PIMCO Canada Corp.

November 10, 2020

Decision

Headnote

National Policy 11-- 203 Process for Exemptive Relief Application in Multiple Jurisdictions -- Relief granted from the self-dealing provision in s. 4.2(1) of NI 81-102 Investment Funds to permit inter-fund trades in debt securities between investment funds subject to NI 81-102 and Canadian pooled funds, U.S. mutual funds and U.S. pooled funds under related management, subject to conditions.

National Policy 11-- 203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from s.13.5(2)(b)(ii) and (iii) of NI 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations to permit inter-fund trades between Canadian mutual funds, Canadian pooled funds, Canadian managed accounts, U.S. mutual funds and U.S. pooled funds under related management at the last sale price, subject to conditions.

Applicable Legislative Provisions

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 13.5, 15.1.

National Instrument 81-102 Investment Funds, ss. 4.2(1), 4.3(1), 4.3(2), 19.2.

National Instrument 81-107 Independent Review Committee for Investment Funds, ss. 6.1(2), 6.1(4).

November 10, 2020

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF PIMCO CANADA CORP. (the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation):

(a) for an exemption from the prohibition in section 4.2(1) of National Instrument 81-102 Investment Funds (NI 81-102) to permit the NI 81-102 Funds (as defined below) to purchase debt securities from, or sell debt securities to, a Canadian Pooled Fund (as defined below) or a U.S. Fund (as defined below) (the Section 4.2(1) Relief);

(b) for an exemption from the prohibitions in sections 13.5(2)(b)(ii) and (iii) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) which prohibit a registered adviser from knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as an adviser, to purchase or sell a security from or to the investment portfolio of a responsible person, an associate of a responsible person or an investment fund for which a responsible person acts as an adviser, in order to permit:

(i) a Canadian Fund (as defined below) to purchase securities from or sell securities to a Canadian Fund;

(ii) a Canadian Client Account (as defined below) to purchase securities from or sell securities to a Canadian Fund;

(the transactions described in (b)(i) and (ii) above each being a Canadian Inter-Fund Trade)

(iii) a Canadian Fund to purchase securities from or sell securities to a U.S. Fund;

(iv) a Canadian Client Account to purchase securities from or sell securities to a U.S. Fund;

(the transactions described in (b)(iii) and (iv) above each being a Cross-Border Inter-Fund Trade); and

(v) the Canadian Inter-Fund Trades and the Cross-Border Inter-Fund Trades to be executed at the last sale price, as defined in the Universal Market Integrity Rules of the Investment Industry Regulatory Organization of Canada, prior to the execution of the trade (the Last Sale Price) in lieu of the closing sale price (the Closing Sale Price) contemplated by the definition of "current market price of the security" in section 6.1(1)(a)(i) of National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) on that trading day where the securities involved in the Inter-Fund Trade (as defined below) are exchange-traded securities (which term shall include Canadian and foreign exchange-traded securities);

((b)(i), (ii), (iii), (iv) and (v) above are collectively referred to herein as the Inter-Fund Trading Relief); and

(c) to revoke the decision dated October 7, 2014 In the Matter of PIMCO Canada Corp. (the Original Decision) insofar as the Original Decision related to the Section 4.2(1) Relief and the Inter-Fund Trading Relief (the Revocation and, together with the Section 4.2(1) Relief and the Inter-Fund Trading Relief, the Exemption Sought).

Under National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions (NP 11-203):

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in all of the provinces and territories of Canada other than Ontario (together with Ontario, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102, NI 81-102 or NI 31-103 have the same meaning if used in this decision, unless otherwise defined herein. In addition, the following terms have the following meanings:

(a) 40 Act means the U.S. Investment Company Act of 1940, as amended;

(b) 40 Act Funds means, together, the Existing 40 Act Funds and the Future 40 Act Funds;

(c) Applicable Inter-Fund Trading Policies has the meaning given to it in paragraph 35;

(d) Canadian Client Account means an account (i) managed by the Filer that is beneficially owned by a client that is resident or domiciled in Canada and is not a responsible person, and (ii) over which the Filer that is registered as a portfolio manager under the securities legislation of one or more provinces or territories of Canada has discretionary authority;

(e) Canadian Clients means, together, the NI 81-102 Funds, the Canadian Pooled Funds and the Canadian Client Accounts;

