Sun Life Global Investments (Canada) Inc.
Headnote
National Instrument 31-103 Registration Requirements and Exemptions -- relief from the requirement for a mutual fund dealer to become a member of the Mutual Fund Dealers Association of Canada -- applicant subject to certain terms and conditions on its registration as a mutual fund dealer.
Applicable Legislative Provisions
National Instrument 31-103 Registration Requirements and Exemptions, ss. 9.2, 15.1.
Applicable Published Document
Letter sent to the Investment Funds Institute of Canada and the Investment Counsel Association of Canada, December 6, 2000, [2000] 23 OSCB 8467.
June 23, 2011
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ONTARIO
AND
IN THE MATTER OF
SUN LIFE GLOBAL INVESTMENTS (CANADA) INC.
(the Filer)
DECISION
Background
The regulator in Ontario has received an application from the Filer for a decision under the securities legislation of Ontario (the Legislation) exempting the Filer from the requirement that the Filer be a member of the MFDA pursuant to section 9.2 of National Instrument 31-103 Registration Requirements and Exemptions (the Requested Relief).
Interpretation
Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless otherwise defined.
The following terms shall have the following meanings:
1. MFDA means the Mutual Fund Dealers Association of Canada.
2. Terms and Conditions means the terms and conditions that will be placed against the Filer's registration as a mutual fund dealer in Ontario in accordance with this decision, as attached as Appendix A to this decision.
Representations
This decision is based on the following facts represented by the Filer.
1. The Filer is a corporation incorporated under the laws of Canada with its head office located in Toronto, Ontario.
2. The Filer is in the process of applying for registration as a dealer in the category of mutual fund dealer in Ontario. Currently, the Filer is registered as a commodity trading manager, investment fund manager and portfolio manager in Ontario.
3. The Filer is the manager of various mutual funds that are qualified for distribution under a simplified prospectus in each of the provinces and territories of Canada (the Current Funds) and will be the manager of other investment funds it expects to establish in the future (the Future Funds, which together with the Current Funds, are referred to herein as the Funds). The Filer's principal business is managing the Funds.
4. Securities of the Current Funds are primarily distributed to the public through registered dealers.
5. The Filer is not a reporting issuer in any jurisdiction of Canada and is not, to its knowledge, in default of securities regulation of any jurisdiction of Canada.
6. The Filer's activities as a mutual fund dealer will be restricted to servicing, and acting as the mutual fund dealer of record in respect of, trades in mutual funds only as permitted by the Terms and Conditions. Membership of the Filer in the MFDA is not appropriate due to the limited nature of the Filer's mutual fund dealer activities.
7. The Filer will obtain and maintain its registration as a mutual fund dealer in Ontario and will comply with applicable securities legislation and rules.
8. Before the Filer, in its capacity as a registered mutual fund dealer, accepts any person or company as a mutual fund client, the Filer will give the person or company written notice about its status as a non-member of the MFDA, using substantially the following words:
Sun Life Global Investments (Canada) Inc. (Sun Life Global Investments) is not currently a member, and does not intend to become a member of the Mutual Fund Dealers Association of Canada (the MFDA). Consequently, clients of Sun Life Global Investments will not have available to them investor protection benefits that would otherwise derive from membership of Sun Life Global Investments in the MFDA, including coverage under the investor protection plan for clients of members of the MFDA.
9. The Filer has agreed to the imposition of the Terms and Conditions set out in the attached Appendix A as a condition of its registration as a dealer in the category of mutual fund dealer.
Decision
The Director is satisfied that the decision meets the test set out in the Legislation to make the decision.
The decision of the Director under the Legislation is that the Requested Relief is granted, provided that the Filer's registration as a mutual fund dealer in Ontario is subject to the Terms and Conditions in Appendix A.
Appendix A
Terms and Conditions on the Registration of Sun Life Global Investments (Canada) Inc.
as a Mutual Fund Dealer under the Legislation
Interpretation
1. In this Appendix A, except as otherwise defined below or unless the context otherwise requires, defined terms contained in National Instrument 14-101 Definitions have the same meaning in this Appendix A.
