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2
Q

Acts

A

The Securities Acts of the provinces or territories.

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3
Q

Advertisement

A

A sales communication that is published or designed for mass distribution through public media.

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4
Q

Agency Transaction

A

A transaction in which a dealer member buys or sells securities from or to a third party on behalf of a client.

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5
Q

Arbitration

A

A method of dispute resolution in which an independent arbitrator is chosen to assist aggrieved parties recover damages. It is an alternative to costly and lengthy litigation.

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6
Q

ATON System

A

This system eliminates the transfer of paper documents between dealer members and puts the onus on the receiving dealer member for maintaining authorizations to transfer and indemnifying the delivering firm for any errors which are the result of errors made by the receiving dealer member.

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7
Q

Autorite des marches financiers (AMF)

A

The body that administers the regulatory framework surrounding Quebec?s fi nancial sector: securities sector, the distribution of financial products and services sector, the financial institutions sector and the compensation sector.

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8
Q

Beneficial Owner

A

The real (underlying) owner of an account, securities or other assets. For example, an investor may own securities which are registered in the name of an investment dealer, trustee or bank to facilitate transfer or to preserve anonymity, but the investor would be the actual owner of the securities.

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9
Q

Blue Sky Laws

A

State laws that govern the sale of securities and mutual funds in order to safeguard investors from fraudulent or unscrupulous transactions. The term originated from a U.S. Supreme Court Justice in his ruling to protect investors from speculative ventures that had ?as much value as a patch of blue sky?.

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10
Q

Broker

A

Another term for a duly registered individual or a dealer member that is registered to trade in securities in the capacity of an agent or principal and is a member of IIROC.

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11
Q

Bucketing

A

Confirming a transaction when no trade has actually been executed.

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12
Q

Canada Business Corporations Act (CBCA)

A

The federal Act that governs all aspects of business corporations, including incorporation and takeover bids.

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13
Q

Canadian Deposit Insurance Corporation (CDIC)

A

A federal Crown Corporation that insures eligible deposits at member institutions and reimburses each depositor for the amount of their insured deposits, up to $100,000, when a member institution fails.

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14
Q

Canadian Investor Protection Fund (CIPF)

A

A fund that protects investors against the insolvency of any dealer member and is funded by IIROC members.

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15
Q

Canadian Securities Administrators (CSA)

A

The CSA is a forum for the 13 securities regulators of Canada?s provinces and territories to co-ordinate and harmonize regulation of the Canadian capital markets.

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16
Q

Carrying Broker

A

Dealer members that offer back office services and facilities to other dealer members, who are known as introducing brokers.

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17
Q

Cash Account

A

An account where an investor is required to pay for purchases or deliver securities sold by the settlement date of the transaction.

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18
Q

Cash Account Rule

A

Rule governing settlement of securities transactions in cash accounts. It prescribes settlement dates, payment methods and restrictions on trading if accounts are overdue.

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19
Q

Chinese Wall (also known as Fire Wall)

A

A company?s internal procedures and policies to ensure that a firm restricts access between departments to non-public, material information in order to avoid the illegal use of inside information. Another term in use is ?Information Barriers?.

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20
Q

Churning

A

Excessive trading in a client?s account solely to generate commissions and resulting in no benefit to the client.

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21
Q

Complaints and Settlement Database (ComSet)

A

A web-based system that allows dealer members to relay information to IIROC on matters such as client complaints, securities-related civil claims and arbitration notices, internal disciplinary actions and criminal offences.

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22
Q

Confidentiality

A

The ethical principle that a securities industry professional will hold secret all information relating to a client and a client?s account unless the client gives consent permitting disclosure or a formal request is made by the appropriate regulators.

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23
Q

Confirmation

A

A written statement acknowledging a securities transaction and confirming the details of the trade.

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24
Q

Conflict of Interest

A

A situation in which the personal or financial interests of a registrant confl ict with the interests of a client or the registrant?s firm. In cases of potential or actual conflict of interest, a client?s interests must be given priority and the conflict should be disclosed to both the client and the firm.

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25
Q

Constrained Share Companies

A

Companies or institutions that are either culturally important or fundamentally important to the Canadian economy (e.g., Canadian banks, trust, insurance, broadcasting and communication companies) and therefore have foreign ownership restrictions.