(f) Canadian Funds means, together, the NI 81-102 Funds and the Canadian Pooled Funds;

(g) Canadian Pooled Funds means, together, the Existing Canadian Pooled Funds and the Future Canadian Pooled Funds;

(h) Clients means, together, the Canadian Clients and the U.S. Clients;

(i) Closed-End Funds means, together, the Existing Closed-End Fund and the Future Closed-End Funds;

(j) Existing 40 Act Fund means each existing investment fund subject to the provisions of the 40 Act and for which PIMCO LLC or another affiliate of the Filer acts as manager and/or portfolio adviser;

(k) Existing Canadian Pooled Fund means each investment fund domiciled in Canada (i) that is not a reporting issuer and to which NI 81-102 and NI 81-107 do not apply, and (ii) for which the Filer acts as manager and/or portfolio adviser;

(l) Existing Closed-End Fund means PIMCO Global Income Opportunities Fund;

(m) Existing NI 81-102 Fund means each existing investment fund (including the Existing Closed-End Fund) (i) that is a reporting issuer and to which NI 81-102 and NI 81-107 apply, and (ii) for which the Filer acts as manager and/or portfolio adviser;

(n) Existing U.S. Pooled Fund means each investment fund (i) domiciled in the United States, (ii) to which the 40 Act does not apply, and (iii) for which PIMCO LLC or another affiliate of the Filer acts as manager and/or portfolio adviser;

(o) Funds means, together, the Canadian Funds and the U.S. Funds (each, a Fund);

(p) Future 40 Act Fund means each investment fund (i) to be established in the future, (ii) subject to the provisions of the 40 Act, and (iii) for which PIMCO LLC or another affiliate of the Filer will act as manager and/or portfolio adviser;

(q) Future Canadian Pooled Fund means each investment fund (i) to be established in the future, (ii) that will be domiciled in Canada, (iii) that will not be a reporting issuer and to which NI 81-102 and NI 81-107 will not apply, and (iv) for which the Filer will act as manager and/or portfolio adviser;

(r) Future Closed-End Fund means each non-redeemable investment fund (i) that will be a reporting issuer and to which NI 81-102 and NI 81-107 will apply, and (ii) for which the Filer will act as manager and/or portfolio adviser;

(s) Future NI 81-102 Fund means each investment fund (including a Future Closed-End Fund) (i) to be established in the future, (ii) that will be a reporting issuer and to which NI 81-102 and NI 81-107 will apply, and (iii) for which the Filer will act as manager and/or portfolio adviser;

(t) Future U.S. Pooled Fund means each investment fund (i) to be established in the future, (ii) that will be domiciled in the United States, (iii) which will not be subject to the provisions of the 40 Act, and (iv) for which PIMCO LLC or another affiliate of the Filer will act as manager and/or portfolio adviser;

(u) Inter-Fund Trades means, together, Canadian Inter-Fund Trades, Cross-Border Inter-Fund Trades and, where applicable, all trades pursuant to the Section 4.2(1) Relief;

(v) IRC means the independent review committee of the Canadian Funds;

(w) NI 81-102 Funds means, together, the Existing NI 81-102 Funds and the Future NI 81-102 Funds;

(x) PIMCO means the global asset management business of PIMCO LLC and its subsidiaries;

(y) PIMCO LLC means Pacific Investment Management Company;

(z) Trust Funds means, collectively, any of the Funds established as a trust;

(aa) U.S. Client Account means an account (i) managed by PIMCO LLC or an affiliate of PIMCO LLC, (ii) that is beneficially owned by a client that is resident or domiciled in the United States and is not a responsible person, and (iii) over which an affiliate of the Filer has discretionary authority;

(bb) U.S. Clients means, together, the U.S. Funds and the U.S. Client Accounts;

(cc) U.S. Funds means, together, the 40 Act Funds and the U.S. Pooled Funds;

(dd) U.S. Inter-Fund Trading Rules means Rule 17a-7 under the 40 Act and other applicable laws governing inter-fund trading in the United States; and

(ee) U.S. Pooled Funds means, together, the Existing U.S. Pooled Funds and the Future U.S. Pooled Funds.

Representations

This decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a corporation incorporated under the laws of the Province of Ontario with its head office located in Toronto, Ontario.

