Archive for the ‘Miscellaneous News’ Category

Toronto Rock Lacrosse Tickets: Update #2

Saturday, February 4th, 2017

I have three more pairs of Toronto Rock Lacrosse tickets to give away!

The games take place at the Air Canada Centre and the seats are very good. Just tell me which ones you would like. A decision regarding who gets tickets will be made two weeks before each game and I will mail them to the lucky winner; while preference will be given to customers and those who tell me they’ve got a kid who plays lacrosse, anybody can win. If you win and don’t want your name publicized, that’s fine.

The second lucky winner was Fed Sanchez, who got the tickets for the Rock’s 18-10 blowout over Buffalo.

The three remaining ticket giveaways are:

Toronto Rock Lacrosse Ticket Giveaway
Date Opponent
Saturday
2017-1-28
7pm
Rochester Knighthawks
Friday
2017-2-3
7:30pm
Buffalo Bandits
Friday
2017-3-3
7:30pm
New England Black Wolves
Saturday
2017-3-11
7:00pm
Calgary Roughnecks
Saturday
2017-3-25
7:00pm
Vancouver Stealth

The games are a lot of fun. One thing that has impressed me is that these guys’ technical skills are so good they can concentrate on strategy … there are a lot fewer loose balls than I remember from my days of box lacrosse at age 10!

To try your luck at receiving a pair of tickets, just eMail me or comment on this post.

The next deadline is Friday, February 17 … if you want tickets to see the game against the New England Black Wolves on Mar 3, contact me on or before that date!

Toronto Rock Lacrosse Tickets – Update #1

Monday, January 16th, 2017

I have four more pairs of Toronto Rock Lacrosse tickets to give away!

The games take place at the Air Canada Centre and the seats are very good. Just tell me which ones you would like. A decision regarding who gets tickets will be made two weeks before each game and I will mail them to the lucky winner; while preference will be given to customers and those who tell me they’ve got a kid who plays lacrosse, anybody can win. If you win and don’t want your name publicized, that’s fine.

The first lucky winner is Charles Chiu, who will shortly receive the tickets to the January 28 game against the Rochester Knighthawks.

The four remaining ticket giveaways are:

Toronto Rock Lacrosse Ticket Giveaway
Date Opponent
Saturday
2017-1-28
7pm
Rochester Knighthawks
Friday
2017-2-3
7:30pm
Buffalo Bandits
Friday
2017-3-3
7:30pm
New England Black Wolves
Saturday
2017-3-11
7:00pm
Calgary Roughnecks
Saturday
2017-3-25
7:00pm
Vancouver Stealth

The games are a lot of fun. One thing that has impressed me is that these guys’ technical skills are so good they can concentrate on strategy … there are a lot fewer loose balls than I remember from my days of box lacrosse at age 10!

To try your luck at receiving a pair of tickets, just eMail me or comment on this post.

The next deadline is Friday, January 20 … if you want tickets to see the game against the Buffalo Bandits on February 3, contact me on or before that date!

FPSC Releases Projection Assumption Guidelines for 2016

Wednesday, July 13th, 2016

OK, so this doesn’t have much to do with preferred shares. But it is such a basic part of portfolio planning and so little known that I really should give it its own post. I mentioned last year’s version on May 25, 2015.

The Financial Planning Standards Council has announced:

and Institut québécois de planification financière (IQPF) have released updated unified Projection Assumption Guidelines for financial planners across Canada. Developed in 2015 by a committee of actuarial and financial planning professionals and updated annually, the Guidelines aid financial planners in making medium and long-term financial projections that are free from potential biases or predispositions.

