BOR 96/05 - Mutual Funds and the Purchase and Sale of Mortgages From and To the Account of Responsible Persons [Rescinded]
Published Date: | 1996-03-29 |
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Effective Date: | 1996-03-27 |
Rescinded Date: | 1998-06-30 |
IN THE MATTER OF THE SECURITIES ACT S.B.C. 1985, c. 83
AND
IN THE MATTER OF MUTUAL FUNDS AND THE PURCHASE AND SALE OF MORTGAGES FROM AND TO THE ACCOUNT OF RESPONSIBLE PERSONS
Order Under Section 113(b)
WHEREAS section 110.1(1)(b) of the Securities Act, S.B.C. 1985, c. 83 (the "Act") mutual fund or responsible person from knowingly causing the mutual fund to purchase or sell the securities of any issuer from or to the account of a responsible person;
AND WHEREAS the Commission recognizes that, where a mutual fund has adequate safeguards to address potential conflicts between the interests of its security holders and the interests of responsible persons, principal trading transactions in mortgages between the mutual fund and a responsible person may be beneficial to the mutual fund;
AND WHEREAS the Commission considers that to do so would not be prejudicial to the public interest;
IT IS ORDERED under section 113(b) of the Act that section 110.1(1)(b) of the Act does not apply to a purchase or sale of a mortgage by a mutual fund from or to the account of a responsible person ("principal transaction") provided that:
(a) a principal transaction involving:
(i) mortgages that are fully guaranteed or insured by the Government of Canada, or the government of a province or territory of Canada, or an agency of any of these governments ("guaranteed mortgages"), is made in accordance with one of the three methods of valuation prescribed by section III (2.4) of National Policy Statement No. 29 ("NP 29"); and
(ii) mortgages that are not guaranteed mortgages is made in accordance with the method of valuation prescribed by section III (2.4)(c) of NP 29; and
(b)) the terms of the principal transaction are reasonable, fair and in the best interests of the mutual fund.
DATED at Vancouver, British Columbia, on March 27, 1996.
Douglas M. Hyndman
Chair