2. The Filer is currently registered under the securities legislation in:

(a) all the provinces as a portfolio manager and exempt market dealer;

(b) Ontario, Québec, and Newfoundland and Labrador as an investment fund manager; and

(c) Ontario and Manitoba as a commodity trading manager under the Commodity Futures Act (Ontario) and an adviser under the Commodity Futures Act (Manitoba), respectively.

3. The Filer is, or will be, the manager of the Canadian Funds.

4. The Filer is, or will be, the portfolio manager of the Canadian Funds. The Filer may also appoint sub-advisers for the Canadian Funds.

5. The Filer may be the trustee of a future Canadian Fund that is a Trust Fund.

6. The Filer is not in default of securities legislation in any of the Jurisdictions.

The Canadian Funds

7. Each NI 81-102 Fund is, or will be, established under the laws of Ontario or Canada as an investment fund that is a trust, a class of shares of a mutual fund corporation or limited partnership and is, or will be, a reporting issuer in one or more of the Jurisdictions.

8. The securities of each NI 81-102 Fund are, or will be, qualified for distribution in one or more of the Jurisdictions under, as applicable, a prospectus, simplified prospectus, annual information form, fund facts and/or ETF facts, prepared and filed in accordance with the securities legislation of such Jurisdictions. Each NI 81-102 Fund is, or will be, subject to the provisions of NI 81-102.

9. Each Canadian Pooled Fund is, or will be, an investment fund established under the laws of Ontario or Canada as a trust, corporation or limited partnership that is not and will not be a reporting issuer in any of the Jurisdictions.

10. The securities of the Canadian Pooled Funds will be distributed on a private placement basis pursuant to available exemptions from the prospectus requirement under applicable securities laws in the Jurisdictions. Other than as may be required pursuant to exemptive relief granted by the Canadian securities administrators, the Canadian Pooled Funds are not, and will not be, subject to NI 81-102.

11. The existing Canadian Funds are not in default of securities legislation in any of the Jurisdictions.

Canadian Client Accounts

12. The Filer offers discretionary investment management services to investors in Canada through the Canadian Client Accounts.

13. Each Canadian Client wishing to receive the discretionary investment management services from the Filer has entered into, or will enter into, a written agreement (an Investment Management Agreement) whereby the client appoints the Filer to act as portfolio manager in connection with an investment portfolio of the client with full discretionary authority to trade in securities for the Canadian Client Account without obtaining the specific consent of the client to execute each trade.

14. Each Investment Management Agreement or other documentation in respect of each Canadian Client Account will contain authorization from the client for the portfolio manager of the Canadian Client Account to make Inter-Fund Trades.

PIMCO LLC

15. PIMCO LLC is a Delaware limited liability company having its head office in Newport Beach, California.

16. PIMCO LLC is registered with the U.S. Securities and Exchange Commission (the SEC) as an investment adviser under the U.S. Investment Advisers Act of 1940 (the Advisers Act).

17. In the United States, all managers of U.S. registered investment companies are registered under, and subject to the requirements of, the Advisers Act. In addition, with respect to their management of registered investment companies, registered investment advisers are subject to the requirements of the 40 Act.

18. The Filer is an indirect wholly-owned subsidiary of PIMCO LLC. As of March 31, 2020, PIMCO worldwide had approximately US$1.78 trillion in assets under management.

19. PIMCO LLC, or another affiliate of the Filer, is, or will be, the manager of the U.S. Funds. PIMCO LLC and other affiliates of the Filer provide advisory services to the U.S. Funds. PIMCO LLC or another affiliate of the Filer may also appoint sub-advisers for the U.S. Funds. Any affiliate of the Filer providing advisory services to a U.S. Fund is appropriately registered to act in such manner.

20. PIMCO LLC and other affiliates of the Filer offer discretionary investment management services to investors in the United States through U.S. Client Accounts.

21. The Filer understands that trades between Canadian Funds and U.S. Client Accounts are not subject to the prohibitions in sections 13.5(2)(b)(ii) and (iii) of NI 31-103.

U.S. Funds

22. Each 40 Act Fund is, or will be, an investment fund established under the laws of a U.S. jurisdiction, the securities of which are, or will be, registered under the 40 Act.

23. The securities of each 40 Act Fund are, or will be, registered pursuant to a registration statement prepared and filed in accordance with the 40 Act. Each 40 Act Fund is, or will be, subject to the provisions of the 40 Act.

