The Securities Commission granted exemptive relief from certain self-dealing provisions to allow inter-fund trades in debt securities between investment funds and pooled funds managed by the same manager or its affiliates. The relief is subject to conditions, including approval from an independent review committee (IRC). The decision also permits the use of more than one custodian for investment funds, which is typically restricted, and allows in-specie subscriptions and redemptions by managed accounts and pooled funds under certain conditions.
The key regulations involved are:
– National Instrument 81-102 Investment Funds (NI 81-102), specifically subsections 4.2(1) (self-dealing prohibition), 6.1 (custodian requirements), and 6.8.1 (short sale collateral requirements).
– National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103), particularly paragraph 13.5(2)(b) (conflict of interest provisions).
– National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107), which outlines the role and requirements of the IRC.
The outcome allows for operational flexibility and potential cost savings for the funds involved, provided they adhere to the conditions set forth to ensure fair dealing and the best interests of fund investors. The decision was made under the National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions, with the Ontario Securities Commission acting as the principal regulator.