OSC's Fab-Boo-Lous Summary Report for Investment Fund and Structured Product Issuers – Lexology

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On October 19, 2022, the OSC published Staff Notice 81-733 Summary Report for Investment Fund and Structured Product Issuers (the Report). The Report provides an overview of the key activities and initiatives of the OSC’s Investment Funds and Structured Products Branch (IFSP) during the 2021-2022 fiscal year. The Report’s overview of the market composition of investment funds and structured products in Canada highlighted the rising numbers of ESG investment funds and a comparative decline in the creation of new crypto asset funds in Canada through fiscal 2021-2022. The Report is organized into the following four broad areas and some of the highlights are summarized below.
Operational Highlights
IFSP completed a total of 359 prospectus reviews during the 2021-2022 fiscal year (slightly less than the 364 reviews completed in the 2020/2021 fiscal year). Some of the novel prospectus filings that were receipted during the fiscal period included crypto asset funds, an income for life fund, an interval fund, and two carbon credit future funds.
The Report included a reminder of the CSA’s staff notice released in January of this year that provides guidance for investment funds on their disclosure practices as they relate to ESG considerations (the ESG Notice), particularly funds whose investment objectives reference ESG factors and other funds that use ESG strategies (ESG Related Funds). Staff have been reviewing, and will continue to review, the prospectus and related documentation of ESG Related Funds in accordance with the ESG Notice. The Report highlights the most common issues raised in comments for ESG Related Funds and notes that as part of these reviews staff are reviewing the sales communications relating to the ESG Related Funds in question.
Exemptive Relief Applications
IFSP completed 142 exemptive relief applications during the fiscal period. In addition to the relief applications granted in connection with the prospectus products noted above, noteworthy relief included an exemption granted to a group of investment funds and a registered adviser to permit domestic and cross-border inter-fund trading. In addition, the CSA granted relief to a Schedule I bank to facilitate the distribution of Canadian Depositary Receipts.
Continuous Disclosure Reviews
Some of the major reviews completed by IFSP during the fiscal period include:
Regulatory Policy
The Report summarizes the major policy initiatives that were completed or are in progress during the period including the prohibition of deferred sales charges, the blanket order to codify permitted means to comply with the trailer ban for order execution only dealers and the amendments to reduce the regulatory burden for investment fund issuers (much of which dealt with relief from certain conflict of interest requirements).
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