Securities Law & Instruments


Subsection 38(1) of the Commodity Futures Act(Ontario) (the CFA) - relief from the registration requirementsof paragraph 22(1)(b) of the CFA granted to extra-provincialadvisers in respect of the provision of advisory services relatingto futures contracts to a mutual fund that does not have anaddress in Ontario, subject to certain terms and conditions.

Statutes Cited

Commodity Futures Act, R.S.O. 1990. c. C.20,as am. 22(1)(b), 38(1).











(Subsection 38(1) of the CFA)

UPON the application of Matisse InvestmentManagement Ltd. ("Matisse") and Asset Logics CapitalManagement Inc. ("Asset Logics" and collectively withMatisse the "Applicants") to the Ontario SecuritiesCommission (the "Commission") for a ruling under subsection38(1) of the CFA that:

(a) Asset Logics and its representatives,partners, officers and employees are not subject to the requirementsof paragraph 22(1)(b) of the CFA with respect of advisingthe StrategicNova Managed Futures Hedge Fund (the "Fund");and

(b) certain non-resident commodity tradingadvisers ("CTAs") and their representatives, partners,officers and employees are not subject to the requirementof paragraph 22(l)(b) of the CFA with respect to theFund;

AND UPON considering the applicationand the recommendation of the staff of the Commission;

AND UPON the Applicants having representedto the Commission that:

1. the Fund is a mutual fund trust establishedunder the laws of British Columbia and is a commodity pool;

2. the Fund has filed a prospectus, datedJuly 19, 2002 (the "Prospectus"), with the Commissionand the equivalent securities regulatory authority in allProvinces of Canada to qualify the sale of units of the Fund;

3. the investment objectives, strategy andrestrictions of the Fund are described in the current prospectus;

4. Matisse is the manager and portfolio managerof the Fund;

5. effective on the date of the 2003 renewalprospectus:

(a) Asset Logics will replace Matisse asthe Fund's portfolio manager;

(b) Asset Logics will engage CTAs to manageportions of the Fund's capital and allocate the Fund's capitalamong the CTAs;

(c) Asset Logics will only retain CTAs thatare registered with, or a member of, the U.S. CommodityFutures Trading Commission and the National Futures Association,or similar regulatory bodies;

(d) each CTA engaged by Asset Logics willbe responsible for making and executing investment decisionsfor that portion of the Fund's investment portfolio allocatedto it; and

(e) Asset Logics will monitor the performanceof the CTAs retained to provide advice to the Fund on adaily basis and allocate and reallocate the Fund's capitalamong the CTAs based on their performance;

6. Asset Logics is registered as a portfoliomanager under the Securities Act (British Columbia)and permitted to advise in respect of securities and exchangecontracts; and

7. the CTAs may not be registered as advisersunder the CFA.

AND WHEREAS paragraph 22(1)(b) of theCFA prohibits a person or company from acting as an adviserunless the person is registered as an adviser, or is registeredas a representative or as a partner or an officer of a registeredadviser and is acting on behalf of a registered adviser, andthe registration is in accordance with the CFA and theregulations;

AND UPON the Commission being satisfiedthat to make this ruling would not be prejudicial to the publicinterest;

IT IS RULED pursuant to subsection 38(1)of the CFA that:

(1) Asset Logics and its representatives,partners, officers and employees are not subject to the requirementof paragraph 22(1)(b) of the CFA in respect of theadvice it provides to the Fund; and

(2) the CTAs and their representatives, partners,officers and employees are not subject to the requirementsof paragraph 22(l)(b) of the CFA in respect of adviceprovided for the benefit of the Fund, so long as:

(i) the obligations and duties of each CTAretained to provide advice for the benefit of the Fund areset out in a written agreement with Asset Logics;

(ii) Asset Logics contractually agrees withthe Fund to be responsible for any loss to the Fund thatarises out of the failure of the CTA (a) to exercise thepowers and discharge the duties of its office honestly,in good faith and in the best interests of the Fund, or(b) to exercise the degree of care, diligence and skillthat a reasonably prudent person would exercise in the circumstances,and this responsibility cannot be waived; and

(iii) the current prospectus of the Funddiscloses Asset Logics' responsibility for the advice providedfor the benefit of the Fund by each of the CTAs and, tothe extent applicable, that there may be difficulty enforcingany legal rights against CTAs and all or a substantial portionof the CTAs' assets are situated outside Canada;


(A) Asset Logics is registered under the SecuritiesAct (British Columbia) in a category of registration thatpermits it to provide discretionary portfolio management services;

(B) all portfolio management services providedby Asset Logics to the Fund and all advice provide by theCTAs for the benefit of the Fund is provided outside of Ontario;

(C) the Fund, Asset Logics and each of theCTAs continue not to have residences in Ontario; and

(D) this Order shall terminate three yearsfrom the date of the Order.

July 25, 2003.

"Robert W. Korthals"
"Paul K. Bates"