SECURITIES AND EXCHANGE COMMISSION

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC

20549

April21 , 2015

DIVISION OF

TRADING AND MARKETS

Robert E. Buckholz

Sullivan & Cromwell LLP

125 Broad Street

New York, NY 10004

Re:

Royal Bank of Canada

File No. TP 15-09

Dear Mr. Buckholz:

In your letter dated April21, 2015, as supplemented by conversations with the staff, you

request on behalf of Royal Bank of Canada, a Schedule I Bank under the Bank Act (Canada) and

a financial holding company ("RBC"), an exemption from Rules 101 and 102 of Regulation M

under the Securities Exchange Act of 1934 ("Exchange Act") in connection with a proposed

acquisition by RBC (the "Acquisition"). 1

You seek an exemption to permit RBC and certain of its affiliates to conduct specified

transactions outside the United States in RBC Shares during the Acquisition. Specifically, you

request that: (i) the Market-Making Subsidiaries be permitted to continue to engage in market

making and facilitation trading activities as described in your letter; (ii) RBC and RBC

Dominion be permitted to continue to engage in derivatives and structured notes hedging and

index-related activities as described in your letter; (iii) the Brokerage Providers be permitted to

continue to engage in brokerage activities and facilitation trading activities as described in your

letter; (iv) the Asset Managers be permitted to continue to engage in investment management

activities as described in your letter; (v) the Plan Facilitators, RBC plan participants who may be

deemed "affiliated purchasers" ofRBC, and RBC Dominion (including Sun Life and

Computershare) be permitted to continue to engage in plan-related activities as described in your

letter; (vi) the Banking Units be permitted to continue to engage in banking-related activities as

described in your letter; (vii) RBC Estate and Trust Services be permitted to continue to engage

in estate and trust-related activities as described in your letter; (viii) the Custody Units be

permitted to continue to engage in custody-related activities as described in your letter; and (ix)

the Stock Borrowing and Lending Units and the Collateral-Taking Units be permitted to continue

to engage in stock borrowing and lending and collateral-taking activities as described in your

letter.

You also seek an exemption to permit certain RBC affiliates to conduct specified

transactions in the United States in RBC Shares during the Acquisition. Specifically, you request

that: (i) the US Brokerage Providers be permitted to continue to engage in unsolicited brokerage

activities in the United States as described in your letter; and (ii) the Brokerage Providers, the

1

We have attached a copy of your letter. Each defined term in our response has the same meaning as defined,

directly or by reference, in your attached letter, unless we note otherwise.

Robert E. Buckholz

April21, 2015

Page 2 of3

Plan Facilitators, the Banking units, RBC Estate and Trust Services, the Custody Units, and the

Stock Borrowing and Lending Units and Collateral-Taking Units be permitted to continue to

engage in the limited transactions that may result from their respective brokerage activities and

facilitation trading activities, the plan-related activities, the banking-related activities, the estate

and trust-related activities, the custody-related activities, and the stock borrowing and lending

and collateral-taking activities, solely when such transactions are routed to the RBC affiliates in

the United States for best execution considerations as described in your letter.

Response:

Based on the facts and representations that you have made in your letter, but without

necessarily concurring in your analysis, we find that it is necessary or appropriate in the public

interest, and is consistent with the protection of investors, to grant, and hereby grants, RBC an

exemption from Rules 101 and 102 ofRegulation M to permit RBC, the Market-Making

Subsidiaries, RBC Dominion, the Brokerage Providers, the Asset Managers, the Plan

Facilitators, the RBC plan participants who may be deemed "affiliated purchasers" ofRBC, the

Banking Units, RBC Estate and Trust Services, the Custody Units, the Stock Borrowing and

Lending Units and the Collateral-Taking Units, and the US Brokerage Providers (collectively,

the "Companies"), to continue to engage in the transactions described in your letter during the

Acquisition.

This exemption is subject to the following conditions:

1. None of the transactions of the Companies described in your letter shall occur in the

United States, with the exception of the unsolicited brokerage activities of the US

Brokerage Providers, and the limited transactions that may result from the brokerage

activities and facilitation trading activities, the plan-related activities, the banking-related

activities, the estate and trust-related activities, the custody-related activities, and the

stock borrowing and lending and collateral-taking activities, solely when such

transactions are routed to the RBC affiliates in the United States for best execution

considerations as described in your letter;

2. All of the transactions described in your letter for which you seek relief shall be effected

in the ordinary course ofbusiness and not for the purpose of facilitating the Acquisition;

3. The documents distributed to U.S. investors in connection with the Acquisition will

disclose the possibility of, or the intention to engage in, the transactions described in your

letter;

4. RBC and each of the Companies will provide to the Securities and Exchange

Commission's Division of Trading and Markets staff ("Division"), upon request, a time­

sequenced schedule of all such transactions made during the Acquisition. Such schedule

will include:

a. size, broker (if any), time of execution, and price of the transactions;

Robert E. Buckholz

April21, 2015

Page 3 of3

b. the exchange, quotation system, or other facility through which the transactions

occurred; and

c. whether the transactions were made for a customer account or a proprietary

account;

5. Upon request of the Division, RBC and each of the Companies will transmit the

information requested in item 4 (above) to the Division at its offices in Washington, D.C.,

within 30 days of its request;

6. RBC and each of the Companies shall retain all documents and other information

required to be maintained pursuant to this letter for at least two years following the

completion of the Acquisition;

7. Representatives ofRBC and each of the Companies shall be made available (in person at

the offices of the Commission in Washington, D.C., or by telephone) to respond to

inquiries of the Division relating to their records; and

8. Except as otherwise exempted by this letter, RBC and each of the Companies will

comply with Regulation M.

This exemption is based solely on the facts presented and the representations made in

your letter. Any different facts or circumstances may require a different response. In the event

that any material change occurs with respect to any of those facts or representations, transactions

in the RBC Shares must be discontinued, pending presentation of the facts for our consideration.

In addition, your attention is directed to the anti-fraud and anti-manipulation provisions

of the Exchange Act, including Sections 9(a) and lO(b), and Rule lOb-5 thereunder.

Responsibility for compliance with these and any other applicable provisions of the federal

securities laws must rest with the participants in the various transactions. We express no view

with respect to any other questions that the proposed transactions may raise, including, but not

limited to, the adequacy of disclosure concerning, and the applicability of any other federal or

state laws to, the proposed transactions.

For the Commission,

by the Division of Trading and Markets,

pursuant to delegated authority, 2

Attachment

2

17 CFR 200.30-3(a)(6).

SULLIVAN & CROMWELL LLP

TELEPHONE : 1-2 I 2-558-4000

FACSIMILE: 1-212-558-3588

125fJJ~~

WWW.SULLCROM .COM

JVew o/~, ...AP.!/100011-211.98

LOS ANGELES • PALO ALTO 'WASHINGTON, O.C ,

FRANKFURT • LONDON • PARIS

BEIJING • HONG KONG • TOKYO

MELBOURNE • SYDNEY

April21, 2015

Division of Trading and Markets,

Securities and Exchange Commission,

100 F Street, N.E.,

Washington, D.C. 20549.

Attention: Josephine J. Tao, Assistant Director

Re:

Royal Bank of Canada: Request for Exemptive Relief from Rules

101 and 102 of Regulation M

Ladies and Gentlemen:

We are writing on behalf of our client, Royal Bank of Canada, a Schedule

I Bank under the Bank Act (Canada) and a financial holding company ("RBC"),

regarding the application of Regulation M to transactions by RBC and its affiliates in the

common shares of RBC ("RBC Shares") during the distribution of RBC Shares to be

made by RBC to stockholders of City National Corporation, a bank holding company

organized as a Delaware corporation ("City National"), in connection with the proposed

acquisition of City National by RBC (the "Acquisition"). Specifically, on behalf of RBC,

we ask the Staff to grant exemptive relief from Rules 101 and 102 of Regulation M to

permit RBC and its affiliates to continue, in the ordinary course ofbusiness as described

below and in accordance with applicable local law, to engage in the following activities

during the Regulation M restricted period applicable to the Acquisition:

•

Market Making and Facilitation Trading in RBC Share Derivatives: Certain

subsidiaries of RBC, including RBC Dominion Securities Inc. ("RBC Dominion"),

RBC Capital Markets, LLC ("RBC Capital Markets"), RBC Europe Limited ("RBC

EL") and RBC Capital Markets (Australia) ("RBC CMA") (such subsidiaries

collectively the "Market-Making Subsidiaries"), regularly make bids and offers for,

and purchase and sell futures and forwards, swaps and options, relating to baskets and

indices that include RBC Shares, and other derivatives relating to RBC Shares (such

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futures, forwards, swaps, options, baskets, indices and other derivatives, collectively,

"RBC Share Derivatives") on the Montreal Exchange ("MX") and other exchanges or

marketplaces in and outside of Canada, as applicable. 1 In addition, RBC and the

Market-Making Subsidiaries purchase and sell, solely in the over-the-counter market,

certain RBC Share Derivatives for which, for credit quality purposes, RBC is the

counterparty. RBC and the Market-Making Subsidiaries effect these transactions for

their own accounts, on both solicited and unsolicited bases, in order to provide

liquidity to the market, to facilitate customer transactions and to readjust RBC' s and

each of the Market-Making Subsidiaries' economic exposure to RBC Shares as

appropriate following such transactions. RBC Dominion is a designated market

maker on the Toronto Stock Exchange ("TSX") and the MX for certain third-party

exchange traded funds ("ETFs") and other securities or derivatives that relate to RBC

Shares. In addition, the Market-Making Subsidiaries act as a market maker, absent a

marketplace obligation, in furtherance of contractual obligations with ETFs.

•

Derivatives and Structured Notes Hedging and Index-Related Adjustments: In

connection with the trading activities described above under "Market Making and

Facilitation Trading in RBC Share Derivatives" and customer trades, RBC and RBC

Dominion effect trades in RBC Shares, and enter into cash-settled swaps, for their

own accounts and for the accounts of their customers, for the purpose of hedging

positions (or adjusting or liquidating existing hedge positions) ofRBC and its

affiliates and of their customers. In addition, to hedge its economic exposure arising

from the issuance of structured notes that it may issue from time to time and that are

linked to baskets or indices that include RBC Shares, RBC enters into hedging

transactions in RBC Shares at the time of the issuance of the structured notes and

over the life of such structured notes. RBC Dominion is the designated market maker

on the TSX for certain ETFs that are index-based and also trades certain ETFs that

are index-based and include RBC Shares. The traded ETFs for which RBC Dominion

is not the market maker generally consist of 10 or more securities and RBC Shares

comprise less than 10% of the value of each such ETF. These ETFs are listed solely

on Canadian exchanges and are comprised exclusively of Canadian securities. In

order to appropriately hedge its positions in these ETFs, RBC Dominion will effect

trades in the securities that are components ofthe applicable ETFs, including RBC

Shares. In addition, RBC Dominion solicits and effects trades in RBC Shares in order

to appropriately adjust RBC Dominion's proprietary index-related portfolio in

Although these activities and the others described in this letter are conducted outside of the United

States (except for those activities specifically described as occurring in the United States), RBC's

customers or counterparties involved in such activities may be based in the United States, Canada

or elsewhere.

