The Securities Commission granted an exemption to CI Investments Inc. (CI) from certain provisions of National Instrument 31-103, specifically sections 13.5(2)(b)(ii) and (iii), which generally restrict in-specie transfers between managed accounts and various funds. This exemption allows CI to conduct in-specie subscriptions and redemptions involving managed accounts and pooled funds, as well as between pooled funds and NI 81-102 Funds, subject to conditions.
The exemption is based on the rationale that such transfers can enhance portfolio management efficiency and reduce transaction costs for clients and funds. CI, as a portfolio manager, must adhere to specific conditions, including obtaining client consent for managed accounts, ensuring the transactions align with the funds’ investment objectives, and valuing transferred securities fairly. Additionally, the exemption mandates record-keeping, oversight by the Chief Compliance Officer, and compliance with the written policies and procedures of CI.
The exemption is contingent on CI’s compliance with the requirements of National Instrument 81-107 regarding independent review committee approvals for NI 81-102 Funds and ensuring that no undue costs are incurred by the funds or managed accounts, except for nominal administrative charges.
The decision underscores the importance of regulatory flexibility to facilitate effective fund management while maintaining investor protection and market integrity.