Section 80 of the Commodity Futures Act (Ontario) (the CFA) - relief from the registration requirements of paragraph 22(1)(b) of the CFA granted to an extra-provincial adviser in respect of the provision of advisory services relating to futures contracts to top and underlying mutual funds that do not have an address in Ontario, subject to certain terms and conditions.
Commodity Futures Act, R.S.O. 1990. c. C20., as am., s. 22(1)(b), s. 80.
Ontario Securities Commission Rule 35-502 -- Non-Resident Advisers.
IN THE MATTER OF
THE COMMODITY FUTURES ACT
R.S.O. 1990, CHAPTER C.20
IN THE MATTER OF
ASSET LOGICS CAPITAL MANAGEMENT INC.
(Section 80 of the CFA)
WHEREAS the Ontario Securities Commission (the "Commission") has received an application from Asset Logics Capital Management Inc. (the Applicant) for an order under section 80 of the CFA that the Applicant and its representatives, partners, officers and employees are not subject to the requirements of paragraph 22(1)(b) of the CFA with respect to advice provided to Asset Traction Fund (the Fund), Asset Logics Funds, Ltd. (Asset Logics) and Global Asset Traction Trading Ltd. (the Trading Company);
AND WHEREAS, unless otherwise defined, the terms herein have the meanings set out in Commission Rule14-501- Definitions;
AND WHEREAS the Applicant having represented to the Commission that:
1. The Applicant is a company incorporated under the Company Act (British Columbia). The head office of the Applicant is located in British Columbia. The Applicant is not ordinarily resident in Ontario;
2. The Applicant is registered as an adviser in the category of portfolio manager under the Securities Act (British Columbia). This registration permits the Applicant to provide advice in British Columbia with respect to securities and exchange contracts, as those terms are defined in the Securities Act (British Columbia), which include but are not limited to: commodity futures contracts and commodity futures options as those terms are defined in the CFA;
3. The Applicant is not registered as an adviser under the Securities Act (Ontario) and is not registered as an adviser under the CFA;
4. The Fund is a mutual fund established pursuant to a trust indenture dated December 1, 2003 which is governed by the laws of British Columbia. The head office of the Fund is in Vancouver, British Columbia. The Fund does not intend to be a reporting issuer in British Columbia or any other province or territory of Canada. The Fund does not have an address in Ontario;
5. Asset Logics is an open-ended investment company incorporated under the laws of the Bahamas. Asset Logics is authorized to issue several classes of securities each of which represents a separate segregated portfolio of assets. Asset Logics does not have an address in Ontario;
6. The Trading Company is a limited liability company incorporated under the laws of Anguilla, British West Indies. The Trading Company does not have an address in Ontario;
7. Asset Logics and the Trading Company are not and do not intend to be reporting issuers in British Columbia or any other jurisdiction in Canada;
8. The investment objective of the Fund is to maximize the absolute return for investors by achieving high capital appreciation over a medium term horizon primarily through the investment in Class A Non-Voting Participating Preference Shares (the Class A Shares) of Asset Logics;
9. The net proceeds from the sale of the Class A Shares are segregated from the proceeds raised from the sale of other classes of securities of Asset Logics and held in the Global Asset Traction Fund (the Reference Sub-Fund), as a segregated portfolio. The Trading Company is the trading vehicle for the Reference Sub-Fund. The Reference Sub-Fund does not have an address in Ontario;
10. The investment objective of the Reference Sub-Fund is to maximize absolute returns for investors by achieving high capital appreciation over the medium term horizon through an indirect investment in derivatives by trading through a wholly owned subsidiary, the Trading Company;
11. The Trading Company will trade in futures, forward contracts, spot contracts, swap or other principal contracts, repurchase or reverse repurchase agreements and other derivatives across a broad spectrum of global markets in accordance with a diversified managed futures program that will be described in the offering memorandum of the Fund and will also invest in certain government securities that will be described in the offering memorandum of the Fund;
12. The Applicant is the investment adviser of Asset Logics, the Trading Company and the Reference Sub-Fund and will be the manager and investment adviser of the Fund; and
13. The Fund intends to offer units of the Fund for sale to investors resident in Ontario pursuant to exemptions from the registration and prospectus requirements through an dealer or limited market dealer registered under the Securities Act (Ontario).
AND WHEREAS paragraph 22(1)(b) of the CFA prohibits a person or company from acting as an adviser unless the person is registered as an adviser, or is registered as a representative or as a partner or an officer of a registered adviser and is acting on behalf of a registered adviser, and the registration is in accordance with the CFA and the regulations;
AND UPON the Commission being satisfied that to make this order would not be prejudicial to the public interest;
IT IS ORDERED pursuant to section 80 of the CFA that the Applicant and its representatives, partners, officers and employees are not subject to the requirement of paragraph 22(1)(b) of the CFA in respect of the advice it provides to the Fund, Reference Sub-Fund, Asset Logics and the Trading Company provided that:
(a) all advice by the Applicant to Fund, Reference Sub-Fund, Asset Logics and the Trading Company is given and received, or portfolio management services are provided, outside of Ontario;
(b) the Applicant remains registered under the Securities Act (British Columbia) in a category of registration that permits it to provide discretionary portfolio management services with respect to commodity futures contracts and commodity futures options and, where required, is registered or licensed under the applicable legislation of a jurisdiction in Canada, other than Ontario, or a foreign jurisdiction to provide advice to the Reference Sub-Fund, Asset Logics or the Trading Company, or is entitled to rely on appropriate exemptions from such registrations or licences pursuant to the applicable legislation of a jurisdiction in Canada, other than Ontario, or a foreign jurisdiction;
(c) the Applicant is not ordinarily resident in Ontario; and
(d) Each of the Fund, Reference Sub-Fund, Asset Logics and the Trading Company do not have an address in Ontario; and
(e) this order shall terminate three years from the date of the order.
January 30, 2004.
"Paul K. Bates"