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Canadian Securities Industry Flashcards

1
Q

Capital Market

A

Financial markets where debt and
equity securities trade. Capital markets include organized exchanges as well as private placement sources of debt and equity.

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2
Q

IIROC

A

Investment industry regulatory organization of canada

IIROC oversees all investment dealers and trading activity on debt and equity marketplaces in Canada.

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3
Q

financial intermediary

A

any organization that facilitates the trading or movement of financial instruments that transfer capital between suppliers and users of capital. They include investment dealers, banks, credit unions, trust companies, and insurance companies.

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4
Q

Agents

A

they do not own title to the securities that they deal with, at any time during the transactions. Their profit is the agent’s commission they charge for each transaction.

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5
Q

Principals

A

investment dealers may own the securities as part of their inventory, at some stage of the buying and selling transaction with investors. The difference between the buying price and the selling price of the securities is their gross profit or loss.

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6
Q

Secondary market distribution

A

previously issued or outstanding securities can be traded. For example, buying and selling stocks through the Toronto Stock Exchange.

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7
Q

retail firms

A

Full-service retail firms offer a wide variety of products and services for the retail investor. They also provide various levels of advice, depending on the financial and wealth management concerns of their investor clients. Self-directed brokers, on the other hand, are considered the do-it-yourself approach to investing. They execute trades for clients at reduced rates, but they do not provide investment advice.

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8
Q

Self directed brokers

A

considered the do-it-yourself approach to investing. They execute trades for clients at reduced rates, but they do not provide investment advice.

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9
Q

Institutional firms

A

investment dealers that serve exclusively institutional clients, organizations that trade large volumes of securities. Institutional clients include pension funds and mutual funds, and may be domestic or foreign institutional firms. In Canada, foreign firms account for about one-third of all institutional clients. Foreign firms include affiliates of many of the major U.S. and European securities dealers.

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10
Q

Integrated firms

A

offer products and services across the industry and participate fully in both the retail and institutional markets. Most integrated firms underwrite all types of federal, provincial, and municipal debt, as well as corporate debt and equity issues. They are active in secondary markets, including the money market, as well as on all Canadian stock exchanges and some foreign exchanges.

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11
Q

Types of investment dealers

A

Retail firms, Institutional firms, integrated firms

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12
Q

CDS Clearing and Depository Services

A

CDS operates CDSX, the facility for the clearing and settlement of trades in equity and debt securities in Canada and for various cross-border transactions. Participants with access to the clearing and settlement system primarily include banks, investment dealers, and trust companies.

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13
Q

What is the process called netting

A

compiles each firm’s clearing settlement sheets and informs each member of the securities or funds it must deliver to balance its account. In this way, the number of securities and the amount of cash that must change hands among the various members each day is substantially reduced.

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14
Q

Schedule I banks

A

are banks that are not a subsidiary of a foreign bank and are considered domestic banks even if they have foreign shareholders

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15
Q

firewalls

A

barriers that inhibit information sharing across a bank’s various business units. In this way, the operations of different businesses within the same banking group are kept separate.

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16
Q

Closed-end funds

A

issue shares only at start-up or at other infrequent periods

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17
Q

open-end funds

A

commonly called mutual funds continually issue shares to investors and redeem these shares on demand. Of the two types of funds, open-end funds are by far the larger, accounting for approximately 95% of aggregate funds invested.

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18
Q

4 key soceieconomic factors affecting finance industry

A

Demographics, Defined benefit and define contribution pension plans, Saving rates, debt levels

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19
Q

Investment Industry Association of Canada

A

A member-based professional association that represents the interests of market participants.

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20
Q

settlement

A

The moment of irrevocable exchange of cash and securities.

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21
Q

investment advisor

A

Help make indirect investments

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22
Q

Retail investors

A

individual clients who buy and sell securities for their personal accounts.

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23
Q

Institutional investors

A

organizations, such as pension and mutual fund companies, that trade in large-share quantities or dollar amounts. They typically have a steady flow of money to invest.

