Alternative Investments

MFDA launches alt-fund proficiency rule consultation

The intended effect of the proposal is to adopt requirements consistent with the policy rationale behind exemption orders that the Canadian Securities Administrators published in January.

Those orders opened an option for registrants outside the Investment Industry Regulatory Organization of Canada (IIROC), including MFDA members, to distribute alternative mutual funds. The orders provided exemptive relief from certain requirements of NI 81-104 by allowing mutual fund dealers and dealing representatives to offer alt mutual funds, as long as they take certain bridge courses.

“[P]art of the purpose of proposed new Policy No. 11 is to codify the provisions of the CSA Exemption Orders,” the MFDA said.

The requirements of the proposed policy apply to both alternative mutual funds sold under a prospectus (liquid alts) and alternative mutual funds sold in pursuant to a prospectus exemption (hedge funds).

Under Policy No. 11, an approved person has to satisfy certain requirements before they can trade or advise in alternative mutual funds. Those requirements also apply to individuals designated by an MFDA member to oversee trading in alternative mutual funds.


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