Regulatory Alerts2019-01-03
Regulation 81-104 Respecting Alternative Mutual Funds
The Quebec securities regulator issued Regulation 81-104 to establish proficiency and supervisory requirements for individuals trading in alternative mutual funds. The regulation mandates that dealing representatives must pass specific courses such as the Canadian Securities Course and Derivatives Fundamentals Course, or complete the Chartered Financial Analyst Program. Additionally, designated supervisors for principal distributors and participating dealers must hold passing grades in the Derivatives Fundamentals Course or have completed the Chartered Financial Analyst Program.
Regulation 81-104 January 3, 2019 PAGE 1 Last amendment in force on January 3, 2019 This document has official status chapter V-1.1, r. 40 REGULATION 81-104 RESPECTING ALTERNATIVE MUTUAL FUNDS
Decision 2003-C-0075, Title; M.O. 2005-06, s. 1; M.O. 2018-07, s. 1. Securities Act (chapter V-1.1, s. 331.1) PART 1 DEFINITIONS, APPLICATION AND INTERPRETATION 1.1. Definitions (1) In this Regulation “alternative mutual fund” has the same meaning as in section 1.1 of Regulation 81-102 respecting Investment Funds (chapter V-1.1, r. 39); “Canadian Securities Course” means a course prepared and conducted by the Canadian Securities Institute and so named by that Institute as of the date on which this Regulation comes into force, every predecessor to that course, and every successor to that course that does not narrow the scope of the significant subject matter of the course; “Chartered Financial Analyst Program” means the 3 level program prepared and conducted by the Association for Investment Management and Research, and so named by that Association as of the date on which this Regulation comes into force, every predecessor to that program, and every successor to that program that does not narrow the scope of the significant subject matter of the program; “Derivatives Fundamentals Course” means a course prepared and conducted by the Canadian Securities Institute and so named by that Institute as of the date that this Regulation comes into force, every predecessor to that course, and every successor to that course that does not narrow the scope of the significant subject matter of the course; and “mutual fund restricted individual” means an individual registered as a dealing representative of a registered dealer, if the activities of that individual are restricted to trading in securities of mutual funds.
Regulation 81-104 January 3, 2019 PAGE 2 (2) Terms defined in Regulation 81-102 respecting Investment Funds and used in this Regulation have the respective meanings ascribed to them in Regulation 81-102 respecting Investment Funds.
Decision 2003-C-0075, s. 1.1; M.O. 2005-06, s. 6 and 7; M.O. 2006-03, s. 1; M.O. 2009-05, s. 1; M.O. 2018-07, s. 2. 1.2. Application This Regulation applies only to (a) an alternative mutual fund that (i) offers, or has offered, securities under a prospectus for so long as the alternative mutual fund remains a reporting issuer, or (ii) is filing a preliminary prospectus or its first prospectus; and (b) a person in respect of activities pertaining to an alternative mutual fund referred to in paragraph (a).
Decision 2003-C-0075, s. 1.2; M.O. 2005-06, s. 6; M.O. 2008-06, s. 4; M.O. 2018-07, s. 3. 1.3. Interpretation (1) Each section, part, class or series of a class of securities of an alternative mutual fund that is referable to a separate portfolio of assets is considered to be a separate alternative mutual fund for purposes of this Regulation. (2) (paragraph revoked).
Decision 2003-C-0075, s. 1.3; M.O. 2005-06, s. 6 and 7; M.O. 2018-07, s. 4. PART 2 (Revoked)
M.O. 2018-07, s. 5. 2.1. (Revoked)
Decision 2003-C-0075, s. 2.1; M.O. 2005-06, s. 7; M.O. 2018-07, s. 5. PART 3 (Revoked)
M.O. 2018-07, s. 6.
Regulation 81-104 January 3, 2019 PAGE 3 3.1. (Revoked)
Decision 2003-C-0075, s. 3.1; M.O. 2005-06, s. 7; M.O. 2018-07, s. 6. 3.2. (Revoked)
Decision 2003-C-0075, s. 3.2; M.O. 2008-06, ss. 1 and 4; M.O. 2018-07, s. 6. 3.3. (Revoked)
Decision 2003-C-0075, s. 3.3; M.O. 2018-07, s. 6. 3.4. (Revoked).
Decision 2003-C-0075, s. 3.4; M.O. 2008-06, s. 2. PART 4 PROFICIENCY AND SUPERVISORY REQUIREMENTS 4.1. Proficiency and Supervisory Requirements (1) No mutual fund restricted individual shall trade in a security of an alternative mutual fund unless that individual (a) has received at least a passing grade for the Canadian Securities Course; (b) has received at least a passing grade for the Derivatives Fundamentals Course; (c) has successfully completed the Chartered Financial Analyst Program; or (d) meets the proficiency standards applicable to trading in securities of alternative mutual funds required by a self-regulatory organization of which the individual, or his or her organization, is a member if the securities regulatory authority or regulator has completed any required review, approval or non-disapproval of the regulatory instrument of the self-regulatory organization that establishes those proficiency standards. (2) No principal distributor or participating dealer shall trade in a security of an alternative mutual fund in the local jurisdiction unless the individual designated by the principal distributor or participating dealer to be responsible for the supervision of trades of securities of alternative mutual fundsin the local jurisdiction has received at least a passing grade for the Derivatives Fundamentals Course or has successfully completed the Chartered Financial Analyst Program.
Regulation 81-104 January 3, 2019 PAGE 4 (3) Despite subsection (2), but subject to compliance with securities legislation, a principal distributor may agree to act as principal distributor of an alternative mutual fundand may trade in securities of a commodity pool if all trades are effected through a participating dealer that satisfies the requirements of subsection (2).
