Several mutual fund managers have received exemptions from joining the Mutual Fund Dealers Association as they reorganize their businesses to comply with the new regime.

In separate decisions, the OSC has granted relief to Acuity Funds, CIBC Securities, Fidelity Investments Canada, Guardian Group of Funds, PH&N and Pursuit Financial Management, freeing them from joining the MFDA.

Some fund managers have mutual fund dealer and limited market dealer registrations that will require them to join the MFDA by July 2, 2002, and file an application and corresponding fees for membership by May 23.

In Acuity’s case, the firm pledged that its trading activities as a mutual fund dealer represent activities that are incidental to its principal business activities. It will disclose to any new client that it is not currently a member, and does not intend to become a member of the MFDA. Clients will not have investor protection benefits that would otherwise derive from membership in the MFDA.

Acuity’s registration is restricted only to trading where the trade consists of:
>a client name trade;
>an exempt trade;
>a fund-on-fund trade;
>an “in furtherance trade;
>a trade to a person who is a permitted client
>a seed capital trade.

Guardian’s exemption carries similar terms.

The other firms are looking at corporate reorganizations to bring themselves in compliance. CIBC Securities has achieved an exemption so that it can carry out a reorganization of the governance structure of its funds. That is expected to take effect on June 30. As part of the reorganization process,
CIBC Securities will be voluntarily wound up and a new firm will obtain registration as a mutual fund dealer and join the MFDA.

Fidelity Retirement Services Company of Canada Limited has applied for registration under the Act as a mutual fund dealer and intends to obtain membership in the MFDA. It is expected that Fidelity’s registration will come under the new firm.

Phillips, Hager & North Investment Funds Ltd. was incorporated on April 10, 2001 in B.C., and is a wholly-owned subsidiary of PH&N formed for the purpose of carrying on the retail distribution business. PH&N is in the process of causing it to concurrently apply for mutual fund dealer registration in each of the jurisdictions and membership in the MFDA within one to two months.

PFMC has also undertaken a corporate reorganization. It has incorporated a subsidiary company, which will be named Pursuit Financial Management Inc., as a mutual fund dealer.