The 2016 updates were completed with extensive feedback from financial planners across Canada and financial firms from across industry sectors. Based on feedback, additions incorporated into the 2016 Guidelines include:

  • •Rate of return assumption guidelines for foreign developed market equities (including U.S. market and EAFE market equities) and emerging market equities, as well as rate of return assumption guidelines for short-term investments, Canadian fixed income and Canadian equities
  • •Margins within which financial planners may deviate from the rate of return assumption guidelines, with explanation for how to apply the margins
  • •Additional explanations for the rate of return assumption guidelines referenced in footnotes, as well as in the body of the report
  • •Updated life expectancy information

The Projection Assumption Guidelines for 2016 are the following:

Inflation rate: 2.1%
Return rates
Short term: 3.0%
Fixed income: 4.0%
Canadian equities: 6.4%
Foreign developed market equities: 6.8%
Emerging market equities: 7.7%
YMPE or MPE growth rate 3.1%
Borrowing rate: 5.0%

To ensure full transparency and replicability, the Guidelines are drawn from four publicly available data sources: the Canada Pension Plan, Quebec Pension Plan, Willis Towers Watson portfolio managers’ survey, and historical data (based on the DEX 91-day T-bill index S&P/TSX, the DEX Universe Bond™ [Canadian bonds] index, the S&P/TSX [Canadian equities] index, the S&P 500 [U.S. equities] index, the MSCI EAFE [Europe, Australia, Far East] index and the MSCI Emerging Markets index).

“Updates to the Projection Assumption Guidelines ensure that financial planners are equipped with the current information to make financial projections,” says Joan Yudelson, FPSC Vice President of Professional Practice, “allowing them to project their clients’ progress toward meeting their life goals and provide appropriate financial planning advice to address any gaps.”

The 2016 Guidelines are in effect as of June 30, 2016. Full detail on the 2016 unified Projection Assumption Guidelines can be found here.

I must say, a nominal return of 4% for Fixed Income looks very optimistic, given that long Canadas yield 1.65% and long corporates are about 3.7%! The main document states that:

The Guidelines were set by combining assumptions from the following sources (each weighted at 25%):
  • assumption used in the most recent QPP actuarial analysis, weighted as follows: 50% of the medium-term assumption (2013 to 2022) and 50% of the long-term assumption (2023 and later)
  • assumption used in the most recent CPP actuarial report (2019 and later)
  • result of the Willis Towers Watson annual portfolio managers’ survey, weighted as follows: 50% of the medium-term projection (year to year) and 50% of the long-term projection (year to year)
  • historic returns over the 50 years ending the previous December 31st (adjusted for inflation) or dating back to inception of the index

The historical component is based on the DEX 91-day T-bill index S&P/TSX, the DEX Universe Bond™ (Canadian bonds) index, the S&P/TSX (Canadian equities) index, the S&P 500 (U.S. equities) index, the MSCI EAFE (Europe, Australia, Far East) index and the MSCI Emerging Markets index.

… and ….

The fixed income assumptions used in the most recent QPP and CPP actuarial reports have been adjusted to account for the opportunity of the QPP and CPP to buy and hold fixed income securities for significantly longer than the typical holding period of individuals. A margin of 0.75% is therefore deducted from the QPP and CPP actuarial assumptions to convert the long-term fixed income assumptions into a more relevant fixed income assumption for individual financial planning.

This does not fill my heart with comfort. Using historical returns as an input for fixed income projections is not an endeavor I would recommend to my friends (it can be justified with equities). Perhaps somebody would like to defend the 4% projection in the comments?

The actual document has material of further interest, including portfolio guidelines:

Portfolio return assumptions based on asset allocation
Investor profile: Conservative Balanced Aggressive
Short term: 5% 5% 5%
Fixed income: 70% 45% 20%
Canadian equities: 25% 40% 35%
Foreign developed market equities 0 10% 25%
Emerging market equities 0   15%
Gross return before fees 4.55% 5.19% 6.05%
Assumed fees 1.25% 1.25% 1.25%
Net return after fees 3.30% 3.94% 4.80%

DBRS Releases and Applies New Insurance Company Methodology

Friday, December 18th, 2015

DBRS has touted their new insurance company rating methodology:

DBRS Limited (DBRS) has today released its “Global Methodology for Rating Life and P&C Insurance Companies and Insurance Organizations (December 2015)” after a public request for comment period. The new methodology considers several factors, including the increased complexity of insurance risks and regulation; major shifts and dynamics in competition across the diverse financial services space; regulatory environment evolution, particularly in respect of evolving views on the definitions of capital; and the growing global reach of internationally active insurance companies.

