This article was authored by Tim Baron, Michael Campbell and Kimberly Poster who are members of our Structured Products Group.
On October 17, 2003, Dynamic Mutual Funds Ltd. obtained exemptive relief from the securities regulators in each province and territory of Canada from certain requirements of National Instrument 81-102 Mutual Funds. The relief will allow certain Dynamic mutual funds to effect limited short-selling of securities subject to the restrictions set out by the regulators.
Dynamic submitted its application for exemptive relief in October 2002. In its application, Dynamic argued that limited and controlled short-selling could benefit its funds, since short-selling would enable the funds to control volatility and enhance fund performance in a flat or declining market. Dynamic maintained that risk management strategies, such as daily marked-to-market rules, cash cover requirements and stop-loss orders, meant that the original rationale for prohibiting short-selling