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26
Continuous Disclosure
The requirement for issuers of securities to issue and file a press release when a material change occurs. A material change report must also be filed with the commission(s) within 10 days through SEDAR. There is no requirement to file a press release for non-material changes.
27
Control Position
Ownership of sufficient voting stock in a company to materially affect its affairs. In all provinces except Manitoba, New Brunswick and Quebec, a 20% holding is deemed to represent control.
28
Discretionary Account
A securities account where the client has given specific written authorization to an investment dealer to make decisions regarding the security, price, quantity or timing of orders in the account.
29
Due Diligence
Investigation into and verification of the details of a potential investment such as an examination of operations and management and the verification of material facts.
30
Duty of Care
The duty an IA has to a client to ensure that everything ?reasonably practicable? is done to protect the client?s assets. This involves devoting the necessary time and attention to be able to make informed decisions for the benefit of the client.
31
Effective Delivery by Electronic Means
The electronic distribution of information to the intended recipients that is equivalent to the information provided in paper form.
32
Fiduciary Duty
A legal term that describes a high degree of duty of care. Criteria that may be used to determine whether a fiduciary duty is present in an IA-client relationship include a high degree of reliance by the client on the IA?s advice and the vulnerability of the client.
33
Financial Action Task Force on Money Laundering (FATF)
An inter-governmental body whose purpose is the development and promotion of policies, both at national and international levels, to combat money laundering and terrorist financing.
34
Financial Transactions Reports Analysis Centre of Canada (FINTRAC)
FINTRAC receives, analyzes, assesses and discloses financial intelligence on suspected money laundering, terrorist financing, and threats to the security of Canada.
35
Fire Wall
See Chinese Wall
36
Frontrunning
Entering an order with the prior knowledge of a pending trade that will likely affect the market price of the security.
37
Good Delivery by Electronic Means
Electronic delivery of information in which the recipients receive prior notice of delivery, have easy access to it, it is delivered unaltered and uncorrupted and the sender receives evidence of its successful delivery.
38
Grey (or Watch) List
A limited-circulation list of issuers on which a firm (including any of its staff ) has confidential information, distributed for the purpose of watching for any trading activity suggesting that the information has been leaked or has been used inappropriately.
39
Inside Information
Material non-public information about a company.
40
Insider
All directors and senior officers of a corporation and those who may also be presumed to have access to non-public or inside information concerning the company; also anyone owning more than 10% of the voting shares in a corporation.
41
Insider Report
Insiders are required to report their holdings upon becoming an insider and they must also report any change in those holdings within 10 days following such change. In Canada, insiders file these reports through the System for Electronic Disclosure by Insiders (SEDI) in electronic format via the Internet.
42
Insider Trading (Illegal)
Using material non-public information about a company to effect trades in that company?s securities or trading in securities as an insider without reporting the trades to the regulators.
43
Integrated Market Enforcement Teams (IMETs)
An initiative of the RCMP and the federal government to detect, investigate and deter capital markets fraud. The teams are composed of police, lawyers and other investigative experts through branches in Toronto, Vancouver, Montreal and Calgary. They are jointly managed by the RCMP and Justice Canada and work closely with securities regulators, such as IIROC and the MFDA, as well as other federal and provincial authorities.
44
Investment Advisor (IA)
An individual licensed to transact in the full range of securities. The term refers to employees of dealer members only. Also known as a Registrant or Registered Representative (RR).
45
Investment Dealer
A person or company that engages in the business of trading in securities in the capacity of an agent or principal and is a member of IIROC.
46
Investment Industry Regulatory Organization of Canada (IIROC)
The national Self-Regulatory Organization and representative of the securities industry. IIROC regulates the activities of dealer members in terms of their capital adequacy and conduct of business, and marketplace members . It oversees trading on the Canadian equity marketplaces, including the Toronto Stock Exchange (TSX); TSX Venture Exchange (TSX-V); Canadian National Stock Exchange (CNSX), including its ?Pure Trading? facility; Alpha ATS; Bloomberg Tradebook Canada; Liquidnet Canada Inc.; Chi-X Canada; Liquidnet Canada Inc.; MatchNow (operated by TriAct); and Omega ATS. IIROC monitors every trade in real time to protect investors and ensure market integrity. IIROC is also responsible for monitoring the Canadian debt markets.
47
Investment Representative (IR)
Refers to an individual licensed as an order taker or sales assistant and is strictly prohibited from providing investment advice to the public.
48
Know Your Client (KYC) Rule
This is the cardinal rule in making investment recommendations. All relevant information about every client, every account and every order must be known to ensure that all recommendations made by an IA to clients are suitable.
49
Manipulative Trading
Any attempt to affect or control the price of a security through trading.
50
Margin
Margin is the amount of money paid by a client when he or she uses credit to buy a security. It is the difference between the market value of a security and the amount loaned by a dealer member.
51
Margin Call