The methodology, which places a high emphasis on the prevailing regulatory and operating environments, is underpinned by the DBRS core rating philosophy of “rating through the cycle.” The unique approach outlined in the new methodology incorporates a transparent approach to the notching between the holding company and operating company ratings, as well as a clear qualitative and quantitative approach to assessing franchise strength, while incorporating other key analytical considerations, including earnings ability, liquidity, risk profile, capitalization and asset quality.

The methodology specifically addresses the rating of insurance holding companies by taking into consideration the unique aspects of these parent companies and the operating groups that they control, considering various characteristics, including their diversified holdings, capital structure and cash flows.

Given an existing FSR at the operating company, the parent holding company would typically be notched down two notches from this FSR to reflect structural subordination under this new methodology. Ratings of a holding company’s debt and preferred shares depend on the FSR at its operating company, which then serves as the anchor point for the rating of the various capital instruments at the operating company and the holding company. Existing insurance company ratings and related ratings of insurance holding companies were revised.

The methodology itself is titled Global Methodology for Rating Life and P&C Insurance Companies and Insurance Organizations:

Impact of Related Methodologies and Criteria – Final Rating and Ratings for Specific Securities

Once DBRS has determined the initial FSR of the insurer, several other methodologies and criteria are employed to determine the final FSR and ratings for specific classes of securities from senior debt to preferred shares. As discussed in these methodologies, the final rating will consider aspects such as the support assessment (or pressure) of applicable sovereign governments and appropriate notching for the holding company, ranking and contingent risk considerations.

Operating Company Ranking of Creditors

This global insurance methodology generates an FSR for the main operating insurance company based on information applicable
to the consolidated group. In jurisdictions where policyholder claims rank above senior and subordinated debt, this claim superiority will be recognized in the notching with reference to the ranking of the various classes of creditors noted below.

General method of ranking (for a standard operating insurance company):
1a. FSR: Credit risk evaluation of the policyholders’ risk of the company’s expected future probability of failing to honour undisputed claims or benefit payments as per the policy contract.
1b. Issuer Rating: The FSR rating will also be the Issuer Rating for the operating insurance company.
2. Senior Debt Rating: FSR minus one notch (if no senior debt will be issued because of regulatory disadvantage and management practice, this placeholder notching for senior debt could be ignored, uplifting the subordinated debt rating, etc.).
3. Sub-Debt Rating: FSR minus two notches.
4. Preferred Shares Rating: FSR minus three notches.

Holding Company Notching

In determining the appropriate rating of holding company debt, DBRS will notch from the FSR of the operating insurance company in accordance with the following general guidelines. While a rating differential between the FSR of the operating insurance company and the rating of the holding company’s senior debt is typically two notches, it can range from zero to four notches or more depending on a number of factors. Such factors include:
• Legal structure and management of the insurance group,
• Diversity of subsidiary operating businesses and their contributions to the strength of the holding company,
• Consistency of dividends from operating businesses as well as the assessment of regulatory upstream dividend constraints and the liquidity of operating companies,
• Stand-alone liquidity of the holding company to meet capital servicing charges,
• Holding company access to funds to pay fixed holding company charges and rollover funding,
• Consolidated financial leverage measures,
• Double leverage ratio (please refer to definitions in the Appendix 2),
• Consolidated fixed-charge coverage ratio,
• Presence of a common regulator for the holding company and operating company, resulting in coordination of regulation and
regulatory action,
• Low solvency ratios in operating subsidiaries, limiting the ability to pay dividends regardless of the regulatory approval process and
• If the operating company’s FSR is rated BBB high or lower, an assessment will be made that may determine a greater than two notch differential for the holding company.

The holding company’s investment in subsidiaries is primarily equity based, which creates a structural subordination for holding company debtholders. DBRS recognizes that this structural subordination will only be realized in the event of the operating company being declared insolvent and, following the creditor adjudication process, the holding company debt investors may find that their claim is treated with the ranking of an equity holder of the operating subsidiary.

