The Ontario Securities Commission (OSC) has granted exemptions to a handful of mutual fund dealers and scholarship plan dealers from the requirement that they participate in a contingency fund, now that the provincial fund they belonged to is being wound up.
The order provides relief to certain mutual fund dealers that are already exempt from joining the Mutual Fund Dealers Association of Canada (MFDA), and don’t hold client assets; and to several scholarship plan dealers; from the basic requirement that registered dealers participate in a compensation fund.
The 29 affected firms did belong to the provincial contingency fund, the Ontario Contingency Trust Fund (OCTF), which is now being closed down.
Trustee proposes closing Ontario Contingency Trust Fund
Earlier this year the OSC announced that the continued operation of the fund is not financially sustainable, and so its trustee has proposed that it be wound up. In response, the firms are seeking an exemption from the requirement that they participate in a client contingency fund.
The OSC granted the exemption on the conditions that the firms aren’t required to belong to an SRO, don’t hold any clients assets, and that they provide disclosure to their clients of the exemption.