Canadian securities regulators provide additional proficiency options for distributing alternative mutual funds

The Canadian Securities Administrators (CSA) today issued blanket relief that provides dealing representatives in the Mutual Fund Dealers Association (MFDA) channel and outside the MFDA channel in Québec with additional proficiency options for distributing alternative mutual funds. 

On January 3, 2019, the CSA adopted amendments to National Instrument 81-102 Investment Funds that introduced alternative mutual funds to the Canadian retail market. These amendments aimed to provide retail investors with greater access to alternative investment strategies, while maintaining appropriate protections. However, mutual fund restricted dealing representatives in the MFDA channel and outside the MFDA channel in Québec have experienced challenges meeting the mandatory proficiency requirements for distributing alternative mutual funds imposed under National Instrument 81-104 Alternative Mutual Funds (NI 81-104). As a result, investor access to alternative mutual funds has been limited. 

The blanket relief makes available additional course options, with updated and relevant information on alternative mutual funds, that may be completed instead of the courses required under NI 81-104.

The CSA is implementing this relief through local blanket orders that are substantially harmonized across the country. Market participants can view these orders on CSA members’ websites and are encouraged to contact their principal regulator with any questions. The CSA anticipates codifying the relief at a later date. 

Alternative mutual funds are permitted to invest in asset classes and use investment strategies that are not permitted for other types of mutual funds. The CSA reminds investors that alternative mutual funds may not be suitable for all investors and emphasizes the importance of consulting an advisor before acquiring alternative mutual fund securities. The CSA also reminds registrants of their ongoing obligations under securities law, including the client suitability requirements.

The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

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