OSC releases 2014 report for investment fund and structured product issuers

February 26, 2015

The OSC last week released its annual Summary Report for Investment Fund and Structured Product Issuers, which reviewed the OSC's initiatives for 2014 that impact investment fund and structured product issuers (including in respect of research on mutual fund fees, the adoption of pre-sale delivery of Fund Facts and the accredited investor exemption), discussed emerging issues and trends (including the recent update on linked note offerings), and set out the results of continuous disclosure reviews and recent developments in staff practices.

Of particular interest, the report discusses some of staff's findings in respect of disclosure and compliance reviews, including in respect of IFRS adoption, investment funds with high management expense ratios, fixed income volatility (the report states a staff notice will soon be published outlining the findings of reviews of asset classes that may be susceptible to liquidity issues), senior loans, direct payment of ongoing dealer service fees and fee and expense disclosure

The report also provides an overview of recent regulatory developments impacting funds, including changes to the “accredited investor” exemption that will now allow fully-managed accounts to purchase securities of investment funds (something that was previously prohibited in Ontario). This amendment harmonizes the managed account category of the accredited investor exemption in all Canadian jurisdictions. The report also discusses the application of recent changes to the conflict of interest provisions under securities laws that historically applied only to mutual funds but now apply to investment funds in general.

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