The standard of care prescribed by section 6.6of the instrument is a minimum standard only. Similarly, the provisions of section6.5of the instrument, designed to protect an investment fund from loss in the event of the insolvency of those holding its portfolio assets, are minimum requirements. The Canadian securities regulatory authorities are of the view that the requirements set out insection6.5may require custodians and sub-custodians to take such additional steps as may be necessary or desirable properly to protect the portfolio assets of the investment fund in a foreign jurisdiction and to ensure that those portfolio assets are unavailable to satisfy the claims of creditors of the custodian or sub-custodian, having regard to creditor protection and bankruptcy legislation of any foreign jurisdiction in which portfolio assets of an investment fund may be located.
(1) Subsection 6.5(3) of the Instrument provides that a custodian or sub-custodian of an investment fund may arrange for the deposit of portfolio assets of the investment fund with a depository, or clearing agency, that operates a book-based system. Such depositories or clearing agencies include The Canadian Depository For Securities Limited, the Depository Trust Company or any other domestic or foreign depository or clearing agency that is incorporated or organized under the laws of a country or a political subdivision of a country and operates a book- based system in that country or political subdivision or operates a transnational book-based system.
Paragraph 6.7(1)(c) of the Instrument requires the custodian of an investment fund to make any changes periodically that may be necessary to ensure that the custodian and sub-custodian agreements comply with Part 6, and that there is no sub- custodian of the investment fund that does not satisfy the applicable requirements of section s 6.2 or 6.3. The Canadian securities regulatory authorities note that necessary changes to ensure this compliance could include a change of sub-custodian.