The Securities Commission has granted an exemption to mutual funds and exchange-traded funds managed by the Filer or its affiliates, allowing them to use receivables from declared dividends as cover for long positions in standardized futures. This exemption deviates from section 2.8(1)(d) of National Instrument 81-102 Investment Funds (NI 81-102), which typically requires funds to hold cash cover for such positions. The decision is intended to enable funds to equitize dividend receivables, allowing them to track their applicable index more accurately or to invest the amount of the receivable as applicable.
The exemption is contingent on the funds holding, on each trading day, a combination of the receivable amount, cash cover, and margin or collateral that equals or exceeds the daily mark-to-market underlying market exposure of the standardized future. This decision is based on the rationale that including receivables as cover aligns with global market practices and reduces tracking error or underinvestment, potentially improving fund performance and investor returns.
The decision was made under the authority of section 19.1 of NI 81-102 and is applicable in multiple jurisdictions across Canada, as outlined in the Multilateral Instrument 11-102 Passport System. The Filer has met all necessary conditions and is not in default of any securities legislation in the jurisdictions concerned.