RBC Global Asset Management Inc. (Re), 2026 CanLII 7599

February 4, 2026

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO

(the Jurisdiction)

AND

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

AND

IN THE MATTER OF RBC GLOBAL ASSET MANAGEMENT INC. (the Filer)

AND

THE FUNDS

(as defined herein)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on its behalf and on behalf of the investment funds that are subject to National Instrument 81-102 Investment Funds (NI 81-102) that the Filer, or an affiliate of the Filer, currently manages (the Existing Funds) and the investment funds that are subject to NI 81-102 that the Filer or an affiliate of the Filer may be the manager of in the future (the Future Funds, and together with the Existing Funds, the Funds, and each, a Fund) for a decision under the securities legislation of the principal regulator (the Legislation) for an exemption from:

(a) in respect of the Funds, the following provisions of NI 81-102 in order to permit each Fund to invest in securities of other existing and future investment funds that are not index participation units (IPUs) and whose securities are, or will be, listed for trading on a stock exchange in the United States (collectively, the Underlying U.S. ETFs):

(i) paragraphs 2.5(2)(a) and (a.1) to permit each Fund to purchase and/or hold securities of an Underlying U.S. ETF even though the Underlying U.S. ETF is not subject to NI 81-102; and

(ii) paragraph 2.5(2)(c) to permit each Fund to purchase and/or hold securities of an Underlying U.S. ETF even though the Underlying U.S. ETF is not a reporting issuer in any province or territory of Canada (together with (i) above, the Underlying U.S. ETF Relief);

(b) in respect of the Funds, paragraph 4.2(1)3 to permit each RBC Underlying ETF (as defined below) to sell a security to or purchase a security from, the Designated Broker (as defined below), that is an affiliate of the Filer and that is selling or purchasing the security as principal; and

(c) in respect of the Filer and each affiliate of the Filer, subparagraph 13.5(2)(b)(i) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) to permit each Fund to purchase a security from or sell a security to the investment portfolio of a "responsible person" (as defined in NI 31-103) (this relief, together with the relief described in paragraph (b) above, the Self Dealing Relief),

(collectively, the Exemption Sought).

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

(a) the Ontario Securities Commission (the OSC) is the principal regulator for this application; 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 the Jurisdiction (together with the Jurisdiction, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102, NI 31-103 and NI 81-102 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 formed by amalgamation under the federal laws of Canada and its head office is located in Toronto, Ontario.

2. The Filer is an indirect, wholly-owned subsidiary of Royal Bank of Canada.

3. The Filer is registered as an adviser in the category of portfolio manager and as a dealer in the category of exempt market dealer under the securities legislation of each Jurisdiction, is registered as an investment fund manager in each of British Columbia, Ontario, Québec and Newfoundland and Labrador and is also registered in Ontario as a commodity trading manager.

4. The Filer is the investment fund manager of each of the Funds.

5. The Filer is not in default of securities legislation in any of the Jurisdictions.

The Funds

6. Each Fund is, or will be, an open-ended investment fund governed by the laws of the Province of Ontario.

7. Each Fund is, or will be, governed by the applicable provisions of NI 81-102, subject to any exemption therefrom that have been, or may in the future be, granted by the securities regulatory authorities.

8. Each Fund is, or will be, a reporting issuer in the Jurisdictions.

9. The Existing Funds are not in default of securities legislation in any of the Jurisdictions.

10. Each Fund is, or will be, subject to National Instrument 81-107 – Independent Review Committee for Investment Funds (NI 81-107).

The Underlying U.S. ETF Relief:

11. The Funds may, from time to time, wish to invest in Underlying U.S. ETFs in accordance with their investment strategy.

12. Each Underlying U.S. ETF is, or will be, a reporting issuer registered with the U.S. Securities and Exchange Commission (SEC) as either (a) an open-end investment company subject to the Investment Company Act of 1940 (ICA) or (b) a commodity pool regulated by the Commodity Futures Trading Commission (CFTC) under the Commodity Exchange Act (CEA).

13. Each Underlying U.S. ETF is, or will be, an "investment fund" within the meaning of applicable Canadian securities legislation.

14. An Underlying U.S. ETF may be managed by the Filer or an affiliate or associate of the Filer, or by a third-party investment fund manager.

15. The securities of an Underlying U.S. ETF will not meet the definition of an IPU in NI 81-102 because the purpose of the Underlying U.S. ETF will not be to:

(a) hold the securities that are included in a specified widely quoted market index in substantially the same proportion as those securities are reflected in that index; or

(b) invest in a manner that causes the Underlying U.S. ETF to replicate the performance of that index.

