Undertaking to Fulfil Affirmative Obligations

2.1 This section of Procedure 4.9 sets out the matters that must be contained in the market maker undertaking. The market maker undertaking is separated into two parts:

(a) the obligations that must be met by a firm seeking to be a market maker in no less than 50 equity market products traded on the Chi-X market;

(b) the obligations that must be met by a firm seeking to be a market maker in CMAP investment products.

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The obligations and metrics are fundamentally different according to whether the market making undertaking relates to CMAP investment products or equity market products.

2.2 A market maker undertaking submitted to Chi-X may be in the form of the template published on the Chi-X web site. A market maker undertaking relating to an application to be registered as market maker in no less than 50 equity market products must contain an undertaking to:

(a) enter and maintain bid and ask orders that are each in excess of the minimum order value specified in table 2.2 and that create a bid-ask spread that is not more than the maximum spread specified in table 2.2;

(b) comply with the requirements in paragraph 2.2(a) for at least the quoting obligation ratio of activecontinuous trading, calculated over a monthly periodby summing the ratio of active continuous trading on each trading day that the participant has submitted orders complying with the requirements in 2.2(a) and dividing that figure by the number of trading days in the month;

(c) comply with the requirements in 2.2(a) and (b) in respect of a subset of the securities traded by Chi-X17, the subset having been agreed between Chi-X and the participant prior to the market maker undertaking being made but:

(i) in the case of market making for cash equity products, consisting of not less than 50 of the securities traded on the Chi-X central limit order book;

(ii) in the case of investment products, consisting of the investment product(s) that are the subject of an agency arrangement between the market maker and a product issuer under rule 14.10(c);

(d) separate market making activities from all other activities in respect of the Chi-X market; and

(e) notify Chi-X immediately it becomes aware that it is failing to comply with paragraphs (a) – (d) above and provide a complete explanation for the failure to comply.

2.3 Chi-X will allocate each security traded on the central limit order book into one of three groups for the purposes of specifying the minimum order value, the maximum spread, and the trading obligation ratio that will apply to market making in each security. Table 2.2 contains the value of each of these measures in respect of each security traded on the Chi-X central limit order book. Investment products are also included in the table as a separate product grouping.

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2.4 A market maker undertaking relating to an application to be registered as a market maker in CMAP investment products must contain an undertaking to:

(a) act in good faith when entering arrangements with product issuers that specify the price and volume of a reasonable bid in the investment products in which it has agreed to act as a market maker;

(b) enter and maintain orders in the order book that are in compliance with the market making arrangements agreed with the product issuer;

(c) comply on a daily basis with the requirements in paragraph 2.4(b) for at least the quoting obligation ratio of active continuous trading, the quoting obligation ratio in being calculated daily by summing the ratio of active continuous trading on each trading day that the market maker has submitted orders complying with the requirements in 2.4(b) and dividing that figure by the period of continuous trading in the relevant investment product on that day less any time during which the Chi-X market is not open or it is not technically possible for the market maker to submit orders to the Chi-X market;

(d) separate market making activities from all other activities in respect of the Chi-X market; and

(e) notify Chi-X immediately it becomes aware that it is failing to comply with paragraphs (a) – (d) above and provide a complete explanation for the failure to comply.

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TABLE 2.2

Security Group Minimum Order

Value

Maximum Spread: Price (P) : Maximum Spread (in tick size)

Quoting Obligation Ratio Group one (Top 50 by market capitalisation) $10,000.00 _{P < $2: 3} $2 ≤ P< $10: 3 $10 ≤ P <$20: 3 $20 ≤ P <$30: 4 $30 ≤ P <$40: 5 $40 ≤ P <$50: 6 $50 ≤ P <$60: 7 $60 ≤ P <$70: 8 $70 ≤ P <$80: 8 $80 ≤ P : 9 85% Group Two (remainder of ASX 200) $5,000.00 _{P < $2: 3} $2 ≤ P <$10: 4 $10 ≤ P <$20: 4 $20 ≤ P <$30: 5 $30 ≤ P: on a case by case basis (but ≥ 6) 80% Group Three (remainder) $2,500.00 _{P < $2: 3} $2 ≤ P <$10: 4 $10 ≤ P <$20: 4 $20 ≤ P : on a case by case basis (but ≥ 5) 75%

Investment Products The amount specified in the agency agreement between the product issuer and the market maker.

The spread, if any, specified in the agency agreement between the product issuer and the market maker.

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