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24
Q

Equity securities

A

represent some form of ownership stake in the company that issued them. For example, if the value
of a company increases, the owner of stock in that company receives a capital gain upon selling it.

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25
Q

money markets

A

Only short-term fixed-income securities with a term of one year or less trade in the money market.

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26
Q

stock exchange

A

an auction market where buyers and sellers of securities meet to trade with each other and where prices are established according to the laws of supply and demand

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27
Q

Toronto Stock Exchange

A

lists equities, some debt instruments that are convertible into a listed equity, income trusts, and exchange-traded funds.

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28
Q

TSX Venture Exchange

A

lists equities and a few debenture issues.

29
Q

TSX Alpha Exchang

A

offers trading in securities listed on the TSX and the TSX Venture Exchange

30
Q

Montréal Exchange (or the Bourse de Montréal

A

trades all financial and equity futures and options listed

for trading in Canada.

31
Q

ICE NGX Canada

A

provides electronic trading, central counterparty clearing, and data services to the North American natural gas and electricity markets.

32
Q

Canadian Securities Exchange

A

lists equities of emerging companies.

33
Q

NEO Exchange

A

exchange that provides listing services and facilitates trading in securities listed on the
NEO Exchange, TSX, and TSX Venture Exchange.

34
Q

CBID, and CBID Institutional

A

is an ATS that operates two distinct fixed-income marketplaces: retail and institutional.

35
Q

MarketAxess

A

provides market data and a trading platform with access to multi-dealer competitive pricing for a wide range of corporate bonds and other types of fixed-income instruments. MarketAxess is a member of IIROC and operates in Ontario and Quebec.

36
Q

CanPX

A

is a joint venture between several Canadian investment dealers and inter-dealer brokers (firms that facilitate trades between investment dealers). The CanPX system combines digital feeds from participating dealers to provide a composite display of real-time bid and offer quotations, in price and yield terms and with volume information. The service covers Government of Canada bonds and Treasury bills.

37
Q

Autorité des marchés financiers

A

regulates both the securities business and Quebec’s financial sector. That sector includes life and property insurance firms, providers of deposit insurance, and distributors of financial products, among others

38
Q

Office of the Superintendent of Financial Institutions (OSFI).

A

Outside of Quebec,
the financial sector is regulated separately from the securities industry by the Office of the Superintendent of Financial Institutions (OSFI).

39
Q

Canadian Securities Administrators

A

umbrella organization of Canada’s ten provincial and three territorial securities regulators designed to improve, coordinate and harmonize regulation of the Canadian capital markets. T

40
Q

Self-regulatory organizations (SRO)

A

private industry organizations to which the provincial regulatory bodies have granted the privilege of regulating their own members.

41
Q

Mutual Fund Dealers Association (MFDA)

A

the mutual fund industry’s SRO responsible for regulating the distribution and sales of mutual funds by its members in Canada.

42
Q

Canadian Investor Protection Fund

A

The primary role of the CIPF is investor protection; its secondary role is overseeing the self-regulatory system. The secondary role provides a mechanism to help CIPF contain the risk associated with its primary role.

43
Q

Mutual Fund Dealers Association Investor Protection Corporation

A

was created in 2005 to provide protection for eligible customers of insolvent MFDA member firms.

44
Q

Securities and Exchange Commission

A

in the United States, where the national Securities and Exchange Commission (SEC) has considerable regulatory authority

45
Q

Investment Representatives

A

largely employed by self-directed brokerage firms, where clients make their own investment decisions. Advisors in this category can trade in, but not provide advice to clients, on securities. The proficiency requirements for IRs are similar to those for IAs, except that the training period is 30 days, rather than 90 days, and the WME education component is not required.

46
Q

National Registration Database

A

web-based system used by investment dealers and employees to file registration forms electronically when applying for approval by a stock exchange, the CSA, or IIROC.

