Presented in partnership with CETFA:

Liquid alternative funds – also referred to as liquid alts – are typically hedge fund or private equity strategies made available through a mutual fund account. The CSA published a proposal paper that was open for comment in 2016. The paper was done as part of a larger fund modernization project that began in 2012.

The CSA’s proposed changes (which are expected in September) are primarily aimed at developing a more comprehensive regulatory framework for publicly offered alternative funds (currently called commodity pools). In addition, the CSA would introduce or revise certain investment restrictions for these funds, including concentration limits, limits on illiquid assets and limits on cash-borrowing, as well as introduce disclosure requirements for alternative funds that would clearly highlight the investment strategies that differentiate these products from conventional mutual funds.

What will be the impact on the mutual fund, ETF and hedge fund industries?