By rating the holding company’s senior debt at least two or more notches below the FSR of the main operating company, the senior and subordinated debt of the holding company is always at least one notch lower than the operating company’s senior and subordinated debt. In jurisdictions where operating companies do not typically issue senior debt, the operating company’s subordinated debt may be rated one notch below the FSR. In this case, the holding company’s senior debt will likely be rated one notch below the operating company’s subordinated debt. Maintaining a notching difference between the operating company’s debts and holding company’s debts will communicate to the investor that there is a ranking and recovery difference between similar debt tranches of the holding company and operating company.

This pass-through of debt capital in the form of equity capital can be reflected in the double leverage ratio (for a definition of this ratio, please refer to Appendix 2). Regulatory environments can place limits when and if dividends can be paid to the holding company by the operating company. A restrictive regulatory environment with respect to dividends creates risk that the holding company may have difficulty meeting its capital servicing obligations. This and other factors that assist or hinder the holding company will be evaluated. Generally, the notching of the capital instruments for a holding company with a two-notch differential would have this pattern of notching for the various rankings of security instruments:

1. Parent Holding Company Issuer Rating – FSR minus two notches.
2. Holding Company Senior Debt – FSR minus two notches.
3. Holding Company Sub-Debt – FSR minus three notches.
4. Holding Company Preferred shares – FSR minus four notches.

The extent of the notching can vary with the restrictiveness of the regulatory and supervisory environment in terms of dividends and other payments. For example, as a result of U.S. regulatory dividend restrictions for insurance companies, the issuer rating for U.S. holding companies would typically be rated three notches below the FSR. For non-U.S. insurance holding companies that have significant U.S. insurance operations, the analysis would consider the parent holding company’s ability to access sufficient dividend income from other operations as well as the U.S. insurance subsidiaries.

A New Competitor: Canadian Preferred Share Trust

Monday, July 20th, 2015

On May 28, Fierra Capital announced:

that Canadian Preferred Share Trust (the “Fund”) has filed a preliminary prospectus dated May 27, 2015with the securities regulatory authorities of all of the Canadian provinces and territories for an initial public offering (the “Offering”) of Class A Units and Class F Units (collectively, the “Units”) of the Fund at a price of $10.00 per Unit. The Class F Units are designated for fee based and/or institutional accounts and will not be listed on a stock exchange but will be convertible into Class A Units on a weekly basis.

The Fund’s investment objectives are to provide holders of Units with monthly cash distributions, preserve capital and provide the opportunity for capital appreciation and reduce the risk of rising interest rates by managing portfolio duration. The Fund has been created to invest in an actively managed portfolio comprised primarily of Canadian preferred shares. The Fund’s distributions are initially targeted to be $0.0333 per Unit per month ($0.40 per annum) to yield 4.0% on the subscription price per Unit.

Fiera Capital is the manager, portfolio manager and promoter of the Fund. Fiera Capital is responsible for creating, structuring, managing and promoting the Fund and will also implement the Fund’s investment strategies.

The final prospectus was announced on June 23.

Exchange Ratios (when offering extant preferred shares in exchange for units of the fund; many, many different issues will be accepted) were announced June 24.

And on July 2 the issue closed:

Canadian Preferred Share Trust (the “Trust”) announces the closing of its initial public offering (the “Offering”) for aggregate gross proceeds of approximately $90 million. Pursuant to the Offering, the Trust issued Class A Units and Class F Units (together, the “Units”) at a price of $10.00per Unit. The Trust has granted the Agents an over-allotment option, exercisable for a period of 30 days from today’s date, to purchase up to an additional 1 million Class A Units.

The Class A Units are listed on the Toronto Stock Exchange under the symbol PFT.UN. The Class F Units are designated for fee based and/or institutional accounts and will not be listed on a stock exchange but will be convertible into Class A Units on a weekly basis.

The Trust’s investment objectives are to:

(i) provide holders of Units with monthly cash distributions;
(ii) preserve capital and provide the opportunity for capital appreciation; and
(iii) reduce the risk of rising interest rates by managing portfolio duration.