When an investor purchases or sells securities on margin and the securitie?s price go against the investor, the dealer member will demand the deposit of additional cash or marginable securities to the account to protect the broker?s loan.
52
Margin Deficiency
A situation in which a client?s margin in an account falls below the level required by the firm. This results in a margin call.
53
Materiality
This relates to the Cash Account Rule, and basically means that debits relating to such items as dividends, interest and fees (as opposed to trading activity) do not trigger account restrictions.
54
Memorandum of Understanding
A formal agreement between two or more regulatory bodies to co-operate in certain aspects of securities regulation.
55
Money Laundering
The process in which the proceeds of crime are converted into legitimate funds using complex transactions, usually through financial institutions.
56
Mutual Fund Dealer
A firm licensed exclusively for the purpose of trading in mutual fund securities.
57
Mutual Fund Dealers Association (MFDA)
The Self-Regulatory Organization that regulates the distribution (dealer) side of the mutual fund industry in Canada.
58
National Registration Database (NRD)
A web-based system that permits dealer members and advisors to fi le registration forms electronically, reduces the regulatory burden for industry participants and harmonizes securities regulations across jurisdictions.
59
National Registration System (NRS)
A voluntary way of filing through NRD so that a submission is reviewed only by one reviewer, known as the Principal Regulator on behalf of all other provinces/territories. The purpose of NRS is to improve the current registration system through a mutual reliance process.
60
Net Worth
Assets less liabilities. This must be included on the NAAF and taken into account by an IA when making investment recommendations to clients.
61
New Account Application Form (NAAF)
A form that is filled out by a client and an IA at the opening of an account. It provides personal information about the client, their financial position, risk tolerance, investment objectives, etc. which assists the IA in handling the account and (where applicable) making suitable investment recommendations. The NAAF must be completed and approved before (or promptly thereafter) any trades are executed in an account.
62
Nominee Account
An account that is in the name of an entity that is not the beneficial owner and in whose name securities are transferred.
63
Non-Client Order (N-C)
An order for the account of an employee of a dealer member. Client orders are given priority over non-client orders for the same securities at the same price and terms.
64
Non-Objecting Beneficial Owners (NOBOs)
The beneficial owners of securities who do not object to the release of their names and related information and permit issuers to communicate with them directly.
65
Objecting Beneficial Owners (OBOs)
The beneficial owners of securities who object to the release of their names and related information and will not permit issuers to communicate with them directly.
66
Office of the Superintendent of Financial Institutions (OSFI)
The primary regulator of federally chartered financial institutions and federally administered pension plans. OSFI supervises and regulates all banks, and all federally incorporated or registered trust and loan companies, insurance companies, co-operative credit associations, fraternal benefit societies and pension plans.
67
OmbudsNetwork
The OmbudsNetwork provides Canadian financial services consumers with access to independent, impartial and effective complaint resolution services in the banking, life and health insurance, general insurance, securities and mutual funds industries.
68
Performance Data
A measurement or description of the investment performance of a security.
69
Personal Information Protection and Electronic Documents Act (PIPEDA)
The Act that governs each firm?s information gathering processes and regulates what firms can do with the personal information that it collected, used and disclosed in the course of doing business.
70
Politically Exposed Persons (PEPs)
Senior foreign government officials, their immediate family members and their close associates. These individuals pose a potential money laundering threat if their funds are the proceeds of embezzlement or foreign corruption.
71
Power of Attorney
A legal document giving authority to an individual to direct the affairs of the person giving the authority (usually in the case of an absence).
72
Principal
The person for whom a broker executes an order, or a dealer member buying or selling for its own account. The term may also refer to a person?s capital or to the face amount of a bond.
73
Pro Group
Those considered ?non-clients? with regard to the purchase of certain securities. This includes (both individually and as a group) the dealer member, employees of the dealer member and partners, Directors and Officers of the dealer member and their associates and affiliates.
74
Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA)
The Act that legislates specific measures aimed at assisting in the detection and deterrence of money laundering and terrorist financing facilitating the investigation and prosecution of money laundering and terrorist financing offences.
75
Proxy
Securityholder material relating to a meeting that the reporting issuer is required under corporate law or securities legislation to send to the registered holders of the securities.
76
Red Flags
Warning signals and indicators of possible improper activities that may provide a basis for further action.
77
Registered Representative (RR)
Another term for an Investment Advisor which is commonly used by regulators. In a broad sense it includes individuals licensed to do business in the securities industry.
78
Registered Representative Mutual Funds (RRMF)
An individual registered to trade in mutual fund securities only. This category of registration is being discontinued, however, persons in jurisdictions which permitted this registration prior to September 28, 2009 will be grandfathered.
79
Registrant
This refers to individuals registered with the Securities Administrators or Self-Regulatory Organizations.
80
Relationship Disclosure Document (RDD)
