Securities Law & Instruments

Headnote

Mutual reliance review system for exemptiverelief applications -- Portfolio manager registrant exempted(subject to conditions) from the dealer registration requirement,in clause 25(1)(a) of the Act, for trades in shares or unitsof mutual funds, where: the mutual fund is managed by the registrant(or an affiliate of the registrant), the registrant is the portfolioadviser to the fund, and the trade is made to an account thatis fully managed by the registrant, or an affiliate of the registrant-- Portfolio manager registrant also exempted (subject to conditions)from the dealer registration requirement, in clause 25(1)(a)of the Act, for trades that consist of any act, advertisementor solicitation, directly or indirectly, in furtherance of anothertrade in shares or units of such mutual funds, where the othertrade is a purchase or sale that is made by or through anotherdealer that is registered under the Act in the appropriate categoryof registration.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 25, 74(1).

Applicable Ontario Rules

National Instrument 14-101 Definitions.

National Instrument 81-102 Mutual Funds.

Ontario Securities Commission Rule 31-506 SROMembership - Mutual Fund Dealers.

Ontario Securities Commission Rule 45-501 ExemptDistributions.

Documents Cited

Letter Sent to The Investment Funds Instituteof Canada and the Investment Counsel Association of Canada,December 6, 2000, (2000), 23 OSCB 8467.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN,

ONTARIO, QUÉBEC, NEWBRUNSWICK, NOVA SCOTIA,

PRINCE EDWARD ISLAND, NEWFOUNDLANDAND LABRADOR,

YUKON TERRITORY, NORTHWESTTERRITORIES AND NUNAVUT

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

RBC GLOBAL INVESTMENT MANAGEMENTINC.

 

MRRS DECISION DOCUMENT

WHEREAS the Canadian securities regulatoryauthority or regulator (the "Decision Maker") in eachof the Provinces of British Columbia, Alberta, Saskatchewan,Ontario, Québec, New Brunswick, Nova Scotia, Prince EdwardIsland, Newfoundland and Labrador, Yukon Territory, NorthwestTerritories and Nunavut (the "Jurisdictions") hasreceived an application (the "Application") from RBCGlobal Investment Management Inc. ("RBC Global") fora decision, pursuant to the securities legislation (the "Legislation")of each Jurisdiction, that the "dealer registration requirement"(the "Dealer Registration Requirement"), as such termis defined in National Instrument 14-101 Definitions("NI 14-101"), shall not apply to RBC Global, or toany officers or employees (each an "RBC Global Representative")of RBC Global acting on its behalf, in respect of any trades,in shares or units of a mutual fund (an "RBC Global PortfolioManaged Fund") that is managed by RBC Global, or an affiliateof RBC Global, and in respect of which RBC Global acts as portfolioadviser, as such term is defined in National Instrument 81-102("NI 81-102"), where:

(i) the trade is made by RBC Global to anRBC Global Managed Account (as defined below);

(ii) the trade is made by RBC Global to anRBC Affiliate Managed Account (as defined below); or

(iii) the trade consists of Marketing or WholesalingActivities (as defined below);

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this Application.

AND WHEREAS RBC Global has representedto the Decision Makers that:

1. RBC Global is registered under the Legislationof each Jurisdiction, other than Nunavut where it is pursuingregistration, as an adviser in the categories of "investmentcounsel" and "portfolio manager" (or the equivalent)and RBC Global is registered under the Legislation of Ontarioand Newfoundland as a dealer in the category of "limitedmarket dealer".

2. RBC Global carries on business primarilyas an investment counsel and portfolio manager and offersportfolio management services to persons and companies (each,an "RBC Global Portfolio Managed Client") throughinvestment portfolio accounts (each, an "RBC Global ManagedAccount") under which RBC Global, pursuant to a writtenagreement made between RBC Global and the RBC Global PortfolioManaged Client, makes investment decisions for the accountand has full discretionary authority to trade in securitiesfor the account without obtaining the specific consent ofthe RBC Global Portfolio Managed Client.

3. RBC Global has certain affiliates (an "RBCAffiliate"), including RBC Private Counsel Inc. ("RBCPrivate Counsel"), that also carry on business as aninvestment counsel and portfolio manager and offer portfoliomanagement services to persons and companies (each, an "RBCAffiliate Portfolio Managed Client") through investmentportfolio accounts (each, an "RBC Affiliate Managed Account")under which the RBC Affiliate, pursuant to a written agreementmade between the RBC Affiliate and the RBC Affiliate PortfolioManaged Client, makes investment decisions for the accountand has full discretionary authority to trade in securitiesfor the account without obtaining the specific consent ofthe RBC Affiliate Portfolio Managed Client.

4. RBC Private Counsel is registered underthe Legislation of each Jurisdiction as an adviser in thecategories of "investment counsel" and "portfoliomanager" (or the equivalent).

5. Incidental to its principal business ofportfolio management, RBC Global proposes to distribute sharesor units of RBC Global Portfolio Managed Funds to RBC GlobalManaged Accounts and to RBC Affiliate Managed Accounts.

