The Securities Commission has granted an exemption to a financial management firm from certain self-dealing restrictions under National Instrument 31-103 (NI 31-103), specifically section 13.5(2)(b), which prohibits registered advisers from causing investment portfolios they manage to trade securities with associated portfolios. This exemption allows for:
1. Inter-fund trades between pooled funds managed by the firm and discretionary accounts managed by the firm, provided these trades are consistent with the investment objectives of the funds or accounts, have been approved by an independent review committee (IRC) or equivalent, and occur at the current market price or the last sale price.
2. In-specie purchases and redemptions of fund units or shares using portfolio securities between managed accounts and pooled funds, with the condition that the managed account client has authorized such transactions, the IRC has approved the transaction, and the next account statement describes the securities and their value.
3. In-specie purchases and redemptions of fund units or shares using portfolio securities between pooled funds, under the oversight of the IRC and without compensation to the filer.
The exemption is subject to several conditions, including IRC approval, consistency with investment objectives, proper documentation, and valuation of securities at market price. The decision also allows for inter-fund trades involving exchange-traded securities to be executed at the last sale price as defined in the Universal Market Integrity Rules.
The Commission’s decision is based on the belief that the exemption will benefit the funds and managed accounts by providing cost and timing efficiencies, and that the transactions will be conducted in the best interests of the clients. The exemption is granted under the authority of the applicable legislative provisions, including sections 13.5(2)(b) and 15.1 of NI 31-103, and is subject to the conditions outlined in the decision.