NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Years ended December 31, 2005 and 2004 (in thousands of dollars, except per share amounts)

19. LONG-TERM INCENTIVE PLAN:

Effective January 1, 2001, TSX Inc. introduced an interim bonus plan (in lieu of a long-term incentive plan) for officers and director level employees of TSX Inc. and its affiliates.  The interim bonus plan provided eligible employees with a deferred award based on the annual financial performance of the Company.  Amounts earned in 2001 were converted into deferred share units for executive officers and restricted share units for other participants in conjunction with the public offering of the Company, with each deferred share unit or restricted share unit having an initial value equal to the price of one common share of the Company in the public offering.  Amounts earned in 2002 were converted into deferred share units or restricted share units based on the share value, with each deferred share unit or restricted share unit having a value based on the value of one common share of the Company on December 31, 2002.

In general, deferred share units vest in accordance with the same schedule contemplated by the existing interim bonus plan, being, for deferred share units issued on conversion of 2001 amounts, one-third on each of December 31, 2002, 2003 and 2004, and, for deferred share units issued on conversion of 2002 amounts, one-third on each of December 31, 2003, 2004 and 2005, but can only be redeemed upon termination of employment or retirement.  Restricted share units vest in accordance with the same three-year vesting schedule described above and were redeemed at the end of the schedule, or in certain circumstances, on an earlier date.  The deferred share unit plan and the restricted share unit plan were established for the purpose of converting amounts earned under the interim bonus plan.  No shares will be issued or transferred on redemption of deferred share units or restricted share units; only cash payments will be made. Each participant may elect to receive their incentive compensation, in whole or in part, in the form of deferred share units.

In January, 2004 the Board approved a long-term incentive plan which provides for the granting of restricted share units ("RSUs”). The amount of the award payable at the end of three years will be determined by the total shareholder return at the end of the three year period. Total shareholder return represents the appreciation in share price plus dividends paid on a share, measured at the time RSUs vest.

The Company records its obligation under the plan, if any, in the period in which the award is earned.  As at December 31, 2005, $18,398 (2004 - $11,674) has been accrued and is included in accounts payable and accrued liabilities and other liabilities.  The Company has purchased derivative financial instruments to effectively hedge against the impact of its share price fluctuations on the non-performance based portion of the long-term incentive plan (note 4).