16. An Underlying U.S. ETF's investment objectives and strategies will be substantially consistent with the investment restrictions in NI 81-102 and, as such, a Fund's limited investment in securities of an Underlying U.S. ETF will not cause the Fund to indirectly invest in assets or have access to investment strategies that it would not be permitted to have directly.

17. The securities of an Underlying U.S. ETF are, or will be, listed on a national securities exchange registered with the SEC in the United States (a National Securities Exchange) and the market for them is, or will be, liquid because it is, or will be, supported by authorized participants (similar to designated brokers or dealers). As a result, the Filer expects a Fund to be able to dispose of such securities through market facilities in order to raise cash, including to fund the redemption requests of its securityholders.

18. An investment in an Underlying U.S. ETF by a Fund will otherwise comply with section 2.5 of NI 81-102, including that:

(a) no Underlying U.S. ETF will hold more than 10% of its net asset value (NAV) in securities of another investment fund (at the time of purchase) unless the Underlying U.S. ETF (i) is a clone fund, as defined in NI 81-102, or (ii) in accordance with NI 81-102, purchases or hold securities: (A) of a money market fund, as defined in NI 81-102, or (B) that are IPUs issued by an investment fund; and

(b) no Fund will pay management or incentive fees which to a reasonable person would duplicate a fee payable by an Underlying U.S. ETF for the same service.

19. Absent the Underlying U.S. ETF Relief, a Fund's investment in an Underlying U.S. ETF would:

(a) be prohibited by paragraphs 2.5(2)(a) or (a.1) of NI 81-102, as applicable, because such Underlying U.S. ETF may not be subject to NI 81-102; and

(b) be prohibited by paragraph 2.5(2)(c) of NI 81-102 because such Underlying U.S. ETF may not be a reporting issuer in any Jurisdiction.

20. As the securities of the Underlying U.S. ETF will not be IPUs, a Fund may not rely on the exception in paragraph 2.5(3)(a) of NI 81-102 when investing in securities of an Underlying U.S. ETF.

21. The key benefits of a Fund investing in the Underlying U.S. ETFs are greater choices, lower fees and expenses and potentially enhanced returns. For example:

(a) an investment in an Underlying U.S. ETF may lead to efficiencies that result from lower operating expenses and overall management fees relative to the cost of investing directly in the individual portfolio securities held by the Underlying U.S. ETF or the cost of investing through a Canadian exchange-traded fund;

(b) an investment in an Underlying U.S. ETF will provide the Fund with access to specialized knowledge, expertise and/or analytical resources of the investment advisor to the Underlying U.S. ETF;

(c) investing through an Underlying U.S. ETF provides a potentially better risk profile, diversification and improved liquidity and/or tradability than direct holdings of asset classes to which the Underlying U.S. ETF provides exposure; and

(d) the investment strategies of the Underlying U.S. ETFs offer significantly broader exposure to certain asset classes, sectors and markets than those available in the existing Canadian market.

22. The Filer submits that having the option to allocate a limited portion of a Fund's assets to one or more Underlying U.S. ETFs will increase diversification opportunities and may improve the Fund's overall risk/reward profile. As such, the Filer considers that the Underlying U.S. ETF Relief will not be prejudicial to the Funds and their securityholders.

Self-Dealing Relief

23. The Funds may also purchase and hold securities of an investment fund managed by the Filer or an affiliate whose securities are listed for trading on an exchange in Canada (the Exchange) (each, an RBC Underlying ETF).

24. RBC Dominion Securities Inc., an affiliate of the Filer, is the designated broker (the Designated Broker) for the majority of the RBC Underlying ETFs and is an authorized participant for all RBC Underlying ETFs.

25. To the extent consistent with the investment objectives and strategies of a Fund, the Filer, as portfolio manager of the Fund, may from time to time wish to cause a Fund to make a sizable investment in an RBC Underlying ETF, which may require the Fund to make large trades in securities of that RBC Underlying ETF. The Filer considers that, in order to give a Fund best execution for such large trades, it is more beneficial for the Fund to make those trades through the Designated Broker at the NAV per unit of the RBC Underlying ETF rather than execute the trades on the Exchange at the prevailing market price. The Filer believes that the Designated Broker can provide best execution because, as the lead market maker who facilitates the unit creation and redemption process for the RBC Underlying ETF, it may have a ready inventory of units of the RBC Underlying ETF to sell and can provide a superior trading result through lower trading costs (by not crossing the bid-ask spread) relative to trades on the Exchange at the prevailing market price.

