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CPH > Chap 3: The Canadian Regulatory Framework > Flashcards

Chap 3: The Canadian Regulatory Framework Flashcards

1
Q

We use the term _________ to describe the securities regulatory authority of each province,
whether it is a commission, registrar, administrator, or other official.

A

Administrator

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2
Q

The various regulators work together to coordinate and harmonize the regulation of the Canadian capital markets through the:

A

Canadian Securities Administrators (CSA)

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3
Q

The primary mandate of each securities regulator is to:

A

promote the integrity of financial markets and ensure

investor protection

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4
Q

The Ontario Securities Commission (OSC) mandate

A

“to protect investors from unfair,

improper or fraudulent practices and to foster fair and efficient capital markets and confidence in their integrity

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5
Q

Generally, the securities acts are based on three broad principles of regulation:

A
  1. Disclosure of facts that investors need to make reasoned investment decisions
  2. Registration of securities dealers, advisors, and other stated categories of registration
  3. Enforcement of securities laws and administrative policies
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6
Q

The underlying principle of securities regulation in Canada is ______, _______, and ___________

A

Full, True, and Plain Disclosure

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7
Q

To maintain an exchange listing that allows investors to engage in secondary trading, the issuer must meet the requirements of the applicable act or acts and of any exchange on which the securities are traded. These requirements, often referred to as ___________ ___________ ____________, vary in complexity among the different
exchange

A

Continuous disclosure requirements

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8
Q

Again, similar to prospectus requirements upon initial distribution, continuous disclosure requirements
are in place to help investors:

A

make informed decisions

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9
Q

The _________ are responsible for registering persons and companies that engage either in direct selling of securities to the public or in advising others on buying or selling securities.

A

Administrators

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10
Q

In all provinces, anyone who disagrees with a ruling of the administrator may:

A

appeal to the courts

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11
Q

Regulation of the securities industry in Canada occurs at three levels:

A

federal, provincial, and industry.

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12
Q

The U.S, has the SEC. In contrast Canada has:

A

no formal federal securities regulatory body.

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13
Q

Securities dealers are also subject to the federal Proceeds of Crime (Money Laundering) and Terrorism Financing Act (PCMLTFA), which is enforced by ____________________________ and the federal _____________________________.

A

Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)

Personal Information Protection and Electronic Documents Act (PIPEDA).

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14
Q

What is IMETs and what do they do?

A

Integrated Market Enforcement Teams (IMETs)

Their goal is to strengthen the law enforcement community’s ability to detect, investigate, and deter capital markets fraud.

IMETs is a joint initiative of the RCMP and the federal Gov’t.

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15
Q

What is JSOT and what do they do?

A

Joint Serious Offences Team (JSOT) was launched by OSC to elevate efforts to target fraud and other serious misconduct. They investigate and prosecute serious violations of the law using provisions of the Securities Act (Ontario) and Criminal code.

JSOT is an enforcement partnership between the OSC, the RCMP Financial Crime Program, and the Ontario Provincial Police Anti-Rackets Branch.

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16
Q

Each _______ regulates securities activities within its borders through a securities commission or equivalent, and its own securities legislation.

A

province

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17
Q

As a result of the CSA’s efforts, securities markets are now governed by a number of largely harmonized ______________ and ___________________.

A

National Instruments (NI) and Multilateral Instruments (MI)

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18
Q

A National Instrument(NI) is an instrument that has been adopted by _______________, whereas an Multilateral Instrument(MI) has __________________________

A

All CSA Jurisdictions

Not been adopted by one or more CSA Jurisdictions.

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19
Q

The CSA is an umbrella organization whose objective is to __________, ___________, and ___________ the regulation of the Canadian capital markets.

A

improve, coordinate, and harmonize

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20
Q

The mission of the Canadian Securities Administrators (CSA) members is threefold:

A
  1. To protect investors from unfair, improper, or fraudulent practices
  2. To foster fair and efficient capital markets
  3. To reduce risks to the market’s integrity and to investor confidence in the markets.
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21
Q

The CSA uses three primary tools in delivering its mandate:

A

The Passport System
The Super memorandum of understanding (Super MOU)
Various electronic databases.

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22
Q

The ________ ________ is designed to reduce unnecessary duplication in the review of filings made in multiple jurisdictions and is based on the principles of mutual reliance.

A

Passport System

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23
Q

The ____________ is a memorandum of understanding about the oversight of the marketplaces. Like the Passport system, it provides for the oversight functions to be based on mutual reliance principles.

A

Super Memorandum of Understanding (Super MOU)

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24
Q

The CSA has developed four electronic databases to streamline regulatory processes and make info more easily available to the market:

A
  1. System for Electronic Document Analysis and Retrieval (SEDAR)
  2. System For Electronic Disclosure by Insiders (SEDI)
  3. National Registration Database(NRD)
  4. Cease Trade Orders (CTO) National Database
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25
Q

What is SEDAR

A

System for Electronic Document analysis and Retrieval.

It is an electronic filing system and a depository for mandatory regulatory filings, including stock exchange filings.

26
Q

What is SEDI?

A

System for Electronic Disclosure by Insiders

SEDI allows insiders to file insider reports with all CSA regulators through a single submission over the internet.

27
Q

What is the NRD?