Decision 2003-C-0075, s. 4.1; M.O. 2018-07, s. 7. 4.2. (Revoked).
Decision 2003-C-0075, s. 4.2; M.O. 2008-06, s. 2. PART 5 (Revoked)
M.O. 2018-07, s. 8. 5.1. (Revoked)
Decision 2003-C-0075, s. 5.1; M.O. 2005-06, s. 7; M.O. 2018-07, s. 8. 5.2. (Revoked)
Decision 2003-C-0075, s. 5.2; M.O. 2018-07, s. 8. 5.3. (Revoked)
Decision 2003-C-0075, s. 5.3; M.O. 2018-07, s. 8. PART 6 (Revoked)
M.O. 2018-07, s. 9. 6.1. (Revoked)
Decision 2003-C-0075, s. 6.1; M.O. 2005-06, s. 7; M.O. 2018-07, s. 9. 6.2. (Revoked)
Decision 2003-C-0075, s. 6.2; M.O. 2005-06, s. 7; M.O. 2008-06, s. 4; M.O. 2018-07, s. 9.
Regulation 81-104 January 3, 2019 PAGE 5 6.3. (Revoked)
Decision 2003-C-0075, s. 6.3; M.O. 2005-06, s. 7; M.O. 2017-08, s. 1; M.O. 2018-07, s. 9. PART 7 (Revoked)
Decision 2003-C-0075, Part 7; M.O. 2005-06, s. 2. 7.1. (Revoked).
Decision 2003-C-0075, s. 7.1; M.O. 2005-06, s. 2. 7.2. (Revoked).
Decision 2003-C-0075, s. 7.2; M.O. 2005-06, s. 2. 7.3. (Revoked).
Decision 2003-C-0075, s. 7.3; M.O. 2005-06, s. 2. PART 8 (Revoked)
M.O. 2018-07, s. 10. 8.1. (Revoked).
Decision 2003-C-0075, s. 8.1; M.O. 2005-06, s. 3. 8.2. (Revoked).
Decision 2003-C-0075, s. 8.2; M.O. 2005-06, s. 3. 8.3. (Revoked).
Decision 2003-C-0075, s. 8.3; M.O. 2005-06, s. 3. 8.4. (Revoked).
Decision 2003-C-0075, s. 8.4; M.O. 2005-06, s. 3. 8.5. (Revoked)
Decision 2003-C-0075, s. 8.5; M.O. 2013-24, s. 1; M.O. 2018-07, s. 10.
Regulation 81-104 January 3, 2019 PAGE 6 8.6. (Revoked).
Decision 2003-C-0075, s. 8.6; M.O. 2005-19, s. 1. PART 9 (Revoked)
Decision 2003-C-0075, Part 9; M.O. 2008-06, s. 3. 9.1. (Revoked).
Decision 2003-C-0075, s. 9.1; M.O. 2008-06, s. 3. 9.2. (Revoked).
Decision 2003-C-0075, s. 9.1; M.O. 2005-06, s. 4, 6 and 7; M.O. 2006-03, s. 2; M.O. 2008-06, s. 3. 9.3. (Revoked).
Decision 2003-C-0075, s. 9.3; M.O. 2005-06, s. 5. 9.4. (Revoked).
Decision 2003-C-0075, s. 9.4; M.O. 2005-06, s. 5. PART 10 EXEMPTION 10.1. Exemption (1) The regulator or the securities regulatory authority may grant an exemption from this Regulation, in whole or in part, subject to such conditions or restrictions as may be imposed in the exemption. (2) Despite subsection (1), in Ontario, only the regulator may grant such an exemption.
Decision 2003-C-0075, s. 10.1; M.O. 2005-06, s. 6. PART 11 EFFECTIVE DATE AND TRANSITIONAL 11.1. (Revoked).
Decision 2003-C-0075, s. 11.1; M.O. 2005-06, s. 5.
Regulation 81-104 January 3, 2019 PAGE 7 11.2 (Revoked)
Decision 2003-C-0075, s. 11.2; M.O. 2005-06, s. 6; M.O. 2018-07, s. 11. Decision 2003-C-0075, 2003-03-03 Bulletin hebdomadaire: 2003-05-16, Vol. XXXIV n° 19 Amendments Decision 2005-PDG-0122, 2005-05-19 Bulletin de l'Autorité: 2005-06-03, Vol. 2 n° 22 M.O. 2005-06, 2005 G.O. 2, 1500 Decision 2005-PDG-0240, 2005-08-09 Bulletin de l'Autorité: 2005-08-26, Vol. 2 n° 34 M.O. 2005-19, 2005 G.O. 2, 3516 Decision 2006-PDG-0185, 2006-10-19 Bulletin de l'Autorité: 2006-11-17, Vol. 3 n° 46 M.O. 2006-03, 2006 G.O. 2, 3586 Decision 2008-PDG-0058, 2008-02-22 Bulletin de l'Autorité: 2008-03-14, Vol. 5 n° 10 M.O. 2008-06, 2008 G.O. 2, 726 Decision 2009-PDG-0123, 2009-09-04 Bulletin de l'Autorité: 2009-09-25, Vol. 6 n° 38 M.O. 2009-05, 2009 G.O. 2, 3362A Decision 2013-PDG-0188, 2013-11-13 Bulletin de l'Autorité: 2013-12-19, Vol. 10 n° 50 M.O. 2013-24, 2013 G.O. 2, 3713 Decision 2017-PDG-0116, 2017-09-26 Bulletin de l’Autorité: 2017-11-02, Vol. 14 n° 43 M.O. 2017-08, 2017 G.O. 2, 3323 Decision 2018-PDG-0073, 2018-11-14 Bulletin de l’Autorité: 2018-12-20, Vol. 15 n° 50 M.O. 2018-07, 2018 G.O. 2, 5308