Ndax Canada Inc. (Ndax, we, us or our) is registered as an Investment Dealer under the securities or derivatives legislation in each of the provinces and territories of Canada and is a member of the Canadian Investment Regulatory Organization (CIRO). Ndax is operating under the terms of the exemptive relief decision Re Ndax Canada Inc. dated Dec 19, 2024 (the Decision Document) (found here) granted by the Alberta Securities Commission and the other members of the Canadian Securities Administrators. Under the terms of the Decision Document, Ndax and our representatives are required to take reasonable steps to identify and address existing and reasonably foreseeable material conflicts of interest in a user’s best interest and tell users about them, including the nature and extent that the conflicts might impact users and how Ndax addresses them in a user’s best interest.  

A conflict of interest may arise where (a) the interests of Ndax or those of our representatives and those of a user may be inconsistent or different, (b) Ndax or our representatives may be influenced to put Ndax or the representative’s interests ahead of those of a user, or (c) monetary or non-monetary benefits available to Ndax, or potential negative consequences for Ndax, may affect the trust a user has in Ndax. 

Ndax and our representatives always seek to resolve all material conflicts of interest in our users’ best interest. Where it is determined that Ndax cannot address a material conflict of interest in our users’ best interest, Ndax and our representatives will avoid that conflict.  

Ndax has adopted policies and procedures to assist it in identifying and addressing any material conflicts of interest in the best interest of our users. 

Material Conflicts of Interest 

A description of the material conflicts of interest that Ndax has identified in relation to our role as the operator of a crypto trading platform (the Platform) under the terms of the Decision Document, the potential impact and risk that each conflict of interest could pose, and how each conflict of interest has been or will be addressed, is set out below. 

Confidential information  

Ndax and our employees are prohibited to use confidential information acquired in the course of or in connection with one’s duties or exploit a situation for the purpose of obtaining an advantage of any kind.  

Ndax has established strict policies and procedures and has put in place a number of safeguards to ensure the appropriate handling of confidential information. Ndax uses encryption and other security measures to protect that information from unauthorized access or disclosure, and access to sensitive information is restricted to only those employees who have a legitimate business need to know. Access to confidential information, including trading information is restricted by role-specific access controls, ensuring only authorized personnel handle sensitive data. To adhere to our policies, Ndax has implemented pre- and post-trade supervision protocols, with continuous monitoring to prevent misuse of confidential information. Additionally, employee activities are carefully supervised to prevent unauthorized trading or sharing of restricted data. 

Ndax’s policies and procedures aim to protect confidential information, creating a secure and transparent environment for its users while minimizing the risk of unauthorized access or misuse of sensitive data. Through continuous monitoring and stringent oversight of employee activities, Ndax strengthens these safeguards, ensuring the integrity of the Platform is consistently maintained.

Trading and financial or professional relationships with users 

Ndax employees may not have activities of a financial or professional nature with a user without Ndax’s prior authorization. This authorization process involves a thorough assessment and ongoing supervision of any material conflicts of interest, ensuring that Ndax is acting in user’s best interest. Unauthorized engagements could otherwise lead to biased decision-making or undue influence, potentially compromising the fairness of services provided to users. To prevent such conflicts, Ndax conducts regular compliance reviews, monitors employee activities, and requires full disclosure of any potential outside engagements, safeguarding transparency and the integrity of user interactions. 

Ndax’s internal policies and procedures restrict employees from any financial dealings with the users, such as lending or borrowing fiat, virtual currencies, securities, or any other asset; accepting any considerations, except those of nominal value, which will not cause a reasonable person to question whether it created a conflict of interest; acquire a power of attorney or act as a trustee or executor on behalf of a User, or otherwise have full or partial control or authority over the financial affairs. 

Trading of proprietary virtual assets

Ndax participates passively as a liquidity provider on the Platform by posting bid and ask orders. That means that some of the trades on the Platform are matched with Ndax, and Ndax either buys or sells the virtual assets into or out of its proprietary holdings. Acting as a liquidity provider in respect of the Platform creates the potential for conflicts of interest, which Ndax has taken steps to address. This conflict could affect users by potentially creating biases in price-setting or prioritizing Ndax’s interests over those of the users. To prevent this, Ndax has implemented strict policies and monitoring procedures to ensure fair and transparent pricing, separating liquidity provision functions from customer service and trading oversight. Regular audits and compliance pre- and post-trading checks are conducted to maintain objectivity, protecting users from any undue influence and ensuring alignment with best practices. Ndax has ensured that its passive liquidity provision activities do not have an unreasonable advantage over users, as the matching engine on the central limit order book that powers the Platform does not distinguish between Ndax’s orders and Users’ orders. In addition, Ndax’s passive liquidity provision algorithm does not analyze or consider, or have any advanced knowledge of, any existing orders on the centralized order book when determining the bids or asks to place. In determining what bids or asks to place, Ndax relies on current market pricing provided to it by its third-party liquidity providers. Furthermore, post-trade supervision is conducted to ensure that best execution standards are met in favour of the user, specifically in instances of proprietary trading where Ndax acts as a principal. Any transaction identified as falling outside of preset parameters is promptly corrected to benefit the user, ensuring fair and transparent handling of all trades.

User priority rule 

The interests of our users must always be given priority over those of Ndax and our employees. We will give the execution of your orders priority over any orders placed for our proprietary accounts and we will not trade in reliance upon orders or knowledge of orders to be placed for your account. Orders are placed based on time and price priority, ensuring fair execution and preventing conflicts of interest by prioritizing orders transparently and objectively. This process guarantees that all user orders are handled impartially and executed according to market timing and price criteria. 