The Trust has been created to invest in an actively managed portfolio comprised primarily of Canadian preferred shares. The Trust’s distributions are initially targeted to be $0.0333 per Unit per month ($0.40 per annum) to yield 4.0% per annum on the subscription price per Unit.

Fiera Capital is the manager, portfolio manager and promoter of the Trust. Fiera Capital is responsible for creating, structuring, managing and promoting the Trust and will also implement the Trust’s investment strategies.

Fiera Capital is also the manager of National Bank Preferred Equity Fund, which used to be Altamira Preferred Equity Fund, which launched quietly in 2012.

Good luck!

Sarao Looking More Like a Hero All The Time!

Saturday, April 25th, 2015

We will all remember that Navinder Singh Sarao has been elected Official Flash Crash Scapegoat by the US Department of Justice.

But the case continues to bring more questions than it purports to answer – even Flash Boys’ author Michael Lewis shows a grudging admiration for the man:

The people at the CFTC who decided to come forth, five years after the fact, with this new and improved explanation for the flash crash, must have known they would be creating a controversy with themselves at the center of it. It’s actually sort of brave of them.

They’ve been ridiculed in the news media and will no doubt soon be hauled before various congressional committees. They’ll have annoyed their colleagues at the Securities and Exchange Commission, who now look like even greater fools than they did before, for not bothering to mention in their report on the crash the various nefarious activities of algorithmic traders, and instead offering up as the primary cause of the crash a stupid mistake made by a money manager in Kansas. The authors of the SEC report either consciously ignored or did not bother to acquire from the CFTC a lot of accessible, and damning, information about what was happening in the U.S. stock markets the day of the flash crash. The world will now want to know why they did this.

Then there is the biggest question of all: How can a guy working from his parents’ house in suburban England whose only actionable orders were to BUY stock market futures cause such a sensational collapse in U.S. stocks? On the day of the flash crash, Sarao never actually sold stocks. He was trying to trick the market into falling so that he could buy in more cheaply. But whom did he fool with his trick? Whose algorithms were so easily gamed that they responded to phony sell orders by creating a crash? Stupidity isn’t a crime. Still, it would be interesting to know who, at this particular poker table, on this particular day, was the fool.

It would also be interesting to know how it occurred to Sarao that his trick might work. There’s a fabulous yet-to-be-told story here, about a smart kid in the U.K. who somehow figures out that the machines that execute the stock market trades of others might be gamed — and so he games them.

Eric Hunsader of Nanex takes time to point out that a recent spoofing penalty cost $50,000:

Pursuant to an offer of settlement in which Jonathan Brims (“Brims”) neither admitted nor denied the rule violations upon which the penalty is based, on January 20, 2015, a Panel of the CBOT Business Conduct Committee (“BCC” or “Panel”) found that it had jurisdiction over Brims pursuant to CBOT Rules 400 and 402 as the conduct occurred while Brims was an employee of a CBOT member firm. The Panel also found that during the time period from September 2011 through December 2012, Brims, on multiple occasions, entered large orders in the 5-Year Note, 10-Year Note, Bond, and Ultra Bond futures contract markets without the intent to trade. The Panel specifically found that Brims placed a small order to sell (buy) in the futures contract market on the CME Globex electronic trading platform (“Globex”). Brims subsequently entered multiple large-lot buy (sell) orders at or near the best bid (offer) on Globex to create the appearance of an imbalance in buy/sell pressure. Once the small order began trading, Brims canceled the large orders. The Panel further found that Brims entered the large orders for the purpose of inducing other market participants to trade against the small orders resting on the other side of the order book. The Panel concluded that Brims thereby violated CBOT Rules 432.B.2. and 432.Q.

Interestingly, Sarao provided information about (some of!) his algorithms to UK regulators, including a fascinating allegation:

I have traded using a basic TT for numerous years. Due to the fact that there were some individuals in the emini S&P who quite remarkably seemed to know WHERE 100% OF MY ORDERS WERE RESTING, even if they were over 90% partially filled !!! and hence made a concentrated effort to manipulate around those orders so they would not get filled, I decided to pay Edge Financial to build a program for me that would help disguise my orders more effectively. Initially I was told that the reason these individuals knew where all my orders were was because I traded so big and was as such ‘the elephant In the room’. However, It Is worth noting that further examination showed that their special manipulative activity occurred exactly the same if I did a 20 lot order or a 200 lot order.

