Investor Alert:
CIRO is issuing a warning to Canadian investors regarding Canada Token Trade.
Effective Date: December 31, 2021
The accrued interest calculation in subsection 4803(6) of the IIROC Rules1 , which was illustrated in GN 4800-21-002, is intended for monthly pay instruments that compound interest monthly.
However, instruments such as NHA mortgaged-backed securities (NHA MBS), compound interest semi-annually. Furthermore, the interest is due on the first day of the month, but is not paid to the investor until mid-month. Consequently, these instruments require a different accrued interest calculation and are exempt from the accrued interest calculation in subsection 4803(6); and therefore, should follow the calculation in Appendix 1.
IIROC Rules this Guidance Note relates to:
section 4803.
This Guidance Note replaces MR0148 - Exemption from Regulation 800.48 – Interest Calculation for Monthly Pay Instruments.
Appendix 1 – Exempt from accrued interest calculation example