MFDA advisors looking to sell liquid alternative funds to retail investors under new rules coming into force next year will have to meet proficiency standards, the SRO says.
Commonly known as liquid alts, funds that use alternative strategies such as shorting, leveraging and derivatives will soon be available to retail investors, not only accredited investors.
CSA’s new rules, effective Jan. 3, temporarily retained the mutual fund dealer proficiency requirements for commodity pools and applied them to alternative mutual funds. Those requirements will remain until new ones are developed.
Referring to ongoing client reforms, CSA says in its notice of amendments to the new rules that “significant changes to the dealer proficiency standards are best dealt with on a more holistic basis.”
In an email to Advisor.ca, an MFDA spokesperson said that once the rules for liquid alts are in effect (specifically, amendments to NI 81-101), advisors will have to comply with the specific proficiency requirements contained therein, but the SRO offered no further details.
It added that, for liquid alts already on the market after receiving exemptive relief from securities commissions, that relief may not permit MFDA advisors to sell those products.