TD Asset Management is the latest firm to obtain an exemption from the mutual fund self-dealing prohibitions of the Ontario Securities Act.

Under the decision, mutual funds will be allowed to trade the securities of TD Bank, provided that a fund governance mechanism is used to oversee the holdings and trades of these securities to ensure that they are free from any influence by the bank and without taking into account any consideration relevant to TD Bank.

The decision covers the TD mutual funds, the TD MAP Portfolios, the TD Private Funds and the Emerald Pooled Funds, and any future funds.

The Ontario Securities Commission’s decision notes that TDAM will create an Independent Review Committee, comprised entirely of individuals who are wholly independent of TDAM, to oversee the holdings, purchases and sales of securities of TD Bank by the funds, to ensure that they have been made free from any influence by TD Bank. The Independent Committee will consider the best interests of unitholders of the funds and no other factors. The compensation for members of the Independent Committee will be allocated among the funds in a manner that is considered by the Independent Committee to be fair and reasonable.

And, within 30 days of the end of each month in which TDAM trades TD Bank securities on behalf of one of its funds, it must report the trade on SEDAR. A slew of other conditions also apply to the committee, including: it must have at least three members, none of whom is an associate or employee of TDAM; it must have a written mandate describing its duties and standard of care; none of the funds relieves the members of the Independent Committee from liability for loss that arises out of a failure to satisfy the standard of care, covers their legal fees or pays their liability insurance.