The Mutual Fund Dealers Association reports that it may allow certain firms an exemption from the restriction against commingling money for mutual fund transactions with money held in trust for the purchase and sale of other securities, such as GICs and segregated funds.

The MFDA says that its staff has received several applications for exemptive relief from the so-called “Commingling Prohibition”, under which the dealer must maintain separate trust accounts for cash received for the purchase and sale of other securities or financial instruments.

However, it reports that the MFDA Regulatory Issues Committee of the MFDA Board of Directors has determined that to grant exemptive relief would not be prejudicial to the interest of its members, their clients or the public. “Accordingly, the MFDA will be issuing a Decision Document, which will provide exemptive relief to all MFDA Members that are Level 3 and 4 Dealers.” MFDA Members that are eligible for the relief will be named in a schedule to the Decision Document.

As a condition of relying on the relief, MFDA members will be required to obtain relief from the relevant Canadian securities regulatory authorities, too.

“In accordance with the Decision Document, such MFDA relief may also be relied on only as long as the MFDA Regulatory Issues Committee has not determined that a change has occurred in the coverage of the MFDA Investor Protection Corporation that would reduce protection to clients of members with respect to commingled trust moneys,” it adds.

MFDA dealers must notify the MFDA Membership Services Department when they apply for relief to the regulators, and when they receive exemptive relief.