Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions - Relief granted from s. 13.5(2)(a) of NI 31-103, following the acquisition of the manager by another organization, to permit mutual funds to purchase securities of related entities on secondary market - Relief also granted from s. 13.5(2)(b) of NI 31-103 to permit inter-fund trades and in specie transfers between public mutual funds, pooled funds and managed accounts - Relief subject to conditions including IRC approval or client consent – relief also subject to pricing and transparency conditions - inter-fund trades will comply with conditions in s. 6.1(2) of NI 81-107.
Applicable Legislative Provisions
National Instrument 31-103 Registration Requirements and Exemptions – ss. 13.5, 15.1 National Instrument 81-107 Independent Review Committee for Investment Funds – ss. 6.1, 6.2
July 20, 2012
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO
AND
IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF BLACKROCK INVESTMENTS CANADA INC. (BlackRock Investments),
BLACKROCK ASSET MANAGEMENT CANADA LIMITED (BlackRock Canada),
BLACKROCK INSTITUTIONAL TRUST COMPANY, N.A. (BTC), AND
BLACKROCK FINANCIAL MANAGEMENT, INC. (BFM)
(each, a Filer and, collectively, the Filers)
AND
IN THE MATTER OF THE NI 81-102 FUNDS (as defined below) AND THE POOLED FUNDS (as defined below)
DECISION
Background
The securities regulatory authority or regulator in Ontario received an application (the Application) on behalf of the Filers and on behalf of the existing mutual funds and future mutual funds of which BlackRock Investments is the investment fund manager to which National Instrument 81-102 – Mutual Funds (NI 81-102) applies (each, an NI 81-102 Fund and, collectively, the NI 81-102 Funds) and on behalf of the existing mutual funds and future mutual funds of which BlackRock Canada is the investment fund manager and to which NI 81-102 does not apply (each, a BlackRock Canada Pooled Fund and, collectively, the BlackRock Canada Pooled Funds) and on behalf of the existing mutual funds and future mutual funds of which BlackRock Investments is the investment fund manager to which NI 81-102 does not apply (each a BlackRock Investments Pooled Fund and, collectively, the BlackRock Investments Pooled Funds) for a decision under section 15.1 of National Instrument 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) providing relief from the following:
Transactions in Securities of Related Issuers
(a) from the requirement in section 13.5(2)(a) of NI 31-103 that prohibits a registered adviser from knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as an adviser, from purchasing a security of an issuer (a Related Issuer) in which a responsible person or an associate of a responsible person (referred to as Access Persons) is a partner, officer or director unless this fact is disclosed to the client and the written consent of the client is obtained before the purchase, in order to permit
(i) an NI 81-102 Fund or a BlackRock Investments Pooled Fund to purchase certain non-exchange-traded debt securities of a Related Issuer in the secondary market; and
(ii) a BlackRock Investments Pooled Fund to purchase exchange-traded securities of a Related Issuer in the secondary market;
Transactions with Related Parties
(b) from the requirement in section 13.5(2)(b) of NI 31-103 that prohibits a registered adviser from knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as an adviser, from purchasing or selling a security from or to the investment portfolio of any of the following:
(i) a responsible person;
(ii) an associate of a responsible person;
(iii) an investment fund for which a responsible person acts as an adviser;
in order to permit
(i) an NI 81-102 Fund to purchase securities from or sell securities to a BlackRock Investments Pooled Fund or a BlackRock Canada Pooled Fund (each a Pooled Fund and, collectively, the Pooled Funds) or a fully managed account managed by BlackRock Canada, BTC or BFM for a Canadian resident client (each, a Managed Account and, collectively, the Managed Accounts);
(ii) a Pooled Fund to purchase securities from or sell securities to another Pooled Fund, an NI 81-102 Fund or a Managed Account;
(iii) a Managed Account to purchase securities from or sell securities to a BlackRock Investments Pooled Fund or an NI 81-102 Fund;
(iv) a BlackRock Investments Pooled Fund and a Managed Account to engage in In Specie Transactions, as described below;
(v) a Pooled Fund and an NI 81-102 Fund to engage in In Specie Transactions; and
(vi) an NI 81-102 Fund and a Managed Account to engage in In Specie Transactions,
(collectively, the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:
(a) the Ontario Securities Commission is the principal regulator for the Application; and
(b) the Filers have 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, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland & Labrador, Northwest Territories, Yukon and Nunavut (the Passport Jurisdictions).
Interpretation
Terms defined in MI 11-102, National Instrument 14-101 – Definitions, NI 81-102 or National Instrument 81-107 – Independent Review Committee for Investment Funds (NI 81-107) and NI 31-103 have the same meanings if used in this Decision, unless otherwise defined.
Representations
This Decision is based on the following facts represented by the Filers:
The head office of each of BlackRock Canada and BlackRock Investments is located in Toronto, Ontario. The head office of BTC is located in San Francisco, California. The head office of BFM is located in New York, New York.
BlackRock Canada is registered as a portfolio manager, investment fund manager and exempt market dealer in Ontario and in each of the Passport Jurisdictions (together, the Jurisdictions) and as a commodity trading manager in Ontario.
BlackRock Investments is registered as a portfolio manager, investment fund manager and exempt market dealer in Ontario.
BTC is