Securities Law & Instruments

Headnote

The Filer is a corporation incorporated under the laws of Canada and has its head office in Montreal, Quebec. It is a wholly owned subsidiary of CIBC.

The Filer is registered as an adviser in the category of portfolio manager under the securities legislation of each jurisdiction of Canada. It is also registered as an investment fund manager in the provinces of Ontario and Quebec and as a commodity trading manager in the province of Ontario and a derivatives portfolio manager in the province of Quebec.

Applicable Legislative Provisions

Multilateral Instrument 11-102 Passport System ("MI 11-102"), Part 4.

Regulation 31-103 Respecting Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 8.6.

May 14, 2013


IN THE MATTER OF
THE SECURITIES LEGISLATION OF
QUEBEC AND ONTARIO
(THE JURISDICTIONS)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS
IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
CIBC GLOBAL ASSET MANAGEMENT INC.
(CGAM OR THE FILER)

AND

THE AXIOM PORTFOLIOS LISTED IN SCHEDULE A

AND

THE CIBC MUTUAL FUNDS LISTED IN SCHEDULE B

AND

THE CIBC POOLS LISTED IN SCHEDULE C

AND

THE IMPERIAL POOLS LISTED IN SCHEDULE D

AND

RENAISSANCE FUNDS LISTED IN SCHEDULE E

DECISION



Background

The securities regulatory authority or regulator in the Jurisdictions (the Decision Maker) has received an application from the Filer for an amended decision under the securities legislation of the Jurisdictions (the Legislation) replacing the decision (the Prior Relief) dated September 28, 2010 granting an exemption from the dealer registration in order to extend the exemption to trades in

(a) Class O units of the mutual funds set out in Schedule A hereto (the Existing Axiom Portfolios) and any mutual funds established in the future as part of the group of Axiom Portfolios (the Future Axiom Portfolios and together with the Existing Axiom Portfolios, the Axiom Portfolios), and

(b) Class O units of the mutual funds set out in Schedule B hereto (the Existing CIBC Mutual Funds) and any mutual funds established in the future as part of the group of CIBC Mutual Funds (the Future CIBC Mutual Funds and together with the Existing CIBC Mutual Funds, the CIBC Mutual Funds),

in addition to trades in units of the mutual funds set out in Schedule C hereto (the Existing CIBC Pools and previously known as the CIBC Pools) and any mutual funds established in the future as part of the group of CIBC Pools (the Future CIBC Pools and together with the Existing CIBC Pools, the CIBC Pools), the mutual funds set out in Schedule D hereto (the Existing Imperial Pools) and any mutual funds established in the future as part of the group of Imperial Pools (the Future Imperial Pools and together with the Existing Imperial Pools, the Imperial Pools), Class O units of the mutual funds set out in Schedule E hereto (the Existing Renaissance Funds) and any mutual funds established in the future as part of the group of Renaissance Funds (the Future Renaissance Funds and together with the Existing Renaissance Funds, the Renaissance Funds), (the Axiom Portfolios, the CIBC Mutual Funds, the CIBC Pools, the Imperial Pools, and the Renaissance Funds, together, the Funds) to the clients of the Filer;

(the Requested Relief).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Autorité des marchés financiers is the principal regulator for the application;

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Nunavut, Northwest Territories and Yukon; and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a corporation incorporated under the laws of Canada and has its head office in Montreal, Quebec. It is a wholly owned subsidiary of CIBC.

2. The Filer is registered as an adviser in the category of portfolio manager under the securities legislation of each jurisdiction of Canada. It is also registered as an investment fund manager in the provinces of Ontario and Quebec and as a commodity trading manager in the province of Ontario and a derivatives portfolio manager in the province of Quebec.

3. The Filer is not in default of the securities legislation of any province or territory.

Investment Management Services

4. Canadian Imperial Bank of Commerce (CIBC) is in the business of offering investment management services to both individual and institutional clients. It uses different affiliates to do so, including the Filer, in order to focus its services appropriately for the relevant client groups.

5. The principal components of the investment management services include:

(i) advisory services specific to clients, including discussing their investment needs and goals and reflecting those in a statement of investment policy (SIP);

(ii) selection of portfolio securities;

(iii) if funds are used to carry out the client's SIP, the establishment and operation of such funds.