24. Each U.S. Pooled Fund is, or will be, an investment fund established under the laws of a U.S. jurisdiction as a trust, corporation, limited liability company or limited partnership that is exempt from the requirements of the 40 Act.

25. The securities of the U.S. Pooled Funds are, or will be, distributed on a private placement basis pursuant to available exemptions from the registration requirement under the 40 Act (or other applicable securities laws in the United States). The Existing U.S. Pooled Funds are not, and the Future U.S. Pooled Funds will not be, subject to the 40 Act.

Inter-Fund Trading

26. The Filer wishes to be able to permit any Canadian Fund or Canadian Client Account to engage in Inter-Fund Trades of portfolio securities with a Fund.

27. NI 31-103, NI 81-102 and NI 81-107 restrict inter-fund trading. Absent the Exemption Sought, neither the Canadian Funds nor Canadian Client Accounts, nor the Filer on their behalf, will be permitted to engage in Cross-Border Inter-Fund Trades as contemplated in this decision.

28. The Filer is a responsible person for the purpose of section 13.5(2)(b) of NI 31-103 and, absent exemptive relief, is prohibited from effecting any Inter-Fund Trades between Canadian Funds or Canadian Client Accounts and (i) Trust Funds that are an associate of the Filer or other responsible person, and (ii) other Funds that are investment funds for which the Filer, or other responsible person, acts as an adviser.

29. Absent exemptive relief, each NI 81-102 Fund is prohibited under section 4.2(1) of NI 81-102 from purchasing a security from or selling a security to certain Trust Funds (if an associate of the Filer or a portfolio adviser to the NI 81-102 Fund) and would also be prohibited under section 4.2(1) of NI 81-102 from purchasing a security from or selling a security to a Fund established in the future under a corporate structure that would be an affiliate of the Filer.

30. The exception in section 4.3(1) of NI 81-102 which permits certain inter-fund trades of securities subject to public quotations is not available for any Inter-Fund Trades of debt securities because debt securities are typically not subject to public quotations.

31. The exception in section 4.3(2) which permits certain inter-fund trades of debt securities is not available for any Inter-Fund Trades of debt securities between:

(a) NI 81-102 Funds and Canadian Pooled Funds; and

(b) NI 81-102 Funds and U.S. Funds.

In both instances, that exemption only applies where the investment funds on both sides of the inter-fund trade are investment funds subject to NI 81-107. The Canadian Pooled Funds and U.S. Funds are not subject to NI 81-107.

32. The Filer cannot rely on the exception in subsection 6.1 of NI 81-107 for the Inter-Fund Trades unless each party to the transaction is a reporting issuer and the Inter-Fund Trade occurs at the "current market price of the security" which, in the case of exchange-traded securities, includes the Closing Sale Price but not the Last Sale Price.

33. Each Inter-Fund Trade will be consistent with the investment objectives of the Fund or Canadian Client Account, as applicable.

34. The Original Decision was obtained to permit Inter-Fund Trades in unlisted debt securities between a NI 81-102 Fund and a Canadian Pooled Fund. For Inter-Fund Trades involving a Canadian Pooled Fund, the Original Decision requires that an IRC be established for the Canadian Pooled Funds in order to review such Inter-Fund Trades. For Canadian Client Accounts, which are not subject to an IRC approval process, the Original Decision requires client authorization of Canadian Inter-Fund Trades in the Investment Management Agreement or other documentation.

35. The Filer, PIMCO LLC, and all other affiliates of the Filer are subject to cross trade and other applicable policies (the Applicable Inter-Fund Trading Policies). Such Applicable Inter-Fund Trading Policies include a Canadian specific policy which ensures that Canadian Inter-Fund Trades are conducted in accordance with the requirements of applicable securities legislation, including NI 81-102 and NI 81-107 and the Original Decision.

36. At the time of a Canadian Inter-Fund Trade, the Filer will have policies and procedures in place to enable the Canadian Funds and Canadian Client Accounts to engage in Canadian Inter-Fund Trades.

37. At the time of a Cross-Border Inter-Fund Trade, the Filer will have policies and procedures in place to enable the Canadian Funds and Canadian Client Accounts to engage in Cross-Border Inter-Fund Trades.

38. In respect of each NI 81-102 Fund, the Filer, as manager, has established or will establish an IRC in accordance with the requirements of NI 81-107.

