IFIC Comments on U.S. 'Volcker Rule'
Toronto, Ontario – February 14, 2012 – The Investment Funds Institute of Canada (IFIC) today published its response to the United States financial regulatory authorities in response to their Notice of Proposed Rulemaking regarding implementation of the ‘Volcker Rule’ as set out in the Dodd‐Frank Wall Street Reform and Consumer Protection Act.
In its comment letter, IFIC outlines the likely impact of certain aspects of the Volcker Rule on Canadian investment fund managers and their investment funds, as well as resulting broader implications for the Canadian investment funds industry. The proposed rule would affect every Canadian investment fund manager that is affiliated to a U.S. bank, and the Canadian mutual funds they manage.
“As drafted, the Volcker Rule erects a barrier between the Canadian mutual fund industry and its Canadian clients – especially among our retiree ‘snowbird’ population,” said Joanne De Laurentiis, IFIC President and CEO. “The exemptions we are seeking would restore the longstanding U.S. regulatory practice of allowing Canadian mutual funds to deal with Canadians temporarily resident in the U.S.“
IFIC’s letter makes the following recommendations:
- that Canadian mutual funds be excluded from the proposed definition of “covered fund”;
- that U.S. registered investment companies, as well as Canadian and other foreign mutual funds, be excluded from the definition of “affiliate”; and
- that Canadian “snowbirds” and other individuals, temporarily resident in the U.S., be excluded from the definition of “resident of the United States”.
- Implementing these recommendations would not, in IFIC’s view, impair the objectives of the
- Volcker Rule or diminish the legitimate scope of the intended prohibitions.
In addition to the recommendations noted above, IFIC expressed complete support of the comprehensive submissions made by Canada’s five largest banks. Ms. De Laurentiis also noted the industry’s appreciation for the strong positions taken by Minister of Finance, James Flaherty and Bank of Canada Governor, Mark Carney, who have raised concerns about the extra‐ territorial effect of the proposals.
IFIC will continue to advocate for the exclusions our industry has recommended as there has never been any suggestion that Canadian mutual funds or their managers have contributed to, or might in the future, contribute to, any instability in the U.S. financial system.
IFIC’s comment letter is available here.
IFIC is the national association of the investment funds industry, representing 150 mutual fund companies, retail distributors, and industry affiliates. IFIC advocates for responsible public policies that recognize the value, and enhance the growth, of an investment funds based savings culture in Canada. IFIC has contributed to the industry’s development since 1962.
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