UBS Global Asset Management (Americas) Inc.
Application to the Commission for an order, pursuant to section 5.1 of Rule 13-503 (Commodity Futures Act) Fees, that the applicant not be required to pay an additional activity fee as required by section 3.1 of Rule 13-503 and Appendix B to Rule 13-503 which is normally charged to an applicant that is not subject to participation fees under Rule 13-503 or Rule 13-502.
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S. 5, AS AMENDED
ONTARIO SECURITIES COMMISSION
RULE 13-503 (COMMODITY FUTURES ACT) FEES
IN THE MATTER OF
UBS GLOBAL ASSET MANAGEMENT (AMERICAS) INC.
(Section 5.1 of Rule 13-503 (Commodity Futures Act) Fees)
WHEREAS the Ontario Securities Commission (the Commission) has received an application from UBS Global Asset Management (Americas) Inc. (UBS AM) for a ruling under section 80 of the Commodity Futures Act, R.S.O. 1990, c.20 (the CFA) that UBS AM and its officers are not subject to the requirement of paragraph 22(1)(b) of the CFA (the CFA Exemption Application);
AND WHEREAS the Commission has received an application from UBS AM, pursuant to section 5.1 of Rule 13-503 (Commodity Futures Act) Fees, for an order exempting, in part, the Applicant from the requirement to pay certain activity fees prescribed by Part 3 of Rule 13-503;
AND WHEREAS the Applicant has represented to the Director that:
1. UBS AM is incorporated under the laws of Delaware and is resident in Illinois. UBS AM is a commodity trading advisor registered with the Commodity Futures Trading Commission and a member of the National Futures Association in the United States, which permits UBS AM to provide advice in respect of futures contracts and options on futures contracts in the U.S.
2. UBS AM currently acts as an adviser providing discretionary portfolio management services to UBS Global Allocation Trust (the Trust), an investment trust established under the laws of Ontario, which is managed by UBS Global Asset Management (Canada) Co. (UBS Canada), a registered adviser under the CFA, and may in the future act as an adviser by providing such portfolio management services for the benefit of clients of one or more:
a. registered advisers under the CFA, or
b. registered brokers and dealers acting as a portfolio adviser pursuant to section 44 of the Regulations to the CFA.
3. Pursuant to section 3.1 of Rule 13-503, a person or company that files a document or takes an action listed in Appendix B shall, concurrently with the filing or taking of the action, pay the activity fee shown in Appendix B beside the description of the document or action.
4. Pursuant to section 1 of Appendix B, UBS AM is required to pay a fee of $5,500 in filing the CFA Exemption Application with the Commission. UBS AM is required to pay an additional amount of $2,000 as UBS AM is not subject to, and is not reasonably expected to become subject to, a participation fee under Rule 13-503.
5. UBS Canada is required to pay fees to UBS AM for the advisory services provided to the Trust. These fees will be deducted from the management fee that UBS Canada receives from the Trust and will be subject to a participation fee pursuant to Part 2 of Rule 13-503.
6. UBS Canada will not be able to deduct the fees paid to UBS AM from the participation fee because UBS AM is not a registrant in Ontario.
7. Where the principal adviser (or the manager of the Trust, as in this case) and the sub-adviser are related entities, requiring the sub-adviser to pay the additional $2,000 is effectively akin to double charging UBS AM and UBS Canada for the advisory services provided to the Trust.
AND UPON considering the application and the recommendation of staff;
IT IS ORDERED, pursuant to section 5.1 of Rule 13-503, that for the purposes of the CFA Exemption Application, UBS AM shall not be required to pay the additional activity fee of $2,000.
August 9, 2004.
"David M. Gilkes"