Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- Relief granted from NI 21-101 and NI 23-101 to permit certain funds to conduct inter-fund trades between mutual funds, pooled funds, and managed accounts -- inter-fund transfers will comply with conditions in s. 6.1(2) of National Instrument 81-107 - Independent Review Committee for Investment Funds (NI 81-107) including Independent Review Committee approval.

Applicable Legislative Provisions

National Instrument 21-101 Marketplace Operation, s. 15.1.

National Instrument 23-101 Trading Rules, ss. 6, 8, 12.1.

July 15, 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,

MANITOBA, ONTARIO, QUEBEC, NEW BRUNSWICK,

NOVA SCOTIA, PRINCE EDWARD ISLAND,

NEWFOUNDLAND AND LABRADOR,

NORTHWEST TERRITORIES, YUKON AND

NUNAVUT

(Jurisdictions)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

(MRRS)

AND

IN THE MATTER OF

UBS GLOBAL ASSET MANAGEMENT

(CANADA) CO.

(the Filer)

AND

IN THE MATTER OF

THE FUNDS REFERENCED IN SCHEDULE A

(the Funds)

 

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (Decision Maker) in each of the Jurisdictions received an application (the Application) under the securities legislation of the Jurisdictions (the Legislation) from the Filer for relief (the Requested Relief) from the provisions of National Instrument 21-101 Marketplace Operation, and Part 6 and Part 8 of National Instrument 23-101 Trading Rules to facilitate trades (the Inter-Fund Trades) in securities involving the Filer's Pooled Funds (as defined below) and Managed Accounts (as defined below).

Under the MRRS:

(i) the principal regulator for the Application is the Ontario Securities Commission; and

(ii) this Decision Document represents the decision of each of the Decision Makers.

Interpretation

Defined terms contained in National Instrument 14-101 Definitions, in NI 81-102 Mutual Funds (NI 81-102) and in National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) have the same meaning in this MRRS Decision Document unless they are otherwise defined in this Decision Document.

Managed Account means an existing or future managed account that the Filer, or an affiliate of the Filer, manages and/or advises.

NI 81-102 Fund means an existing or future investment fund that the Filer, or an affiliate of the Filer, manages and/or advises that is a reporting issuer, and is subject to NI 81-102.

Pooled Fund means an existing or future pooled fund that the Filer, or an affiliate of the Filer, manages and/or advises.

Public Fund means an existing or future investment fund that the Filer, or an affiliate of the Filer, manages and/or advises that is a reporting issuer, but is not subject to NI 81-102.

Representations

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

1. Each NI 81-102 Fund, each Public Fund, and each Pooled Fund (each a Fund) is, or will be, an open-ended or closed-ended mutual fund trust, or an open-ended or closed-ended mutual fund corporation.

2. Each NI 81-102 Fund and each Public Fund is, or will be, a reporting issuer in one or more of the Jurisdictions and subject to NI 81-107. The Pooled Funds are not, or will not, be a reporting issuer in any of the Jurisdictions and are not, or will not, be subject to NI 81-102 or NI 81-107.

3. The Managed Accounts are not, or will not, be subject to NI 81-102 or NI 81-107.

4. The Filer, or an affiliate of the Filer, has established, or will establish, an independent review committee (the IRC) in respect of each NI 81-102 Fund and in respect of each Public Fund in accordance with the requirements of NI 81-107.

5. The Filer, or an affiliate of the Filer, will establish an IRC (which will likely also be the IRC in respect of the NI 81-102 Funds and the Public Funds) in respect of each Pooled Fund.

6. The mandate of the IRC of a Pooled Fund, among other things, will include approving Inter-fund Trades between the Pooled Fund and another Pooled Fund, a NI 81-102 Fund, a Public Fund and/or a Managed Account. The IRC of the Pooled Funds will be composed by the Filer, or an affiliate of the Filer, in accordance with the requirements of section 3.7 of NI 81-107 and will be expected to comply with the standard of care set out in section 3.9 of NI 81-107. Further, the IRC of the Pooled Funds will not approve any Inter-fund Trades unless it has made the determination set out in section 5.2(2) of NI 81-107.

