MD Management Limited conflicts of interest disclosure

Conflicts of interest — generally

Actual, potential and perceived conflicts of interest arise where an action or decision by someone has the effect of benefiting an individual (including him or her) or a group of people at the expense of others. Such conflicts exist in almost all human interactions and will arise from time to time:

between you and our firm, as well as between you and your MD Advisor^*.
between you and our other clients: we act for many clients, offering different types of accounts and must allocate investment opportunities among all of them fairly, so as not to favour intentionally one client over another.
between us and our related or associated companies.

Canadian securities laws require us to take reasonable steps to identify and respond to material conflicts of interest in your best interest. We also are required to tell you about them, including how the conflicts might impact you and how we address them in your best interest.

We have policies and procedures in place to address how we will manage material conflicts of interest in your best interest, which are referred to in the table below.

We seek to avoid or minimize conflicts where reasonably possible. We seek to avoid actual or perceived favouritism or discrimination amongst clients and to ensure that no client receives preferential treatment over another in the operation and management of their account and execution of trades.
We avoid conflicts prohibited by law as well as material conflicts that we cannot effectively manage in your best interest. Some conflicts cannot be avoided. In situations where we do not or cannot avoid conflicts and where our interests may compete with yours, your interest is always put first.
We control or manage acceptable conflicts by physically separating different business functions, restricting the internal exchange of information in person or through systems, reducing the possibility of one part of our organization unsuitably influencing another, removing the financial incentive of an employee to favour a particular product or service over another that may be more suitable, and setting up and testing our operational review and approval processes.

In connection with your MD Management Limited (MD) account, the most significant conflict that we have is that we generally recommend that you invest in MD Funds, which are mutual funds managed by our affiliate MD Financial Management Inc. (which are also referred to as “proprietary products”), to fulfil your agreed investment strategy. We may also recommend you invest in other securities and investment funds, and you may ask us about these securities and investment funds.

If you have an MD ExO^® Direct account, your account will be invested by the appointed portfolio advisor in MD Mutual Funds that meet the investment objective and strategy of your MD ExO Direct account. Because we invest your MD ExO Direct account only in the specific MD Funds, the suitability determination we conduct will not consider the larger market of non-proprietary products or whether those non-proprietary products would be better, worse or equal in meeting your investment needs and objectives.

You will receive information about your investments and all information about the fees you directly and indirectly pay to us and to MD Financial Management Inc. as manager of the MD Funds, which is one way in which we manage this conflict.

There are also conflicts of interest inherent in the management of the MD Funds and the MDPIM Pools by MD Financial Management Inc. The conflicts of interest are addressed by MD Financial Management Inc. in the best interests of the funds and are referred to and considered by the Independent Review Committee for those funds. The members of the Independent Review Committee are independent of MD Financial Management Inc. and other members of the MD and Scotiabank group.

Material conflicts arising from being a member of the Scotiabank group

MD is a wholly owned indirect subsidiary of the Bank of Nova Scotia (Scotiabank). Our relationship to Scotiabank and its other financial services subsidiaries (the Scotiabank group) creates conflicts of interest when we provide products and services to you that are sourced from or provided by other members of the Scotiabank group.

Scotiabank and its various financial services subsidiaries, including MD and MD Financial Management Inc., are commercial businesses and seek to maximize profits while providing fair, honest and appropriate services to clients. This means that MD may encourage you to do more business with it and the other members of the MD and Scotiabank group, and it may engage affiliates to provide it with products and services for your account, but will always do so in a way that it considers in your best interests. MD will enter into these transactions or arrangements only where they are permitted under applicable securities laws and where it believes they are in your best interests.

Although MD is under common ownership with the other members of the Scotiabank group and may from time to time have directors and officers in common with these other firms, MD is a separate and distinct corporate entity.

MD generally carries on its activities independent of the other firms owned by Scotiabank. However, from time to time there may be certain cooperative business arrangements between it and the other firms, such as arrangements relating to introduction of clients, distribution of products, advisory relationships or administrative support.

