The most recent annual report from the OSC’s Investment Funds & Structured Products Branch describes its key activities and initiatives as well as emerging issues and trends. In addition to describing activities undertaken in 2015, the report outlines some expectations for the branch in 2016.

With respect to its ongoing examination of mutual fund fees, the report indicates that the findings from the research previously commissioned by the CSA, and comments gathered throughout the consultation process will inform policy recommendations. The CSA expects to communicate its policy direction in the first half of 2016.

As part of the modernization of investment fund product regulation project, the CSA is continuing its long anticipated work on the final stage, which will create a separate regime for “alternative funds” (currently only generally applicable to commodity pools). At the same time, consideration is being given to whether amendments should also be made to National Instrument 81-102 - Investment Funds (NI 81-102) regarding the investment strategies of conventional investment funds. Work has begun on draft proposed amendments for an alternative funds regime, with a view to publishing the amendments for comment in mid-2016.

Continuous disclosure reviews of fund issuers have focused on topics including mutual fund portfolio liquidity, and fund-of-funds fees disclosure. Staff is continuing to monitor liquidity issues and may in future publish additional guidance if needed. Similarly, in their reviews, Staff has noticed errors in the calculation of the management expense ratio and trading expense ratio of fund of funds and may publish additional guidance to assist issuers with respect to regulatory expectations.

The report (and the team at AUM Law) also encourages fund managers to review the report issued by the CRR branch, OSC Staff Notice 33-746 Annual Summary Report for Dealers, Advisers and Investment Fund Managers, which includes commentary on deficiencies from compliance reviews of registrants. Topics include non-delivery of net asset value adjustments, and non-compliance by fund managers of private investment funds of the prohibition on commingling fund assets with assets of the fund managers.