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Canadian Securities Regulatory Monitor News and Insight

Category Archives: Portfolio Managers

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Tomorrow, May 18, Registrants Will Receive the OSC’s 2016 Risk Assessment Questionnaire – What Will Your Firm’s Risk Rating Be?

Posted in Exempt Market Dealers, Industry News, Investment Funds, Mutual Funds, OSC, Portfolio Managers, Registrants

For the first time since 2014, the Ontario Securities Commission (OSC) will send Ontario registrants a risk assessment questionnaire (RAQ) that must be completed by portfolio managers, investment fund managers, exempt market dealers, restricted portfolio managers and restricted dealers registered in Ontario. Registrants will receive the 2016 RAQ tomorrow, May 18.

The OSC uses data gathered through the RAQ to apply a risk ranking to firms. Firms with higher risk rankings are more likely to be targeted by the OSC for compliance reviews. As a result, it is important that the RAQ answers be considered … Continue Reading

The CSA Proposes Mandatory Standardized Risk Classification Methodology for Mutual Funds and ETFs

Posted in Amendments, Continuous and Timely Disclosure, CSA, Investment Funds, Mutual Funds, Portfolio Managers

The Canadian Securities Administrators (CSA) are proposing to introduce a mandatory standardized risk classification methodology for mutual funds and ETFs (the Proposed Methodology).[1] Fund managers would be required to use the Proposed Methodology to determine the investment risk level of conventional mutual funds (which must be disclosed in the Fund Facts document) and exchange-traded mutual funds (ETFs) (to be disclosed in the proposed ETF Facts document). Currently, fund managers may determine the risk level of a mutual fund using a methodology of their choosing, though the methodology developed by the Investment Funds Institute of … Continue Reading

Mutual Fund Compensation and Reinvestment Practices Face OSC Scrutiny

Posted in Compliance and Supervision, Continuous and Timely Disclosure, Investment Funds, Mutual Funds, OSC, Portfolio Managers

The OSC recently published its 2014 Summary Report for Investment Fund and Structured Product Issuers which includes, among other topics, a summary of key OSC policy initiatives affecting investment fund issuers and highlights of 2014 continuous disclosure and compliance reviews of investment funds The report also sets out OSC Staff observations on key emerging issues and trends for mutual funds.

OSC criticizes reinvestment of distributions by “default”

Some mutual funds offer a choice between making distributions to investors in cash, or in the form of reinvested units. OSC Staff is concerned about mutual funds that set the payment of distributions … Continue Reading

Registration Exemption Available for Southbound Advice of SEC-Registered Advisers Based in Ontario

Posted in Advisors, OSC, Portfolio Managers, Registration, SEC

The Ontario Securities Commission (OSC) has recently granted a five year exemption from Ontario registration requirements to an SEC-registered adviser operating from Ontario with an exclusively US client base. Kalenjin Advisory Ltd. (Kalenjin) and its Ontario-resident advising representative provide securities advice exclusively to high net worth individuals resident in the United States with respect to securities traded on trading venues outside of Canada (Foreign Securities).

Citing a supervisory memorandum of understanding with the SEC, the OSC exempted Kalenjin and its advising representative from this registration requirement, provided that Kalenjin and its representatives remain appropriately … Continue Reading

The OSC’s 2014 Risk Assessment Questionnaire Exposes Registrants to Risk of Self-Incrimination

Posted in Exempt Market Dealers, Industry News, Investment Funds, Mutual Funds, OSC, Portfolio Managers, Registrants

For the first time in three years, the Ontario Securities Commission (OSC) has sent Ontario registrants a risk assessment questionnaire that must be completed by portfolio managers, investment fund managers, exempt market dealers, restricted portfolio managers and restricted dealers registered in Ontario. The OSC intends to use the data gathered through the questionnaire to inform its decisions about “which firms require further attention and oversight”.

In some cases, the questionnaire may put recipient registrants at risk of admitting working capital deficiencies, inappropriate marketing practices and other potential violations. As a result, it is important that answers be considered carefully. The … Continue Reading

Portfolio Managers – A Regulatory Check-up

Posted in Compliance and Supervision, Continuous and Timely Disclosure, OSC, Portfolio Managers

In its latest annual review summary report for dealers, advisers and investment fund managers (the “Report”), the Ontario Securities Commission (“OSC”) provides some helpful guidance for registrants.

