Canadian securities regulators have completed the first phase of their project to modernize mutual fund rules.

The Canadian Securities Administrators announced Thursday that it has finalized a series of rule amendments that aim to update the product regulation of investment funds. The first phase of the project largely involved codifying the sort of exemptive relief that is routinely granted to funds, along with introducing some new requirements.

Specifically, the amendments will ease access to the market for exchange-traded funds by eliminating the need for them to apply for regulatory exemptions. The CSA says that this will reduce regulatory costs, which should ultimately benefit investors.

Among other things, the amendments will also allow mutual funds to short sell up to 20% of their net asset value, and give them more flexibility to use derivatives. They will impose new requirements on the use of mutual fund ratings and rankings in sales communications to ensure they are not misleading; and they will require that funds make their NAV available to the public, in order to boost performance transparency.

Additionally, the amendments include changes “to reflect developing global standards in mutual fund product regulation”; particularly to enhance the resilience of money market funds to certain short-term market risks, by introducing new liquidity requirements and term restrictions.

“By modernizing these important investment fund rules, we are responding to the rapidly evolving investment fund landscape, as well as maintaining consistency with global standards,” said Bill Rice, chair of the CSA, and chair and CEO of the Alberta Securities Commission.

Subject to ministerial approval, the amendments will come into force April 30. The new requirements for money market funds will come into force following a six-month transition period.

In the second phase of the project, the CSA will be seeking to ensure consistent regulation for different sorts of investment funds. It will be looking to make changes to address market efficiency, investor protection, and fairness, issues that arise out of the fact that different sorts of funds face differing regimes. It will also be proposing new restrictions and operational requirements on closed-end funds to harmonize their regulation with the requirements facing mutual funds and ETFs.