26. The number of units of an RBC Underlying ETF that a Fund wishes to purchase may not equal the prescribed number of units determined by the manager of the RBC Underlying ETF or a multiple thereof. Accordingly, in the case of a Fund's purchase of units of an RBC Underlying ETF, and to ensure that the Fund is able to make the required ETF investment on the applicable trading day (the Trade Date), the Designated Broker would submit a subscription order to the RBC Underlying ETF on the Trade Date for some or all of the number of units a Fund would like to acquire (or the prescribed number of units determined by the manager of the RBC Underlying ETF) which it would purchase as principal at a purchase price per unit equal to the NAV per unit of the RBC Underlying ETF on the Trade Date, in accordance with the terms of its designated broker agreement with the RBC Underlying ETF. As a result, the Designated Broker would likely hold a number of units of an RBC Underlying ETF (purchased by the Designated Broker as principal) which is greater than the number of units of the RBC Underlying ETF that the Fund wishes to acquire.

27. The Designated Broker, acting as principal, would then sell to the Fund, over the Exchange after the close of trading on the Trade Date, such units of the RBC Underlying ETF (along with any other units of the RBC Underlying ETF it already held in inventory, if applicable) required to fulfill the Fund's purchase order, at a purchase price per unit equal to the NAV per unit of the RBC Underlying ETF determined as at the close of trading on such Trade Date (a Purchase NAV Trade), plus a ticket fee not to exceed $0.01 per unit (the Ticket Fee). The Purchase NAV Trade would subsequently be printed on the Exchange prior to market open on the trading day following the Trade Date.

28. In the case of the sale by a Fund of a large number of units of an RBC Underlying ETF, the Designated Broker would, acting as principal, purchase from the Fund, over the Exchange after the close of trading on the Trade Date, such number of units of the RBC Underlying ETF that are required to fulfill the Fund's sale order, at a sale price per unit equal to the NAV per unit of the RBC Underlying ETF determined as at the close of trading on such Trade Date, less the Ticket Fee. The Designated Broker may then submit an exchange request to the RBC Underlying ETF and tender such units (or the prescribed number of units determined by the manager of the RBC Underlying ETF) to the RBC Underlying ETF on the Trade Date. The Designated Broker would in connection with the exchange request receive cash and/or in-kind securities with a value equal to the NAV per unit of the number of units of the RBC Underlying ETF exchanged by the Designated Broker on the Trade Date (a Sale NAV Trade, and together with a Purchase NAV Trade, each a NAV Trade), less the Ticket Fee. The Sale NAV Trade would subsequently be printed on the Exchange prior to market open on the trading day following the Trade Date.

29. Paragraph 4.2(1)3 of NI 81-102 provides that an investment fund must not purchase a security from, or sell a security to, an associate or affiliate of the manager or portfolio adviser of the investment fund. Subsection 4.3(1) of NI 81-102 provides that this self-dealing restriction does not apply with respect to a purchase or sale of a security by an investment fund if the price payable for the security is:

(a) not more than the ask price of the security as reported by any available public quotation in common use, in the case of a purchase by the investment fund, or

(b) not less than the bid price of the security as reported by any available public quotation in common use, in the case of a sale by the investment fund.

30. Given that each NAV Trade would be printed on the Exchange prior to market open on the trading day following the Trade Date at the most recently calculated NAV per unit of the RBC Underlying ETF, the Fund would not be able to rely on the exception in subsection 4.3(1) of NI 81-102 as it would not know, at the time the NAV Trade is submitted, whether the purchase price (in the case of Purchase NAV Trade) or the sale price (in the case of a Sale NAV Trade) payable for the units of the RBC Underlying ETF is not more than the ask price or not less than the bid price, respectively, for the units of the RBC Underlying ETF on the Exchange.

31. In addition, pursuant to subparagraph 13.5(2)(b)(i) of NI 31-103, the Filer, in its capacity as portfolio advisor to a Fund, is prohibited from knowingly causing the Fund to purchase or sell a security from or to the investment portfolio of a responsible person. The Designated Broker is a "responsible person", as defined in NI 31-103, as it is an affiliate of the Filer who has access, in its capacity as lead market maker of the RBC Underlying ETF, to an investment decision made by the Filer on behalf of the RBC Underlying ETF. As a result, the Filer is prohibited from causing the Fund to engage in NAV Trades of units of the RBC Underlying ETF through the Designated Broker because such trades involve the purchase or sale of units of the RBC Underlying ETF from or to the investment portfolio of a "responsible person".

