The Securities Commission granted an exemption from certain requirements of National Instrument 81-102 Investment Funds (NI 81-102), specifically paragraphs 15.3(4)(c) and (f), to allow funds to reference performance ratings and awards from Fundata and Lipper in their sales communications. This exemption is subject to conditions and is based on the understanding that these ratings and awards provide valuable, objective insights to investors.
The key reasons for the exemption include the inability of the current ratings to meet the matching requirement of NI 81-102, which necessitates performance ratings for each standard performance data period, and the timing restrictions for the publication of ratings in sales communications. The FundGrade A+ Awards and Lipper Awards are based on proprietary methodologies that do not align with the standard periods defined in NI 81-102, and the results are published on a schedule that does not fit within the 45-day and three-month limits for advertisements and other sales communications, respectively.
The exemption allows the use of these ratings and awards in sales communications with the following conditions:
1. Compliance with Part 15 of NI 81-102, except as specified in the exemption.
2. Inclusion of specific disclosures in sales communications, such as the award category, number of funds in the category, ranking entity name, period and ending date of the rating, and a statement that ratings are subject to change monthly.
3. A brief overview of the FundGrade A+ Award or Lipper Award, and the meaning of the ratings.
4. Reference to the rating entity’s website for more details on the methodology.
5. The awards referenced must not be older than 365 days from the date of the sales communication.
6. The ratings and awards must be based on performance comparisons within categories established by the Canadian Investment Funds Standards Committee (CIFSC) or its successor.
The decision was made by the Ontario Securities Commission, acting as the principal regulator under the Process for Exemptive Relief Applications in Multiple Jurisdictions, and is applicable across Canadian jurisdictions.