2. In this Appendix A,
(a) "Adviser" means an adviser as defined in the Legislation;
(b) "Client Name Trade" means, for the Firm, a trade to, or on behalf of, a person or company in securities of a mutual fund that is managed by the Firm or an affiliated entity of the Firm, where, immediately before the trade, the person or company is shown on the records of the mutual fund or of another mutual fund managed by the Firm or an affiliated entity of the Firm as the holder of securities of such mutual fund, and the trade consists of:
(i) a purchase, by the person or company, through the Firm, of securities of the mutual fund; or
(ii) a redemption, by the person or company, through the Firm, of securities of the mutual fund;
and where the person or company:
(iii) is a client of the Firm or an affiliated entity of the Firm that was not solicited by the Firm or an affiliated entity of the Firm; or
(iv) was an existing client of the Firm or an affiliated entity of the Firm on the Effective Date;
(c) "Effective Date" means June 23, 2011;
(d) "Employee", for the Firm, means:
(i) an employee of the Firm;
(ii) an employee of an affiliated entity of the Firm; or
(iii) an individual that is engaged to provide, on a bona fide basis, consulting, technical, management or other services to the Firm or to an affiliated entity of the Firm, under a written contract between the Firm or the affiliated entity and the individual or a consultant company or consultant partnership of the individual, and, in the reasonable opinion of the Firm, the individual spends or will spend a significant amount of time and attention on the affairs and business of the Firm or an affiliated entity of the Firm;
(e) "Employee", for a Service Provider, means an employee of the Service Provider or an affiliated entity of the Service Provider, provided that, at the relevant time, in the reasonable opinion of the Firm, the employee spends or will spend, a significant amount of time and attention on the affairs and business of:
(i) the Firm or an affiliated entity of the Firm; or
(ii) a mutual fund managed by the Firm or an affiliated entity of the Firm;
(f) "Executive", for the Firm, means a director, officer or partner of the Firm or of an affiliated entity of the Firm;
(g) "Executive", for a Service Provider, means a director, officer or partner of the Service Provider or of an affiliated entity of the Service Provider;
(h) "Exempt Trade", for the Firm, means a trade in securities of a mutual fund that the Firm would be authorised to make if it were registered under the Legislation as an exempt market dealer;
(i) "Firm" means Sun Life Global Investments (Canada) Inc.;
(j) "Fund-on-Fund Trade" means a trade that consists of:
(i) a purchase, through the Firm, of securities of a mutual fund that is made by another mutual fund;
(ii) a purchase, through the Firm, of securities of a mutual fund that is made by a person or company where the person or company, an affiliated entity of the person or company, or another person or company is, or will become, the counterparty in a specified derivative or swap with another mutual fund; or
(iii) a sale, through the Firm, of securities of a mutual fund that is made by another mutual fund where the party purchasing the securities is:
(1) a mutual fund managed by the Firm or an affiliated entity of the Firm; or
(2) a person or company that acquired the securities where the person or company, an affiliated entity of the person or company, or an other person or company is, or was, the counterparty in a specified derivative or swap with another mutual fund; and
where, in each case, at least one of the referenced mutual funds is a mutual fund that is managed by either the Firm or an affiliated entity of the Firm;
(k) "In Furtherance Trade" means, for the Firm, a trade by the Firm that consists of any act, advertisement, or solicitation, directly or indirectly in furtherance of an other trade in securities of a mutual fund, where the other trade consists of:
(i) a purchase or sale of securities of a mutual fund that is managed by the Firm or an affiliated entity of the Firm; or
(ii) a purchase or sale of securities of a mutual fund where the Firm acts as the principal distributor of the mutual fund; and
where, in each case, the purchase or sale is made by or through an other registered dealer if the Firm is not otherwise permitted to make the purchase or sale pursuant to these terms and conditions;
(l) "Legislation", as the context permits, means the securities legislation of the principal regulator of the Firm, being the Ontario Securities Commission or the securities legislation of another jurisdiction where the Firm is registered as a mutual fund dealer;
(m) "Managed Account" means, for the Firm or an affiliated entity of the Firm, an investment portfolio account of a client under which the Firm or an affiliated entity of the Firm, pursuant to a written agreement made between the Firm or the Firm's affiliated entity and the client, makes investment decisions for the account and has full discretionary authority to trade in securities for the account without obtaining the client's specific consent to the trade;
(n) "Managed Account Trade" means, for the Firm, a trade to, or on behalf of, a Managed Account of the Firm or an affiliated entity of the Firm, where the trade consists of a purchase or redemption, through the Firm of securities of a mutual fund, that is made on behalf of the Managed Account, where, in each case:
(i) the Firm or an affiliated entity of the Firm is the portfolio adviser to the mutual fund;
(ii) the mutual fund is managed by the Firm or an affiliated entity of the Firm; and
(iii) the mutual fund is prospectus-qualified.