47
Q

gatekeeper

A

the guarding of markets from possible wrongdoing by unscrupulous clients. IAs must not, through act or omission, facilitate breaches of securities laws or regulations by clients.

48
Q

Arbitration

A

method of dispute resolution in which an independent arbitrator is chosen to listen to the facts and arguments of both sides in the dispute. The arbitrator then decides how the dispute should be resolved and what remedy should be imposed, if any.

49
Q

Ombudsman for Banking Services and Investments (OBSI)

A

This organization investigates customer complaints against financial services providers, including some banks and other deposit-taking organizations, investment dealers, mutual fund dealers, and mutual fund companies. OBSI is independent of the financial services industry.

50
Q

Unethical conduct is defined as

A

any omission, conduct, or manner of doing business that, in the opinion of the disciplinary body, is not in the interest of the public or the exchange.

51
Q

Gross domestic product (GDP)

A

total market value of all the final goods and services produced in a country over a given period.

52
Q

final goods

A

something purchased by the ultimate end user. Intermediate goods are products used in the manufacture of final goods. For example, a computer is a final good, whereas the computer chip inside it is an intermediate good, because it is a part of the computer. Only the market value of the computer, the final good, is included in GDP.

53
Q

Expenditure approach

A

approach to calculating GDP adds up everything that consumers, businesses, and governments spend money on during a certain period. Included in the calculation are business investments and all the exports and imports that flow through the economy.

54
Q

nominal GDP

A

dollar value of all goods and services produced in a given year at prices that prevailed in that same year.

55
Q

real GDP

A

This measure removes the changes in output that are attributable to inflation and allows us to see how much GDP has grown, based solely on productivity.

56
Q

productivity

A

output (e.g., GDP) per unit of input (e.g., the labour and capital used to produce the goods and services)

57
Q

business cycles

A

economy tends to move in cycles that include periods of economic expansion followed by periods of economic contraction

58
Q

Economic indicators

A

provide information on business conditions and current economic activity. They can help to show whether the economy is expanding or contracting

59
Q

participation rate

A

represents the share of the working-age population that is in the labour force. This rate is an important indicator because it shows the willingness of people to enter the work force and take jobs.

60
Q

Flaw in labour market indicators

A

those actively working who switch to discouraged workers are not considered in the rates. those working part time job who are looking for full time job are considered working. Some people are unemployed for a short period of time (expansion phase) whereas some people is for a long period of time (recession phase)

61
Q

fiscal agent

A

institution appointed to advise in, and conduct, various financial matters of another

62
Q

overnight rate

A

interest rate set in the overnight market, a marketplace wherein major Canadian financial institutions lend each other money in the form of one-day loans (called overnight loans). Changes in the target for the overnight rate influence other short-term interest rates, for such things as consumer loans or mortgages

63
Q

basis points

A

A basis point equals 1/100th of a percentage point. Each day, the Bank targets the mid-point of the operating band as its key monetary policy objective.

64
Q

Bank Rate

A

rate of interest that the Bank charges on one-day loans to the chartered banks and other major financial institutions who are members of Payments Canada

65
Q

Large Value Transfer System

A

This system allows participating financial institutions to conduct large transactions with each other through an electronic wire system. Among other things, this system permits these financial institutions to track their LVTS receipts and payments electronically throughout the day and to know the net outcome of these flows by the end of the day (same day settlement).

66
Q

drawdown

A

is the transfer of deposits to the Bank from the chartered banks, which effectively drains the supply of available cash balances from the banking system. Financial institutions consequently have less money available to lend to consumers and businesses, which causes interest rates to increase. Consumers and businesses are less willing to borrow at these higher rates.

67
Q

redeposit

A

is a transfer of funds from the Bank to the chartered banks. This increase in deposits and reserves increases the money supply, which in turn decreases interest rates. Consumers and businesses are then more willing to borrow, and banks have more money to lend.

68
Q

protective provisions

A

safeguards in the bond contract to guard against any weakening in the security holder’s position. The object is to create a strong instrument that does not force the company into a financial constraint.

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