On June 7, 2013, some Canadian mutual funds obtained exemptive relief under  National Instrument 81-102 – Mutual Funds (NI 81-102) to permit them to enter into cleared swaps in accordance with the clearing mandates issued by the U.S. Commodity Futures Trading Commission (CFTC) under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). The relief allows these mutual funds to enter into cleared swaps without having to comply with the counterparty designated rating requirement, the 10% mark-to-market exposure limitation and certain of the custodial requirements in NI 81-102.

On November 28, 2012 the CFTC issued its first mandatory clearing determination pursuant to Dodd-Frank. These final rules require that certain types of swaps between specified categories of market participants be cleared. Generally, where one party to a swap is a U.S. Person (as defined by the CFTC) and the other party is, among others, a mutual fund, that swap must be cleared, absent an available exception. The CFTC has adopted final rules that create a phased-in implementation schedule for compliance with these mandatory clearing determinations. For certain types of swaps, such as fixed-to-floating interest rate swaps, basis swaps, forward rate agreements in U.S. dollars, the Euro, Pounds Sterling or the Japanese Yen, overnight index swaps in U.S. dollars, the Euro and Pounds Sterling and untranched credit default swaps on certain North American indices, the clearing mandate is effective for mutual funds and other market participants on June 10, 2013. For iTraxx CDS indices, the compliance date for clearing is July 25, 2013.

If your NI 81-102 funds enter into over-the- counter derivatives that have been mandated for clearing, you should seek similar relief.


Carol E. Derk 


Investment Management
Financial Services Sectors