In all cases, the conflicts described in this section raise perceptions that MD will favour the business interests of the various members of the Scotiabank group, rather than your interests. These conflicts and how MD manages them to ensure that it acts in your best interests are described below.

Related service providers to MD

The following entities that are part of the Scotiabank group provide services to you and/or MD or to MD Financial Management Inc. as manager of the mutual funds in which you may invest.

MD Financial Management Inc. shares common management and back office and oversight functions and manages the MD Funds and the MDPIM Pools, which are investment options for your accounts with MD.
Jarislowsky, Fraser Limited provides sub-advisory services to certain of the MD Funds and the MDPIM Pools.
1832 Asset Management LP provides advisory and sub-advisory services to certain of the MD Funds, the MDPIM Pools and to the MD ExO Direct program.
MD representatives may be licensed as insurance agents with Scotia Wealth Insurance Service Inc. and may recommend you acquire insurance, including MD Stable Income Fund, which is a segregated fund of MD Life Insurance Company and is managed by MD Financial Management Inc.
Estate and trust services are provided by The Bank of Nova Scotia Trust Company (Scotiatrust®).

Distribution activities of our affiliates

Affiliates of MD may participate as a dealer, including as a member of a selling group, in distributing securities, including securities of issuers that are related to the Scotiabank group. MD may take investment actions for your account or in securities that are distributed by our affiliates. We avoid conflicts of interest inherent in these circumstances because the business of MD is separate from the corporate finance and research activities of its affiliates. Information barriers are in place to prevent the transfer of material non-public and other confidential client information between MD and our affiliates.

Relationships between the MD Group of Companies and Scotiabank

MD is a subsidiary of MD Financial Management Inc., which has direct and sole ownership in the following companies, in addition to MD:

MD Life Insurance Company
MD Growth Investments Limited
MD Platinum Global Private Equity GP Ltd.
MD Platinum Global Real Estate GP Ltd.
MD Platinum Global Private Credit GP Ltd.
MD Platinum Global Private Equity 2023 Trust

None of the above-noted companies are reporting issuers.

Certain directors and officers of MD are also officers and/or directors of MD Financial Management Inc. and/or the above-noted companies and of other entities within the Scotiabank group. Each such director or officer has been retained by the related MD or Scotiabank company in their respective capacity due to their business experience, skills and education. As well, the various MD companies utilize common personnel and resources to achieve cost savings.

MD believes that the relationships described above and the utilization of related personnel within the MD Group of Companies do not raise conflicts of interest since all of the above-disclosed companies are affiliates and are working toward achieving the common objective of better serving the financial needs of their respective stakeholders. It is the position of MD that any relationships an MD director or officer might have with another MD or Scotiabank entity do not raise conflicts as none of the individuals is in a position to personally influence clients of MD to invest in any of the MD Funds or the Pools, nor are they compensated by any of the MD entities or Scotiabank entities on a commission or other basis that could result in decisions being made, or influence being exerted, against the interests of any of the MD clients.

In addition to applicable regulatory provisions and contractual provisions respecting any business arrangements that may exist between MD, the other MD entities and the other Scotiabank group firms, the directors, officers and employees of each of the firms are subject to guidelines or codes of conduct governing their actions. These guidelines are supplemented by our internal compliance policies and procedures.

Investments in related and connected issuers

Under certain circumstances, MD may cause your account to invest in securities where the issuer of the securities or another party to the transaction is a party having an ownership or business relationship with us. Since these transactions may create a conflict or the appearance of a conflict between our interests and yours, MD has adopted policies and procedures to assist in identifying and minimizing any conflicts of interest that may arise.

The MD Funds, the MDPIM Pools and the MD Platinum™ Pools are all related and connected issuers to MD.

MD Stable Income Fund is a segregated fund (insurance product) of MD Life Insurance Company and as such is related to MD.