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response to changes in the applicable indices. During the restricted period related to

the Acquisition, these hedging and other transactions will be effected exclusively on

the TSX or other exchanges or alternative trading systems ("ATSs") in Canada, and

all such transactions will be entered into in the ordinary course of business and not in

contemplation or facilitation of the Acquisition.

•

Brokerage Activities and Facilitation Trading: Certain subsidiaries of RBC,

including RBC Dominion, RBC Direct Investing Inc., RBC Dominion Securities

Global Limited ("RBC Dominion Global"), RBC Investment Services (Asia) Limited,

West Indies Stockbrokers Limited, RBC Merchant Bank (Caribbean) Limited, RBC

Capital Markets, RBC EL and RBC CMA (such subsidiaries collectively the

"Brokerage Providers"), engage in discount brokerage and/or full-service brokerage

activities for their customers through ordinary customer facilitation and related

services. The discount brokerage division engages only in unsolicited brokerage

activities, while the full service brokerage division provides additional services,

including discussions with customers regarding investment strategies (including with

respect to RBC Shares) and solicited and unsolicited brokerage activities. 2 The

Brokerage Providers also effect transactions in RBC Shares and RBC Share

Derivatives for their own principal accounts in order to facilitate unsolicited customer

transactions. The Brokerage Providers may accomplish these activities by engaging

in direct buying and selling of RBC Shares or relaying buy and sell orders for RBC

Shares to unaffiliated third parties. These activities are conducted primarily in

Canada, except that these transactions may be routed to RBC subsidiaries in the

United States for best execution considerations. Additionally, RBC's affiliated

United States broker-dealers, including RBC Capital Markets and RBC Capital

Markets Arbitrage S.A. (such subsidiaries collectively the "US Brokerage

Providers"), engage in unsolicited brokerage activities of the kind described above

with their customers and related trades may be effected on the New York Stock

Exchange ("NYSE"), the TSX, other exchanges or an ATS. All ofthe US Brokerage

Providers are members of FINRA. We ask that the requested relief also cover these

United States activities of these RBC subsidiaries.

•

Asset Management: Certain subsidiaries ofRBC, including RBC Dominion, RBC

Phillips, Hager and North Investment Counsel Inc., RBC Dominion Global, RBC

Private Counsel (USA) Inc., RBC Global Asset Management Inc., RBC Global Asset

Management (UK) Limited, RBC Investment Management (Asia) Limited, RBC

During the applicable restricted period, RBC will fully restrict and direct employees in the full

service brokerage division not to solicit orders from customers with respect to RBC Shares (except

where acting as an Asset Manager, as discussed below).

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Investment Management (Caribbean) Limited ("RBC IM Caribbean"), RBC

Investment Solutions (CI) Limited ("RBC ISCIL"), RBC Investment Management

(UK) Limited ("RBC IM UK") and RBC Investment Management (USA) Limited

("RBC IM USA") (such subsidiaries individually an "Asset Manager" and

collectively the "Asset Managers"), provide discretionary investment management

services for their customers, both directly or via affiliated or third-party investment

managers or sub-advisors. The types of accounts managed by the Asset Managers on

a discretionary basis include mutual funds, exchange-traded funds, pooled funds,

other institutional accounts (such as corporations, trusts, pension plans, foundations,

not-for-profit organizations and accounts of the customers of other affiliated and

third-party investment management firms to which the Asset Manager provides

advisory or sub-advisory services) and accounts of individuals (such funds,

individuals and institutional accounts, the "Managed Accounts"). As part of their

ordinary investment management activities on behalf of the Managed Accounts, the

Asset Managers may buy and sell RBC Shares, or trade put or call options in respect

of RBC Shares, for certain of the Managed Accounts. A substantial majority of such

activity takes place in Canada, and a small portion of such activity may occur in other

non-United States jurisdictions. During the restricted period related to the

Acquisition, the Asset Managers will purchase or sell RBC Shares, and will otherwise

act, only in accordance with: (i) an exemptive relief decision that RBC has received

from the Ontario Securities Commission ("OSC") in connection with certain trading

restrictions imposed on RBC and its affiliates under Canadian law, (ii) the investment

mandate of the applicable Managed Account and (iii) the fiduciary duties imposed on

the Asset Managers under Canadian law in respect of the Managed Accounts over

which they exercise control or discretion. The transactions described above may be

routed to certain RBC subsidiaries, including RBC Dominion, or to unaffiliated third

parties, at the direction of the applicable Asset Manager.

•

Trading in RBC Shares Pursuant to Employee Plans: RBC maintains employee

share ownership, option and other incentive plans covering employees of RBC and

various of its subsidiaries (the "Employee Plans"). Certain subsidiaries of RBC,

including RBC Dominion (the "Plan Facilitators"), from time to time purchase RBC

Shares on the open market to facilitate the grant of awards or exercises pursuant to

the terms of the Employee Plans. The Plan Facilitators make the purchases on a

regular basis, depending on the plan, solely to satisfy RBC's obligation to deliver

shares based on pre-determined payroll deductions of the employee or grants and

exercises under the plans. RBC also operates deferred incentive programs that grant

senior-level employees long-dated notional RBC Share participation units. Insofar as

the award grants of RBC Shares are adjusted from time to time, and to hedge against

currently existing unmatured notional share grants, RBC Dominion enters into total

return swaps for RBC Shares. During the restricted period related to the Acquisition,

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these activities by the Plan Facilitators will be conducted pursuant to an exemptive

relief decision granted by the OSC to RBC and its affiliates. The transactions that

may result from these plan-related activities are effected on the TSX, the NYSE and

other equity marketplaces, based on best execution considerations.

•

Employee Exercise ofStock Options and Sale ofShares: Employees ofRBC and its

subsidiaries, including executive officers, may purchase RBC Shares upon the

exercise of their stock options. Employees exercising stock options commonly sell

RBC Shares to fund the exercise price of the options they exercise. The vesting

schedule of the stock options is pre-determined pursuant to the terms of the applicable

plans. The sales of RBC Shares by executive officers are effected only on the TSX or

other marketplaces in Canada.

•

Purchases for Dividend Reinvestment Plan: RBC operates a dividend reinvestment

plan ("DRIP") that provides holders ofRBC common and preferred shares with a

right to receive additional RBC Shares rather than cash dividends. The plan is only

open to shareholders residing in Canada and the United States. The requirements of

the DRIP are satisfied either through open market share purchases that are directed by

Sun Life Financial Trust Inc. ("Sun Life") and Computershare Trust Company of

Canada ("Computershare") and effected by RBC Dominion as broker, or with shares

issued from treasury. The transactions that may result from these DRIP-related

activities are effected on the TSX or other equity marketplaces outside of the United

States.

•

Banking-Related Activities: In connection with their retail and commercial banking

services, certain subsidiaries ofRBC, including Royal Bank of Canada (Channel

Islands) Limited and RBC (Suisse) SA (such subsidiaries collectively the "Banking

Units"), engage in the marketing and sale of investment products, including funds that

may include RBC Shares, to banking customers. In addition, certain of the Banking

Units provide investment advice and financial planning guidance to banking

customers, and such advice and guidance may include information that would assist

customers in determining whether to purchase or sell RBC Shares. The marketing

and sale of investment products and the provision of investment advice and financial

planning guidance to banking customers as described above occur solely outside of

the United States, and primarily in the United Kingdom, various member states of the

European Union and Switzerland. The transactions that may result from these

banking-related activities are effected on the TSX, the NYSE and other equity

marketplaces, based on best execution considerations.

•

Trading in RBC Shares by Trustees, Corporate Service Providers and Personal

Representatives ofEstates: Certain subsidiaries of RBC, including Royal Trust

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Corporation of Canada, The Royal Trust Company, RBC cees Trustee Limited, RBC

cees Trustee Guernsey Limited, Regent Capital Trust Corporation Limited, Royal

Bank of Canada Trust Company (Bahamas) Limited, Royal Bank of Canada Trust

Company (Cayman) Limited, RBC Trust Company (Delaware) Limited, RBC

Trustees (CI) Limited, RBC Trust Company (International Limited), RTC Trust

Company (Jersey) Limited and RTC Trustees (Guernsey) Limited (such subsidiaries

collectively "RBC Estate and Trust Services"), act as trustees, corporate service

providers, administrators, executors or personal representatives of estates and trusts

("Estates and Trusts"). As part oftheir responsibilities, RBC Estate and Trust

Services sell RBC Shares already held by the Estates and Trusts and purchase RBC

Shares on a limited basis where permitted under applicable laws and with any

required consents. Such activities are conducted in accordance with RBC Estate and

Trust Services' fiduciary duty to act in a manner that is in the best interests of the

beneficiaries or grantors and to deal fairly, honestly and in good faith in doing so.

These activities of the RBC Estate and Trust Services are conducted both inside and

outside of the United States and primarily in Canada and the United Kingdom. The

resulting transactions in RBC Shares may occur through the facilities of the TSX and

other equity marketplaces and in the United States through the NYSE, based on best

execution considerations.

•

Custody-Related Activities: In addition to the activities described under other items,

certain subsidiaries of RBC ("Custody Units") engage in the provision of custody

services, including the settlement of trades in RBC Shares which clients or third

parties authorized by clients to operate their accounts, such as the client's investment

advisor or manager, arrange to be executed with a third-party broker. In connection

with such custody services, the Custody Units may also perform other ancillary

services, such as acting as a trustee and purchasing or selling RBC Shares upon the

direction of their clients or the clients' investment advisors or managers (which may

include effecting purchases or sales of shares in accordance with trustee's fiduciary

obligations). The purchases of or bids for RBC Shares that may be deemed to result

from these custody-related activities may occur through the facilities of the TSX and

other equity marketplaces and in the United States through the NYSE, based on best

execution considerations.

