Securities Law

BCN 2002/43 - Notice of Adoption of Multilateral Instrument 81-104 Commodity Pools [BCN - Rescinded]

Published Date: 2002-10-25
Effective Date: 2002-10-24
Related Document(s):

Effective November 1, 2002, the Commission and the other members of the Canadian Securities Administrators (the CSA or we), except Québec, have adopted Multilateral Instrument 81-104 Commodity Pools.

Substance and Purpose
We 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, and which can use leverage, beyond the scope permitted for conventional mutual funds by National Instrument 81-102 Mutual Funds. 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.

This specialized rule reflects 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 because:

a) We believe that it is not necessary for commodity pools to have different seed capital restrictions than conventional mutual funds.
b) Mutual fund salespeople are proficient to sell mutual funds. While commodity pools are a specialized type of mutual fund, the fundamental skills the salesperson must have to assess whether the investment is suitable for their client remains the same.
c) Mutual funds, including commodity pools, are typically purchased as a longer term investment. With this in mind, we believe that a commodity pool should not be required to provide financial disclosure any more frequently than conventional mutual funds.

The text of MI 81-104 is in the attached BC Reg. 283/2002. 

The related Companion Policy 81-104CP, describes the CSA’s views for the interpretation and application of MI 81-104.

Prior publications
We published for comment previous versions of MI 81-104 in June 1997 (NIN 97/25), June 2000 (NIN 2000/19) and December 2001 (BCN 2001/83). On August 8, 2002, we published advance notice that subject to government approval, we expected to adopt the instrument effective November 1, 2002 (BCN 2002/33).

Questions may be referred to:

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

October 24, 2002


Joyce C. Maykut, Q.C.
Vice Chair

Ref:  MI 81-104
 NIN 97/25
 NIN 2000/19
 BCN 2001/83
 BCN 2002/33

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.