(o) "Mutual Fund Instrument" means National Instrument 81-102 Mutual Funds, as amended;
(p) "Permitted Client" means a person or company that is a client of the Firm, or an affiliated entity of the Firm, and that is, or was at the time the person or company became a client of the Firm or an affiliated entity of the Firm:
(i) an Executive or Employee of the Firm or an affiliated entity of the Firm;
(ii) a Related Party of an Executive or Employee of the Firm or an affiliated entity of the Firm;
(iii) a Service Provider of the Firm or an affiliated entity of the Firm or an affiliated entity of a Service Provider of the Firm or an affiliated entity of the Firm;
(iv) an Executive or Employee of a Service Provider of the Firm or an affiliated entity of the Firm; or
(v) a Related Party of an Executive or Employee of a Service Provider of the Firm or an affiliated entity of the Firm;
(q) "Permitted Client Trade" means, for the Firm, a trade to a person, who is a Permitted Client or who represents to the Firm that he or she is a person included in the definition of Permitted Client, in securities of a mutual fund that is managed by the Firm or an affiliated entity of the Firm, and the trade consists of a purchase or redemption, by the person, through the Firm, of securities of the mutual fund;
(r) "Registered Plan" means a registered pension plan, deferred profit sharing plan, registered retirement savings plan, registered retirement income fund, registered education savings plan or other deferred income plan registered under the Income Tax Act (Canada);
(s) "Related Party", for a person, means another person who is:
(i) the spouse of the person;
(ii) the issue of:
(1) the person;
(2) the spouse of the person; or
(3) the spouse of any person that is the issue of a person referred to in sub-paragraphs (1) or (2) above;
(iii) the parent, grandparent or sibling of the person, or the spouse of any of them;
(iv) the issue of any person referred to in paragraph (iii) above;
(v) a Registered Plan established by, or for the exclusive benefit of, one, some or all of the foregoing;
(vi) a trust where one or more of the trustees is a person referred to above and the beneficiaries of the trust are restricted to one, some, or all of the foregoing; or
(vii) a corporation where all the issued and outstanding shares of the corporation are owned by one, some, or all of the foregoing;
(t) "securities", for a mutual fund, means shares or units of the mutual fund;
(u) "Seed Capital Trade" means a trade in securities of a mutual fund made to a person or company referred to in any of subparagraphs 3.l(1)(a)(i) to 3.l(1)(a)(iii) of the Mutual Fund Instrument; and
(v) "Service Provider" means:
(i) a person or company that provides or has provided professional, consulting, technical, management or other services to the Firm or an affiliated entity of the Firm;
(ii) an Adviser to a mutual fund that is managed by the Firm or an affiliated entity of the Firm; or
(iii) a person or company that provides or has provided professional, consulting, technical, management or other services to a mutual fund that is managed by the Firm or an affiliated entity of the Firm.
3. In this Appendix A, a person or company is considered to be:
(a) an affiliated entity of another person or company if one is a subsidiary entity of the other or if both are subsidiary entities of the same person or company, or if each of them is controlled by the same person or company;
(b) controlled by a person or company if
(i) in the case of a person or company
(1) voting securities of the first-mentioned person or company carrying more than 50 percent of the votes for the election of directors are held, otherwise than by way of security only, by or for the benefit of the other person or company; and
(2) the votes carried by the securities are entitled, if exercised, to elect a majority of the directors of the first-mentioned person or company;
(ii) in the case of a partnership that does not have directors, other than a limited partnership, the second-mentioned person or company holds more than 50 percent of the interests in the partnership; or
(iii) in the case of a limited partnership, the general partner is the second-mentioned person or company;
(c) a subsidiary entity of another person or company if
(i) it is controlled by
(1) that other; or
(2) that other and one or more persons or companies, each of which is controlled by that other; or
(3) two or more persons or companies, each of which is controlled by that other; or
(ii) it is a subsidiary entity of a person or company that is that other's subsidiary entity.
4. In this Appendix A:
(a) "issue" and "sibling" includes any person having such relationship through adoption, whether legally or in fact;
(b) "parent" and "grandparent" includes a parent or grandparent through adoption, whether legally or in fact;
(c) "registered dealer" means a person or company that is registered under the Legislation as a dealer in a category that permits the person or company to act as dealer for the subject trade; and
(d) "spouse", for an Employee or Executive, means a person who, at the relevant time, is the spouse of the Employee or Executive.
5. In this Appendix A, any terms that are not otherwise defined in National Instrument 14-101 Definitions or specifically defined above shall, unless the context otherwise requires, have the meaning:
(a) specifically ascribed to such term in the Mutual Fund Instrument; or
(b) if no meaning is specifically ascribed to such term in the Mutual Fund Instrument, the same meaning the term would have for the purposes of the Legislation.
Restricted Registration: Permitted Activities
6. The registration of the Firm as a mutual fund dealer under the Legislation shall be for the purposes only of trading by the Firm in securities of a mutual fund where the trade consists of:
(a) a Client Name Trade;
(b) an Exempt Trade;
(c) a Fund-on-Fund Trade;
(d) an In Furtherance Trade;
(e) a Managed Account Trade, provided, at the time of the trade, the Firm or an affiliated entity of the Firm who is a portfolio manager to the Managed Account, is registered under the Legislation as an adviser in the category of portfolio manager;
(f) a Permitted Client Trade; or
(g) a Seed Capital Trade;
provided that, in the case of all trades that are only referred to in clauses (a) or (f), the trades are limited and incidental to the principal business of the Firm.