The Securities Commission has granted an alternative mutual fund, managed by Venator Capital Management Ltd., an exemption from certain provisions of National Instrument 81-102 Investment Funds (NI 81-102). Specifically, the fund is exempt from subsections 9.3(1) and 10.3(1), which ordinarily require mutual funds to process purchase and redemption orders at the net asset value per security immediately after the order is received.
The exemption allows the fund to consolidate and process these orders on a weekly basis, using the net asset value determined at the end of that week. This decision was made under the condition that the fund clearly discloses this weekly processing schedule in its simplified prospectus and Fund Facts documents, and indicates that the fund is suitable for investors who can accept this processing frequency.
The reasoning behind the decision includes the belief that weekly processing will reduce transaction costs, mitigate excessive portfolio turnover, and protect the fund from having to sell positions at inopportune times during volatile market conditions, ensuring fair treatment of all unitholders.
The decision is based on the fund’s representations, including its compliance with securities legislation, its intention to offer units via a simplified prospectus, and its commitment to calculate the net asset value daily for continuous disclosure obligations.
The exemption is subject to the conditions that the fund’s purchase and redemption processing frequencies are disclosed and that the fund is identified as suitable only for investors who can accept these frequencies. The Ontario Securities Commission, as the principal regulator, is satisfied that granting the exemption is not prejudicial to the public interest.