Securities Law

BCN 2002/33 - Advance Notice of Adoption of Multilateral Instrument 81-104 Commodity Pools [BCN - Rescinded]

Published Date: 2002-08-08
Effective Date: 2002-08-08

Multilateral Instrument 81-104 Commodity Pools is an initiative of the British Columbia Securities Commission (the Commission) and other members of the Canadian Securities Administrators (the CSA or we).  The instrument and its companion policy deal with commodity pools, and permit commodity pools to invest in, or use, commodities or derivatives, subject to specialized rules.  The full text of the instrument and the policy can be found on the Ontario Securities Commission’s website at (see Rules & Regulation - Rulemaking & Notices - Rules, Proposed & Final).

The instrument has been made or is expected to be made by members of the CSA with the exception of Québec, and will be implemented as:

  • a rule or regulation in each of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Newfoundland and Nova Scotia; and
  • a policy in all other jurisdictions represented by the CSA.

If the required government approval is obtained in British Columbia, the Commission intends to make the instrument and adopt the companion policy effective November 1, 2002. 

The Commission des valeurs mobilières du Québec (the CVMQ) participated closely in the development of the instrument and the policy, but has not yet decided to adopt them. The CVMQ must follow the new rule-making procedures now in force in Québec, which mean that the instrument and the policy must be published for a further comment period in Québec and approval must be obtained from the Québec Ministry of Finance.  If the CVMQ decides to implement the instrument and the policy and they come into force in Québec, the CSA will rename them as national instruments.

Substance and Purpose
The CSA will regulate publicly offered commodity pools under the instrument. MI 81-104 defines commodity pools as specialized publicly offered mutual funds that invest in, or use, commodities or derivatives beyond the scope permitted by National Instrument 81-102 Mutual Funds (NI 81-102). Since commodity pools are publicly offered mutual funds, they are subject to the mutual fund rules established by NI 81-102 and other applicable securities legislation unless those rules are specifically excluded or varied by MI 81-104.

The instrument allows commodity pools to invest in commodities (either directly or through the use of derivatives), and permits leverage in ways that are not permitted for conventional mutual funds. The specialized rules of the instrument are intended to reflect the different investment objectives and risk profile of commodity pools when compared with conventional mutual funds regulated by NI 81-102.

The Commission will not adopt the sections of the instrument dealing with seed capital for new commodity pools, the increased proficiency for salespersons selling commodity pools in BC, and some of the commodity pool prospectus and continuous disclosure requirements.

The policy describes the CSA’s views on the interpretation and application of the instrument.

Summary of Written Comments Received by the CSA
The instrument was first published for comment in June of 1997, and after considering the comments received, a revised version was published for comment in June of 2000. After considering the additional comments, the CSA published a final revised version for comment in December 2001. NIN 97/25, NIN 2000/19, and BCN 2001/83

After the latest publication, the CSA received two letters providing comments from three commenters.

We have considered the comments received and thank all the commenters. The names of all the commenters on the first and second publications, a summary of their comments and the CSA’s responses are included in the first two notices published by the Ontario Securities Commission with the June 2000 and December 2001 versions of the instrument, and are posted on the OSC’s website. The comments received during the most recent comment period are contained in an Appendix to the OSC’s Notice of adoption, and are also available on the OSC website.

Summary of Changes to the Instrument
There were no material changes made to the Instrument from the version published in December 2001. Several minor corrections or clarifications to the instrument were made based on the comments received after that publication, including the following:

  • Paragraph 1.3(2) has been redrafted to state the interpretative provision more directly and to make clear that it relates to the application of section 2.3 of NI 81-102 to commodity pools.
  • Paragraph 3.3 was amended to take out an incorrect section reference.
  • Paragraph 7.3(b) was amended by replacing the word “provide” with the phrase “make available”.
  • Paragraph 9.2(b)(iii) was added in order to clarify the CSA’s expectations for prospectus disclosure of the commodity pool’s past use of leverage.

Please refer your questions to any of:

Noreen Bent
Manager and Senior Legal Counsel
British Columbia Securities Commission
(604) 899-6741
or 1-800-373-6393 (in B.C. and Alberta)

Patricia Gariepy
Senior Legal Counsel
Alberta Securities Commission
(403) 297-5222

Bob Bouchard
Director, Corporate Finance and Chief Administrative Officer
The Manitoba Securities Commission
(204) 945-2555

Rebecca Cowdery
Manager, Investment Funds Regulatory Reform
Ontario Securities Commission

Ann Leduc
Legal Counsel, Service de la réglementation
Commission des valeurs mobilières du Québec
(514) 940-2199

August 8, 2002


Douglas M. Hyndman

Ref:  Multilateral Instrument 81-104 Commodity Pools
  Companion Policy 81-104CP

This Notice may refer to other documents. These documents can be found at the B.C. Securities Commission public website at in the Commission Documents database or the Historical Documents database.