Regulatory Alerts2020-12-10
Regulation to Amend Regulation 41-101 Respecting General Prospectus Requirements
The Commission de suivi issued this regulation to amend Regulation 41-101 by introducing a new exemption for no-trailing-commission ETF switches. The amendment relieves participating dealers from the obligation to deliver ETF facts documents to clients when switching between ETF classes with identical aggregate values and no material differences other than management fees. This change, which aligns with suitability determination rules, comes into force on December 31, 2020, with specific filing provisions for Saskatchewan.
REGULATION TO AMEND REGULATION 41-101 RESPECTING GENERAL PROSPECTUS REQUIREMENTS Securities Act (chapter V-1.1, s. 331.1, par. (4.1), (11) and (34))
- Regulation 41-101 respecting General Prospectus Requirements (chapter V-1.1, r. 14) is amended by inserting, after section 3C.2, the following: “3C.2.1. Delivery of ETF facts documents for no-trailing-commission ETF switches (1) In this section: “no-trailing-commission ETF switch” means, in respect of a client of a participating dealer, a purchase of securities of a class or series of an ETF in respect of which an investment fund manager does not pay the participating dealer a trailing commission immediately following a redemption of securities of another class or series of the ETF in respect of which the investment fund manager pays the participating dealer a trailing commission, if all of the following apply: (a) the aggregate value of the securities purchased is the same as the aggregate value of the securities redeemed; (b) there are no material differences between the class or series of securities purchased and the class or series of securities redeemed other than the rate of management fees charged in respect of the two classes or series; (c) the participating dealer, who executed the purchase and redemption of the securities, was not required by securities legislation or the rules of an SRO applicable to the dealer to make a suitability determination in respect of the client in connection with those securities; “suitability determination” has the same meaning as in section 1.1 of Regulation 81-105 respecting Mutual Fund Sales Practices (chapter V-1.1, r. 41).
- Despite subsection 3C.2(2), a dealer is not required to deliver or send to the purchaser of a security of an ETF the most recently filed ETF facts document for the applicable class or series of securities of the ETF in connection with a no-trailing-commission ETF switch.”.
- Effective date (1) This Regulation comes into force on 31 December 2020. (2) In Saskatchewan, despite paragraph (1), if this Regulation is filed with the Registrar of Regulations after 31 December 2020, this Regulation comes into force on the day on which it is filed with the Registrar of Regulations.
Share