The CSA announced last week that it is adopting amendments to complete the first phase of its project to modernize the product regulation of publicly offered investment funds. The amendments, initially published as a proposal in June 2010, seek to codify exemptive relief frequently granted to address market and product developments over the years in the investment fund industry. According to the CSA, these amendments to NI 81-102 Mutual Fundsand related consequential amendments help to modernize the investment fund rules by making requirements "more effective and relevant in today's more diverse and increasingly innovative retail fund marketplace."
Specifically, among other things, the amendments will: (i) eliminate the need for ETFs to seek exemptive relief from certain operational requirements designed primarily for open-end conventional mutual funds; (ii) allow mutual funds to short sell securities subject to a cap of 20% of their net asset value; and (iii) introduce new investment restrictions for money market funds.
The final rules reflect changes made in response to comments to the 2010 proposal. As these changes are not considered material, the amendments will, assuming Ministerial approvals, come into effect on April 30, 2012.
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