(1) An investment fund must not enter into transactions under sections 2.12, 2.13 or 2.14 unless,
(a) for transactions to be entered into through an agent appointed under section 2.15, the manager has reasonable grounds to believe that the agent has established and maintains appropriate internal controls and procedures and records; and
(b) for reverse repurchase transactions directly entered into by the investment fund without an agent, the manager has established and maintains appropriate internal controls, procedures and records.
(2) The internal controls, procedures and records referred to in subsection (1) must include
(a) a list of approved borrowers, purchasers and sellers based on generally accepted creditworthiness standards;
(b) as applicable, transaction and credit limits for each counterparty; and
(c) collateral diversification standards.
(3) The manager of an investment fund must, on a periodic basis not less frequently than annually,
(a) review the agreements with any agent appointed under section 2.15 to determine if the agreements are in compliance with this Instrument;
(b) review the internal controls described in subsection (2) to ensure their continued adequacy and appropriateness;
(c) make reasonable enquiries as to whether the agent is administering the securities lending, repurchase or reverse repurchase transactions of the investment fund in a competent and responsible manner, in conformity with the requirements of this Instrument and in conformity with the agreement between the agent, the manager and the investment fund entered into under subsection 2.15(4);
(d) review the terms of any agreement between the investment fund and an agent entered into under subsection 2.15(4) in order to determine if the instructions provided to the agent in connection with the securities lending, repurchase or reverse repurchase transactions of the investment fund continue to be appropriate; and
(e) make or cause to be made any changes that may be necessary to ensure that
(i) the agreements with agents are in compliance with this Instrument,
(ii) the internal controls described in subsection (2) are adequate and appropriate,
(iii) the securities lending, repurchase or reverse repurchase transactions of the investment fund are administered in the manner described in paragraph (c), and
(iv) the terms of each agreement between the investment fund and an agent entered into under subsection 2.15(4) are appropriate.