•

Stock Borrowing and Lending and Taking Collateral: Certain subsidiaries of RBC

(the "Stock Borrowing and Lending Units") borrow and lend securities, including

RBC Shares, from and to customers as part of stock lending transactions in the

ordinary course of business. In some circumstances, a customer may purchase RBC

Shares from a third party in anticipation of lending them to a Stock Borrowing and

Lending Unit, or a customer or fund manager may arrange for a third party to

purchase RBC Shares after the customer has borrowed them from a Stock Borrowing

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and Lending Unit. In addition, certain subsidiaries ofRBC (the "Collateral-Taking

Units") accept RBC Shares as collateral. In the event that the borrower defaults on a

loan, the Collateral-Taking Units may foreclose on the collateral and in some

circumstances dispose of it, including by selling it in the market. The stock

borrowing and lending and collateral-taking activities described above are conducted

solely outside of the United States, primarily in Canada, the United Kingdom and

Australia. The purchases of or bids for RBC Shares that may be deemed to result

from these stock borrowing and lending and collateral-taking activities may occur

through the facilities of the TSX and other equity marketplaces and in the United

States through the NYSE, based on best execution considerations.

The availability of the exemptions requested by this letter would be

conditioned on the disclosure and record-keeping undertakings outlined below under

"Relief Requested."

RBC has provided us with, and authorized us to make on its behalf, the

factual representations set forth in this letter about the market for RBC Shares and the

activities of RBC and its affiliates. The description of Canadian laws and regulations has

been provided by Osler, Hoskin & Harcourt LLP.

I.

The Market for RBC Shares

The principal trading market for RBC Shares is the TSX. Additionally,

there are a number of ATSs in Canada where RBC Shares are traded. RBC Shares are

also listed on the NYSE. RBC is a foreign private issuer as defined in Rule 3b-4(c) of the

Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated

thereunder (the "Exchange Act") and is subject to the information reporting requirements

of the Exchange Act.

As of January 31,2015, RBC had approximately 1,442.6 million common

shares outstanding. RBC' s market capitalization at January 31, 2015 was approximately

$85.0 billion, 3 the largest of any Canadian bank and of any Canadian company,

representing 6.8% of the S&P TSX 60 Index. The average daily trading volume value of

RBC Shares on the TSX during the two month period beginning on December 22, 2014

and ending on February 19,2015 (the "Prescribed Period") was approximately $173.0

million, or approximately 70.0% of the worldwide average daily trading volume value for

As used in this Jetter, "$"refers to U.S. dollars and "C$" refers to Canadian dollars. For purposes

of this Jetter, and except as otherwise noted, Canadian dollars have been converted to United

States dollars at the rate of C$1.2176 = $1.00, the average exchange rate from December 22, 2014

through February 20, 2015, as published by the Federal Reserve.

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that period. The average daily trading volume value of RBC Shares on the NYSE for the

Prescribed Period was approximately $28.7 million, or approximately 11.6% ofthe

worldwide average daily trading volume value for that period. In addition, the average

daily trading volume value ofRBC Shares on the TSX for the 2014 calendar year was

approximately $129.4 million, or approximately 75.7% ofthe worldwide average daily

trading volume value for that year, and the average daily trading volume value ofRBC

Shares on the NYSE for the 2014 calendar year was approximately $8.2 million, or

approximately 4.8% of the worldwide average daily trading volume value for that year.

RBC expects to issue approximately 41.36 million RBC Shares (representing

approximately 2.87% of RBC Shares outstanding as of January 31, 20 15) and, assuming

the full exercise of all converted City National stock options and other City National

equity awards as described below, a maximum of approximately 44.19 million RBC

Shares (representing approximately 3.06% ofRBC Shares outstanding as of January 31 ,

2015), as consideration for shares of City National common stock in the Acquisition,

based on approximately 55.225 million shares of City National common stock

outstanding as of January 22, 2015. As described in more detail below under "The

Acquisition," RBC currently expects that approximately 2.83 million RBC Shares will be

issuable in respect of converted City National stock options and other City National

equity awards.

The TSX provides for trading in equities through a fully automated

electronic exchange trading system. Order entry is restricted to persons with authorized

access and the system provides for fully automated order matching and trade execution.

The TSX is an auction market based on time and price priority (subject to priority to

crosses between orders from the same participating organization). There is full pre-trade

transparency of orders (price and volume) other than a portion of the volume that may be

4

hidden on an "iceberg order" where a large order is to be traded. Public identification of

the participating organization entering the order is optional. There is full post trade

transparency (price and volume) of executions. There is a Market on Close facility for

certain securities with no pre-trade transparency other than broadcast imbalance and

indicative calculated closing price. There is a 45-minute post-closing Special Trading

Session that permits trades effected solely at the regular session closing prices. Order

and trade data is disseminated in real time to various information vendors. Other

Canadian markets (the ATSs) offer similar functionality but do not all provide pre-trade

transparency. Some markets only provide post-trade transparency.

4

Additional information regarding iceberg orders is provided by the TSX and is available at

http://www. tsx.com/trading/toronto-stock-exchange/order-types-and~ features/icebergs.

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The MX is Canada's exchange for listed derivatives. It provides for

trading in single stock equity options, currency options (U.S. Dollar), index futures and

options and interest rates futures and options through a fully automated electronic

exchange trading system. Order entry is restricted to persons with authorized access and

the system provides for fully automated ordering matching and trade execution. The MX

is a continuous auction market based on time and price priority. There is full pre-trade

transparency of orders (price and volume) with the exception that participants may opt to

only disclose a portion of the total volume that they wish to trade. The balance may be

hidden as part of an "iceberg order" that becomes visible as the disclosed portion is

executed. There is full post trade transparency (price and volume) of executions. Order

and trade data is disseminated in real time to various information vendors.

As of January 31, 2015, the overall market capitalization of equity

securities listed on the TSX was approximately $2,217 billion and there were 1,513 listed

companies on the TSX. The primary market index is the S&P/TSX Composite, which

currently is composed of 250 of the most prominent domestic companies listed on the

TSX, including RBC.

II.

RBC's Market Activities

RBC is the largest bank in Canada and one of the largest banks in the

world based on market capitalization. RBC is also one ofNorth America's leading

diversified financial services companies and provides personal and commercial banking,

wealth management services, insurance, investor services and capital markets products

and services on a global basis. For the fiscal year ended October 31, 2014, RBC had

consolidated reported net income of approximately $7.39 billion and at October 31, 2014

it had total assets of approximately $772.46 billion and equity attributable to shareholders

of approximately $43.27 billion. RBC serves more than 16 million personal, business,

public sector and institutional clients through offices in Canada, the United States and 38

other countries and operates through the following business segments: Personal &

Commercial Banking, Wealth Management, Insurance, Investor & Treasury Services and

Capital Markets. RBC's head office is in Montreal, Quebec, Canada and its executive

offices are located in Toronto, Ontario, Canada. The market activities for which RBC is

seeking relief will be managed principally by representatives in Toronto. As described in

more detail below under "Canadian Market Regulation," in Canada, RBC and its

affiliates are regulated by, among others, the OSC and other provincial securities

regulatory authorities and the Investment Industry Regulatory Organization of Canada

("IIROC").

The trading activities for which RBC is seeking relief will, except as

described below with respect to United States activities, occur principally on securities

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exchanges or other marketplaces in Canada and be managed principally by

representatives within Canada and subject to the regulation and supervision of IIROC and

other applicable Canadian regulatory agencies. The management of the ordinary course

trading activities of the applicable affiliates is operated separately from the management

of RBC responsible for decisions relating to the Acquisition. The clients and

counterparties involved may be based or organized in Canada, the United States or other

jurisdictions. RBC has confirmed that the activities described below for which it is

requesting relief are permitted under, and would be conducted in accordance with,

applicable Canadian law (including, where applicable, pursuant to relevant exemptive

relief).

•

Market Making and Facilitation Trading in RBC Share Derivatives: The

Market-Making Subsidiaries regularly make bids and offers for, and purchase and

sell RBC Share Derivatives on the MX and other exchanges or marketplaces in

and outside of Canada, as applicable. In addition, RBC and the Market-Making

Subsidiaries purchase and sell, solely in the over-the-counter market, certain RBC

Share Derivatives for which, for credit quality purposes, RBC is the counterparty.

RBC and the Market-Making Subsidiaries effect these transactions for their own

accounts, on both solicited and unsolicited bases, in order to provide liquidity to

the market, to facilitate customer transactions and to readjust RBC's and each of

the Market-Making Subsidiaries' economic exposure to RBC Shares as

appropriate following such transactions. RBC Dominion is a designated market

maker on the TSX and the MX for certain third-party ETFs and other securities or

derivatives that relate to RBC Shares. In addition, the Market-Making

Subsidiaries act as a market maker, absent a marketplace obligation, in

furtherance of contractual obligations with ETFs. RBC believes that the activities

of the Market-Making Subsidiaries described above accounted for approximately

5% of the average daily trading volume ofRBC Shares on the TSX for the 2014

calendar year.

•

Derivatives and Structured Notes Hedging and Index-Related Adjustments: In

connection with the trading activities described above under "Market Making and

Facilitation Trading in RBC Share Derivatives" and customer trades, RBC and

RBC Dominion effect trades in RBC Shares, and enter into cash-settled swaps, for

their own accounts and for the accounts of their customers, for the purpose of

hedging positions (or adjusting or liquidating existing hedge positions) ofRBC

and its affiliates and of their customers. In addition, to hedge its economic

exposure arising from the issuance of structured notes that it may issue from time

to time and that are linked to baskets or indices that include RBC Shares, RBC

enters into hedging transactions in RBC Shares at the time of the issuance of the

structured notes and over the life of such structured notes. RBC Dominion is the

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designated market maker on the TSX for certain ETFs that are index-based and

also trades certain ETFs that are index-based and include RBC Shares. The

traded ETFs for which RBC Dominion is not the market maker generally consist

of 10 or more securities and RBC Shares comprise less than 10% of the value of

each such ETF. These ETFs are listed solely on Canadian exchanges and are

comprised exclusively of Canadian securities. In order to appropriately hedge its

positions in these ETFs, RBC Dominion will effect trades in the securities that are

components of the applicable ETFs, including RBC Shares. In addition, RBC

Dominion solicits and effects trades in RBC Shares in order to appropriately

adjust RBC Dominion's proprietary index-related portfolio in response to changes

in the applicable indices. During the restricted period related to the Acquisition,

these hedging and other transactions will be effected exclusively on the TSX or

other exchanges or A TSs in Canada, and all such transactions will be entered into

in the ordinary course of business and not in contemplation or facilitation of the

Acquisition. RBC believes that the activities described above accounted for less

than 4% of the average daily trading volume ofRBC Shares on the TSX for the

2014 calendar year.

