While preparing a previous poston BetaPro’s new exchange-traded fund (ETF), the Horizons BetaPro S&P/TSX 60 Index EFT (HXT), I couldnt help but notice several references to conflicts of interest in the prospectus. I dont read enough ETF prospectuses to know if this is standard fare but I cant help wondering if the references are the usual boiler-plate or something more substantive. Heres an overview of the conflicts of interest:
1. The ETF Managers may trade and make investments for their own accounts . The ETF Managers may take positions the same as, different than or opposite to those of the ETF.
2. The ETF managers do not devote their time exclusively to the management of the ETF . [and] will have conflicts of interest in allocating management time, services and functions to the ETF and the other persons for which they provide similar services.
3. all of the positions held by accounts owned, managed or controlled by the Investment Manager will be aggregated for purposes of applying certain exchange position limits. As a result, the ETF may not be able to enter into or maintain certain positions if such positions, when added to the positions already held by the ETF and such other accounts, would exceed applicable limits.
4. The ETF Managers may at times have interests that differ from the interests of the Unitholders of the ETF.
5. MGI Securities Inc., a dealer through whom Units of the ETF may be purchased, is related to the Manager . As a consequence of this relationship, MGI Securities Inc. may at times have interests that differ from the interests of the Unitholders of the ETF.
6. National Bank Financial (NBF) may act as a broker, dealer, market maker, and has an affiliate that may act as a counterparty and another that holds an indirect minority interest in a subsidiary of the ETF Manager. These relationships may create actual or perceived conflicts of interest which investors should consider in relation to an investment in the ETF. In particular, by virtue of these relationships, NBF may profit from the sale and trading of Units. NBF, as market maker of the ETF in the secondary market, may therefore have economic interests which differ from and may be adverse to those of Unitholders.
7. NBF and its affiliates may engage in business with the ETF, the issuers of securities making up the investment portfolio of the ETF, or with the Manager or any funds sponsored by the Manager or its affiliates. Services offered may include making loans, entering into derivative transactions and providing advisory or agency services.
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Blogs & Comment
Closer look at BetaPro’s new ETF (HXT)
By Larry MacDonald
While preparing a previous poston BetaPro’s new exchange-traded fund (ETF), the Horizons BetaPro S&P/TSX 60 Index EFT (HXT), I couldnt help but notice several references to conflicts of interest in the prospectus. I dont read enough ETF prospectuses to know if this is standard fare but I cant help wondering if the references are the usual boiler-plate or something more substantive. Heres an overview of the conflicts of interest:
1. The ETF Managers may trade and make investments for their own accounts . The ETF Managers may take positions the same as, different than or opposite to those of the ETF.
2. The ETF managers do not devote their time exclusively to the management of the ETF . [and] will have conflicts of interest in allocating management time, services and functions to the ETF and the other persons for which they provide similar services.
3. all of the positions held by accounts owned, managed or controlled by the Investment Manager will be aggregated for purposes of applying certain exchange position limits. As a result, the ETF may not be able to enter into or maintain certain positions if such positions, when added to the positions already held by the ETF and such other accounts, would exceed applicable limits.
4. The ETF Managers may at times have interests that differ from the interests of the Unitholders of the ETF.
5. MGI Securities Inc., a dealer through whom Units of the ETF may be purchased, is related to the Manager . As a consequence of this relationship, MGI Securities Inc. may at times have interests that differ from the interests of the Unitholders of the ETF.
6. National Bank Financial (NBF) may act as a broker, dealer, market maker, and has an affiliate that may act as a counterparty and another that holds an indirect minority interest in a subsidiary of the ETF Manager. These relationships may create actual or perceived conflicts of interest which investors should consider in relation to an investment in the ETF. In particular, by virtue of these relationships, NBF may profit from the sale and trading of Units. NBF, as market maker of the ETF in the secondary market, may therefore have economic interests which differ from and may be adverse to those of Unitholders.
7. NBF and its affiliates may engage in business with the ETF, the issuers of securities making up the investment portfolio of the ETF, or with the Manager or any funds sponsored by the Manager or its affiliates. Services offered may include making loans, entering into derivative transactions and providing advisory or agency services.
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