For a full list of Scotiabank’s related and connected issuers, please visit:

Related_and_Connected_Issuer_list.pdf

Other material conflicts

You may open different types of accounts with MD:

fee-based accounts (MD Plus^™ accounts)
advisory accounts
managed accounts (MD ExO Direct)

The conflicts noted below may not apply to every type of account, and we have identified specific conflicts that apply to specific types of account.

MATERIAL CONFLICT OF INTEREST	HOW CONFLICTS WILL BE ADDRESSED
We earn compensation by selling products and services to you for which you pay us. MD Advisors are compensated through a combination of salary and bonus. MD Advisors may, from time to time, participate in internal promotional events. Nominal rewards may be earned, including qualification for educational trips that are paid for by MD.	We will inform you of fees, commissions and other compensation so that you know what you will be paying. Please see our Schedule of fees and commissions at mdm.ca/investing/investing-fees. Bonuses for MD Advisors are driven by many components, such as professional practice standards, sales targets, client satisfaction and banking referrals. No MD Advisor compensation is generated directly from commissions. Rewards for MD Advisors are structured to ensure that they do not influence recommendations.
Different products and services have differing levels of compensation.	Our Advisors are not compensated based on products and services sold to clients. MD is required by securities regulations and firm policy only to make suitable investment recommendations that put your interest first. MD monitors the investment products as part of its product due diligence and takes into account the compensation structures and fees of those products.
We would like you to use more of our services and buy more of our products.	We do not engage in “tied selling,” where purchase of one service is conditional on buying another as well, a practice that is prohibited by regulation in any event. We have policies and procedures prohibiting recommendations solely for the purpose of generating revenue for us or MD Financial Management Inc. without such recommendations being in your best interest. We have in place compliance programs to monitor MD Advisors to help identify and address concerns.
MD receives a financial planning fee in respect of the holdings of MD clients in Series A securities of the MD Funds. This fee is paid to MD by MD Financial Management Inc. based on the amounts invested by MD clients in the MD Funds.	The financial planning fee is disclosed in the prospectus of the MD Funds. It is disclosed to MD clients in their annual costs and expenses statement. The financial planning fee is paid to MD and not to individual MD Advisors. Given the services provided to you by MD and the MD Advisors, MD considers that the financial planning fee is payable to it to compensate it for the services provided to you in respect of investment in the MD Funds.
Our compensation, organizationally and individually, may involve payments based on sales volume.	You do not pay a commission to us to invest in any fund. MD Advisors are salaried and do not receive commissions for any products offered.
We would like you to use more of the services and products offered by MD and our related companies, including MD Financial Management Inc. and other members of the Scotiabank group.	Where we use referral arrangements, we disclose and manage them according to regulatory standards. We have policies and procedures, against which we monitor our MD Advisors’ activities, prohibiting recommendations solely for the purpose of generating revenue for us without such recommendations being in your best interest. MD Advisors may make referrals to other MD affiliates or Scotiabank group entities for other financial products or services, and to the approved Scotiabank group partners for banking products, as appropriate. Before any referral, you will be told about any referral fees we pay or receive in respect of your referral. MD Advisors will not receive referral fees directly; however, referrals to other MD and Scotiabank group entities will be taken into account when considering their bonus and overall performance.
We may receive compensation from securities issuers and other third parties based on their products we sell to you, such as trailer fees on mutual funds and commissions and trailer fees on segregated funds and insurance policies.	We disclose to you the situations and type of third-party compensation we may receive. Securities regulations require issuers to provide specific disclosure in the offering document (e.g., prospectus) of such arrangements and the compensation we will receive. We ensure that we conduct due diligence on any products in which you may invest and make investment recommendations that are suitable for you and that we put your interests first.
We may be compensated in other ways as a result of the business you may do with us, including interest spreads on uninvested cash deposits with us and foreign exchange spreads when you convert currencies.	Various forms of compensation we received are disclosed to you. Please refer to MD’s Relationship Disclosure Document.