•

Brokerage Activities and Facilitation Trading: The Brokerage Providers engage

in discount brokerage and/or full-service brokerage activities for their customers

through ordinary customer facilitation and related services. The discount

brokerage division engages only in unsolicited brokerage activities, while the full

service brokerage division provides additional services, including discussions

with customers regarding investment strategies (including with respect to RBC

Shares) and solicited and unsolicited brokerage activities. 5 The Brokerage

Providers also effect transactions in RBC Shares and RBC Share Derivatives for

their own principal accounts in order to facilitate unsolicited customer

transactions. The Brokerage Providers may accomplish these activities by

engaging in direct buying and selling of RBC Shares or relaying buy and sell

orders for RBC Shares to unaffiliated third parties. These activities are conducted

primarily in Canada, except that these transactions may be routed to RBC

subsidiaries in the United States for best execution considerations. RBC believes

that the activities of the Brokerage Providers described above accounted for

approximately 8% of the average daily trading volume of RBC Shares on the TSX

for the 2014 calendar year. Additionally, the US Brokerage Providers engage in

unsolicited brokerage activities of the kind described above with their customers

During the applicable restricted period, RBC will fully restrict and direct employees in the full

service brokerage division not to solicit orders from customers with respect to RBC Shares (except

where acting as an Asset Manager, as discussed below).

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and related trades may be effected on the NYSE, the TSX, other exchanges or an

ATS. All ofthe US Brokerage Providers are members ofFINRA. RBC believes

that the activities of the US Brokerage Providers described above accounted for

approximately 3% of the average daily trading volume ofRBC Shares on the

NYSE for the 2014 calendar year. We ask that the requested relief also cover

these United States activities of these RBC subsidiaries.

•

Asset Management: The Asset Managers provide discretionary investment

management services for their customers, both directly or via affiliated or third­

party investment managers or sub-advisors. As part of their ordinary investment

management activities on behalf of the Managed Accounts, the Asset Managers

may buy and sell RBC Shares, or trade put or call options in respect of RBC

Shares, for certain ofthe Managed Accounts. A substantial majority of such

activity takes place in Canada, and a small portion of such activity may occur in

other non-United States jurisdictions. During the restricted period related to the

Acquisition, the Asset Managers will purchase or sell RBC Shares, and will

otherwise act, only in accordance with: (i) an exemptive relief decision that RBC

has received from the OSC in connection with certain trading restrictions imposed

on RBC and its affiliates under Canadian law, (ii) the investment mandate of the

applicable Managed Account and (iii) the fiduciary duties imposed on the Asset

Managers under Canadian law in respect of the Managed Accounts over which

they exercise control or discretion. The transactions described above may be

routed to certain RBC subsidiaries, including RBC Dominion, or to unaffiliated

third parties, at the direction of the applicable Asset Manager. Under Canadian

law, the Asset Managers have a fiduciary duty to oversee the Managed Accounts

in a manner that is in the best interests of the Managed Accounts and to deal

fairly, honestly and in good faith in doing so. Further, only portfolio managers

registered as advising representatives of an Asset Manager are permitted to advise

the Managed Accounts in respect of any securities. Restrictions on trading of

RBC Shares by the Asset Managers for the Managed Accounts therefore make it

more difficult for an Asset Manager to meet its fiduciary duty to purchase, or to

bid for, RBC Shares when such actions are otherwise in the best interests of the

Managed Accounts. RBC believes that the activities of the Asset Managers

described above, except for RBC Dominion, RBC Dominion Global, RBC IM

Caribbean, RBC ISCIL, RBC IM UK and RBC IM USA, accounted for

approximately 3.5% of the average daily trading volume of RBC Shares on the

TSX for the 2014 calendar year. The activities ofRBC Dominion and RBC

Dominion Global have been captured above under "Brokerage Activities and

Facilitation Trading" and the activities of RBC IM Caribbean, RBC ISCIL, RBC

IM UK and RBC IM USA are considered to be minimal.

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•

Trading in RBC Shares Pursuant to Employee Plans: The Plan Facilitators

from time to time purchase RBC Shares on the open market to facilitate the grant

of awards or exercises pursuant to the terms of the Employee Plans. The Plan

Facilitators make the purchases on a regular basis, depending on the plan, solely

to satisfy RBC's obligation to deliver shares based on pre-determined payroll

deductions of the employee or grants and exercises under the plans. RBC also

operates deferred incentive programs that grant senior-level employees long-dated

notional RBC Share participation units. Insofar as the award grants of RBC

Shares are adjusted from time to time, and to hedge against currently existing

unmatured notional share grants, RBC Dominion enters into total return swaps for

RBC Shares. During the restricted period related to the Acquisition, these

activities by the Plan Facilitators will be conducted pursuant to an exemptive

relief decision granted by the OSC to RBC and its affiliates. The transactions that

may result from these plan-related activities are effected on the TSX, the NYSE

and other equity marketplaces, based on best execution considerations. RBC

believes that the activities of the Plan Facilitators described above accounted for

less than 1% of the average daily trading volume ofRBC Shares on the TSX for

the 2014 calendar year and approximately 1% of the average daily trading volume

ofRBC Shares on the NYSE for the 2014 calendar year. RBC will instruct its

executive officers deemed to be "reporting insiders" under the OSC requirements

(as described below under "Canadian Market Regulation") not to (i) request an

increase in their contributions or allocations to the applicable plans or (ii) effect

transfers of existing investments into an investment in RBC Shares, in each case

during the restricted period for the distribution, and will use reasonable efforts to

monitor plan activity for compliance with such instructions (or to effect other

procedures designed to establish compliance).

•

Employee Exercise ofStock Options and Sale ofShares: Employees of RBC

and its subsidiaries, including executive officers, may purchase RBC Shares upon

the exercise of their stock options. Employees exercising stock options

commonly sell RBC Shares to fund the exercise price of the options they exercise.

The vesting schedule of the stock options is pre-determined pursuant to the terms

of the applicable plans. The sales of RBC Shares by executive officers are

effected only on the TSX or other marketplaces in Canada. RBC believes that the

activities described above accounted for less than 1% of the average daily trading

volume ofRBC Shares on the TSX for the 2014 calendar year.

•

Purchases for Dividend Reinvestment Plan: RBC operates a DRIP that provides

holders of RBC common and preferred shares with a right to receive additional

RBC Shares rather than cash dividends. The plan is only open to shareholders

residing in Canada and the United States. The requirements of the DRIP are

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satisfied either through open market share purchases that are directed by Sun Life

and Computershare and effected by RBC Dominion as broker, or with shares

issued from treasury. The transactions that may result from these DRIP-related

activities are effected on the TSX or other equity marketplaces outside of the

United States. RBC believes that the activities by each of Sun Life,

Computershare and RBC Dominion described above accounted for less than 1%

of the average daily trading volume of RBC Shares on the TSX for the 2014

calendar year.

•

Banking-Related Activities: In connection with their retail and commercial

banking services, the Banking Units engage in the marketing and sale of

investment products, including funds that may include RBC Shares, to banking

customers. In addition, certain of the Banking Units provide investment advice

and financial planning guidance to banking customers, and such advice and

guidance may include information that would assist customers in determining

whether to purchase or sell RBC Shares. The marketing and sale of investment

products and the provision of investment advice and financial planning guidance

to banking customers as described above occur solely outside of the United

States, and primarily in the United Kingdom, various member states of the

European Union and Switzerland. The transactions that may result from these

banking-related activities are effected on the TSX, the NYSE and other equity

marketplaces, based on best execution considerations. RBC believes that the

activities by the Banking Units described above accounted for less than 1% of the

average daily trading volume ofRBC Shares worldwide for the 2014 calendar

year.

•

Trading in RBC Shares by Trustees, Corporate Service Providers and Personal

Representatives ofEstates: RBC Estate and Trust Services act as trustees,

corporate service providers, administrators, executors or personal representatives

of Estates and Trusts. As part oftheir responsibilities, RBC Estate and Trust

Services sell RBC Shares already held by the Estates and Trusts and purchase

RBC Shares on a limited basis where permitted under applicable laws and with

any required consents. Such activities are conducted in accordance with RBC

Estate and Trust Services' fiduciary duty to act in a manner that is in the best

interests of the beneficiaries or grantors and to deal fairly, honestly and in good

faith in doing so. These activities of the RBC Estate and Trust Services are

conducted both inside and outside of the United States and primarily in Canada

and the United Kingdom. The resulting transactions in RBC Shares may occur

through the facilities of the TSX and other equity marketplaces and in the United

States through the NYSE, based on best execution considerations. RBC believes

that the activities by the RBC Estate and Trust Services described above

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accounted for less than 1% of the average daily trading volume ofRBC Shares

worldwide for the 2014 calendar year.

•

Custody-Related Activities: In addition to the activities described under other

items, the Custody Units engage in the provision of custody services, including

the settlement of trades in RBC Shares which clients or third parties authorized by

clients to operate their accounts, such as the client's investment advisor or

manager, arrange to be executed with a third-party broker. In connection with

such custody services, the Custody Units may also perform other ancillary

services, such as acting as a trustee and purchasing or selling RBC Shares upon

the direction of their clients or the clients' investment advisors or managers

(which may include effecting purchases or sales of shares in accordance with the

trustee's fiduciary obligations). The purchases of or bids for RBC Shares that

may be deemed to result from these custody-related activities may occur through

the facilities of the TSX and other equity marketplaces and in the United States

through the NYSE, based on best execution considerations. RBC believes that the

activities by the Custody Units described above accounted for less than 1% of the

average daily trading volume of RBC Shares on the TSX for the 2014 calendar

year and less than 1% of the average daily trading volume of RBC Shares on the

NYSE for the 2014 calendar year.

•

Stock Borrowing and Lending and Taking Collateral: The Stock Borrowing

and Lending Units borrow and lend securities, including RBC Shares, from and to

customers as part of stock lending transactions in the ordinary course of business.

In some circumstances, a customer may purchase RBC Shares from a third party

in anticipation of lending them to a Stock Borrowing and Lending Unit, or a

customer or fund manager may arrange for a third party to purchase RBC Shares

after the customer has borrowed them from a Stock Borrowing and Lending Unit.

