In late May, the Ontario Securities Commission (OSC) released OSC Staff Notice 81-738 Next Steps Following OSC Consultation Paper 81-737 Opportunity to Improve Retail Investor Access to Long-Term Assets through Investment Fund Product Structures (Staff Notice) which responded to the October 2024 consultation paper that set out a proposed framework for a new type of investment fund product structure (an OLTF) to facilitate long-term asset investment opportunities for retail investors.
The consultation discussion paper included several potential elements, and feedback was sought on a number of these structural elements. There were approximately 40 letters received on the proposal, which were generally supportive of the concept of a framework for OLTFs. However, many commentators were concerned that an Ontario only approach, as well as some of the suggestions for the framework were too restrictive and would have an adverse impact on the potential market for OLTFs.
While the OSC is continuing to consider rulemaking opportunities for OLTFs, for now, the Investment Management Division is working with the Office of Economic Growth and Innovation to consider novel exemptive relief requests that would allow for alternative investment funds that provide retail investors with exposure to long-term assets. This Long-Term Asset Fund Project will be conducted through the OSC's LaunchPad. OSC staff intends to review feedback from stakeholders on market demand and the investor experience related to different fund structures and different long-term assets. They will also work with the CSA to look at multijurisdictional or national exemptive relief in appropriate circumstances.
The Staff Notice indicates that any applicant for exemptive relief should address the threshold structural and investor protection mechanisms that were set out in the original consultation paper on OLTFs.
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