Mutual fund trading in Canada will resume today on a limited basis.

In recognition of pricing difficulties due to the continued closure of U.S. equity exchanges, the Canadian Securities Administrators issued orders this afternoon relieving Canadian mutual funds with material exposure to U.S. securities from the obligation to set a NAV and permitting such funds to suspend redemptions until U.S. markets resume normal business operations.


“This action was taken to give mutual fund managers flexibility in determining the best course of action for meeting their obligations to properly value funds and to allow investors access to those funds,” said
Douglas Hyndman, Chair of the CSA, which represents the 13 provincial and territorial securities commissions.

A Canadian mutual fund will not be obliged to value its portfolio, where 5% or more of a fund’s NAV at closing on Monday, September 10, 2001, was invested in securities that trade solely on an exchange that has temporarily ceased operation. Funds that choose to exercise this option are not permitted to process sales or redemptions, nor may they permit switches in the fund.

Funds with less than 5%exposure to U.S. securities are required to set a NAV using fair valuation techniques if necessary. These funds will be open for business as usual.

Funds exempted under these orders may choose to set a NAV using fair valuing techniques. These funds will also be open for business as usual.

“The Canadian fund industry is committed to minimizing the effects of these tragic events on Canadian investors,” said Tom Hockin, IFIC’s President & CEO. “IFIC has been in constant communication will all industry participants, and the regulators have given us the opportunity to communicate openly with them, which will ultimately help the markets get back to normal as soon as possible.”

The orders take effect on September 13, and are in place until U.S. markets resume operations — expected on Monday. If U.S. markets remain closed, the order will expire next Wednesday when regulators will review the situation.

A copy of the order is available on IFIC’s home page at www.ific.ca.