In addition, the Collateral-Taking Units accept RBC Shares as collateral. In the

event that the borrower defaults on a loan, the Collateral-Taking Units may

foreclose on the collateral and in some circumstances dispose of it, including by

selling it in the market. The stock borrowing and lending and collateral-taking

activities described above are conducted solely outside of the United States,

primarily in Canada, the United Kingdom and Australia. The purchases of or bids

for RBC Shares that may be deemed to result from these stock borrowing and

lending and collateral-taking activities may occur through the facilities of the

TSX and other equity marketplaces and in United States through the NYSE, based

on best execution considerations. RBC believes that the activities by the Stock

Borrowing and Lending Units and the Collateral-Taking Units described above

accounted for less than 1% of the average daily trading volume of RBC Shares on

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the TSX for the 2014 calendar year and that the volume of transactions on the

NYSE has been minimal.

III.

•

Information Barriers: RBC has established information barrier policies and

procedures to prevent material non-public information from passing between the

sales/trading areas of RBC and its affiliates and other areas of RBC and its

affiliates. Accordingly, during restricted periods prior to announcements of

earnings results or other material developments that have not yet become public,

RBC's traders and sales force who conduct trading activities are generally able to

continue their market activities, although senior management may restrict such

activities in extraordinary circumstances. RBC will continue to maintain these

policies and procedures during the distribution related to the Acquisition.

•

Other activities: RBC and its affiliates conduct other market activities in RBC

Shares in the ordinary course of their business, such as publishing research reports

with respect to RBC and trading in RBC Shares or in RBC Share Derivatives. In

connection with the distribution related to the Acquisition, RBC and its affiliates

will comply with Regulation M, either by suspending market activities not subject

to exemptive relief during the relevant period (such as the publishing of research

reports) or by conducting those actions in accordance with an available exception

from Regulation M. Accordingly, RBC is not seeking relief from the Staff for

these activities.

The Acquisition

On January 22, 2015, RBC, City National and RBC USA Holdco

Corporation, a Delaware corporation and a direct, wholly-owned subsidiary of RBC

("HoldCo"), entered into an Agreement and Plan of Merger (the "Merger Agreement")

pursuant to which RBC will acquire City National. Under the Merger Agreement, City

National will merge with and into HoldCo, with HoldCo surviving the merger.

In connection with the Acquisition, City National's common stockholders

will be entitled to elect to receive the consideration in cash or RBC Shares, subject to

proration, equalizations and certain other limitations set forth in the Merger Agreement.

1.

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Each share of City National common stock that is converted into

the right to receive cash consideration will receive an amount in

cash equal to the "Per Share Amount." The Per Share Amount will

be calculated by dividing the "Closing Transaction Value" by the

number of shares of City National common stock outstanding at

completion of the Acquisition. Subject to certain adjustments and

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limitations as set forth in the Merger Agreement, the Closing

Transaction Value represents an aggregate value, calculated by

adding (1) the aggregate cash included in the Acquisition ($94.50

multiplied by 50% ofthe number of shares of City National

common stock outstanding at completion of the Acquisition

(subject to certain adjustments)) and (2) the aggregate number of

RBC Shares included in the Acquisition (41,358,212, as increased

based on increases in City National shares permitted to be issued

following execution of the Merger Agreement and decreased by

shares of City National, if any, cancelled in connection with the

Acquisition) multiplied by the volume weighted average RBC

Share price for the 10 trading days preceding the date of

completion ofthe Acquisition (the "Valuation Period").

ii.

Each share of City National common stock that is converted into

the right to receive stock consideration will receive a number of

RBC Shares equal to the Per Share Amount divided by the volume

weighted average RBC Share price for the Valuation Period.

As discussed below under "Canadian Market Regulation," market manipulation and

dissemination of false information to affect the prices of listed securities are prohibited

under Canadian law.

The Acquisition is subject to the approval of City National stockholders.

City National plans to mail the proxy statement/prospectus to its common stockholders as

soon as practicable following the declaration of effectiveness of the registration statement

referred to below, and the meeting of City National's stockholders to vote on whether to

approve the Acquisition is expected to occur between 10 and 60 business days from the

date of such mailing. In addition, under the Merger Agreement, an election form will be

mailed to City National stockholders approximately 35 days prior to the closing of the

Acquisition (the "Mailing Date"). The deadline by which a valid election may be made

on the election form is currently expected to be the day that is 30 days after the Mailing

Date. We refer to the period during which City National stockholders may make their

elections regarding cash or stock as the Election Period.

The RBC Shares to be delivered in the Acquisition distribution will be

registered under the Securities Act of 1933, as amended, and the rules and regulations

promulgated thereunder, pursuant to a registration statement on Form F-4. As noted

above, based on outstanding share information provided by City National as of January

22, 2015, RBC currently expects to issue approximately 41.36 million RBC Shares

(representing approximately 2.87% ofRBC Shares outstanding as of January 31, 2015)

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and, assuming the full exercise of all converted City National stock options and other

City National equity awards as described below, a maximum of approximately 44.19

million RBC Shares (representing approximately 3.06% ofRBC Shares outstanding as of

January 31, 20 15), as merger consideration in the Acquisition. Upon completion of the

Acquisition, all outstanding options to purchase shares of City National common stock

will be converted into options to purchase RBC Shares and all other City National equity

awards will be settled on the basis set forth in the Merger Agreement. Based on

information provided by City National, RBC currently expects that approximately 2.83

million RBC Shares will be issuable in respect of converted City National stock options

and other City National equity awards. All of the RBC Shares to be delivered in the

Acquisition and upon exercise of converted City National stock options and other City

National equity awards will be newly issued shares. In addition, an application will be

made to list on the TSX and the NYSE the RBC Shares issuable in the Acquisition and

upon exercise of converted City National stock options and other City National equity

awards.

IV.

Application of Regulation M

In connection with the Acquisition, RBC will distribute RBC Shares to

City National stockholders and, therefore, will be engaged in a "distribution" in the

United States for purposes of Regulation M. Because there will be a Valuation Period

and a stockholder election as to consideration, pursuant to Rule 100 of Regulation M

there will be three different restricted periods for the distribution (although the second

and third periods are expected to overlap). The first restricted period for the distribution

will begin on the day that the proxy statement/prospectus is first mailed to City National

stockholders and will end when the City National stockholder vote is completed (the

"First Restricted Period"). The second restricted period for the distribution will occur

during the Election Period (the "Second Restricted Period"). The third restricted period

for the distribution will begin one day prior to the commencement ofthe Valuation

Period and will end upon the completion ofthe Valuation Period, which will occur on the

date of the closing of the Acquisition (the "Third Restricted Period", and together with

the First Restricted Period and the Second Restricted Period, the "Restricted Period"). 6

The Market-Making Subsidiaries, the Brokerage Providers, the US

Brokerage Providers, the Asset Managers and other subsidiaries ofRBC may, from time

to time, purchase RBC Shares for their own accounts and/or the accounts of others and

6

See the Division of Market Regulation Staff Legal Bulletin No. 9: Frequently Asked Questions

About Regulation M (revised April 12, 2002), available at

http: //www.sec.gov/interps/legaVmrslb9.htm; Release 33-8511 (Dec. 13, 2014) (restricted period

for mergers, acquisitions, and exchange offers includes valuation and election periods).

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may recommend and exercise investment discretion with respect to the purchase of RBC

Shares. Depending upon the specific subsidiary and type of activity, these purchases may

occur on either a solicited or unsolicited basis and may be performed by the subsidiary

directly, through another RBC subsidiary or through an unaffiliated third party.

Accordingly, the RBC subsidiaries may be deemed to be "affiliated purchasers" of RBC,

as defined in Rule 100 of Regulation M. 7 Additionally, RBC Capital Markets is serving

as a financial advisor to RBC in connection with the Acquisition and therefore RBC

believes that it qualifies as a distribution participant subject to Rule 101 of

Regulation M. 8 The other affiliates described in this letter that constitute affiliated

purchasers, as well as RBC itself, would be subject to Rule 102 of Regulation M, and we

have assumed for purposes of the relief requested in this letter that RBC Capital Markets

would also be deemed to be subject to Rule 102.

Under Rule 102, RBC and its affiliated purchasers would not be permitted

to bid for or purchase, or attempt to induce any person to bid for or purchase, RBC

Shares during the Restricted Period, except to the extent that one of the specified

exceptions under the applicable rule is available. There are no exceptions available under

Rule 102 that would permit RBC and its affiliated purchasers to engage in the activities

described in this letter. Therefore, without the requested exemptive relief, RBC and its

affiliates would not be permitted to engage in their respective ordinary course financial

services activities during the Restricted Period.

The Market-Making Subsidiaries are significant market makers in listed

options on RBC Shares and significant participants in trading of other RBC Share

Derivatives, including in connection with providing expected services to their customers. 9

Certain divisions of RBC, as autonomous divisions of RBC, may not be "affiliated purchasers,"

but for purposes of this letter RBC has assumed that they may be deemed to be affiliated

purchasers under Regulation M.

Although a limited set of the activities for which exemptive relief is requested under this letter

could be permitted under Rule 101 of Regulation M to the extent effected by a distribution

participant, RBC respectfully requests exemptive relieffor all such activities in the event that RBC

Capital Markets was deemed not to be a distribution participant. We note that the investment

banking department of RBC Capital Markets, which is serving in the financial advisory role, is

subject to information barrier policies and procedures, which are in compliance with applicable

OSC regulations, to prevent material non-public information from passing between it and the

sales/trading areas of RBC and its affiliates (including the departments of RBC Capital Markets

for which relief is requested under this letter).

9

Derivatives on RBC Shares (other than securities futures) generally would not be "covered

securities" for the purpose of Rule 100 of Regulation M. See, e .g. , Release 34-38067 (Dec. 20,

1996), 62 FR 520, 524. Derivative market activities by RBC affiliates, however, might in some

cases be regarded as involving inducements to purchase RBC Shares. To avoid uncertainty, the

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Accordingly, if the Market-Making Subsidiaries are precluded from conducting ordinary

course market making and trading activities in RBC Share Derivatives, the application of

Regulation M could have adverse effects on the Canadian market for RBC Share

Derivatives. Additionally, ifRBC and RBC Dominion are prohibited from hedging their

derivatives or structured products and adjusting or terminating those hedges, they would

be exposed to market price movement in respect of positions established in the ordinary

course of business prior to commencement of the Restricted Period.