I asked Edge to design 3 more functions specifically to help try and hide my orders from these people. I do not know If this can be described as HFT, to me It Is just giving me the ability to have some extra functions that my base trading software (TT) does not give me and It should be noted that I only use these functions Intermittently
and sometimes not at all. It Is called Navtrader, but it could be called anything and I was the only one who helped design it, albeit my design Ideas were 100% generated from what I had already seen other traders using already in the emini SP. Please note I believe I have only had this NavTrader since the beginning of 2013 at the very earliest

I decided that the only way I could mask my orders, was to place them as the market changed price so that they may not be seen In the ‘chaos’ of a price change. So I would have my orders pending to be placed as the market went from bid to offer or offer to bid.

The 3 main functions are as follows:
JOIN : These are pending orders that will be joined anywhere requested along the order book and become active when the price changed, Remarkably, these orders were still subject to the Insider trading I describe above, even when they are as small as a 50 lot !

SNAP: These are orders that are the same as JOIN but at the market best price ao that they become traded almost Immediately. I also have a function that lets you put In a minimum quantity so that the buy/sell SNAP order only becomes active when there Is a minimum of that number of contracts on the offer/bid. This worked rather beautifully when the mass manipulator of the e-mini sp was doing his normal manipulative activity at price 1800.00 on Friday 24th January circa 12.23pm. The fake bids he had placed were being removed too quickly for me to hit. If I had put a snap for 700 with 0 as minimum volume , It would not have been filled because as soon the bid was more than 1 lot bid the 700 would have been active. With my 699 then resting the normal forms of manipulation that occur on 100% of my orders EXCLUSIVELY would then have preceded to follow. So I put a 700 lot SNAP with a minimum volume of 600, et voila I got my full 700.

ICE: The Iceberg function on the CME Isn’t adequate for me, I hardly ever use it because It puts me at the back of the queue all the time. Hence, 2,000 needs to trade to get me out of 800 lots for example. My iceberg function is placed at a price and as soon as It Is bid/offered at the price the iceberg will take all contracts at the price up to and Including the number of my order. Again, there Is a minimum volume box, so for example I can put 50 Into it and put a sell ICE of 1,000 and then at that price every time the bid Is more than 50, the ICE will take all contracts out until 1,000 Is traded. This Is a good way of catching spoofers, and et voila I can trade 1.000 lots at one price (following on from the above example).

The other orders I sometimes place during the day are slightly away from the market price and move up and down as the market moves with It This Is to catch any blips up/down In the market so that I can make a small profit as the market comes back Into line(almost Immediately). These orders are placed rarely and only when I believe the market Is excessively weak or strong. Again, this was Inspired by other traders I could see doing the exact same thing.

Well … Assiduous Readers will be sympathetic, I hope, to my readiness to believe that one guy working alone with some occasional contract help can make the big guys look like fools. But these three functions seem perfectly straightforward to me and it will be most interesting to learn whether Sarao did in fact develop and use them and if they did in fact work as well as claimed.

Hunsader has produced a chart showing the January 24 spoofing/counter-spoofing battle:

NanexSaraoSpoofing
Click for Big

On the other hand, of course, there are some pretty damning affidavits; it seems clear that:

  • Sarao was spoofing
  • He was also engaged in anti-spoofing
  • spoofing rules are unenforceable and should be scrapped

Yield Calculator for Resets: New and Improved!

Thursday, March 26th, 2015

Assiduous Reader KB writes in and says:

I often have occasion to use your modified for resets spreadsheet on your site (ytc_resets).

I always have to remember to only use 25 years when I want a “Limit Maturity” of 30 years.

Anyway, it bothered me enough times that I modified it. I also added a couple fields for entering reset spread and GoC 5 year rate instead of having to modify the dividend formula each time.