7. Inter-fund Trades involving a NI 81-102 Fund and/or a Public Fund will be referred to the IRC of the NI 81-102 Fund and the Public Fund, respectively, under section 5.2(1) of NI 81-107 and will be subject to the requirements of section 5.2(2) of NI 81-107.

8. The investment management agreement or other documentation in respect of a Managed Account will contain the authorization of the client for the portfolio manager to conduct Inter-fund Trades with another Managed Account, a NI 81-102 Fund, a Public Fund, and/or a Pooled Fund.

9. The Filer cannot rely upon the exemption from NI 21-101 and Parts 6 and 8 of NI 23-101 codified under paragraph 6.1(3) of NI 81-107 in connection with Inter-Fund Trades involving the Pooled Funds or Managed Accounts.

Decision

Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.

The decision of the Decision Makers is that the Requested Relief is granted in respect of each Fund and each Managed Account provided that:

(a) In respect of each Inter-Fund Trade involving a NI 81-102 Fund and/or a Public Fund trading with a Pooled Fund and/or a Managed Account:

(i) if the transaction is with a Pooled Fund, the IRC of the Pooled Fund has approved the transaction in respect of the Pooled Fund on the same terms as are required under section 5.2 of NI 81-107;

(ii) if the transaction is with a Managed Account, the investment management agreement or other documentation in respect of the Managed Account authorizes the transaction; and

(iii) the transaction complies with paragraphs (b) to (g) of subsection 6.1(2) of NI 81-107.

(b) In respect of each Inter-Fund Trade involving a Pooled Fund:

(i) the IRC of the Pooled Fund has approved the transaction in respect of the Pooled Fund on the same terms as are required under section 5.2 of NI 81-107;

(ii) if the transaction is with another Fund, the IRC of the other Fund has approved the transaction in respect of the other Fund on the same terms as are required under section 5.2 of NI 81- 107;

(iii) if the transaction is with a Managed Account the investment management agreement or other documentation in respect of the Managed Account authorizes the transaction; and

(iv) the transaction complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107.

(c) In respect of each Inter-Fund Trade involving a Managed Account:

(i) the investment management agreement or other documentation in respect of the Managed Account authorizes the transaction;

(ii) if the transaction is with another Managed Account, the investment management agreement or other documentation in respect of the other Managed Account authorizes the transaction;

(iii) if the transaction is with a Fund, the IRC of the Fund has approved the transaction in respect of the Fund on the same terms as are required under section 5.2 of NI 81-107; and

(iv) the transaction complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107.

"Rhonda Goldberg"
Manager, Investment Funds

 

Schedule A

Pooled Funds

UBS (Canada) American Equity Fund
UBS (Canada) Balanced Fund
UBS (Canada) Bond Fund
UBS (Canada) Canada Plus Equity Fund
UBS (Canada) Canadian Equity Fund
UBS (Canada) Cash in Action Fund
UBS (Canada) Cash Management Fund
UBS (Canada) Diversified Fund
UBS (Canada) Dynamic Alpha Strategies Fund
UBS (Canada) Emerging Markets Equity Fund
UBS (Canada) Emerging Technologies Fund
UBS (Canada) Global Bond Fund
UBS (Canada) Global Equity Fund
UBS (Canada) Global Large Cap Equity Fund
UBS (Canada) Global Allocation Fund
UBS (Canada) International Equity Fund
UBS (Canada) International Large Cap Equity Fund
UBS (Canada) Long Term Bond Fund
UBS (Canada) Money Market Fund
UBS (Canada) Short Term Bond Fund
UBS (Canada) Small Capitalization Fund
UBS (Canada) U.S. $ Cash Management Fund
UBS (Canada) U.S. Equity Fund
UBS (Canada) U.S. Growth Equity Fund
UBS (Canada) U.S. 130/30 Fund