OSC publishes requirements for use of dealer rebates of mutual fund trailing commissions

Announcements and Updates Fees and expenses Sales practices


On April 3rd, 2025, the Ontario Securities Commission published OSC Rule 81-510 Dealer Rebates of Trailing Commissions (the Rule).

The Rule replaces temporary exemptive relief that was initially granted by way of blanket order, which is set to expire on May 31, 2025. The Rule codifies the temporary exemptive relief that was granted in Ontario Instrument 81-508 Temporary Exemptions from the OEO Trailer Ban to Facilitate Dealer Rebates of Trailing Commissions and Client Transfers (the OSC Blanket Order), which was later extended by OSC Rule 81-509 Extension to Ontario Instrument 81-508 Temporary Exemptions from the OEO Trailer Ban to Facilitate Dealer Rebates of Trailing Commissions and Client Transfers (OSC Rule 81-509). 

The Rule permits the continued payment of trailing commission rebates to investors in limited circumstances where investors hold mutual fund securities that pay trailing commissions in accounts held at order-execution only (OEO) dealers. It also permits the continued payment of trailing commission rebates in relation to the processing of client-initiated transfers of mutual fund securities with trailing commissions into OEO dealer accounts.

The temporary exemptive relief provided by the OSC Blanket Order and OSC Rule 81-509 cannot be extended further under Ontario securities laws. However, the equivalent blanket orders issued by the other Canadian Securities Administrators jurisdictions (the CSA Blanket Orders) continue to be in effect and are either not subject to an expiration date or subject to an expiration date that can be further extended.

The Rule therefore ensures continued harmonization with the other CSA jurisdictions and also avoids potential uncertainty that might arise with the disruption of the rebate solution by ensuring that OEO investors in Ontario continue to receive dealer rebates of trailing commissions as contemplated under the OSC Blanket Order, OSC Rule 81-509 and the CSA Blanket Orders.  

The Rule comes into force on the earlier of 15 days after Ministerial approval or June 17, 2025.

Investors should contact their OEO dealer with any questions or to request further information. 

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