The Ontario Securities Commission is publishing for comment the revised application of the Mutual Fund Dealers Association of Canada for a contingency fund, known as the MFDA Investor Protection Corp.

The OSC is publishing the proposed protection fund’s revised application for regulatory approval of the MFDA IPC to serve as a compensation fund. It’s also publishing the proposed form of approval order.

In February 2001, the commission recognized the MFDA as a self-regulatory organization for mutual fund dealers, subject to certain terms and conditions, including that it would establish a contingency fund to cover customers of members of the MFDA.

The MFDA and the MFDA IPC submitted an application in November 2002. Eight comment letters were received on this initial application. As a result of those comments, the MFDA entered discussions to join the Canadian Investor Protection Fund, rather than starting its own new fund. While this may yet happen, there are assorted technical issues that must be resolved first, so the MFDA IPC is going to be established in the meantime.

The latest version of the fund proposes beefing up the proposed coverage to $1 million per account, and it sets out things such as the fund’s governance. The proposal recommends a $30 million fund, initially drawn from a $25 million line of credit and assessments on fund dealers.

Assessments will initially be based on assets under administration at the annual rate of $22-$24 per million dollars of assets under administratoin, which would be payable by members in quarterly installments in June, September and December, if coverage commences April 1, 2005. Thereafter, annual assessments of $22-24 per million of AUA will be made for a period of five years. This annual assessment will be made and be payable quarterly in equal installments.

A copy of the OSC request for comment is available on both the OSC web site: www.osc.gov.on.ca and on the MFDA web site: www.mfda.ca