6. RBC Global also proposes to engage in Marketingand Wholesaling Activities in respect of RBC Global PortfolioManaged Funds. "Marketing and Wholesaling Activities"means for, RBC Global, a trade by RBC Global that consistsof any act, advertisement or solicitation, directly or indirectly,in furtherance of another trade in shares or units of an RBCGlobal Managed Fund, and the other trade is a purchase orsale of shares or units of the RBC Global Managed Fund, thatis, in each case, made by or through another dealer that isregistered under the Legislation of the Jurisdiction in acategory that permits that other dealer to act as a dealerfor such trade.

7. In the absence of this Decision, RBC Globalwould have to be registered under the Legislation of eachJurisdiction as a dealer in the category of "mutual funddealer" or "investment dealer" (or the equivalent)in order to carry out the trading activities permitted bythis Decision;

8. In order to obtain registration under theLegislation of all of the Jurisdictions as a mutual fund dealer,RBC Global would be required to be a member of the MutualFund Dealers Association of Canada (the "MFDA").

9. The MFDA has rules that govern its membershipwhich would have the effect of precluding RBC Global frombeing a member of the MFDA if it continues to conduct itsprinciple business of acting as an investment counsel andaccepting discretionary portfolio management mandates.

AND WHEREAS under the System, this MRRSDecision Document evidences the decisions of each Decision Maker(collectively, the "Decision").

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met.

THE DECISION of the Decision Makers underthe Legislation is that the Dealer Registration Requirementin the Legislation shall not apply to any trades by RBC Global,in shares or units of an RBC Global Portfolio Managed Fund,made through an RBC Global Representative, to an RBC GlobalManaged Account,

PROVIDED THAT:

(A) RBC Global is, at the time of the trade,registered under the Legislation as an adviser in the categoryof "portfolio manager" (or the equivalent);

(B) if the trade is made in a Jurisdictionother than Ontario or Newfoundland, the trade is made by orat the direction of an RBC Global Representative who is, atthe time of the trade, registered under the Legislation toact on behalf of RBC Global as an adviser in the categoryof "portfolio manager" (or the equivalent);

(C) if the trade is made in the Jurisdictionsof either Ontario or Newfoundland and Labrador, RBC Globalis, at the time of the trade, registered under the Legislationof the Jurisdiction as a dealer in the category of "limitedmarket dealer", and the trade is made on behalf of RBCGlobal by a RBC Global Representative who is, at the timeof the trade, either: (i) registered under the Legislationto act on behalf of RBC Global as an adviser in the categoryof "portfolio manager" (or the equivalent), or (ii)acting under the direction of such a person and is himselfor herself registered under the Legislation to trade on behalfof RBC Global pursuant to its registration as a limited marketdealer; and

(D) for each Jurisdiction, this Decision shallterminate one year after the coming into force, subsequentto the date of this Decision, of a rule or other regulationunder the Legislation of the Jurisdiction that relates, inwhole or part, to any trading by persons or companies thatare registered under the Legislation as portfolio managers(or the equivalent), in securities of a mutual fund, to anaccount of a client, in respect of which the person or companyhas full discretionary authority to trade in securities forthe account, without obtaining the specific consent of theclient to the trade, but does not include any rule or regulationthat is specifically identified by the Decision Maker forthe Jurisdiction as not applicable for these purposes.

AND, IT IS THE DECISION of the DecisionMakers under the Legislation of each Jurisdiction that the DealerRegistration Requirement in the Legislation shall not applyto any trades by RBC Global, in shares or units of an RBC GlobalManaged Fund, made through an RBC Global Representative, where:

(i) the trade is made to an RBC AffiliateManaged Account, or

(ii) the trade consists of Marketing or WholesalingActivities,

PROVIDED THAT:

(E) in the case of each such trade referredto in paragraph (i), the corresponding RBC Affiliate havingfull discretionary trading authority in respect of the RBCAffiliate Managed Account is either:

(i) registered under the Legislation asan adviser in the category of "portfolio manager"(or the equivalent); or

(ii) registered under the Legislation asa dealer in the category of "investment dealer"(or the equivalent), and is authorized to act as a portfoliomanager in respect of the RBC Affiliate Managed Account,pursuant to an exemption from the "adviser registrationrequirement", as such term as defined in National Instrument14-101 Definitions, that is made available underthe Legislation to dealers who are members of the InvestmentDealers Association of Canada; and

(F) in the case of each trade referred toin paragraphs E (i) and (ii), if the trade is made in theJurisdictions of either Ontario or Newfoundland and Labrador,RBC Global is, at the time of the trade, registered underthe Legislation of the corresponding Jurisdiction, as a dealerin the category of "limited market dealer" and theRBC Global Representative that makes the trade on behalf ofRBC Global is, at the time of the trade, registered underthe Legislation of the corresponding Jurisdiction to tradeon behalf of RBC Global pursuant to its registration as a"limited market dealer".

June 11, 2003.

"Paul M. Moore"
"Harold P. Hands"