6. Potential clients may be referred to the Filer from within the CIBC group of companies. Referral fees are paid to firms within the CIBC group of companies for the referral of a client in relation to the value of the assets that the client transfers to the Filer. The Filer currently does not pursue external referrals to any extent.

7. When potential clients approach the Filer or are approached by the Filer through business development representatives, it is to seek or solicit investment management services including understanding how portfolios are managed generally. When the client has determined to proceed with investment management services, discussions of how the clients' own assets will be managed occur, including the ability to carry out the SIP through relevant Funds. The client understands and is looking for more than what the client would receive if the client simply purchases Funds.

8. While the various segments of the investment management services are carried out in different entities, the investment management business for each client category is one integrated business of CIBC.

9. When a client selects investment management services from the Filer, the Filer is responsible not only for know-your-client and suitability reviews like a dealer but also takes on the responsibility of selection. There is also advice rendered to the client but, in the case of discretionary portfolio management services, the decision is clearly made by the portfolio manager and not the client. The Funds are a tool to deliver the investment management services required by the Filer, as investment manager, for its clients. They are not sold to investment management clients.

The Funds

10. Each of the Funds is or will be an open-ended mutual fund trust established under the laws of the Province of Ontario.

11. The Funds are used as tools to provide the investment management services to the clients of the Filer.

12. None of the CIBC Pools or the Imperial Pools pay investment management fees nor do the Renaissance Funds, Axiom Portfolios or CIBC Mutual Funds pay management fees in respect of their Class O units. Investment management fees of the Filer's clients are paid under the managed account agreements (Managed Account Agreements) or agreements with CGAM Fund Clients (as hereinafter defined).

13. The trades in units of the CIBC Pools, the Imperial Pools and the Renaissance Funds on behalf of the Filer's clients, are effected through the Filer acting as the dealer, in reliance on the Prior Order.

14. None of the CIBC Pools or Imperial Pools charge, nor do the clients pay, a sales commission or other fees in respect of the trades in units of the Funds nor do the Renaissance Funds, the Axiom Portfolios or the CIBC Mutual Funds pay sales commissions in respect of their Class O units.

Imperial Pools

14. The Imperial Pools are reporting issuers in each of the provinces and territories.

15. The Imperial Pools are currently purchased in certain cases on behalf of clients of the Filer and are also purchased on behalf of managed account clients of CIBC Trust Corporation and CIBC Private Investment Counsel Inc., other members of the CIBC group of companies and affiliates of the Filer.

16. CIBC is the investment fund manager of the Imperial Pools and in that capacity provides, or arranges to provide for, the administration of each Imperial Pool. CIBC Asset Management Inc. (CAMI), an affiliate of CIBC and of the Filer, is the portfolio manager of the Imperial Pools. CAMI may retain portfolio sub-advisers, including the Filer, to provide portfolio management services to the Imperial Pools. CIBC Trust is the trustee and CIBC Mellon Trust Company is the custodian.

17. Clients of the Filer pay fees to the Filer, the Filer is responsible for paying the fees to CAMI for its services, and CAMI in turn is responsible for the fees of any sub-adviser.

CIBC Pools

18. The CIBC Pools are not reporting issuers in the Jurisdictions.

19. The CIBC Pools are purchased on behalf of clients with a Managed Account Agreement and CGAM Fund Clients and are also purchased on behalf of managed account clients of CPIC.

20. The Filer is both the investment fund manager and portfolio manager of each CIBC Pooled Fund and in that capacity is responsible for the administration of each CIBC Pooled Fund and the investment decisions made on behalf of each CIBC Pooled Fund. CIBC Mellon Trust Company is the trustee and custodian.

21. Each of the CIBC Pools either pay all administration fees and expenses relating to its operation or the Filer waives and/or absorbs such fees and expenses.

Renaissance Funds

22. The Renaissance Funds are reporting issuers in each of the Provinces and the Territories. The Class O units of the Renaissance Funds are offered to certain investors, including institutional investors or segregated funds, fund of funds and investors where dealers or discretionary managers offer separately managed accounts or similar programs. Some of these investors may not qualify for any applicable private placement exemptions.

23. Although currently there are more than 40 Renaissance Funds which may offer Class O units, Class O units of the Renaissance Funds are only rarely used for the managed accounts of clients of the Filer.

