The Canadian Securities Administrators yesterday released an update on their planned alternative funds framework for investment funds.
As we previously discussed, the CSA announced the implementation of certain aspects of Phase 2 of the Modernization of Investment Fund Product Regulation Project last June. At the time, the CSA stated that an alternative funds proposal would be considered at a later date in conjunction with certain restrictions for non-redeemable investment funds proposed in 2013.
According to the CSA, the previous discussions regarding an alternative funds framework generated a significant response from stakeholders, including in regards to topics such as (i) the attributes of alternative investment funds, including the criteria to be used to differentiate mutual funds and non-redeemable investment funds from alternative investment funds; (ii) naming conventions; (iii) whether alternative investment funds should be permitted to borrow cash and what limits on borrowing should be set; (iv) the use and measurement of leverage; (v) whether short selling should be allowed beyond the limits currently permitted in respect of mutual funds including in respect of cash cover requirements; (vi) other investment restrictions, including in respect of fund-on-fund investing and concentration requirements; and (vii) proficiency standards for representatives selling alternative funds.
In light of the feedback received, the CSA expect to continue consulting with stakeholders until mid-2015, with an expectation of publishing proposed rules towards the end of this year.
For more information, see CSA Staff Notice 81-326.
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