Rules and Procedures for Trading on the NACX

Buyers and sellers on the NACX must be approved by the NACX. As part of the membership application process, prospective members will be evaluated to determine if they meet the membership standards to trade on the NACX. The NACX membership standards are based on: degree of sophistication, capitalization, demonstrated knowledge of emissions trading, trading purpose and primary source of business, amongst other criteria. Only registered members will be allowed to trade on the NACX and be given access to the secure data room and trading platform.

All offsets and other ECUs traded on NACX must be verified in accordance with applicable regulations and protocols and if registrable, registered on the appropriate registry. As national and international standards evolve, other verification and registration processes may be required or changed.

Offset and ECU documentation may be subject to independent review by the NACX or a firm designated by the NACX prior to being posted for order matching on the NACX.

At least 7 days prior to posting for sale on the NACX, seller must deposit all Offset Documents, including executed transfer instruments, with the NACX's Escrow Agent. An electronic copy of the Offset Documents (except the executed transfer instruments), will then be displayed in the "secure data room". The offsets shall be posted for order matching on the NACX at such time designated by the NACX. In depositing the documents with the Escrow Agent, the seller agrees that the offsets are exclusively offered for sale with the NACX and cannot be offered for sale on any other exchange or through a bilateral negotiation during the posting period. The NACX determines the posting period.

To protect the Buyer and Seller, all transactions are settled through the NACX's designated Escrow Agent, pursuant to the escrow agreement between the Escrow Agent and the NACX. All members agree to the use of the Escrow Agent in the Transaction Services Agreement.

Once an order has been matched on the trading screen, or if applicable, manually, it is a legal and binding contract. All trades are to be settled no later than the close of business five business days after trade was enacted on the NACX ("T+5") (today, plus five business days). The settlement of the trade will involve the Buyer wiring the settlement amount, in Canadian funds, to the Escrow Agent's account using the appropriate wire instructions. Once the funds are received, the Escro Agent will release the Offset Documents to the Buyer for delivery by courier to the address provided by the Buyer upon registration with NACX, and simultaneously release the fees to the NACX and the net settlement proceeds to the Seller.

If a trade fails to settle within T+5 because the purchaser's funds are not received, the NACX will cancel the trade unless instructed to extend T+5 by both the buyer and seller. In such case, the NACX will apply an administrative charge for non-settlement by the purchaser. The purchaser is liable for any loss incurred by the seller or the NACX due to the failed trade.

Each trade between the Buyer and Seller will be confirmed by the NACX, issuing a Transaction Confirmation, which will confirm the terms of the transaction. Notwithstanding the Transaction Confirmation process, an order becomes a legal and binding contract between the Buyer and Seller upon an Order Match (when the bid price is the same or higher than the ask price). The NACX reserves the right to correct any errors made in the trading process. All bids and asks must be made for the entire volume of offsets in a Lot approved by NACX. In no case will the contract value of a lot sold be less than $150,000 CAD.

Any changes to settlement instructions, authorized representatives, mailing addresses, email addresses, telephone numbers, corporate name, or any other information required by the NACX, must be mailed to the NACX in hard copy form, on corporate letterhead and signed by authorized signatories of the corporation.

Notwithstanding that the NACX may conduct its own independent review of offset projects as an added step to ensure the presence of all project documents, the NACX cannot be held liable for any deficiencies, errors, discrepancies or changes affecting the offsets before, during or after the trade has occurred. The Exchange reserves the right to reject any offset projects or offsets being proposed for posting on the NACX and the NACX will refer any offsets that do not meet its review standards back to the project or offset owner for rectification.