The OSC regulates or oversees through recognized self regulatory organizations the activities of approximately 1300 registered firms and 66,000 individuals in Ontario.  The Report largely focuses on registrants directly regulated by the OSC: exempt market dealers, portfolio managers (“PMs”) and investment fund managers.… Continue Reading

Indications : meilleures pratiques

Posted in Autorités canadiennes en valeurs mobilières, Compliance and Supervision, CSA, Exempt Market Dealers, Portfolio Managers, Registrants

Le 9 janvier 2014, les Autorités canadiennes en valeurs mobilières (« ACVM ») émettaient l’avis 31‑336 relativement aux obligations de connaissance du client, de connaissance du produit et d’évaluation de la convenance au client.

Cet avis est à l’intention des gestionnaires de portefeuille, des courtiers sur le marché dispensés et des autres personnes inscrites.

Dans un premier temps, les ACVM rappellent que les obligations de connaissance du du client, du produit et d’évaluation de la convenance au client sont fondamentales et sont au cœur du régime de protection des investisseurs.

L’avis 31-336 fait suite à diverses inspections et conclusions résultant … Continue Reading

CSA Issues Guidance on Relationship Disclosure Practices for Portfolio Managers and Exempt Market Dealers

Posted in Broker-Dealers, Compliance and Supervision, Continuous and Timely Disclosure, CSA, Investment Funds, Portfolio Managers

Last week, the CSA published Staff Notice 31-334 – CSA Review of Relationship Disclosure Practices. The notice summarizes findings of a recent CSA compliance review of registered portfolio managers (PMs) and exempt market dealers (EMDs) and provides guidance on relationship disclosure information (RDI) practices.… Continue Reading

OSC Reports on 2012 Compliance Experience

Posted in Compliance and Supervision, Continuous and Timely Disclosure, Exempt Market Dealers, Investment Funds, OSC, Portfolio Managers, Registrants

The OSC has released its 2012 compliance report (OSC Staff Notice 33-738) on dealers, advisers and investment fund managers. This report reflects the increasing importance ascribed by the OSC to registrant practices and registration issues. The report also allows licensed securities businesses to benchmark their practices against regulatory expectations.

Directly and through self-regulatory organizations, the OSC oversees 1,300 firms and 66,000 individuals. The OSC follows a risk-based approach to compliance assessments (p. 35). For the last two years, over 80% of compliance reviews have resulted in requirements for enhanced or significantly enhanced compliance by registrants (p. 36).… Continue Reading

New Rules Proposed for Direct Electronic Linkages to Exchanges and Other Marketplaces

Posted in Broker-Dealers, CSA, Exempt Market Dealers, Marketplaces, Portfolio Managers, Proposals

Under Canadian securities law, registered dealers are intended to intermediate orders between customers and marketplaces. Sophisticated marketplace participants maintain a variety of relationships with brokers, some of whom are expected to provide order-routing services rather than advice. These sophisticated participants generate large volumes of orders to buy and sell securities and are concerned with limiting costs and delays in conveying orders to organized marketplaces. Accordingly, accessing marketplaces by direct electronic access (DEA) allows sophisticated marketplace participants, such as institutional traders, to effect their complex trading strategies more efficiently.… Continue Reading

Canadian Securities Regulatory Requirements Applicable to Non-Resident Broker-Dealers, Advisers and Investment Fund Managers

Posted in Advisors, Broker-Dealers, CSA, Enforcement, Exempt Market Dealers, Investment Funds, Portfolio Managers, Registrants, Registration

The purpose of this paper is to provide a non-resident of Canada with an overview of the dealer registration, adviser registration, investment fund manager registration and prospectus requirements that should be considered and addressed by the non-resident before it begins to trade securities with, or provide investment advice to, any person or company located in Canada, or to act as an investment fund manager in Canada. All currency amounts that are referred to in this paper are denominated in Canadian dollars.

The Canadian Securities Regulatory Framework

Like the United States, Canada has a federal system of government whereby the authority … Continue Reading