CSA’s proposed rules around mutual fund sales practices shouldn’t apply to pooled funds, the Portfolio Management Association of Canada (PMAC) says in a submission to the regulator.
In September, CSA published for comment proposed amendments to the mutual funds instrument (NI 81-105). The comment period ended Thursday.
PMAC put aside the question of banning deferred sales charges and prohibiting trailers where no suitability assessment is made, saying that only a small percentage of its 250 member firms are compensated that way. Other organizations, including the Investment Funds Institute of Canada, have focused on the proposed ban.
Read: IFIC outlines problems with proposed ban of DSCs, trailers
Instead, PMAC said the use of pooled funds is not the same as retail mutual funds and they should be treated differently under the proposed rules.
Pooled funds are generally available only to sophisticated investors, whose clients benefit from other protections, including investment management arrangements, discretionary management under an investment policy statement, and portfolio managers’ duty of care, PMAC said.
“We note that the CSA has not articulated—nor are we aware of—any specific regulatory, market or investor protection concerns arising from the provision of pooled funds to investors that would necessitate the application of NI 81-105 to such funds,” the submission said.
More regulation could increase costs that would be passed on to pooled fund investors, it said, which would be warranted only if there were specific policy concerns.