Segall Bryant & Hamill

Headnote

MI 11-102 -- relief granted from margin rate applicable to U.S. money market mutual funds in calculation of market risk in Form 31-103F1 -- margin rate for funds distributed in Canada is 5%, while funds distributed in U.S. is 100% -- similar regulation of money market funds -- NI 31-103.

Applicable Legislative Provisions

NI 31-103, ss. 12.1, 15.

June 17, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the "Principal Jurisdiction")

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

SEGALL BRYANT & HAMILL

(the "Filer")

DECISION

Background

The Principal Regulator (as defined below) in the Principal Jurisdiction has received an application from the Filer for a decision under Subsection 15.1 of National Instrument 31-103 Registration Requirements and Exemptions ("NI 31-103") for relief from the requirement in section 12.1 of NI 31-103 that the Filer calculate its excess working capital using Form 31-103F1 (the "Form F1") only to the extent that the Filer be able to apply the same margin rate to investments in money market mutual funds qualified for sale by prospectus in the United States of America as is the case for money market mutual funds qualified for sale in a province of Canada when calculating market risk pursuant to Line 9 of the Form (the "Exemption Sought").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator (the "OSC" or "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 the province of Quebec.

Interpretation

Defined terms contained in National Instrument 31-103 -- Registration Requirements and Exemptions and MI 11-102 have the same meanings in this decision (the "Decision") unless they are otherwise defined in this Decision.

Representations

This Decision is based on the following facts represented by the Filer.

1. The Filer is a partnership established under the laws of the State of Minnesota in the United States of America ("U.S.") with its head office located in Chicago, Illinois.

2. The Filer is registered in the provinces of Ontario and Quebec as a portfolio manager.

3. The Filer is not a reporting issuer in any jurisdiction of Canada and is not, to its knowledge, in default of securities regulation in any jurisdiction of Canada, other than as disclosed in this Decision.

4. The Filer was established in 1994. The Filer is an independent, employee owned partnership which provides professional portfolio management of US equity, fixed income, balanced asset allocation portfolios and alternative investments to foundations, endowments, corporations, public funds, multi-employer plans, and private clients, primarily in the U.S. More than 80% of the Filer's revenues are received from clients in jurisdictions other than Canada.

5. The Filer is registered with the U.S. Securities and Exchange Commission as an investment adviser under the United States Investment Advisers Act of 1940, as amended ("the 1940 Act").

6. The Filer invests its cash balances in money market mutual funds qualified for sale by prospectus in the U.S., specifically money market mutual funds which are registered investment companies under the 1940 Act, and which comply with Rule 2a-7 thereunder ("Rule 2a-7").

7. It is not practicable for the Filer to invest its cash balances in money market mutual funds qualified for sale by prospectus in a province of Canada because: such mutual funds are unlikely to be qualified for sale in the U.S.; as they are not offered by the financial institution used by the Filer they are not easily used for cash management purposes; there may be foreign exchange issues as the Filer invests in U.S. dollar denominated securities; there may be tax implications; and the Filer lacks familiarity with Canadian money market funds and their issuers.

8. Under Schedule 1 of Form F1 an investment in the securities of a money market mutual fund qualified for sale by prospectus only in the U.S. would be subject to a margin rate of 100% of the market value of such investments for the purposes of Line 9 of Form F1.

9. The Filer would have excess working capital as calculated using Form F1 of less than zero unless relief is granted, and could not meet the capital requirements under NI 31-103.

10. The margin rate required for a money market mutual fund qualified for sale by prospectus in a province of Canada is 5% of the market value of such investment, as opposed to 100% for the market value of investments in a money market mutual fund qualified for sale by prospectus in the U.S.

11. The regulatory oversight and the quality of investments held by a money market mutual fund qualified for sale by prospectus in each of the U.S. and a province of Canada is similar. In particular Rule 2a-7 sets out requirements dealing with portfolio maturity, quality, diversification and liquidity, which are similar to requirements under National Instrument 81-102 -- Mutual Funds ("NI 81-102").

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 under the Legislation is that the Exemption Sought is granted so long as:

(a) any money market mutual fund invested in by the Filer is qualified for sale by prospectus in the U.S. as a result of being a registered investment company under the 1940 Act, which complies with Rule 2a-7;

(b) the requirements for money market mutual funds under Rule 2a-7 or any successor rule or legislation are similar to the requirements for Canadian money market mutual funds under NI 81-102 or any successor rule or legislation; and

(c) the Filer is registered with the U.S. Securities and Exchange Commission as an investment adviser under the 1940 Act.