The Mutual Fund Dealers Association’s 2001 application to the Ontario Securities Commission for recognition, including the MFDA’s proposed Investor Protection Corp. has been published for comment.

OSC recognition required the MFDA to establish a contingency fund. The IPC is the MFDA’s response to this concern. Members of the MFDA will be required to contribute to the IPC as a condition of membership. The fund intends to provide protection to eligible customers of the MFDA members if customer property held by members is unavailable as a result of the insolvency of the member. Coverage is to begin on July 1, 2003.

The MFDA IPC board has determined that $5 million is an adequate initial fund size. The board will conduct an annual review of the adequacy of the level of assets and assessment amounts and methodology to ensure that the level of assets remains adequate to cover potential customer claims. The fund will provide coverage of at least $100,000 per eligible customer account.

The OSC is seeking comments on all aspects of the MFDA IPC application and related documents. The proposed approval order establishes terms and conditions, including: corporate structure of the IPC, corporate governance, funding and maintenance of the IPC, customer protection, financial and operational viability, and its rules.

In connection with the application, the MFDA is also proposing to amend its rule regarding advertising and sales communications.

The comment period expires on Jan. 24, 2003.