On April 17, the Canadian Securities Administrators (CSA) issued blanket orders permitting mutual funds that invest a portion of their assets in fixed income securities to engage in additional short-term borrowing between April 17 and July 31, 2020. Ordinarily, mutual funds that engage in short-term borrowing to accommodate redemption requests are subject to a limit on that borrowing of 5% of the fund’s net asset value at the time of the borrowing. That limit is being temporarily increased to 10%, provided that certain conditions are met, such as having strict controls around the additional borrowing, disclosing the use of any additional borrowing to investors, ensuring that the additional borrowing is in the best interests of all investors. If you are managing a mutual fund that you think would benefit from these blanket orders, AUM Law can advise you on the criteria for exemptive relief and related matters.
April 30, 2020