39. Inter-Fund Trades involving an NI 81-102 Fund will be referred to and approved by the IRC of the NI 81-102 Fund under subsection 5.2(1) of NI 81-107 and the Filer, as manager of an NI 81-102 Fund, and the IRC of the NI 81-102 Fund, will comply with section 5.4 of NI 81-107 in respect of any standing instructions the IRC provides in connection with the Inter-Fund Trade. The IRC of the NI 81-102 Funds will not approve an Inter-Fund Trade involving an NI 81-102 Fund unless it has made the determination set out in subsection 5.2(2) of NI 81-107.

40. In respect of each Canadian Pooled Fund, the Filer, as manager, has established or will establish an IRC (which may also be the IRC of the NI 81-102 Funds) to review and approve, including by way of standing instructions, any proposed Inter-Fund Trade involving a Canadian Pooled Fund.

41. The mandate of the IRC of a Canadian Pooled Fund includes or will include, approving Inter-Fund Trades. The IRC of a Canadian Pooled Fund is, or will be, created by the Filer, as manager of a Canadian Pooled Fund, in accordance with the requirements of section 3.7 of NI 81-107 and complies, or will comply, with the standard of care set out in section 3.9 of NI 81-107. The IRC of the Canadian Pooled Funds will not approve any Inter-Fund Trade involving a Canadian Pooled Fund unless it has made the determination set out in subsection 5.2(2) of NI 81-107.

42. The mandate of the IRC of the NI 81-102 Funds and the Canadian Pooled Funds will be expanded to include approval of Cross-Border Inter-Fund Trades between a Canadian Fund and a U.S. Fund.

43. Prior to the Filer engaging in Inter-Fund Trades on behalf of a Canadian Client Account, each Investment Management Agreement or other documentation will contain the authorization of the client for the Filer, as portfolio manager of the Canadian Client Account, to engage in Inter-Fund Trades.

44. When the Filer engages in an Inter-Fund Trade of securities between Funds or between a Canadian Client Account and a Fund, including a Cross-Border Inter-Fund Trade, each will comply with the following procedures:

(a) the portfolio manager of the Client, or their designee, will deliver the trade instructions in respect of a purchase or a sale of a security by the Client to the applicable trading desk of the Filer or PIMCO LLC;

(b) the specialist trading desk for the instrument to be traded will determine whether the instrument is eligible to be crossed with any pending purchase or sell orders, as applicable;

(c) the specialist portfolio manager is responsible for obtaining pricing for the Inter-Fund Trade in accordance with PIMCO's Global Cross-Trading Policy and related procedures;

(d) the specialist portfolio manager will review and provide approval for the price of the proposed Inter-Fund Trade;

(e) the portfolio managers of the selling and purchasing Clients will provide their respective approval of the Inter-Fund Trade;

(f) the proposed Inter-Fund Trade will be reviewed by PIMCO's Compliance team;

(g) once all approvals have been provided, the order will be executed on a timely basis in accordance with the requirements of paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107 provided that, for exchange-traded securities the Inter-Fund Trade may be executed at the Last Sale Price of the security prior to the execution of the trade; and

(h) the Filer's policies and procedures applicable to the Inter-Fund Trades will require that:

(i) each Inter-Fund Trade is executed in accordance with the investment policies and investment restrictions of each participant in the Inter-Fund Trade;

(ii) each Inter-Fund Trade is in the best interests of both the selling and purchasing Client;

(iii) Inter-Fund Trades will be executed for no consideration other than cash payment against prompt delivery of a security;

(iv) no brokerage commission, fee or other remuneration will be paid in connection with an Inter-Fund Trade other than the nominal cost to print or otherwise display the Inter-Fund Trade; and

(v) the Inter-Fund Trade complies with all other requirements of applicable law.

45. If the IRC of a Canadian Fund becomes aware of an instance where the Filer did not comply with the terms of any decision document issued in connection with the Inter-Fund Trades, including any Cross-Border Inter-Fund Trades, or a condition imposed by securities legislation or the IRC in its approval, the IRC of the Canadian Fund will, as soon as practicable, notify in writing the securities regulatory authority or regulator which is the Canadian Fund's principal regulator.

46. The Filer has not applied for any changes to the In Specie Transfer Relief as defined in the Original Decision. Accordingly, the Revocation does not apply to the In Specie Transfer Relief.

