The Securities Commission granted Canoe Financial LP and its managed mutual funds (the Funds) an exemption from certain derivative cover requirements under National Instrument 81-102 Investment Funds (NI 81-102). This exemption allows the Funds to engage in specific derivative transactions without adhering to the cover requirements typically mandated by sections 2.8(1)(d), 2.8(1)(e), and 2.8(1)(f) of NI 81-102. The relief permits:
1. **Short Derivatives**: Funds can maintain short derivative positions up to 20% of their net asset value, provided they meet certain cash cover requirements.
2. **FX Derivatives**: Funds can substitute currency risks without increasing overall exposure, ensuring the aggregate currency exposure does not exceed the fund’s net asset value.
3. **Interest Rate Derivatives**: Funds can manage interest rate and duration risks by substituting one risk for another without increasing overall exposure.
The decision is based on the belief that these measures will allow the Funds to better achieve their investment objectives without increasing leverage or risk. The Alberta Securities Commission acted as the principal regulator, and the decision is effective across all Canadian jurisdictions except Alberta and Ontario. The exemption is subject to conditions ensuring the Funds’ strategies align with their investment objectives and maintain appropriate risk management practices.