Might be useful in place of the one you initially modified, or not. You can check it out, modify it, or throw it out. (it’s Excel 2007)

I’ve checked it out and everything is in order; so I have appropriated this development and it is now available for download.

Note that the new version is a .xlsx file and there may still be a few doddering old fogeys out there who haven’t upgraded since the last geological era, so the Old .xls version is still available.

There’s a detailed numerical example for the use of this calculator in the post What is the Yield of HSE.PR.A?. This explanation is based on the old version, but if you can’t figure out the layout difference then you don’t deserve to use nice things anyway.

Manulife Buries Poorly Performing Manulife Preferred Income Fund

Sunday, December 14th, 2014

A division of Manulife Financial Corp. announced on October 17:

the receipt of the required approvals from securityholders to proceed with certain of the previously announced proposed fund mergers. It is currently anticipated that the mergers will be implemented at the close of business on or about October 24, 2014 and on or about November 7, 2014, as detailed below.

Fund Mergers
For the mergers listed below, Manulife Investments has received the following approvals from securityholders to proceed with implementing the mergers on or about October 24, 2014:

Terminating Fund Continuing Fund Approval status
Manulife International Value Equity Class Manulife International Value Equity Fund Approved
Manulife Preferred Income Fund Manulife Preferred Income Class Approved

The inception date of the surviving fund was August 1, 2013 and accordingly performance reports date back only to then.

The last performance data I have for the non-surviving fund may provide a clue as to why the old fund was dropped, but only very nasty, cynical people would dream of a connection:

Performance to September 30, 2014
Period BMO-CM “50” Index Manulife Preferred Income Fund
One Month -0.76% -1.07%
Three Months -0.11% +0.15%
One Year +4.14% +3.07%
Three Years +3.67% +1.48%
Five Years +5.74% +2.91%

FAIR Canada Picking Our Pockets Again

Saturday, October 18th, 2014

The Canadian Foundation for Advancement of Investor Rights (FAIR Canada) has announced (back in August, actually, but I don’t spend a lot of time refreshing my knowledge of them):

the receipt of significant new funding from both the Ontario Securities Commission (OSC) and the Investment Industry Regulatory Organization of Canada (IIROC).

The OSC has provided a $2.5 million contribution toward FAIR Canada’s fundraising campaign. The OSC’s contribution comes from funds collected from monetary sanctions and settlements.

“We are thrilled that the OSC has again demonstrated its strong support of FAIR Canada’s work through a substantial funding contribution,” said Neil Gross, Executive Director of FAIR Canada. “FAIR Canada has developed an ambitious fundraising plan and we are grateful to lead donors like the OSC and Stephen Jarislowsky for getting our campaign off to a terrific start.”

Earlier this year, FAIR Canada announced that one of its long-standing directors, Stephen Jarislowsky, had made a $2 million contribution which challenged FAIR Canada to raise at least an additional $4 million to provide a $6 million endowment fund.

“The OSC’s contribution will go a long way to meeting this challenge and will help to provide a sustainable basis of funding for the organization going forward. FAIR Canada encourages like-minded individuals and organizations to contribute to our campaign,” said Gross.

From this one-time commitment of funds by the OSC, $500,000 will be allocated to cover day-to-day operating expenses and $2 million will be placed in trust with the FAIR Canada Jarislowsky Endowment Fund for long-term funding of the organization.

“On behalf of the board of directors of FAIR Canada, we would like to express our sincere thanks to the OSC for its generous financial support and its support of our activities,” said FAIR Canada board Chair Ellen Roseman. “FAIR Canada provides an important voice in the policy development process and we thank the OSC for recognizing the value of our work. With this new funding we will continue to be able to fulfill our mission.”

FAIR Canada also announced today that, with IIROC’s final payment under its second round of funding totaling $900,000, IIROC’s funding commitment has now been completed.

IIROC has played a pivotal role in supporting FAIR Canada since FAIR Canada’s inception in 2008. “FAIR Canada thanks IIROC for this grant and for the generous financial support they have provided throughout the past six years,” said Gross, noting that IIROC had supplied FAIR Canada with very substantial original funding and had made additional contributions pursuant to a 2012 agreement.

