The Ontario Securities Commission says that its proposed mutual fund governance regime would result in directly quantifiable financial benefits to the mutual fund industry as a whole, ranging between $86 million to $158 million per year.

Those estimates are contained in a report prepared by Keith Martin, which follows the initial cost-benefit analysis completed on the OSC’s original fund governance concept.

In response to comments received to its original proposal, and after further consideration by the Canadian Securities Administrators, the OSC decided to develop a revised proposal for mutual fund governance and to include a comprehensive CBA of the estimated impact of the proposed changes.

The new regime will remove legislated prohibitions or constraints on related party transactions and, subject to appropriate oversight by an Independent Review Committee, permit these to take place. The objective of the paper is to provide estimates of the financial impact resulting from the ability of mutual funds to enter into such transactions.

Over a 10-year period, the discounted present value of these annual amounts would be between $ 808 million and $1.5 billion. Between $51 million and $95 million is attributable to the impact of the 60-Day Rule, and it is anticipated that the ability to carry out interfund trading could contribute a further $35 million to $63 million.

It also notes that, while not readily translatable into dollar terms, there will be improved efficiencies and a leveling of the playing field for both dealer and non-dealer related mutual funds. The analysis reflects both quantitative and qualitative impacts. It also doesn’t look at the impact on small fund firms, nor does it really address the costs of establishing IRCs.

http://www.osc.gov.on.ca/en/Regulation/Rulemaking/Rules/rule_20040109_81-107_mutualfundreport.pdf