To ensure adherence to these principles, all trading activities are closely monitored by the compliance team. Automated systems and ongoing trade supervision are used to verify that order execution aligns with the time and price priority framework. Additionally, all proprietary trading activities are segregated and reviewed to confirm no conflicts of interest or unfair practices arise.

Gifts, entertainment and payments 

Ndax and our employees are prohibited from accepting gifts, entertainment or payments that could influence decisions to be taken in the course of performing one’s duties. In carrying out their duties, and to avoid any real or perceived conflict-of-interest situations, Ndax employees may not receive any other form of compensation than that paid by Ndax without the prior written approval of Ndax. Employees receiving or giving gifts above a nominal value are required to fully disclose the gift, avoid giving or accepting it if possible, and obtain pre-approval when unavoidable. In addition, Ndax ensures that our practices for compensating our representatives are not inconsistent with their obligations to our users. Regular supervision and review processes are conducted to monitor representatives’ activities and verify that their actions remain user-focused and compliant with our policies. Any conflicts are mitigated through structured supervision, including periodic transaction reviews, and the evaluation of user interactions to identify and address any potential misalignments between compensation incentives and user’s needs. Additionally, Ndax enforces strict adherence to our policies, ensuring representatives maintain transparency, integrity, and objectivity in their roles, thereby upholding a fair and trustworthy environment for our users.

Outside activities 

At times, our representatives may participate in activities outside of their employment with Ndax, such as serving on a board of directors, participating in community events or pursuing personal outside business interests, whether paid or unpaid. A potential conflict can arise from a representative of Ndax engaging in such activities as a result of compensation received, the time commitment required, or the position held by the representative in respect of these outside activities. The potential impact and risk to you are that these outside activities may call into question the representative’s ability to carry out their responsibilities to you or properly service you, and there may be confusion about which entity(ies) the representative is acting for when providing you with services and/or if the outside activity places the representative in a position of power or influence over you.   

We address this conflict by requiring all representatives to disclose any proposed outside activities to us prior to engaging in such activities. All employees are required to disclose any outside activities, detailing the nature of the activity, time commitments, position held, and any compensation received in accordance with applicable securities laws. This information is evaluated to identify any real, potential, or perceived conflicts of interest, with a priority placed on protecting user interests. Any outside activity must receive pre-approval before engagement, ensuring that users remain unaffected by the employee’s external commitments. We will not allow the representative to proceed with the outside activity if we determine that the outside activity will give rise to material conflicts of interest that cannot be addressed in our users’ best interest. 

We have established continuous supervision mechanisms to ensure compliance with the internal policies and procedures. If a new activity is disclosed or a potential for a conflict with an existing activity arises during the course of the activity, the new information is evaluated, and corrective actions are implemented immediately. These measures ensure that Ndax maintains a transparent and ethical operational environment while safeguarding user interests.

Referral arrangements 

Ndax may enter into referral arrangements from time to time whereby it pays or provides a fee or other benefit for the referral of a user to Ndax, or whereby it receives a fee or other benefit for the referral of a user to another entity. Referral arrangements may be entered into both with other registrants and with non-registrants. Such arrangements could impact users by potentially introducing them to third-party services or products that may not fully align with Ndax’s standards or the user's best interests. To mitigate this, Ndax has implemented strict controls: all referral partners undergo a thorough vetting process to assess their qualifications, service quality, and adherence to regulatory standards. Ongoing supervision and compliance reviews aim to ensure that referrals consistently meet Ndax’s quality and ethical guidelines; however, they cannot guarantee this outcome. Additionally, Ndax provides transparent disclosure of referral arrangements to users, enabling them to make informed decisions.

In all cases, the referral arrangement will be set out in a written agreement which will be entered into in advance of any referrals being made. Details of how the referral fee is calculated and paid, to whom it is paid and other required information regarding each referral arrangement will be provided to affected users prior to the services being rendered. The fees paid in referral arrangements are clearly disclosed and determined on a case-by-case basis. Typically, fees are only paid once the referral obligations have been fully met.

Ndax also has policies and procedures that are designed to ensure that fees and other benefits received or paid or provided, as applicable, in connection with referral arrangements are appropriate and do not provide inappropriate incentives, and that any referral by Ndax is in the user’s best interest. Ndax undertakes periodic reviews of existing referral arrangements and identifies any potential referral arrangements not previously disclosed to users. This ensures that all referral arrangements are transparent and that appropriate actions and disclosures are made to users. It is Ndax’s policy that users do not pay any additional charges and fees in connection with referrals and are not obligated to purchase any product or service in connection with a referral. 

Complaint handling 

Addressing a complaint by a user can create a potential conflict if we have a choice between addressing the complaint in a manner that is beneficial to us or addressing the complaint in the best interests of the user. The potential risk to you is that we act in our own business interests. To control this potential conflict, we have adopted internal policies and procedures for the handling of user complaints. The complaint handling process is enforced through structured procedures designed to ensure a fair and transparent resolution. Each complaint is logged and tracked, with clear timelines and escalation paths in place to address issues promptly. Employees handling complaints are required to uphold neutrality, professionalism, and adherence to regulatory standards. The supervisor conducts a periodic review and oversee the entire process to ensure consistent enforcement, with any deviations from procedure promptly addressed to maintain the integrity of the complaint resolution process and addresses any escalations. Additionally, information is set out in the Relationship Disclosure Document under “Complaints and Dispute Resolution Process”. 

Changes 

This conflict of interest statement may change from time to time, for example, if we later consider we have another material conflict that we have not previously disclosed to you or we change how we address a conflict in your best interest. Any changes to this document will be communicated to you in a timely manner upon identification of a conflict that has not been previously disclosed.

Last Updated on December 19, 2024.