The Securities Commission granted an investment fund, Bitcoin Split Trust, an exemption from certain margin deposit limits under National Instrument 81-102 Investment Funds (NI 81-102). The fund, managed by 3iQ Corp., is structured as a non-redeemable investment trust and aims to provide its holders with fixed quarterly cash interest payments and the opportunity to participate in the performance of bitcoin on a leveraged basis.
The exemption allows the fund to deposit up to 35% of its net asset value (NAV) as margin with any one futures commission merchant in Canada or the United States, and up to 70% of its NAV in total with all such merchants. This is in contrast to the standard limit of 10% of NAV for transactions involving specified derivatives, as stipulated by sections 6.8(1) and 6.8(2)(c) of NI 81-102.
The Commission’s decision was based on representations by the Filer, including the fund’s structure, investment objectives, and risk management practices. The exemption was granted on the condition that the fund’s margin deposits are held in segregated accounts and are not available to satisfy claims against the dealers by their creditors.
The decision was made under the securities legislation of Ontario, with the Ontario Securities Commission acting as the principal regulator. The Filer indicated reliance on Multilateral Instrument 11-102 – Passport System in multiple Canadian jurisdictions. The exemption is subject to the fund adhering to the specified conditions regarding margin deposits.