The Securities Commission has granted alternative mutual funds an exemption from certain requirements of National Instrument 81-102 Investment Funds (NI 81-102) and National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101), subject to conditions. The key aspects of the decision are as follows:
1. **Margin Deposit Relief**: Funds can deposit up to 35% of their net asset value (NAV) as margin with any one futures commission merchant in Canada or the United States, and up to 70% in aggregate with all merchants, for transactions in standardized futures. This exceeds the usual 10% limit. The margin must be held in segregated accounts and not be available to satisfy claims against the dealer.
2. **Leverage Relief**: Funds are permitted to use Value at Risk (VaR) to calculate exposure instead of the standard leverage limit of 300% of the fund’s NAV. The VaR is limited to 20% of NAV. This relief also includes exemption from certain disclosure requirements related to leverage exposure in simplified prospectuses and fund facts documents.
3. **Performance Relief**: Funds that have not distributed securities under a simplified prospectus for 12 consecutive months can include past performance data in their sales communications, simplified prospectus, and fund facts documents. This includes periods when the fund was not a reporting issuer. The funds must disclose certain information regarding this past performance data and make their financial statements available upon request.
The exemptions are granted under the condition that the funds establish a derivatives risk management program and use third-party verification of VaR calculations. The relief is granted based on the understanding that these measures will manage the funds’ derivatives risks effectively.
The decision is set to expire on October 2, 2027.