Benefits of the Exemption Sought

47. The securities regulatory authorities in the Jurisdictions granted the Original Decision on the basis that it is in the best interests of the Canadian Clients.

48. The Filer has determined that it would be in the best interests of all Clients to permit Inter-Fund Trades, including Cross-Border Inter-Fund Trades, for the following reasons:

(a) because of the various investment objectives and investment strategies that are or will be utilized by the Clients, it may be appropriate for different investment portfolios to acquire or dispose of the same securities. The Filer has determined that engaging in these Inter-Fund Trades directly rather than with a third party has potential benefits such as maintaining access to attractive investment opportunities, lower trading costs, reduced market disruption and quicker execution;

(b) making all Clients subject to similar sets of rules governing the execution of transactions will result in cost and timing efficiencies in respect of the execution of transactions for all Clients, for example reducing market exposure risk due to delayed execution and improving liquidity for thinly traded securities; and

(c) making all Clients subject to similar sets of rules governing the execution of transactions will result in less complicated and more reliable compliance procedures, as well as simplified and more efficient monitoring thereof in connection with execution of transactions on behalf of all Clients.

49. The foregoing benefits are currently enjoyed by the Canadian Clients pursuant to existing regulatory exceptions and the Original Decision. The Filer has determined that the Exemption Sought is in the best interests of the Canadian Clients because it would extend these benefits to Cross-Border Inter-Fund Trades with U.S. Clients, significantly broadening the pool of potential inter-fund trading counterparties.

50. U.S. Funds currently conduct inter-fund trading pursuant to the Applicable Inter-Fund Trading Policies that comply with U.S. Inter-Fund Trading Rules. From a procedural perspective, inter-fund trades involving 40 Act Funds are subject to reporting to the applicable U.S. fund board. Also, in order to comply with SEC rules governing inter-fund trades and the Applicable Inter-Fund Trading Policies as noted above, it is explicitly required that no brokerage commission, fee or other remuneration be paid by the accounts in connection with the transaction. Cross-Border Inter-Fund Trades would be conducted on PIMCO's portfolio management systems, which are reviewed by an integrated compliance group.

51. U.S. Inter-Fund Trading Rules impose similar requirements to the regulatory exceptions, and the Original Decision respecting appropriate consideration, policies and procedures, governance and review, recordkeeping and pricing for inter-fund trades. Because the Original Decision permits Canadian Inter-Fund Trades with respect to exchange-traded securities to be executed at the Last Sale Price instead of the Closing Sale Price, the Filer has determined that there is no material difference between the pricing requirements that apply to Canadian Inter-Fund Trades under the Original Decision and the pricing requirements that apply to inter-fund trades in the United States.

52. The Filer has determined that similar regulatory requirements applicable to inter-fund trading in Canada and the United States, together with PIMCO's integrated portfolio management systems and compliance group, creates a framework for conducting Cross-Border Inter-Fund Trades in a manner that minimizes conflicts of interest and promotes fairness for all Clients.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator is that:

1. the Revocation is granted;

2. the Section 4.2(1) Relief is granted provided that the following conditions are satisfied:

(a) the Inter-Fund Trade is consistent with the investment objectives of each of the Funds involved in the trade;

(b) the IRC of the Canadian Fund involved in the trade has approved the transaction in respect of that Canadian Fund in accordance with the terms of section 5.2 of NI 81-107;

(c) where a U.S. Fund is involved as a counterparty to the Inter-Fund Trade:

(i) if the U.S. Fund is a 40 Act Fund, the board of directors of the U.S. Fund (where the U.S. Fund is an incorporated entity) or the board of trustees (where the U.S. Fund is a trust), as applicable, of the U.S. Fund has approved policies and procedures that permit Cross-Border Inter-Fund Trades that require compliance with Rule 17a-7 under the 40 Act; and

(ii) if the U.S. fund is a U.S. Pooled Fund, the Cross-Border Inter-Fund Trade is made in accordance with policies and procedures that (A) are similar to the requirements of Rule 17a-7 of the 40 Act, and (B) have been approved by PIMCO LLC; and

(d) the Inter-Fund Trade complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107; and

3. the Inter-Fund Trading Relief is granted provided that the following conditions are satisfied:

(a) the Inter-Fund Trade is consistent with the investment objectives of each of the Clients involved in the trade;

