Institute Recommends Changes to Proposed Regulatory Framework for Canadian Funds

Washington, DC, June 18, 2002 - The Institute recently submitted a comment letter to the Canadian Securities Administrators (CSA) regarding a proposed new framework for regulating the Canadian mutual fund industry.

The CSA concept proposal indicates that Canadian fund managers would be required to meet minimum capital requirements under the new regime being considered by the CSA, but sought comment on whether a minimum capital requirement is justified and, if so, the amount.

The Institute's letter states that the proposed capital requirement is excessive, unnecessary, and will have anti-competitive effects on the Canadian fund industry. The Institute believes that other aspects of mutual fund regulation and the use of insurance are far more effective than minimum capital requirements as a means to manage operational risk for fund managers and consumers.