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Securities Law

NIN 99/16 - Report on Comparison of Segregated Funds and Mutual Funds [NIN - Rescinded]

Published Date: 1999-05-07
Effective Date: 1999-05-05
On May 7, 1999, the Canadian Securities Administrators ("CSA") and the Canadian Council of Insurance Regulators ("CCIR") will release their report comparing the legal and regulatory framework of mutual funds and segregated funds, entitled "Comparative Study of Individual Variable Insurance Contracts (Segregated Funds) and Mutual Funds" and "Individual Variable Insurance Contracts (Segregated Funds) and Mutual Funds: Comparative Table" (collectively, the "Report").

Last year, the CSA and the CCIR began cooperating, through a group now known as the Joint Forum of Financial Market Regulators, in order to address issues of common interest. The Joint Forum undertook, as its first project, to organize a working group of regulatory and industry representatives to consider and compare the regulatory and legal framework applicable to segregated funds and mutual funds.

The working group has completed this project and presented its Report to the Joint Forum at their meeting held in Toronto on April 7, 1999. The CSA and the CCIR are of the view that it is important for both securities and insurance regulators to understand the investment products they each regulate and their respective regimes of regulation. The CSA regulate mutual funds and the CCIR regulate individual variable insurance contracts (IVICs) and the segregated funds which determine the value of an IVIC. Due to the increased popularity of both forms of investment vehicle, the CSA and the CCIR wish to ensure that their respective regimes of regulation are harmonized and coordinated and ultimately give similar protections to investors in these different, yet functionally similar products.

The CSA and the CCIR see completion of the comparison project as an important first step towards ensuring their goals are met. The Report describes:
  • the entities that offer and manage the products
  • the nature and structure of the products and how they differ
  • the regulation applicable to the products, their operation and their sale to customers
  • the regulatory rationale or philosophy behind the applicable regulation.

The CSA and the CCIR have asked their respective staff to work together to identify where additional harmonization or coordination of regulation is warranted. At this time, amendments to the Securities Act which would impact on segregated funds, described in NIN#98/28, have not yet been proclaimed in force.

The CSA and the CCIR have advanced their respective understanding about mutual funds and segregated funds through the preparation of the Report and are confident that industry participants and the public will find the comparison informative and of significant interest. The CSA and the CCIR are very grateful for the cooperative efforts of the members of the working group in carrying out this project and contributing to their collective knowledge.

The Report is available on the British Columbia Securities Commission’s website at in the publications section. A limited number of copies of the Report is available for pick-up from the Commission, upon request. Requests should be directed to:

Shandie Hertslet
Information Officer
British Columbia Securities Commission
200 - 865 Hornby Street
Vancouver, British Columbia V6Z 2H4
Tel: (604) 899-6670
Fax: (604) 899-6665

Toll Free: 1-800-373-6393

DATED at Vancouver, British Columbia, on May 5, 1999

Douglas M. Hyndman

Ref: NIN#98/28