FAIR Canada was founded by ex-regulators and currently trumpets its staff of lawyers; they receive cash from the regulatory slush funds. Nice work, if you can get it.

Update, 2015-12-7: The OSC news release stated:

The Ontario Securities Commission (OSC) announced today the allocation of $2.5 million in funds collected from monetary sanctions and settlements to the Canadian Foundation for Advancement of Investor Rights (FAIR Canada), a national charitable organization dedicated to advancing investor interests.

“We are pleased to provide funding to FAIR Canada to support the long-term continuation of their work on behalf of investors in Ontario and across the country,” said Howard Wetston, Q.C., Chair and CEO of the OSC. “The work conducted by FAIR Canada has been extremely valuable to the OSC as we look to further educate, engage and protect retail investors in Ontario.”

Providing protection to investors is central to the OSC’s mandate. The OSC’s support is consistent with its own investor focused initiatives such as the Office of the Investor, which leads the OSC’s efforts to identify and understand investor issues and concerns through investor engagement and research. The Office works closely with the OSC’s Investor Advisory Panel and the Investor Education Fund to support their mandates.

The OSC’s financial contribution to FAIR Canada will support its operation and ongoing pursuit to advance the education of the public, government and regulators about capital markets, savings, investments and investment practices. FAIR Canada, in addition to providing education through conferences, roundtables and symposia, conducts and publishes research and is a national voice for investors in securities regulation.

Of this one-time commitment of funds by the OSC, $500,000 will be provided to FAIR Canada to cover its day-to-day operating expenses and $2 million will be placed in trust with the FAIR Canada Jarislowsky Endowment Fund for long-term funding of the organization.

The OSC administers and enforces securities legislation in the province of Ontario. The OSC’s statutory mandate is to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets.

The 2015-6-30 Financial Statements of FAIR observe:

Endowment Fund

In the 2014 fiscal year, the Foundation received $2,000,000 from the Jarislowsky Foundation (“JF”) to establish an Endowment Fund for the purpose of providing operating funds to the Foundation. Under the terms of the agreement, the Foundation must raise an additional $4,000,000 in matching contributions to add to the Endowment Fund, with the exact amount of the Matching Contribution required to be 200 percent of the market value of the original capital as of the Matching Gift Deadline. Should the required matching contributions not be received by the deadline, JF has the right to call for the return, within 10 days of the Matching Gift Deadline, of the original capital at its market value plus the net income earned from the Endowment Fund less any disbursements from the Endowment Fund, based on the disbursement policy set out in the agreement.

In the 2015 fiscal year, the Foundation received $2,000,000 of the required matching contributions from the Ontario Securities Commission (“OSC”) which is subject to the completion of the terms of the JF Endowment Fund. The OSC’s right to call for the return of the OSC’s endowment contribution is the same as stated in the JF endowment fund agreement except that the return of such funds to the OSC must be made within 40 days.

The Foundation has received an extension of the Matching Gift Deadline from both JF and the OSC until March 31, 2016 in order to raise the remaining $2,000,000 in funding.

Hymas Investment Management Inc. Complaints Policy

Friday, August 1st, 2014

The regulators have decided I don’t pay enough tax, so in accordance with CSA Staff Notice 31-338 Guidance on Dispute Resolution Services Client Disclosure for Registered Dealers and Advisers that are not members of a Self-Regulatory Organization I have joined the Ombudsman for Banking Services and Investments and, more importantly, paid my OBSI Portfolio Manager Membership Fee. Assiduous Readers will be relieved to learn that since this fee is not actually charged by a Securities Commission, I do not expect it to be included when the various commissions discuss the rate of increase in regulatory fees.

I haven’t had a single complaint in the fourteen years I’ve run my own shop, and none in the eight years before that during which I was with Greydanus, Boeckh & Associates, Inc., but who knows? Tomorrow there might be a flood.

Procedures for clients with complaints are detailed on the Hymas Investment Management Inc. website under the heading "Complaints".