Repeal of National Instrument 81-104 Alternative Mutual Funds

The Canadian Securities Administrators (CSA), with the exception of the Autorité des marchés financiers (AMF), has published Multilateral CSA Notice – Repeal of National Instrument 81-104 Alternative Mutual Funds.

As a result of prior rule amendments that migrated most operational aspects of National Instrument 81-104 Alternative Mutual Funds (NI 81-104) to National Instrument 81-102 Investment Funds, the only remaining operational aspect of NI 81-104 is Part 4, which is focused on proficiency requirements for mutual fund restricted individuals for the distribution of alternative mutual funds (the Proficiency Requirements).

As the course options prescribed by the Proficiency Requirements pre-date the introduction of the alternative mutual funds regime and do not address the differences between conventional mutual funds and alternative mutual funds, CSA members issued harmonized blanket orders to provide additional proficiency course options on January 28, 2021 (the Blanket Orders).

The Mutual Fund Dealers Association of Canada, now known as Canadian Investment Regulatory Organization (CIRO), later codified the Blanket Orders with Policy No. 11 Proficiency Standards for the Sale of Alternative Mutual Funds (Policy No. 11), which took effect on July 21, 2022.

As of January 1, 2023, Policy No. 11 is now known as Interim Mutual Fund Dealer Rule 1000 Proficiency Standards for the Sale of Alternative Mutual Funds (Rule 1000) of CIRO. Given the overlap between Rule 1000 and the Proficiency Requirements, NI 81-104 is no longer necessary.

Provided all ministerial approvals are obtained, where applicable, the repeal of NI 81-104 will come into force on January 29, 2024 in all CSA jurisdictions except Québec.

At this time, the AMF is not proposing to repeal NI 81-104 and will continue to rely on its local blanket order (the AMF Blanket Order). The AMF will consider repealing NI 81-104 and revoking the AMF Blanket Order after mutual fund dealers registered in Québec are transitioned to the equivalent requirements under CIRO rules.

Questions:

Stephen Paglia, Manager, Investment Funds and Structured Products Branch
[email protected]

Irene Lee, Senior Legal Counsel, Investment Funds and Structured Products Branch
[email protected]