True Exposure Investments, Inc. (Re), 2026 CanLII 35821

April 21, 2026

(the Jurisdiction)

AND

(the Filer)

decision

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the TRU.X Exogenous Risk Pool (the Existing Fund) and any other mutual fund or alternative mutual fund that is or may be managed by the Filer now or in the future that offer ETF Securities (as defined below) either alone or along with Mutual Fund Securities (as defined below) (collectively, the Future Funds and together with the Existing Fund, the Funds, and each, a Fund), for a decision under the securities legislation of the Jurisdiction (the Legislation) that exempts each Fund from the requirement in subsection 6.1(1) of National Instrument 81-102 Investment Funds (NI 81-102) that, except as provided in section 6.8.1 of NI 81-102, all portfolio assets of a Fund be held under the custodianship of one qualified custodian, to permit the Fund to deposit portfolio assets with a borrowing agent that is not the Fund’s custodian or sub-custodian in connection with a short sale of securities, if the aggregate market value of the portfolio assets held by the borrowing agent after such deposit, excluding the aggregate market value of the proceeds from outstanding short sales of securities held by the borrowing agent, (i) in the case of a Fund that is a mutual fund, other than an alternative mutual fund, does not exceed 10% of the Fund’s net asset value (the NAV) at the time of deposit, or (ii) in the case of a Fund that is an alternative mutual fund, does not exceed 25% of the Fund’s NAV (each a Short Sale Collateral Limit) at the time of deposit (the Short Sale Collateral Relief).

Under National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator; and

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in all of the provinces and territories of Canada other than Ontario (together with Ontario, the Jurisdictions).

Interpretation

Capitalized terms used herein have the meaning ascribed thereto below (or in MI 11-102, National Instrument 14-101 Definitions and NI 81-102, as applicable) unless otherwise defined in this decision:

(a) ETF Facts means an ETF facts document prepared, filed and delivered in accordance with Part 3B of National Instrument 41-101 General Prospectus Requirements;

(b) ETF Securities means securities of an exchange-traded class of a Fund that will be listed on the TSX or another Marketplace and that will be distributed pursuant to a simplified prospectus prepared in accordance with NI 81-101 and Form 81-101F1;

(d) Fund Facts means a Fund facts document prepared, filed and delivered in accordance with Form 81-101F3 Contents of Fund Facts Document;

(e) Marketplace means a “marketplace” as defined in National Instrument 21-101 Marketplace Operation that is located in Canada;

(f) Mutual Fund Securities means securities of a non-exchange-traded class of a Fund that will be distributed pursuant to a simplified prospectus prepared in accordance with NI 81-101 and Form 81-101F1;

(g) NI 81-101 means National Instrument 81-101 Mutual Fund Prospectus Disclosure;

(h) Prime Broker means any entity that acts as a lender or borrowing agent, as the case may be, to one or more investment funds;

(i) Securityholders means beneficial or registered holders of Mutual Fund Securities or ETF Securities of a Fund, as applicable; and

(j) TSX means the Toronto Stock Exchange.

Representations

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

The Filer

The Filer is a corporation incorporated under the federal laws of Canada. The head office of the Filer is located at 130 King Street West, Suite 1900, Toronto, Canada, M5X 1E3.
The Filer is registered as an investment fund manager (IFM) in the Provinces of Ontario, Quebec, and Newfoundland and Labrador.
The Filer is the IFM of the Existing Fund and the Filer will be the IFM of the Future Funds.
The Filer is not a reporting issuer in any Jurisdiction and is not in default of securities legislation of any of the Jurisdictions.

The Existing Fund

The Existing Fund is, and each Future Fund will be, an open-ended mutual fund, established as either a trust or a class of shares of a mutual fund corporation governed by the laws of Ontario and is, or will be, a reporting issuer in the Jurisdictions in which its securities are distributed.
The Filer offers Mutual Fund Securities and ETF Securities of the Existing Fund to interested retail investors by means of a simplified prospectus, Fund Facts and ETF Facts, as applicable, as a mutual fund or an alternative mutual fund that complies with the various requirements of NI 81-102 and all other applicable securities legislation, including NI 81-101, National Instrument 81-105 Mutual Fund Sales Practices, National Instrument 81-106 Investment Fund Continuous Disclosure and National Instrument 81-107 Independent Review Committee for Investment Funds.
The Existing Fund is and each Future Fund will be a reporting issuer in the Jurisdictions in which it offers its Mutual Fund Securities and ETF Securities.
The Mutual Fund Securities of the Existing Fund consist of Series F units, Series N units and Series P units. The ETF Securities of the Existing Fund consist of Series E units.
Each Fund is and will be subject to NI 81-102 and the Securityholders of each Fund is and will have the right to vote at a meeting of Securityholders in respect of any matter prescribed by NI 81-102.
ETF Securities of the Existing Fund are currently listed on the TSX.
The Existing Fund is not in default of the Legislation, except for a recent shorting transaction which caused it to inadvertently exceed the applicable Short Sale Collateral Limit. Granting the Short Sale Collateral Relief will remedy this issue.

The Short Sale Collateral Relief

As part of its investment strategies, a Fund that engages in short sales of securities is permitted to grant a security interest in favour of and to deposit pledged portfolio assets with its Prime Broker. If a Fund engages as its Prime Broker an entity that is not its custodian or sub-custodian, then a Fund may only deliver to its Prime Broker portfolio assets having a market value, in the aggregate, of not more than 10% of the NAV of the Fund with respect to a mutual fund, other than an alternative mutual fund, or not more than 25% of the NAV of the Fund with respect to an alternative mutual fund, at the time of deposit.
A Prime Broker may not wish to act as the borrowing agent for a Fund that has the ability to sell securities short that have an aggregate market value of up to 50% of the Fund’s NAV if the Prime Broker is only permitted to hold, as security for such transactions, portfolio assets having an aggregate market value that is not in excess of 10% of the NAV of the Fund with respect to a mutual fund, other than an alternative mutual fund, or 25% of the NAV of the Fund with respect to an alternative mutual fund.
Prime Brokers that are qualified to act as a custodian or sub-custodian under NI 81-102 are not widely appointed as custodians or sub-custodians under NI 81-102 as it can be both operationally challenging and costly to appoint them to act in such capacity.
Given the typical collateral requirements that Prime Brokers impose on their customers who engage in the short sale of securities, if the Short Sale Collateral Limits apply, the Funds would need to retain multiple Prime Brokers in order to sell short securities to the extent permitted under Section 2.6.1 of NI 81-102 and, if granted, the Short Sale Collateral Relief described above. Managing and overseeing relationships with multiple Prime Brokers introduces unnecessary operational and administrative complexities and additional costs of operation for the Funds.

Decision

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

The decision of the principal regulator under the Legislation is that the Short Sale Collateral Relief is granted provided that each Fund otherwise complies with subsections 6.8.1(2) and (3) of NI 81-102.

“Darren McKall”

Darren McKall, Associate Vice President

Investment Management Division

Ontario Securities Commission

Application No.: 2026-161

SEDAR+ No.: 6424308