If they are restricted by Regulation M, the Brokerage Providers may be

unable to execute unsolicited brokerage orders submitted by their customers in the

normal course, or customer facilitation trades in the ordinary course, thereby forcing their

customers to take their orders elsewhere (with related delays and inconvenience) or to

refrain from completing ordinary course financial transactions. RBC believes that the

Brokerage Providers would be likely to lose a significant number of these customers if

they were prevented from providing them with customary facilitation services during the

Restricted Period.

Likewise, given the importance ofRBC Shares to the overall Canadian

securities market, to prohibit the Asset Managers from trading RBC Shares during the

Restricted Period (which, as noted above, would be limited to transactions in accordance

with an exemptive relief decision that RBC has received from the OSC and with the

investment mandate of the applicable Managed Account) would have a significant

adverse effect on their ability to manage their investments on behalf of their clients.

Additionally, the restrictions imposed by Regulation M make it more difficult for an

Asset Manager to meet its fiduciary duty to purchase, or to bid for, RBC Shares when

such actions are otherwise in the best interests of the Managed Accounts.

The purchase of RBC Shares by the Plan Facilitators in connection with

the Employee Plans are intended only to facilitate the grant of awards or exercises

pursuant to the terms of those plans. The Plan Facilitators purchase RBC Shares solely to

satisfy RBC's obligation to deliver shares based on pre-determined payroll deductions of

the employee or grants and exercises under the plans. RBC Dominion serves as the

purchaser in Canada solely because it is an in-house broker-dealer and, accordingly,

RBC's use ofRBC Dominion allows RBC to reduce the expense of engaging a third­

party agent. With respect to the deferred incentive programs, RBC Dominion enters into

total return swaps for RBC Shares solely to facilitate the grant of awards and to hedge

against unmatured notional share grants.

activities covered by this request for exemption include the RBC Share Derivatives trading and

hedging and other activities in RBC Shares described in this letter.

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Any related sales by employees exercising their stock options occur at the

discretion of those employees, who typically time the exercise of their options to realize

the value of options that would expire or to otherwise meet their own financial objectives.

RBC believes that it may place a significant burden on employees not to be able to

exercise their stock options or make a corresponding sale of shares during the Restricted

Period.

With respect to the DRIP, Sun Life and Computershare engage in open

market purchases, which are effected by RBC Dominion, solely to satisfy RBC's

obligation to deliver shares. The purchases are made solely in response to dividend

announcements of RBC. RBC believes that it would be disruptive to restrict the ability of

holders of RBC common and preferred shares to have their dividends reinvested pursuant

to the terms of the plan during an extended period of time. The activities related to the

Employee Plans and the DRIP have represented a small proportion of all trading in RBC

Shares, and RBC believes that they will not have a significant effect on the market price

of RBC Shares.

The marketing and sale of ftmds that include RBC Shares by the Banking

Units would generally qualify as basket transactions for purposes of the exemption

provided by Rule 101(b)(6). RBC believes that all or substantially all of the ftmds

contain a minimum of 20 securities, and RBC Shares do not represent more than 5% of

the value of such ftmds. The Banking Units may not rely on the exception for basket

transactions because they are affiliated purchasers of the issuer. However, RBC believes

that as RBC Shares represent such a limited percentage of the value of, and the number of

securities included in, each fund and the Banking Units market and sell these ftmds in the

ordinary course of business, the marketing and sale of these ftmds is unlikely to have a

significant effect on the market price ofRBC Shares. Moreover, the financial planning

and investment advisory activities of the Banking Units do not constitute bids for or

purchases of RBC Shares, and RBC believes that it is unlikely that such activities would

constitute inducements to purchase RBC Shares.

RBC Estate and Trust Services have fiduciary or similar duties under

applicable local law to invest the assets of the Estates and Trusts in the best interests of

their beneficiaries. Accordingly, RBC Estate and Trust Services would be prohibited by

law from trading in RBC Shares unless they believed that such trading was in the best

interests ofthe beneficiaries ofthe Estates and Trusts. The activities ofthe RBC Estate

and Trust Services historically have represented a small proportion of all trading in RBC

Shares, and RBC believes that these activities will not have a significant effect on the

market place of RBC Shares.

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RBC believes that the Custody Units' services in arranging settlement of

trades do not constitute bids for, purchases of or inducements to make bids for or

purchases of RBC Shares. In addition, any purchases or sales of RBC Shares that the

Custody Units may engage in as a trustee are incidental to their function of providing

custodial services to their clients. The Custody Units do not have any discretion as to

such purchases or sales and execute transactions either in accordance with trustee's

fiduciary obligations or upon specific directions of clients or their portfolio managers.

The activities of the Stock Borrowing and Lending Units and the

Collateral-Taking Units do not constitute bids for, purchases of or inducements to make

bids for or purchases of RBC Shares in the traditional sense. Nonetheless, RBC believes

that in some circumstances (1) the activities of the Stock Borrowing and Lending Units

may be deemed to be attempts to induce a bid or purchase because a customer may

purchase RBC Shares from a third party in anticipation of lending them to a Stock

Borrowing and Lending Unit, or a customer may arrange for a third party to purchase

RBC Shares after the customer has borrowed them from a Stock Borrowing and Lending

Unit; and (2) the activities of the Collateral-Taking Units may be deemed to be attempts

to induce a bid or purchase because RBC may foreclose on collateral that includes RBC

Shares and dispose of it, including by selling it in the market. RBC therefore seeks

exemptive relief in order to continue to conduct these activities during the Restricted

Period. It would place a significant burden on customers not to be able to borrow RBC

Shares from any Stock Borrowing and Lending Unit, and as with the unsolicited

brokerage activities described above, RBC believes that the Stock Borrowing and

Lending Units would likely lose a significant number of customers if the Stock

Borrowing and Lending Units could not continue to provide customary stock lending

services. Similarly, if borrowers could not pledge their RBC Shares to the Collateral­

Taking Units, the borrowers would be burdened with finding either other assets to pledge

or other sources of debt. Because stock lending transactions are intended only to help

facilitate customer transactions and do not themselves involve the sale or purchase of

RBC Shares, and Collateral-Taking Units would only sell RBC Shares following a

default by the borrower, RBC believes that it is unlikely that the activities of Stock

Borrowing and Lending Units and the Collateral-Taking Units would have a significant

effect on the market price of RBC Shares.

The market making, derivatives and structured notes hedging, brokerage,

asset management, plan-related activities, banking-related activities, estates and trusts

services, custody-related activities and stock borrowing, lending and taking of collateral

described in this letter are also important aspects ofRBC's business as a major Canadian

financial institution, are standard activities for Canadian financial institutions and are

permissible under home country law under comparable circumstances (including, where

applicable, pursuant to relevant exemptive relief). Accordingly, interrupting these

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activities for such an extended period could also have an adverse impact on RBC's

business, including its ability to properly manage its risks, and could result in loss of

business due to customer and employee dissatisfaction.

RBC Shares would easily qualify as actively traded securities that are

exempt under Rule 101(c)(1), with a worldwide average daily trading volume value for

the Prescribed Period of approximately $24 7.2 million, a worldwide average daily trading

volume for the 2014 calendar year of $170.9 million and an estimated public float value

(as of October 31, 2014) of approximately $94.4 billion. Regulation M normally would

not interfere with market activities in actively traded securities, such as RBC Shares.

However, because the RBC affiliates may constitute affiliated purchasers of the issuer,

they may not rely on the actively traded securities exception to do what brokers for large

United States issuers are normally allowed to do during distributions by those issuers.

Finally, RBC believes that the risk of market manipulation by affiliates of

RBC is further limited by the information barrier policies and procedures and fiduciary

duties described above, the fact that the market activities that are the subject of this

request for exemptive relief are ordinary course market activities of RBC and its affiliates

rather than activities commenced or managed in contemplation of the Acquisition and the

fact that applicable Canadian law prohibits market manipulation and dissemination of

false information to affect the prices of listed securities. As discussed further below

under "Canadian Market Regulation," the activities for which exemptive relief is being

requested are subject to and will be conducted in accordance with applicable Canadian

law (including, where applicable, pursuant to relevant exemptive relief). Applicable

Canadian law provides important safeguards against the risk of the types of abuse that

Regulation M was designed to prevent.

For these reasons, RBC asks the Staff to provide an exemption from

Regulation M that would allow RBC and its affiliates to continue to engage in the

ordinary course market activities described above during the Restricted Period, as

permitted under market practice and applicable Canadian law.

V.

Canadian Market Regulation

Regulation ofRBC and its Subsidiaries

RBC, as a Canadian chartered bank listed in Schedule I of the Bank Act

(Canada), and its affiliates, such as the Market-Making Subsidiaries, the Brokerage

Providers, the US Brokerage Providers and the Asset Managers, that, to the extent

applicable, are either registered as dealers and/or advisors under the securities legislation

of all provinces and territories of Canada or participate in Canadian capital markets under

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an exemption from such requirements, are subject to regulatory oversight by the OSC

and/or the securities regulatory authorities of all other provinces and territories of

Canada, and are required to comply with those requirements of Ontario securities law that

are summarized below, including OSC Rule 48-501 -Distribution Restrictions ("OSC

Rule 48-501 "). 10

OSC Rule 48-501 is functionally the Canadian securities regulatory

equivalent of Regulation M, except that OSC Rule 48-501 already provides for certain

exceptions covering some of the exemptive relief requested herein, all as more

particularly set out below.

Ontario Securities Law

The principal regulatory authority in Ontario is the OSC. Like the

securities regulatory authorities in the other provinces and territories, the OSC is

responsible for regulating a variety of different market participants that include

investment fund managers, dealers, advisors, issuers of securities, investment funds, self­

regulatory organizations, clearing agencies and marketplaces, including exchanges and

alternative trading systems. The principal source of such regulation is the Securities Act

(Ontario) (the "Ontario Act") 11 which grants the OSC extensive authority to enforce its

provisions.

In addition to the regulation of the market participants referred to above,

the Ontario Act regulates, among other things, the conduct of takeover bids and issuer

10

Due to the impracticality of attempting to summarize the securities laws of all Canadian provinces

and territories, this summary has been limited to a consideration ofthe securities laws of Ontario

for three reasons. First, Ontario has the most significant capital market in Canada and the greatest

number of market participants . As a result, the OSC is one of the most influential members of the

association established by the securities regulatory authorities of Canada's provinces and

territories, referred to as the Canadian securities administrators, and Ontario's securities laws have

a broader application than the securities laws of the other jurisdictions. Second, Ontario's

securities laws have tended to be at least as onerous as the securities laws of the other jurisdictions

and compliance with the standards established by such laws has therefore generally served to

ensure compliance with the securities laws of the other provinces and territories. Third, Ontario's

securities laws have become increasingly representative of the securities laws ofthe other

provincial and territorial jurisdictions as a result of the regulatory uniformity that has been

achieved through the publication of national instruments by the Canadian securities

administrators.

