CH 3 The Canadian Regulatory Environment Flashcards
What is the primary goal of regulators? (2)
- To protect investors
2. To foster market integrity
What’s required to promote market integrity? (3)
- Industry employees must meet high proficiency standards
- Protection funds provide some protection for investors if a dealer firm goes bankrupt
- Regulators have the authority to prosecute wrongdoers in the form of reprimands, finds, suspensions, and even expulsion of licenses
Who’s responsible for regulating?
Each province’s securities commission and SROS
What is Canadian Securities Administrators (CSA)?
CSA is a joint panel, formed by provinces and territories, to coordinate, improve, and harmonize the regulation of the securities industry across Canada
What is Canadian Securities Administrators’s mission?
- fair efficient and vibrant capital market
2. protect investors form unfair, improper and fraudulent practices.
What happens if a SRO rule and a provincial securities commission’s rule is different?
The stricter of the 2 rules will apply
What is the Investment Industry Regulatory Organization of Canada (IIROC)?
IIROC is the national SRO for the securities industry, which monitors dealers and trading activity
What functions do IIROC perform? (5)
- Financial compliance
- Business conduct (sales) compliance
- Registration of firms and their licensed associates
- Enforcement of rules
- Real-time monitoring of trading and market-related activities
What is the Mutual Fund Dealers Association (MFDA)?
SRO for the distribution side of the Canadian mutual fund industry
What is the Autorite des marches financiers (AMF)?
Quebec’s provincial financial regulator
What is the Chambre de la securite financiere (CSF)?
Quebec’s SRO for mutual fund and insurance industry which enforces a code of ethics and determine requirements for licensed persons
What is the Office of the Superintendent of Financial Institutions (OSFI)?
OSFI is a regulatory body for all federally regulated financial institutions
OSFI DOES NOT REGULATE THE SECURITIES INDUSTRY
What does OSFI regulate? (4)
- Deposit-taking institutions like banks, trust companies, loan companies, credit associations
- Insurance companies
- Federally regulated pension plans
- Foreign bank offices that are chartered, licensed, or registered by the federal government to operate in Canada
What is the purpose of investor protection funds?
Protect an investor in the event that a financial institution defaults/becomes insolvent
What are the 3 protection funds that will be tested on this exam?
- Canadian Investor Protection Funds (CIPF)
- Mutual Funds Dealers Association Investor Protection Corporation (MFDA IPC)
- Canada Deposit Insurance Corporation (CDIC)
What is the Canadian Investor Protection Fund (CIPF)?
CIPF is a protection fund that is sponsored by IIROC and funded by IIROC dealer members through quarterly assessments that protects clients of IIROC member firms
What is the primary role of the Canadian Investor Protection Fund (CIPF)?
Investor protection
What is the secondary role of the Canadian Investor Protection Fund (CIPF)?
Oversee self-regulator system to contain risks
How much does the Canadian Investor Protection Fund (CIPF) protect up to?
Up to $1,000,000 in general (non-registered accounts: cash, margins, st sales, options, futures, and foreign currency) and another $1,000,000 for registered accounts(trusts)
does not insure accounts held by fund companies banks or any other non member IIROC firm
What is the Mutual Funds Dealers Association Investor Protection Corporation (MFDA IPC)?
Protection fund that protects clients of Mutual Funds Dealers Association member firms
How much does the Mutual Funds Dealers Association Investor Protection Corporation (MFDA IPC) protect up to?
Up to $1,000,000 for general accounts and a separate $1,000,000 for separate accounts
does not cover losses by changing market val, unsuitable investment default of an issues of securities
What province is the Mutual Funds Dealers Association Investor Protection Corporation (MFDA IPC) not considered an SRO in?
Quebec because they have their own protection fund
What is the Canada Deposit Insurance Corporation (CDIC)?
Protects clients of member deposit-taking institutions