace unless they can be filled in full for their entire volume at the time of receipt. These can be executed on any marketplace as agreed to between both parties at the time of receipt.
Close
Some marketplaces conduct a closing auction in order to facilitate an orderly close while others simply stop trading at a specific point in time. The TSX is currently the only Canadian marketplace that offers a closing auction facility which is used to conduct Market on Close activities for a specific list of securities.

Certain Clients may elect to participate in the TSX’s Market on Close facility, by entering a MOC order during the appropriate TSX trading phase. A Market on Close ("MOC") order must trade on the close, at the calculated closing price as determined by the closing auction of the TSX.

Please be advised that this is an anonymous price facility. Therefore the price at MOC Market orders will be executed at is unknown until after closing auction is completed. The price at which MOC Limit orders are executed at is also unknown until after the closing auction but is limited to the specified price of the order. As such, MOC orders are regulatory exempt from Best Execution and Trade Through Protection obligations. For further details of this facility, please contact your Investment Advisor or Registered Representative

Price Conditions
Market Orders
Market Orders received prior to 9:30 a.m. will be directed through an automated trading system that will seek out the best available price and marketplace for order execution. If time availability permits, any unfilled portion of the order will be booked to the pre-opening of the principal marketplace (currently the TSX) for execution on the opening. If an order is not qualified to obtain the opening price the order will then be placed in time sequence into the principal marketplace.

Market orders received after 4:00 p.m. will be directed to the primary marketplace for order execution.

Orders with Price Limitations
Price Limit orders will be routed through an automated trading system to seek out the best possible marketplace to complete the order. Any unfilled portion of the order will then be booked to the primary marketplace until the order is either filled, expired or cancelled. Orders with “Good Till” dates will remain in the primary marketplace.

Extended Hours Trading
Some marketplaces provide additional order execution facilities outside of their normal trading hours. The TSX conducts an Extended Hours Trading session every day once the Close is completed. All executions during the Extended Hours Trading session are done at the calculated closing price for MOC securities or the last board lot sale price for all other securities. Therefore, if you have an open order on TSX that is booked at either of the aforementioned prices, you may receive a partial or complete fill on TSX.

Disclosure of Marketplace
An order executed on more than one marketplace or alternative marketplaces in either Canada or the United States will be reported to the client using a trade confirmation that will read (not limited to the following); "Traded on Multiple Markets/ Trans. Plus Marches". Should you receive such a confirmation, you are free to contact your Investment Advisor/Registered Representative and NBF will ensure full details of the order execution are provided for all purchases/sales done to complete your order.