II

The term "Ontario Act" includes, for purposes of this letter, any relevant regulations and rules

made under the Ontario Act, including any national instrument or multilateral instrument adopted

in Ontario pursuant to an OSC rule.

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bids as well as trading by insiders. 12 The Ontario Act prohibits insider trading by

providing that no person or company in a special relationship with a reporting issuer 13

shall purchase or sell securities of the reporting issuer with the knowledge of a material

fact 14 or material change 15 that has not been generally disclosed. It also provides that no

reporting issuer and no person or company in a special relationship with a reporting

issuer shall inform, other than in the necessary course of business, another person or

company of a material fact or material change with respect to the reporting issuer before

the material fact or material change has been generally disclosed. For purposes of these

trading and tipping prohibitions, a person or company in a special relationship includes a

person or company that is an insider or affiliate 16 of the reporting issuer. Trading with

knowledge of the trading activity of a managed account is also prohibited in certain

circumstances. According to the Ontario Act, any person or company having information

concerning the investment program of a managed account, including a mutual fund, is

also prohibited from purchasing or selling the securities of an issuer for the person or

company's own account where the portfolio securities ofthe managed account include

12

The term "insider" is defmed in section 1(1) of the Ontario Act to include, in part, every director

or officer of a reporting issuer, such as RBC, and every director or officer of a company that is a

subsidiary of a reporting issuer, such as the Market-Making Subsidiaries, the Brokerage Providers,

the US Brokerage Providers and the Asset Managers.

13

The term "reporting issuer" is defined in section 1(1) of the Ontario Act to mean, in part, an issuer

that has qualified its securities for distribution pursuant to a prospectus under the Act or that has

had its securities listed and posted for trading on a recognized stock exchange. RBC is a reporting

issuer under the Ontario Act.

14

The term "material fact" is defined in section 1(1) of the Ontario Act to include, in part, a fact that

would reasonably be expected to have a significant effect on the market price or value of

securities.

IS

The term "material change" is defined in section 1(1) of the Ontario Act to mean a change in the

business, operations or capital of an issuer that would reasonably be expected to have a significant

effect on the market price or value of any ofthe securities ofthe issuer.

16

A company is deemed to be an affiliate of another company if one of them is the subsidiary of the

other, or if both are subsidiaries of the same company, or each of them is controlled by the same

person or company. A company is deemed to be a subsidiary of another company if, among other

things, it is controlled by that other company, it is controlled by that other company and one or

more companies each of which is controlled by that other company or it is a subsidiary of a

company that is the other company's subsidiary. A company is deemed to be controlled by

another company, or by two or more companies, if the voting securities of the frrst company

carrying more than 50% of the votes for the election of directors are held for the benefit of the

other company or companies and the votes carried by such securities are entitled to elect a

majority of the directors ofthe frrst company.

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securities of that issuer and the information is used by the person or company for its own

advantage.

The Ontario Act also regulates conflicts of interest by prohibiting certain

self-dealing transactions and by prescribing disclosure requirements for transactions that

involve related issuers of registrants such as the Market-Making Subsidiaries, the

Brokerage Providers, the US Brokerage Providers or the Asset Managers that are

registered under the Ontario Act. Certain of these prohibited transactions and disclosure

requirements are summarized below.

As the result of self-dealing restrictions, an investment fund is prohibited

from knowingly making an investment in, among others, any person or company who is a

substantial security holder of the investment fund, its management company or its

distribution company. 17 RBC would be considered a substantial security holder of the

Asset Managers, and investment funds managed by the Asset Managers would therefore

be prohibited from making an investment in RBC in the absence of any exemption. A

mutual fund that is a reporting issuer is also generally prohibited from purchasing

securities from, or selling securities to, the manager of the fund, such as an Asset

Manager, or any affiliate of the manager, such as RBC, a Market-Making Subsidiary, a

Brokerage Provider, or a US Brokerage Provider, unless the price for the security is not

more than the ask price in the case of a purchase, or less than the bid price in the case of a

sale, all as reported on a public quotation system in common use.

The Ontario Act also prohibits a portfolio manager from knowingly

causing any investment portfolio that is managed by it to invest in any issuer in which a

"responsible person" is an officer or director unless the specific fact is disclosed to the

portfolio manager's client and the client's written consent is obtained prior to the

investment. As a result of the definition of the term "responsible person", this self­

dealing restriction serves to preclude any Asset Manager registered under the Ontario Act

from causing any of its clients to invest in RBC without the client's prior written consent

to do so if any director or officer of the Asset Manager or any director of officer of an

affiliate of the Asset Manager that participates in the formulation of, or has access prior

to implementation to, any investment decisions that are made on behalf of, or any advice

that is given to, the client is also a director or officer of RBC.

Registrants are also required to identify any material conflicts of interest

that may exist or arise between the firm and a client and to provide a description of any

17

For such purpose, a person or company is considered to be a substantial security holder of an

issuer if that person or company owns beneficially voting securities to which are attached more

than 20% of the voting rights attached to all voting securities of the issuer.

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such conflicts that a reasonable investor would be expected to be informed of before

purchasing or selling any securities for the client.

Investment fund managers are also required under the Ontario Act to refer

any conflict of interest matter relating to a publicly traded investment fund to the

independent review committee of such investment fund.

As noted above, OSC Rule 48-501 is the Canadian securities regulatory

equivalent of Regulation M. OSC Rule 48-501 prohibits (subject to certain exceptions) a

dealer-restricted person from trading restricted securities during the restricted period in

relation to a distribution of an issuer's securities for its own account, an account over

which it exercises control or direction or an account that it knows, or ought reasonably to

know, is the account of an issuer-restricted person. In the context of the distribution of

RBC Shares contemplated by the Acquisition, RBC Capital Markets is a dealer-restricted

person under OSC Rule 48-501 because RBC has engaged RBC Capital Markets as its

financial advisor and RBC Capital Markets' compensation in this engagement depends

on the outcome of the transaction. RBC Dominion is also a dealer-restricted person under

OSC Rule 48-501 as it is a related entity ofRBC Capital Markets and it engages in

certain of the activities described in paragraph (b )(iii) of the definition of "dealer­

restricted person" under OSC Rule 48-501.

A dealer-restricted person is comparable to a "distribution participant"

under Regulation M and an issuer-restricted person is comparable to an "issuer" under

Regulation M. The exemptions that are available to a dealer-restricted person when

trading for its own account, or an account over which it exercises control or direction,

include an exemption that permits the dealer-restricted person to trade "highly-liquid

securities" during the restricted period as well as an exemption that permits the dealer­

restricted person to engage in market stabilization and market-balancing activities for the

purpose of maintaining a fair and orderly market during the restricted period. For

purposes ofOSC Rule 48-501, the term "highly-liquid security" is defined to mean a

listed security or quoted security that has traded, in total, on one or more marketplaces as

reported on a consolidated market display during a 60-day period ending not earlier than

10 days prior to the commencement of the restricted period: (i) an average of at least 100

times per trading day and (ii) with an average trading value of at least C$1 ,000,000 per

trading day; or is subject to Regulation M and is considered to be an "actively-traded

security" for purposes of Regulation M.

OSC Rule 48-501 (in particular, Section 2.2) also prohibits (subject to

certain exceptions) an issuer-restricted person from bidding for or purchasing a restricted

security for the account of an issuer-restricted person or an account over which the issuer

restricted person exercises direction or control, or to attempt to induce or cause any

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person or company to purchase any restricted security. One of the exceptions to the

trading restrictions placed on issuer-restricted persons in OSC Rule 48-501 is in

connection with the exercise of an option, right, warrant or similar contractual

arrangement held or entered into by the issuer-restricted person prior to the

commencement of the restricted period (the "Previous Rights Exception"). Notably,

however, there is no exception to the issuer-restricted person trading restrictions in

respect of"highly-liquid securities". Accordingly, while RBC employees that are

insiders 18 ofRBC ("Insiders") can exercise their stock options to purchase RBC Shares

by reliance on the Previous Rights Exception, RBC and its affiliates (except as described

below, other than RBC Dominion and RBC Capital Markets, which are also dealer­

restricted persons under OSC Rule 48-501) cannot perform any of the ordinary course

activities described above in this application without exemptive relief from OSC Rule 48­

501. In particular, without exemptive relief in Ontario, RBC Dominion cannot purchase

any RBC Shares on behalf of affiliates of RBC or Insiders in connection with the Share

Ownership Plans or the Managed Accounts.

The above-described exemptions that are generally available to dealer­

restricted persons are not available to a dealer-restricted person when acting for an

account which the dealer-restricted person knows, or reasonably ought to know, is an

account of an issuer-restricted person. Accordingly, although RBC Dominion and RBC

Capital Markets may purchase RBC Shares for either their own account or an account

over which they exercise direction or control throughout the restricted period, and they

may attempt to induce or cause persons or companies to purchase RBC Shares during the

restricted period, they may not purchase RBC Shares for an account of an issuer­

restricted person (including, in respect of the Acquisition, RBC, another affiliate of RBC

or an Insider) as a result of subsection 2.1(a) ofOSC Rule 48-501.

RBC Dominion and RBC Capital Markets have received a decision from

the OSC exempting them from subsection 2.l(a) ofOSC Rule 48-501 to permit them to

engage in certain limited, ordinary course trading activities during the restricted period,

namely, the bidding for or purchasing ofRBC Shares:

• for the account of an Insider when such bid or purchase is made in accordance

with the terms and conditions of an Employee Plan or the DRIP;

• for the account of an Insider, excluding an Insider who in the ordinary course

receives or has access to information as to material facts or material changes

concerning RBC before such facts are generally disclosed and who, directly or

18

See n.l2 above.

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indirectly, exercises, or has the ability to exercise, significant power or influence

over the business, operations, capital or development ofRBC (any such excluded

Insider, a "Reporting Insider" and Insiders, excluding Reporting Insiders, the

"Non-Reporting Insiders") or an account over which a Non-Reporting Insider

exercises direction or control;

•

for the account ofRBC in connection with RBC's normal course issuer bid

("NCIB"); and

•

for the account of RBC or any of its affiliates in furtherance of any of the

foregoing.