32. While the Filer can comply with the self-dealing restriction of paragraph 13.5(2)(b) of NI 31-103 if it causes a Fund to (i) make NAV Trades of units of an RBC Underlying ETF through a third-party dealer that is not an affiliate of the Filer or (ii) trade in units of the RBC Underlying ETF on the Exchange at the prevailing market price, the Filer considers that neither of these options would provide the Fund with the best execution. This is because, while a NAV Trade may be executed with any authorized participant of the RBC Underlying ETF, it is often preferable to do the NAV Trade with the lead market maker as they are the most familiar with the RBC Underlying ETF and its portfolio holdings and thus are able to most effectively and efficiently deliver the creation basket (in the case of a unit creation) and dispose of the basket (in the case of an exchange request). Additionally, if a Fund were limited to trading in units of an RBC Underlying ETF only in the secondary market at the prevailing market price, the Fund and its unitholders would be blocked from the benefits that a NAV Trade would offer (which include (a) executing a purchase or sale of units of the RBC Underlying ETF with certainty at NAV and not exposing the Fund to the difference between the ask price and the bid price for the units of the RBC Underlying ETF on the Exchange and (b) greater efficiency for the Fund as it would be able to take advantage of large trade mechanics (lower trading expenses). Accordingly, the Filer would be unable to provide a Fund with the best possible execution for its trades in units of an RBC Underlying ETF.

33. Absent the Self-Dealing Relief, the Funds and the Filer would not be permitted to execute a NAV Trade of units of an RBC Underlying ETF through the Designated Broker.

34. The Designated Broker will not receive any commission or dealer compensation from a Fund or the Filer for the NAV Trades of RBC Underlying ETF units that it executes for the Fund. The only fee a Fund will pay to the Designated Broker for a NAV Trade will be the Ticket Fee.

35. The Funds' making of NAV Trades of units of an RBC Underlying ETF through the Designated Broker is proposed by the Filer free from any influence by the Designated Broker or any entity related to the Filer and without taking into account any consideration relevant to an entity related to the Filer and represents the business judgment of the Filer uninfluenced by considerations other than the best interests of the Funds. The Filer considers that the Funds' NAV Trades through the Designated Broker will achieve a fair and reasonable result for the Funds.

36. In accordance with the requirements of NI 81-107, the Filer will seek the approval of the independent review committee of the Funds (the IRC) to proceed with the NAV Trades of units of an RBC Underlying ETF through the Designated Broker by way of standing instructions.

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 Exemption Sought is granted provided that:

(a) with respect to the Underlying U.S. ETF Relief:

(i) the investment by a Fund in securities of an Underlying U.S. ETF is in accordance with the investment objectives of the Fund;

(ii) a Fund does not purchase securities of an Underlying U.S. ETF if, immediately after the purchase, more than 10% of the NAV of the Fund, in aggregate, taken at market value at the time of the purchase, would consist of securities of Underlying U.S. ETFs;

(iii) the securities of each Underlying U.S. ETF are listed on a National Securities Exchange in the United States;

(iv) each Underlying U.S. ETF is, immediately before the purchase by a Fund of securities of that Underlying U.S. ETF:

(1) an "investment company" subject to the ICA and in good standing with the SEC; or

(2) a commodity pool subject to the CEA and in good standing with the CFTC and SEC;

(b) With respect to the Self-Dealing Relief:

(i) each NAV Trade by a Fund of units of an RBC Underlying ETF is made in accordance with the investment objectives and investment strategies of the Fund;

(ii) the Filer, as the manager of a Fund, refers the Fund's NAV Trades of units of an RBC Underlying ETF to the Fund's IRC in the manner contemplated by section 5.1 of NI 81-107, and the Filer and the IRC comply with section 5.4 of NI 81-107 in respect of any standing instructions the IRC provides in connection with such transactions;

(iii) the IRC approves a Fund's NAV Trades of units of an RBC Underlying ETF through the Designated Broker, in accordance with the terms of section 5.2 of NI 81-107;

(iv) each NAV Trade is made at a purchase price or sale price equal to the NAV per unit of the RBC Underlying ETF on the Trade Date of the NAV Trade in accordance with the rules of the Exchange;

(v) each NAV Trade is printed on the Exchange prior to market open on the trading day following the Trade Date; and

(vi) a Fund does not pay the Designated Broker any compensation for a NAV Trade in units of an RBC Underlying ETF other than the Ticket Fee; and

(c) the prospectus of each Fund discloses, or will disclose, in the next renewal of its prospectus following the date of this decision, the fact that the Fund has obtained the Exemption Sought on the terms described in this decision.

"Darren McKall"

Darren McKall

AVP, Investment Management Division

Ontario Securities Commission

Application No. 2025/0479; SEDAR #6316051