24. The Renaissance Funds are purchased by the Filer on behalf of clients with a Managed Account Agreement with the Filer.

25. CAMI is the manager of the Renaissance Funds and in that capacity provides, or arranges to provide for, the administration of each Renaissance Fund. CAMI is also the portfolio adviser of the Renaissance Funds. CAMI may retain portfolio sub-advisers, including CGAM, to provide portfolio management services to the Renaissance Funds. CAMI is the trustee and CIBC is the custodian.

26. No management fees or operating expenses are charged in respect of the Class O units of the Renaissance Funds; instead a negotiated management fee is charged by CAMI directly to, or as directed by, the Class O unitholders or the Filer on behalf of the Class O unitholders.

27. Clients of the Filer pay fees to the Filer, the Filer is responsible for paying the negotiated management fees to CAMI for its services and CAMI in turn is responsible for the fees of any sub-adviser.

Axiom Portfolios

28. The Axiom Portfolios are reporting issuers in each of the Provinces and the Territories. The Class O units of the Axiom Portfolios are offered to certain investors, including institutional investors or segregated funds, fund of funds and investors where dealers or discretionary managers offer separately managed accounts or similar programs. Some of these investors may not qualify for any applicable private placement exemptions.

29. Class O units of the Axiom Portfolios will only rarely be used for the managed accounts of clients of the Filer.

30. The Axiom Portfolios are purchased by the Filer on behalf of clients with a Managed Account Agreement with the Filer.

31. CAMI is the manager of the Axiom Portfolios and in that capacity provides, or arranges to provide for, the administration of each Axiom Portfolio. CAMI is also the portfolio adviser of the Axiom Portfolios. CAMI may retain portfolio sub-advisers, including CGAM, to provide portfolio management services to the Axiom Portfolios. CAMI is the trustee and CIBC is the custodian.

32. No management fees or operating expenses are charged in respect of the Class O units of the Axiom Portfolios; instead a negotiated management fee is charged by CAMI directly to, or as directed by, the Class O unitholders or the Filer on behalf of the Class O unitholders.

33. Clients of the Filer pay fees to the Filer, the Filer is responsible for paying the negotiated management fees to CAMI for its services and CAMI in turn is responsible for the fees of any sub-adviser.

CIBC Mutual Funds

34. The CIBC Mutual Funds are reporting issuers in each of the Provinces and the Territories. The Class O units of the CIBC Mutual Funds are offered to certain investors, including institutional investors or segregated funds, fund of funds and investors where dealers or discretionary managers offer separately managed accounts or similar programs. Some of these investors may not qualify for any applicable private placement exemptions.

35. Although currently there are more than 40 CIBC Mutual Funds which may offer Class O units, Class O units of the CIBC Mutual Funds will only rarely be used for the managed accounts of clients of the Filer.

36. The CIBC Mutual Funds are purchased by the Filer on behalf of clients with a Managed Account Agreement with the Filer.

37. CIBC is the manager of the CIBC Mutual Funds and in that capacity provides, or arranges to provide for, the administration of each CIBC Mutual Fund. CAMI is the portfolio adviser of the CIBC Mutual Funds. CAMI may retain portfolio sub-advisers, including CGAM, to provide portfolio management services to the CIBC Mutual Funds. CIBC Trust Corporation is the trustee and CIBC is the custodian.

38. No management fees or operating expenses are charged in respect of the Class O units of the CIBC Mutual Funds; instead a negotiated management fee is charged by CAMI directly to, or as directed by, the Class O unitholders or the Filer on behalf of the Class O unitholders.

39. Clients of the Filer pay fees to the Filer, the Filer is responsible for paying the negotiated management fees to CIBC for its services and CIBC in turn is responsible for the fees of any portfolio manager.

Institutional Clients

40. The Filer only provides investment management services to institutional clients. Such clients either approach the Filer directly or the Filer is approached by consultants acting for such clients in respect of investment management mandates. While many institutional clients have sufficient assets to have a diversified portfolio in a segregated account, some institutional clients authorize the Filer to utilize funds to carry out the investment management mandate because of their efficiency. The Filer uses the CIBC Pools for some of its institutional clients. The Imperial Pools are used by the Filer. The Filer currently only has used rarely the Renaissance Funds where there is not a comparable investment fund available in the CIBC Pools or through the Filer's portfolio managers. It desires to be able similarly to use Axiom Portfolios and CIBC Mutual Funds where there is not a comparable investment fund available in either CIBC Pools or the Renaissance Funds.

