Altamira Management Ltd. has been granted relief from the self-dealing prohibitions to allow mutual funds managed by it to trade debt securities of any issuer from or to the account of a related principal dealer, National Bank Financial Inc.

Similar relief was granted to several firms back on July 10, 2002. Back then, the OSC issued a decision exempting Scotia Cassels Investment Counsel Inc., RBC Global Investment Management Inc. and certain other portfolio managers affiliated with registered dealers from the self-dealing prohibition. Since then, National Bank bought Altamira, which sought similar relief.

Altamira told regulators that the supply of government debt has dwindled in recent years, leaving s a limited supply of corporate debt available in the primary and secondary markets. This has led to higher prices in the secondary market. The self-dealing prohibition has made it even more difficult for Altamira to buy debt securities for its mutual funds in the secondary market.

The regulators granted the relief, provided that:

  • trades represent the business judgment of the firm uninfluenced by considerations other than the best interests of the Altamira Fund;
  • trades are consistent with the investment objective of the fund as disclosed in its simplified prospectus;
  • the terms of the trade are better than the terms quoted by one or more dealers who are neither affiliates nor associates of NB Financial;
  • and, where buying corporate debt, the purchase cannot be made from NB Financial during the 60-day period after the distribution of securities, if NB Financial acted as underwriter in the distribution, or as a selling group member selling more than 5% of the underwritten securities.

Also, the funds’ simplified prospectuses must disclose that it may trade debt with the account of NB Financial, and the annual information form of the funds must describe the policies it has to ensure compliance with the decision. These trades must also be reported on SEDAR.

http://www.osc.gov.on.ca/en/Regulation/Orders/2003/ord20030606_213_altamiramngmt.htm