As we previously discussed, the CSA announced the implementation of certain aspects of Phase 2 of the Modernization of Investment Fund Product Regulation Project last June. At the time, the CSA stated that an alternative funds proposal would be considered at a later date in conjunction with certain restrictions for non-redeemable investment funds proposed in 2013.
According to the CSA, the previous discussions regarding an alternative funds framework generated a significant response from stakeholders, including in regards to topics such as (i) the attributes of alternative investment funds, including the criteria to be used to differentiate mutual funds and non-redeemable investment funds from alternative investment funds; (ii) naming conventions; (iii) whether alternative investment funds should be permitted to borrow cash and what limits on borrowing should be set; (iv) the use and measurement of leverage; (v) whether short selling should be allowed beyond the limits currently permitted in respect of mutual funds including in respect of cash cover requirements; (vi) other investment restrictions, including in respect of fund-on-fund investing and concentration requirements; and (vii) proficiency standards for representatives selling alternative funds.
In light of the feedback received, the CSA expect to continue consulting with stakeholders until mid-2015, with an expectation of publishing proposed rules towards the end of this year.
For more information, see CSA Staff Notice 81-326.