41. Institutional clients will typically enter into a Managed Account Agreement with the Filer. In a few cases, clients (which will not include retail clients) will want to name the Fund(s) in which they will be invested in their agreement with the Filer (the CGAM Fund Clients). This agreement will deal with such topics as fees and reporting and functions as a subscription agreement as the client makes the final determination of the Funds to be used. Despite that difference in respect of the CGAM Fund Clients, the relationship between the Filer and all of its clients, both in seeking out the Filer and in respect of the ongoing relationship, are the same. The Filer carries on the business of advice in respect of securities with all clients. The Filer is not in the business of trading funds.

42. There is no offering document for the CIBC Pools. The CGAM Fund Clients receive a copy of the trust documents of the CIBC Pools, the general statement of investment policy of the CIBC Pools and the investment policy guidelines of the relevant CIBC Pools prior to their purchase and copies of financial statements thereafter.

43. Where the portfolio managers or an equivalent mutual fund are not available in the CIBC Pools, CGAM Fund Clients may invest in the Imperial Pools. Clients with whom the Filer has a Managed Account Agreement may be given a copy of the prospectus of the Imperial Pools; however these clients are not asked to participate in the selection of the Imperial Pools -- this is done by the Filer as part of the discretionary investment mandate given to it.

Requested Dealer Relief

44. The Filer is seeking to replace the Prior Relief with the amended Decision to expand the types of funds that the Filer determines is desirable for its institutional clients to include the Axiom Portfolios and the CIBC Mutual Funds.

45. The Filer sought the Prior Relief for the same fundamental reasons behind the relief available pursuant to section 8.6 of NI 31-103, namely that the Filer is in the business of providing discretionary investment management services and not in the business of trading funds. No commissions or fees (other than its investment management fees payable to the Filer by its clients) are payable to the Filer on the purchase of units of the Funds, and no commissions or other fees are payable by the Filer's clients in connection with the Filer's investments in the Funds on its clients' behalf.

46. The Filer does not qualify for the relief under section 8.6 of NI 31-103 when using the Axiom Portfolios and the CIBC Mutual Funds because it is not the investment fund manager of such funds, precluding reliance on section 8.6, and is seeking for the following reasons:

(i) the Prior Relief did not include the Axiom Portfolios or the CIBC Mutual Funds;

(ii) affiliates of the Filer are the investment fund managers of the Axiom Portfolios and the CIBC Mutual Funds; and

(iii) a minority of the Filer's clients choose to name the Fund(s) in their agreement with the Filer and, accordingly, do not provide full discretion to the Filer with respect to the Funds selected.

Decision

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

The Prior Relief is terminated.

The decision of the Decision Maker under the Legislation is that the Requested Relief is granted provided that the Filer is at the time of trade, registered under the Legislation as an adviser in the category of portfolio manager.

"Eric Stevenson"
Surintendant de l'assistance aux clientèles et de la distribution
 
May 14, 2013

 

SCHEDULE A

AXIOM PORTFOLIOS

Class O

Axiom Balanced Income Portfolio

Axiom Canadian Growth Portfolio

Axiom Diversified Monthly Income Portfolio

Axiom Global Growth Portfolio

Axiom Balanced Growth Portfolio

Axiom Foreign Growth Portfolio

Axiom Long-Term Growth Portfolio

Axiom All Equity Portfolio

 

SCHEDULE B

CIBC MUTUAL FUNDS

Class O

CIBC Money Market Fund

CIBC U.S. Dollar Money Market Fund

CIBC Short-Term Income Fund

CIBC Canadian Bond Fund

CIBC Monthly Income Fund

CIBC Global Bond Fund

CIBC Global Monthly Income Fund

CIBC Dividend Income Fund

CIBC Dividend Growth Fund

CIBC Canadian Equity Fund

CIBC Canadian Equity Value Fund

CIBC U.S. Equity Fund

CIBC U.S. Small Companies Fund

CIBC International Equity Fund

CIBC European Equity Fund

CIBC Emerging Markets Fund

CIBC Asia Pacific Fund

CIBC Canadian Resources Fund

CIBC Energy Fund

CIBC Canadian Real Estate Fund

CIBC Precious Metals Fund

CIBC Canadian Short-Term Bond Index Fund

CIBC Canadian Bond Index Fund

CIBC Canadian Index Fund

CIBC U.S. Broad Market Index Fund

CIBC U.S. Index Fund

CIBC International Index Fund

CIBC Emerging Markets Index Fund

 

