Investment fund managers that have obtained approval from the Ontario Securities Commission to self-trustee pooled funds and/or exemptive relief for fund-on-fund structures may have selected fund custodians that meet the requirements of National Instrument 81-102 Investment Funds (NI 81-102) in order to comply with the terms of those regulatory orders. The custodian requirements in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) that took effect in June 2018 are more flexible than those in NI 81-102 in that IIROC dealers that are permitted to hold investment fund assets are qualified custodians for investment funds. As well, there is an exception for securities recorded on the books of the security’s issuer in the name of the investment fund which may alleviate the need for a fund to retain a custodian for the units of an underlying fund held by the top fund. Investment fund managers with custody arrangements that were put in place to comply with the terms of an order issued prior to the NI 31-103 custody amendments coming into force may wish to consider reviewing their fund custody arrangements in light of the more flexible custodian requirements under NI 31-103. For more information, please contact Stacey Long or a member of our team.
January 29, 2021