Regulators have approved proposed rule changes that will allow mutual fund dealers to commingle their clients’ assets.
In Friday’s OSC Bulletin, it’s reported that the Ontario Securities Commission has approved (and the other securities commissions haven’t objected) amendments to the rules of the Mutual Fund Dealers Association of Canada concerning the segregation of client property.
The amendments remove the existing requirements to hold client cash that is to be invested in mutual funds separately from client cash for other investments. The changes will allow these funds to be commingled with other client assets, but they must still be segregated from the dealers’ assets through the use of a trust account.
Additionally, the amendments would allow for fund dealers to disclose whether interest will be paid on client cash held in trust and, if so, at what rate.
The OSC’s approval is subject to the condition that the changes can’t be implemented until the amendments to regulators’ mutual fund rules are in force, too.