SCHEDULE C

CIBC POOLS

CIBC Balanced Pool

CIBC Global Balanced Pool

CIBC Canadian Equity S&P/TSX Index Pool

CIBC Canadian Equity All Cap Value Pool

CIBC Canadian Bond Active Universe Pool

CIBC Canadian Bond Universe Index Pool

CIBC Canadian Bond Overlay Pool

CIBC Canadian Bond Long Term Index Pool

CIBC U.S. Equity S&P500 Index Pool

CIBC Canadian Money Market Pool

CIBC International Equity Index Pool

CIBC EAFE Equity Pool

CIBC Global Equity Growth Pool

CIBC U.S. Equity Value Pool

CIBC U.S. Equity All Cap Growth Pool

CIBC Canadian Equity Large Cap Dividend Value Pool

CIBC Canadian Bond 5 Year Duration Pool

CIBC Canadian Bond 15 Year Duration Pool

CIBC Canadian Bond 30 Year Duration Pool

CIBC Canadian Bond Corporate Investment Grade Pool

CIBC Canadian Equity Small Cap Pool

 

SCHEDULE D

IMPERIAL POOLS

Imperial Money Market Pool

Imperial Short-Term Bond Pool

Imperial Canadian Bond Pool

Imperial International Bond Pool

Imperial Canadian Dividend Income Pool

Imperial Global Equity Income Pool

Imperial Canadian Equity Pool

Imperial U.S. Equity Pool

Imperial International Equity Pool

Imperial Overseas Equity Pool

Imperial Emerging Economies Pool

Imperial High Income Pool

Imperial Canadian Diversified Income Pool

 

SCHEDULE E

RENAISSANCE FUNDS

Class O

Renaissance Asian Fund

Renaissance Canadian Balanced Fund

Renaissance Canadian Bond Fund

Renaissance Canadian Core Value Fund

Renaissance Canadian Dividend Income Fund

Renaissance Canadian Growth Fund

Renaissance Canadian Monthly Income Fund

Renaissance Canadian Small-Cap Fund

Renaissance Canadian T-Bill Fund

Renaissance China Plus Fund

Renaissance Corporate Bond Capital Yield Fund

Renaissance Diversified Income Fund

Renaissance Emerging Markets Fund

Renaissance European Fund

Renaissance Global Bond Fund

Renaissance Global Focus Fund

Renaissance Global Growth Fund

Renaissance Global Health Care Fund

Renaissance Global Infrastructure Fund

Renaissance Global Markets Fund

Renaissance Global Resource Fund

Renaissance Global Science & Technology Fund

Renaissance Global Small-Cap Fund

Renaissance Global Value Fund

Renaissance High-Yield Bond Fund

Renaissance International Dividend Fund

Renaissance International Equity Fund

Renaissance Millennium High Income Fund

Renaissance Money Market Fund

Renaissance Optimal Global Equity Portfolio

Renaissance Optimal Income Portfolio

Renaissance Real Return Bond Fund

Renaissance Short-Term Income Fund

Renaissance U.S. Equity Fund

Renaissance U.S. Equity Growth Fund

Renaissance U.S. Equity Value Fund

Renaissance U.S. Money Market Fund

Renaissance Optimal Inflation Opportunities Portfolio

Renaissance Canadian All-Cap Equity fund

Renaissance Global Real Estate Fund

Renaissance Corporate Bond Fund

Renaissance U.S. Equity Growth Currency Neutral Fund

Renaissance International Equity Currency Neutral Fund

Renaissance Optimal Global Equity Currency Neutral Fund

Renaissance Global Growth Currency Neutral Fund

Renaissance Global Focus Currency Neutral Fund

Renaissance Global Infrastructure Currency Neutral Fund

Renaissance Global Real Estate Currency Neutral Fund