We may sell you securities of companies that are related or connected to us.	We are required by regulation to disclose this when we make a recommendation to you. The MD Funds and the MDPIM Pools are related and connected issuers.
Individuals registered with us may also be registered with another registered firm related to MD. We may permit certain individuals who are registered with us (including your MD Advisor) to be employed by, participate in, or accept compensation from other persons or firms, outside the scope of their relationship with us.	Insurance licensed MD Advisors act as representatives of Scotia Wealth Insurance Services Inc. for the purpose of selling MD Stable Income Fund, a segregated fund of MD Life Insurance Company, advised on by our affiliate 1832 Asset Management LP. These relationships are subject to legislative and industry regulatory requirements that impose restrictions on dealings between related registered firms and/or individuals that are dually registered with a related registered firm. Such restrictions are intended to minimize the potential for conflicts of interest resulting from these relationships. We have adopted internal policies and procedures that supplement the regulatory requirements, including policies on privacy and confidentiality of information. All such arrangements must be reviewed and approved by management to ensure all potential conflicts are avoided, disclosed and/or controlled.
Individuals may serve on a board of directors or take on other activities that could take time or attention away from your account.	Securities legislation prohibits a registered individual from serving as a director of another registered firm that is not an affiliate of our firm. When an MD Advisor sits on a board of directors of a charity or undertakes other community activities in any substantive way, they are subject to regulatory guidance on the disclosure and internal approvals of outside business activities.
Potential relevant conflicts may arise from gifts and entertainment from third parties to MD staff with which MD has active or potential business relationships.	Representatives are required to obtain pre-approval before accepting any gifts where the value exceeds $200. No representative may give or accept cash gifts or cash equivalents to or from a client, a prospective client, or any entity that does business with or on behalf of the company. No representative may provide or accept extravagant or excessive entertainment to or from a client, a prospective client, or any person or entity that does or seeks to do business with or on behalf of the company. Representatives may provide or accept a business entertainment event, such as dinner or a sporting event, of reasonable value, if the person or entity providing the entertainment is present. Receipt of entertainment is acceptable if the expenses would have been paid as a firm business expense. Pre-approval must be obtained for any entertainment exceeding $200 in value.
Double-charging could arise if funds with trailer fees included in their management expense ratio (MER) were allowed in an MD Plus account; or if a trade commission were charged on an MD Plus account. (MD Plus accounts are fee-based accounts. This means that instead of trade commissions, compensation is a quarterly fee based on a set percentage of the client’s assets.)	The products generally available in MD Plus accounts will not include trailing commissions. Where products are allowed to be held in the MD Plus account which contain trailing commissions, or other forms of embedded commissions, these assets will be excluded from the fee calculation.
We may have access to confidential information about the trading activity, plans or strategies of a client which may be used to make a personal trade prior to placing a client order (front-running).	We have adopted a Code of Ethics for Personal Investing and an Insider Trading Policy, each of which prohibits this type of behaviour.
MD Advisors may engage in personal financial dealings with clients.	We have adopted a Personal Financial Dealings with Clients Procedure.

* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec).

MD ExO®, MD Platinum™ and MD Plus™ are trademarks of The Bank of Nova Scotia, used under licence.

MD ExO® Direct is an investment solution brought to you by MD Management Limited. MD Management Limited – Member – Canadian Investor Protection Fund

The information in this document is intended to assist you in understanding and assessing material potential and actual conflicts of interest, including the nature of such conflicts, the potential impact on and risk that the conflict could pose to you and how we address the conflict to minimize its impact and risks to you and our other clients. Ultimately, we seek to resolve all material conflicts of interest in your best interests. This is an overview of a complex subject. If you ever have any questions or concerns, whether they involve conflicts of interest or other matters, you should never hesitate to say so and ask your MD Advisor for an explanation and/or further information.