The Securities Commission has granted an exemption to investment funds managed by Ninepoint Partners LP, allowing them to invest in unregistered fixed income securities known as 144A Securities without considering them as illiquid assets under National Instrument 81-102 Investment Funds (NI 81-102). This exemption applies to funds that are qualified institutional buyers (QIBs) under Rule 144A of the US Securities Act of 1933.
The decision was made because the Commission recognized that 144A Securities, despite being unregistered, are actively traded among QIBs without holding periods, making them liquid and attractive investment opportunities. The exemption is contingent on the funds maintaining their QIB status at the time of purchase and the securities being traded on a mature and liquid market. Additionally, the funds must disclose in their prospectus that they have obtained this exemption.
The key regulations involved are:
1. National Instrument 81-102 Investment Funds (NI 81-102), particularly sections 1.1 and 2.4, which define illiquid assets and set restrictions on their holdings by investment funds.
2. Rule 144A of the US Securities Act of 1933, which exempts resales of unregistered securities to QIBs from registration requirements.
3. The Securities Act of 1933, which governs the securities and investment industry in the United States.
The outcome allows the funds to invest in 144A Securities without breaching the illiquid asset restrictions, potentially benefiting the funds and their investors by providing access to a broader range of investment opportunities.