The Securities Commission has granted an exemption to Tralucent Asset Management Inc. (the Filer) on behalf of the Tralucent Global Alt (Long/Short) Equity Fund (the Existing Fund) and any future funds managed by the Filer that are mutual funds or alternative mutual funds. This exemption allows these funds to deposit portfolio assets with a borrowing agent that is not their custodian or sub-custodian for the purpose of short selling securities.
Under National Instrument 81-102 Investment Funds (NI 81-102), the exemption permits mutual funds (other than alternative mutual funds) to deposit with a borrowing agent up to 10% of the fund’s net asset value (NAV), and alternative mutual funds up to 25% of the NAV, excluding the value of proceeds from outstanding short sales.
The exemption is subject to the condition that each fund complies with subsections 6.8.1(2) and (3) of NI 81-102. The rationale for the exemption includes the operational challenges and costs associated with appointing Prime Brokers as custodians or sub-custodians, and the need to avoid managing multiple Prime Broker relationships, which can introduce unnecessary complexity and additional operational costs.
The decision was made under the securities legislation of Ontario and relies on National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions, with the Ontario Securities Commission acting as the principal regulator. The exemption is intended to be relied upon in all Canadian provinces and territories except Québec. The Filer is a registered portfolio manager, investment fund manager, and exempt market dealer in various Canadian provinces and is not in default of any securities legislation.