General Motors Investment Management Corporation

Decision

Headnote

Relief granted from margin rate applicable to U.S. money market mutual funds in calculation of market risk in Form 31-103F1 -- margin rate for funds qualified for distribution in Canada is 5%, while funds qualified for distribution in U.S. is 100% -- similar regulation of money market funds -- NI 31-103.

Applicable Legislative Provisions

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 12.1, 15.

November 7, 2012

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Legislation)

AND

IN THE MATTER OF

GENERAL MOTORS INVESTMENT

MANAGEMENT CORPORATION

(the Filer)

DECISION

Background

The Ontario Securities Commission (the Commission) has received an application from the Filer for an exemption under section 15.1 of National Instrument 31-103 Registration Requirements and Exemptions (NI 31-103) from the requirement in section 12.1 of NI 31-103 that the Filer calculate its excess working capital using Form 31-103F1 (the Form F1) only to the extent that the Filer be able to apply the same margin rate to investments in money market mutual funds qualified for sale by prospectus in the United States of America as is the case for money market mutual funds qualified for sale in a province or territory of Canada when calculating market risk pursuant to Line 9 of the Form F1 (the Exemption Sought).

Interpretation

Defined terms contained in NI 31-103 have the same meanings in this decision (the Decision) unless they are otherwise defined in this Decision.

Representations

This Decision is based on the following facts represented by the Filer.

1. The Filer is a corporation established under the laws of the State of Delaware in the United States of America (U.S.) with its head office located in New York City, New York.

2. The Filer is registered in the province of Ontario as a portfolio manager.

3. The Filer is not a reporting issuer in any jurisdiction of Canada.

4. Except for the requirement for the Filer to obtain the Exemption Sought so that its excess working capital remains above zero, the Filer is not, to its knowledge, in default of securities legislation in any jurisdiction of Canada.

5. The Filer is a privately-held independent investment adviser providing discretionary and non-discretionary investment advisory services to clients, including defined benefit and defined contributions plans, charitable organizations, private investments funds and certain other governmental and financial entities. The Filer employs a wide range of products and strategies, including, among others, total plan management, public market securities, real estate and alternative investments, absolute return strategies, private equity and derivatives. More than 95% of the Filer's revenues are received from clients in jurisdictions other than Canada.

6. The Filer has been registered with the U.S. Securities and Exchange Commission as an investment adviser under the United States Investment Advisers Act of 1940, as amended (the 1940 Act), since 1992.

7. The Filer invests its cash balances in a money market mutual fund qualified for sale by prospectus in the U.S., specifically a money market mutual fund which is a registered investment company under the United States Investment Company Act of 1940, as amended (the Investment Company Act), and which complies with Rule 2a-7 thereunder (Rule 2a-7).

8. Under Schedule 1 of the Form F1, the margin rate required for an investment in the securities of a money market mutual fund qualified for sale by prospectus in a province or territory of Canada is 5% of the market value of such investment for the purposes of Line 9 of the Form F1.

9. Under Schedule 1 of the Form F1, the margin rate required for an investment in the securities of a money market mutual fund qualified for sale by prospectus only in the U.S. is 100% of the market value of such investment for the purposes of Line 9 of the Form F1.

10. From a cash management perspective, it would not be prudent for the Filer to invest its cash balances directly in U.S. money market instruments instead of investing in money market mutual funds qualified for sale by prospectus in the U.S. and, therefore, be subject to a lower margin rate on such investments because of the following reasons:

(a) the Filer would have to invest in a multitude of U.S. money market instruments to achieve the diversity that the U.S. money market mutual funds in which it invests provides;

(b) U.S. money market instruments have varying degrees of liquidity and penalties may be incurred if an instrument is disposed of before it matures; and

(c) directly investing in U.S. money market instruments is more time consuming and most likely, more costly, than investing in U.S. money market mutual funds, without any meaningful benefit.

11. It would also not be prudent for the Filer to invest its cash balances in money market mutual funds qualified for sale by prospectus in a province or territory of Canada because of the following reasons:

(a) there are only a limited number of U.S. money market mutual funds that are qualified for sale by prospectus in a province or territory of Canada;

(b) the Filer is a U.S. entity and cannot access U.S. money market mutual funds that are qualified for sale by prospectus in a province or territory of Canada as directly and as easily as it can access U.S. money market mutual funds that are qualified for sale by prospectus only in the U.S.;

(c) the Filer does not have the necessary relationships with Canadian money market mutual fund issuers;

(d) investing in U.S. money market mutual funds that are qualified for sale by prospectus in a province or territory of Canada would be more costly than investing in U.S. money market mutual funds that are qualified for sale by prospectus only in the U.S; and

(e) as a U.S. entity, the Filer could be subject to cross-border tax issues if it were to invest in U.S. money market mutual funds that are qualified for sale by prospectus in a province or territory of Canada.

12. Unless the Exemption Sought is granted, the Filer's excess working capital as calculated using the Form F1 will be less than zero, thereby precluding the Filer from satisfying its capital requirements under NI 31-103 as a registered PM.

13. The regulatory oversight and the quality of investments held by a money market mutual fund qualified for sale by prospectus in each of the U.S. and a province or territory of Canada is similar. In particular, Rule 2a-7 sets out requirements dealing with portfolio maturity, quality, diversification and liquidity, which are similar to requirements under National Instrument 81-102 Mutual Funds (NI 81-102).

Decision

The Commission is satisfied that the Decision meets the test set out in the Legislation for the Commission to make the Decision.

The Decision of the Commission under the Legislation is that the Exemption Sought is granted so long as:

(a) any money market mutual fund invested in by the Filer is qualified for sale by prospectus in the U.S. as a result of being a registered company under the Investment Company Act, and complies with Rule 2a-7;

(b) the requirements for money market mutual funds under Rule 2a-7 or any successor rule or legislation are similar to the requirements for Canadian money market mutual funds qualified for sale by prospectus under NI 81-102 or any successor rule or legislation; and

(c) the Filer is registered with the SEC as an investment adviser under the 1940 Act.

"Marrianne Bridge"
Deputy Director, Compliance and Registrant Regulation
Ontario Securities Commission