The board of directors of the Investment Dealers Association has approved a bylaw amendment regarding the Discretionary Trust Fund.
The original bylaw required that:
- amounts in the DTF be held in an account that is separate from the general funds of the IDA; and
- cheques drawn on the DTF had to be signed by any two of the chair, vice-chair or president of the association.
.The requirements reflected the fundamental reason for the DTF, which was to cover the initial payment to the Canadian Investor Protection Fund in the case of the bankruptcy of any IDA member.
The amendment eliminates the two requirements, which are no longer necessary because the CIPF Board of Governors eliminated the IDA’s liability for the initial payment to the CIPF, as of January 1, 2002. The DTF will continue to operate at the discretion of the IDA board as an internally restricted fund, the Discretionary Fund.
The effect of the rule change is to reduce administrative complexities and costs by simplifying the IDA’s cash management process. Signing requirements for the DF would be in accordance with the IDA’s general signing authority.