In addition, RBC, RBC Dominion, RBC Capital Markets and certain other

ofRBC's affiliates have received a decision from the OSC exempting RBC, its affiliates

(other than RBC Dominion and RBC Capital Markets) and the Insiders, as applicable,

from section 2.2 of OSC Rule 48-501 to permit them to engage in the following limited,

ordinary course trading activities:

•

the bidding for or purchasing of RBC Shares by RBC and its affiliates, including

the Asset Managers, on behalf of a Managed Account;

•

the bidding for or purchasing of RBC Shares by RBC and its affiliates, including

the Plan Facilitators, on behalf of (i) any Insider that is a participant in an

Employee Plan, or (ii) any Managed Account or Insider that is a participant in the

DRIP, provided that in each case such bid or purchase is in accordance with the

terms and conditions of the relevant Employee Plan or the DRIP, as the case may

be;

•

the bidding for or purchasing of RBC Shares by RBC and its affiliates, including

the Banking Units, in connection with the provision of retail and commercial

banking services;

•

the bidding for or purchasing of RBC Shares by RBC and its affiliates, including

the RBC Estate and Trust Services, in connection with the provision of Estates

and Trusts services;

•

the bidding for or purchasing of RBC Shares by RBC and its affiliates, including

the Custody Units, in connection with the provision of custody services;

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•

the bidding for or purchasing of RBC Shares by RBC and its affiliates, including

the Stock Borrowing and Lending Units and the Collateral-Taking Units, in

connection with the provision of securities lending and borrowing services;

•

the bidding for or purchasing of RBC Shares by an Insider in accordance with the

terms and conditions of an Employee Plan or the DRIP;

•

the bidding for or purchasing ofRBC Shares by a Non-Reporting Insider for the

account of such Non-Reporting Insider or an account over which such Non­

Reporting Insider exercises direction or control;

•

the bidding for or purchasing ofRBC Shares by RBC and its affiliates, including

the Market-Making Subsidiaries (but excluding RBC Dominion and RBC Capital

Markets), the Brokerage Providers (but excluding RBC Dominion) and the US

Brokerage Providers (but excluding RBC Capital Markets), in connection with the

provision of market making, trading facilitation, hedging, index-related

adjustments or brokerage services;

•

the bidding for or purchasing of RBC Shares by RBC in connection with RBC' s

NCIB; and

•

attempting by the Bank and its affiliates to induce or cause any person or

company to purchase RBC Shares in furtherance of any of the foregoing.

Investment Industry Regulatory Organization ofCanada

The trading activity of those who trade securities through the TSX is

subject to regulations and rules promulgated by IIROC, including the Universal Market

Integrity Rules ("UMIR"). 19

Each ofRBC's affiliates that is a member ofiiROC, such as RBC

Dominion, is also subject to regulatory oversight by IIROC and is required to comply

19

IIROC is recognized as a self-regulatory organization by the securities regulatory authorities of all

provinces of Canada. Its responsibilities include the regulation of securities trading and market­

related activities of participants on Canadian equity marketplaces through, among other things, the

administration and enforcement of a common set of market integrity rules (i.e., UMIR). The

Canadian equity marketplaces that are currently regulated by IIROC include the TSX; TSX

Venture Exchange; Canadian Securities Exchange; Omega A TS; Alpha Exchange; Bloomberg

Trade book Canada; Chi-X Canada; CX2 Canada A TS; Instinet Canada Cross Limited; Liquidnet

Canada Inc.; Lynx A TS; MATCH Now and TMX Select.

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with the by-laws, rules and policies ofiiROC. As a participating organization of the

TSX, RBC Dominion is also required to comply with the provisions of UMIR.

UMIR requires marketplace participants, such as RBC Dominion, to

transact business openly and fairly and in accordance with just and equitable principles of

trade 20 and it prohibits participants from directly or indirectly, engaging in, or

participating in the use of, any manipulative or deceptive method, act or practice in

connection with any order or trade on a marketplace.Z 1 UMIR also imposes best

execution22 and best price 23 obligations on participants and it prohibits participants from

frontrunning. 24 Such rules are directly applicable to IIROC members that are participants

in a Canadian exchange or ATS, such as RBC Dominion, but are not directly applicable

to RBC Capital Markets, as it is not a participant in a Canadian exchange or an ATS.

UMIR section 7.7 (Trading During Certain Securities Transactions)

("UMIR 7.7") also imposes trading restrictions, similar to those imposed by OSC Rule

48-501, on marketplace participants, such as RBC Dominion, in the context of certain

transactions. However, in the context of the Acquisition, UMIR 7.7 will not apply to

RBC Dominion because RBC Dominion has not been engaged by RBC as a soliciting

dealer or financial advisor on a success-fee basis.

VI.

Relief Requested

Pursuant to Rules 101 (d) and 102(e) of Regulation M, RBC is seeking

exemptive relief from the application ofRules 101 and 102 ofRegulation M to permit

RBC and its affiliates to continue to engage in the market making, derivatives and

structured notes hedging, brokerage, customer facilitation, asset management, plan­

related activities, banking-related activities, estates and trusts services, custody-related

activities and stock borrowing, lending and taking of collateral described in Section II of

this letter during the Regulation M Restricted Period. These activities would be

conducted in the ordinary course of business and not for the purpose of facilitating the

Acquisition. The activities would (subject to the requested relief and, where applicable,

20

UMIR section 2.1 ( 1).

21

UMIR section 2.2(1).

22

UMIR section 5.1.

23

UMIR section 5.2.

24

UMIR section 4.1.

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applicable relief received from Canadian regulators) be conducted in accordance with all

applicable law, all as described in this letter.

As a condition to the relief being requested, RBC would undertake to

include disclosure in the proxy statement/prospectus that will be distributed to City

National shareholders. The disclosure will be substantially similar to the following:

Since the announcement ofthe merger, RBC and certain of its affiliates

have engaged, and intend to continue to engage throughout the proxy

solicitation period, in various market making, derivatives and structured

notes hedging, brokerage and facilitation trading, asset management, plan­

related activities, banking-related activities, estates and trusts services,

custody-related activities and stock borrowing, lending and taking of

collateral, involving RBC common shares outside the United States (and,

to a limited extent, within the United States). Among other things, RBC

or one or more of its affiliates intends to engage in trades in RBC common

shares and/or related derivatives for its own account and the accounts of

its customers (and, to the extent described below, its employees) for the

purpose of hedging their positions established in connection with the

trading of certain derivatives relating to RBC common shares, hedging

RBC's economic exposure arising from the issuance of structured notes,

hedging RBC's exposure in respect of positions in its market making

obligations related to certain exchange traded funds, effecting brokerage

transactions for its customers and other customer facilitation transactions

in respect ofRBC common shares, and effecting delivery ofRBC

common shares as required pursuant to certain ofRBC's benefit or

compensation plans for employees. Further, certain ofRBC's asset

management affiliates may buy and sell RBC common shares, or ETFs,

funds or indices including RBC common shares, outside the United States

(and, in the case of certain asset management activities, within the United

States) as part of their ordinary, discretionary investment management

activities on behalf of their customers or publicly traded funds managed

by them. Certain ofRBC's affiliates may continue to (a) engage in the

marketing and sale to customers of funds that include RBC common

shares, providing investment advice and financial planning guidance to

customers that may include information about RBC common shares, (b)

transact in RBC common shares as trustees and/or personal representatives

of trusts and estates, (c) provide custody services relating to the RBC

common shares and (d) engage in the borrowing and lending of RBC

common shares, as well as accepting RBC common shares as collateral for

loans. These activities occur both outside and inside the United States and

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the transactions in RBC common shares may be effected on the Toronto

Stock Exchange, the New York Stock Exchange, other exchanges or

alternative trading systems and in the over-the-counter market. The

foregoing activities could have the effect of influencing the market price

of RBC common shares. RBC has sought certain exemptive relief from

the SEC in relation to Regulation M under the Exchange Act and from the

Ontario Securities Commission in relation to OSC Rule 48-501 Trading

During Distributions, Formal Bids And Share Exchange Transactions, in

order to permit RBC and certain of its affiliates to engage in the foregoing

activities in the ordinary course during the proxy solicitation period.

As a further condition to the relief being requested, RBC will undertake to

keep records of the date and time when any RBC Shares are purchased or sold, the

market in which the purchase or sale is effected, the amount of RBC Shares purchased or

sold and the price of the purchase or sale, for each purchase or sale of RBC Shares that

any RBC affiliates make during the Restricted Period (this information with respect to

purchases or sales will not include any client-specific data, the disclosure of which is

restricted under applicable law). RBC will maintain such records for a period of two

years following the completion of the distribution related to the Acquisition. Upon the

written request of the Director of the Division of Trading and Markets of the SEC, RBC

will make a copy of the relevant records described above available at the SEC's offices in

Washington, D.C. within 30 days.

In connection with the relief requested by RBC in this letter, please note

that substantially similar exemptive relief from Rule 101 and/or Rule 102 of Regulation

M was granted with respect to: Banco Santander, S.A. under your exemptive letters of

January 6, 2015 and September 18, 2014; Banco Bilbao Vizcaya Argentaria, S.A. under

your exemptive letter ofNovember 17, 2014; UBS AG under your exemptive letter of

October 7, 2014; Deutsche Bank Aktiengesellschaft under your exemptive letter of June

4, 2014; Barclays PLC under your exemptive letter of July 31, 2013; Bank of Montreal

under your exemptive letter of April 8, 2011; Banco Bilbao Vizcaya Argentaria, S.A.

under your exemptive letter of October 28, 2010; Deutsche Bank Aktiengesellschaft

under your exemptive letter of September 16, 2010; the Toronto-Dominion Bank under

your exemptive letter of August 19, 2010; lNG under your exemptive letter ofNovember

19, 2009; Shinhan Financial Group Co., Ltd. under your exemptive letter of March 5,

2009; Banco Santander, S.A. under your exemptive letter of December 22, 2008; and the

Toronto-Dominion Bank under your exemptive letter of December 21, 2007.

*

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If you have any questions or comments with respect to any of the matters

discussed in this letter or require any additional information, please contact the

undersigned at (212) 558-3876.

Very truly yours,

QL£()tkr)

Robert E. Budkll.olz

(Enclosures)

cc:

Anthony Pagano

Catherine Stephen

Matthew Bassani

Shaine Pollock

(Royal Bank of Canada)

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