A document (required by IIROC) that is provided to all clients, and provides information regarding the relationship that the client is entering into with the Advisor. This document should be written in plain language, and entitled ?Relationship Disclosure?.
81
Restricted List
A list of issuers with whom a firm has a current, publicly disclosed involvement requiring restrictions on the firm?s trading or advising activities.
82
Right of Action for Damages
Most securities legislation provides that those who sign a prospectus may be liable for damages if the prospectus contains a misrepresentation. This right extends to experts (e.g., lawyers, auditors, geologists, etc.) who report or give opinions within the text of the document.
83
Right of Rescission
The right of a purchaser of a new issue to withdraw from the purchase agreement within the specific province?s applicable time limits if the prospectus contains an untrue statement or omitted a material fact.
84
Right of Withdrawal
The right of a purchaser of a new issue to withdraw from the purchase agreement within two business days after receiving the prospectus.
85
Safekeeping
A safeguarding service provided by a dealer member for its clients? fully-paid securities registered in the clients? own names. The practice entails the use of vault space to store securities certificates until they are withdrawn or sold.
86
Sales Assistant
An Investment Representative (IR) employed with a full-service investment dealer.
87
Sales Communication
Any type of oral or written communication used to induce the purchase of securities.
88
Securities Acts
The collective term for the Provincial Acts that are administered by the securities commission or registrar in each province and territory, which set the rules under which securities may be issued and traded in that jurisdiction.
89
Securities Administrator
A general term referring to the provincial regulatory authority (e.g., securities commission or provincial registrar) responsible for administering a provincial Securities Act.
90
Securities Eligible for Reduced Margin
Securities which demonstrate suffiicently high liquidity and low price volatility based on meeting specific price risk and liquidity risk measures.
91
Security Cross-Reference
An alphabetical listing of securities held by clients, with the clients? names listed underneath each security.
92
Segregated Securities
Client-owned securities, fully paid for or representing excess collateral in margin accounts that are locked away and cannot be used to conduct a securities fi rm?s business. Segregated securities may be registered in street name.
93
Self-Regulatory Organization (SRO)
An organization recognized by the Securities Administrators as having powers to establish and enforce industry regulations. Its main functions are to protect investors, maintain fair, equitable and ethical practices in the industry and ensure conformity with securities legislation. In Canada, the SROs include: the Investment Industry Regulatory Organization of Canada, the Mutual Fund Dealers Association, the Montreal Exchange (in Quebec) and ICE Futures Canada (in Manitoba).
94
Selling Away
Dealing in securities outside of the normal business of the firm. These dealings are known as outside deals.
95
Settlement Date
The date on which a securities buyer must pay for a purchase or a seller must deliver the securities sold. For stock transactions, settlement must be made on or before the third business day following the transaction date.
96
Soft Dollar Arrangements
Non-cash payments received in exchange for services such as research and computer equipment used to assist in making investment decisions.
97
Short Sale
The sale of a security which the seller does not own but which is loaned to the seller by the dealer member. This is done when an investor believes that the price of a stock is going to fall and he or she intends to cover the sale by buying the stock back at a lower price. Short sales must be declared at the time the order is entered.
98
Standard Performance Data
A calculation of current and effective yield for money market funds and total return for other mutual funds.
99
Street Name
Securities registered in the name of an dealer member or its nominee, instead of the name of the real or beneficial owner, are said to be ?in street name.? Certificates so registered are known as street certificates.
100
Suitability
A registrant?s major concern in making investment recommendations. All information about a client and a security must be analyzed to determine if an investment is suitable for the client in accounts where a suitability exemption does not apply.
101
System for Electronic Disclosure by Insiders (SEDI)
SEDI facilitates the filing and public dissemination of ?insider reports? in electronic format via the Internet.
102
System for Electronic Document Analysis and Retrieval (SEDAR)
SEDAR facilitates the electronic filing of securities information as required by the securities regulatory agencies in Canada and allows for the public dissemination of information collected in the filing process.
103
Tipping
When someone possessing inside information knowingly conveys that information, while also knowing that there is a risk that the recipient will use the information to buy or sell, directly or indirectly, a security to which the information relates or convey the information to someone else who may do so.
104
Transfer Agent
An agent employed by a corporation or mutual fund to maintain shareholder records, including purchases, sales, and account balances.
105
Universal Market Integrity Rules (UMIR)
A common set of equities trading rules designed to ensure fairness and maintain investor confidence. These rules create the framework for the integrity of trading activity on equity marketplaces and allow for the competitive operation of exchanges, quotation and trade reporting systems (QTRSs) and alternative trading systems (ATSs) in Canada.
106
Unsolicited Order
An order entered by a client where there was no recommendation made by the client?s IA or his/her dealer member.
107
Wash Trade
A trade in which there is no change of beneficial ownership of a security. The intent is to give the false impression of legitimate trading activity.

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