(b) the Filer, as manager of a Canadian Fund, refers the Inter-Fund Trade involving such Canadian Fund to the IRC of that Canadian Fund in the manner contemplated by section 5.1 of NI 81-107 and the Filer, and the IRC of the Canadian Fund comply with section 5.4 of NI 81-107 in respect of any standing instructions the IRC provides in connection with the Inter-Fund Trade;

(c) in the case of an Inter-Fund Trade between Canadian Funds:

(i) the IRC of each Canadian Fund has approved the Inter-Fund Trade in respect of the Canadian Fund in accordance with the terms of section 5.2(2) of NI 81-107; and

(ii) the Inter-Fund Trade complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107, except that for the purposes of paragraph (e) of subsection 6.1(2) of NI 81-107 in respect of exchange-traded securities, the current market price of the securities may be the Last Sale Price;

(d) in the case of an Inter-Fund Trade between a Canadian Client Account and a Canadian Fund:

(i) the IRC of the Canadian Fund has approved the Inter-Fund Trade in respect of the Canadian Fund in accordance with the terms of section 5.2(2) of NI 81-107;

(ii) the investment management agreement or other documentation in respect of the Canadian Client Account authorizes the Inter-Fund Trade; and

(iii) the Inter-Fund Trade complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107, except that for the purposes of paragraph (e) of subsection 6.1(2) of NI 81-107 in respect of exchange-traded securities, the current market price of the securities may be the Last Sale Price;

(e) in the case of an Inter-Fund Trade between a Canadian Fund and a U.S. Fund:

(i) the IRC of the Canadian Fund has approved the Inter-Fund Trade in respect of the Canadian Fund in accordance with the terms of section 5.2(2) of NI 81-107;

(ii) where the U.S. Fund:

(A) is a 40 Act Fund, the board of directors of the U.S. Fund (where the U.S. Fund is an incorporated entity) or the board of trustees (where the U.S. Fund is a trust), as applicable, of the U.S. Fund involved in the trade has approved policies and procedures that permit Cross-Border Inter-Fund Trades that require compliance with Rule 17a-7 under the 40 Act; and

(B) is a U.S. Pooled Fund, the Cross-Border Inter-Fund Trade is made in accordance with policies and procedures that (I) are similar to the requirements of Rule 17a-7 of the 40 Act, and (II) have been approved by PIMCO LLC;

(iii) the Inter-Fund Trade complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107, except that for the purposes of paragraph (e) of subsection 6.1(2) of NI 81-107 in respect of exchange-traded securities, the current market price of the securities may be the Last Sale Price;

(iv) the Inter-Fund Trade shall only be executed for orders with a quantity of more than 50 standard trading units; and

(v) the Inter-Fund Trade shall comply with the market integrity requirements as defined in section 6.1(1)(b) of NI 81-107; and

(f) in the case of an Inter-Fund Trade between a Canadian Client Account and a U.S. Fund:

(i) the investment management agreement or other documentation in respect of the Canadian Client Account authorizes the Inter-Fund Trade;

(ii) where the U.S. Fund:

(A) is a 40 Act Fund, the board of directors of the U.S. Fund (where the U.S. Fund is an incorporated entity) or the board of trustees (where the U.S. Fund is a trust), as applicable, of the U.S. Fund involved in the trade has approved policies and procedures that permit Cross-Border Inter-Fund Trades that require compliance with Rule 17a-7 under the 40 Act; and

(B) is a U.S. Pooled Fund, the Cross-Border Inter-Fund Trade is made in accordance with policies and procedures that (I) are similar to the requirements of Rule 17a-7 of the 40 Act, and (II) have been approved by PIMCO LLC; and

(iii) the Inter-Fund Trade complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107, except that for the purposes of paragraph (e) of subsection 6.1(2) of NI 81-107 in respect of exchange-traded securities, the current market price of the securities may be the Last Sale;

(iv) the Inter-Fund Trade shall only be executed for orders with a quantity of more than 50 standard trading units;

(v) the Inter-Fund Trade shall comply with the market integrity requirements as defined in section 6.1(1)(b) of NI 81-107; and

(g) with respect to Cross-Border Inter-Fund Trades only, this decision will cease to be operative three years from the date of such decision.

"Darren McKall"

Investment Funds & Structured Products Branch

Ontario Securities Commission