A

The National Registration Database is a database that allows dealers, underwriters, advisers, and individuals to submit registration applications, changes, renewals, and fees electronically in a single submission to all regulators.

28
Q

What is the CTO National Database?

A

The CTO National Database keeps track of cease trade orders (CTOs), which are orders prohibiting trading in a company’s securities. They are issued by a provincial or territorial securities commission or similar regulatory body against a company for failing to meet disclosure requirements.

29
Q

What is the International Organization of Securities Commissions?

A

The International Organization of Securities Commissions (IOSCO) regulates more than 95% of the world’s securities markets.

IOSCO has more than 200 members, including the OSC, the AMF, the ASC, The BCSC, IIROC, and the MFDA

30
Q

What are the Objectives of the International Organization of Securities Commissions?

A

They Promote adherence to internationally recognized and consistent standards of regulation, oversight, and enforcement in order to protect investors, maintain fair, efficient and transparent markets, and address systemic risks

31
Q

What is the Financial Stability Board?

A

The FSB was established April 2009 at the G20 Leaders’ Summit as the successor to the Financial Stability Forum. The Bank of Canada and the Office of the Superintendent of Financial Institutions (OSFI) are members.

32
Q

Authority is typically given to the SROs in the form of a ______________.

A

Recognition Order

33
Q

The SROs are responsible for:

A

enforcing their members’ conformity with securities legislation.

34
Q

The rules of the SROs must be in the public’s best interest and must set a standard ___________________________ than those imposed by the provinces.

A

Equal to or Higher

35
Q

What is IIROC?

A

The Investment Industry Regulatory Organization of Canada

They are responsible for enforcing the rules and regulations regarding sales, business conduct, financial practices, and trading activities of its dealer members and their representatives.

36
Q

IIROC carries out its regulatory responsibilities by setting and enforcing rules regarding ___________ and ______________.

A

Registration and Licensing

37
Q

IIROC- regulated firms also participate in the ________________________ which protects individual investors in the unlikely event that a firm should go bankrupt

A

Canadian Investor Protection Fund (CIPF)

38
Q

IIROC is a member of the _____________ _________________ _________, which is comprised of over 50 members from around the world, including all major stock exchanges.

A

Intermarket Surveillance Group (ISG)

39
Q

IIROC offers a _____________ service to evaluate reports of systemic wrongdoing

A

whistleblower

40
Q

IIROC and its U.S. counterpart, the ___________ ___________ ____________ ____________ cooperate to enhance the effectiveness of both organizations through the exchange of information and other cross-border assistance.

A

Financial Industry Regulatory Authority (FINRA)

41
Q

The SRO for the mutual fund industry is

A

The Mutual Fund Dealers Association

42
Q

The MFDA does not regulate the mutual funds themselves; this responsibility remains with the _______________ _____________.

A

Securities Commissions

43
Q

In Quebec, the mutual fund industry is regulated by the _________________.

A

Autorité des marchés financiers (AMF)

44
Q

The ________________________________ is the SRO of the mutual fund industry and insurance industry in Quebec

A

Chambre de la securite financiere (CHAMBRE)

45
Q

The Canadian ____________monitor the compliance of listed companies with the terms of the exchange listing agreements and policies.

A

exchanges

46
Q

___________ regulates the trading activity on a number of marketplaces, including the TSX, the TSXV, and the alternative trading systems (ATS)

A

IIROC

47
Q

Only securities that are listed on a _____________ ____________ are eligible to be held in RRSPs, TFSAs, or other registered accounts.

A

designated exchange

48
Q

CIPF is sponsored solely by _________ and funded by __________ assessments on dealer members.

A

IIROC

Quarterly

49
Q

CIPF is funded by the securities industry through the following means:

A
  1. Quarterly assessments paid by dealer members based on their gross revenues
  2. Risk premiums based on capital deficiencies
  3. An annual contribution by IIROC of the interest allocated to them in the prior year
50
Q

A limit has been placed by CIPF on the coverage provided for a client’s general accounts equal to ___________ for losses related to securities and cash balances. Separate accounts of clients are each entitled to the maximum
coverage of ______________ unless they are combined with other separate accounts.

A

$1,000,000

$1,000,000

51
Q

The MFDA Investor Protection Corporation (MFDA IPC) is to MFDA member firms what __________ is to IIROC dealer
members

A

CIPF

52
Q

Except in Québec, MFDA IPC protects mutual fund investors when an MFDA member goes insolvent.
MFDA IPC provides coverage of______________per eligible account for losses related to the insolvency of an MFDA
member.

A

$1,000,000

53
Q

The MFDA IPC is funded through member assessments, which are calculated according to the _________ ________ __________ of each member firm.

A

Assets Under Administration

54
Q

What is the CDIC?

A

The Canadian Deposit Insurance Corporation is a federal Crown Corporation that provides insurance for deposits in eligible Canadian banks and trust and loan companies.

55
Q

Eligible deposits for CDIC include

A

savings accounts, chequing accounts, and term deposits with a term of five years or less in Canadian currency and payable in Canada

56
Q

The deposits are insured by CDIC to a limit of __________ per person at each member institution.

A

$100,000

57
Q

____________ is a process in which the proceeds of crime are converted into seemingly legitimate funds through complex transactions with the purpose of obscuring the origin of the funds.

A

Money Laundering

58
Q

The 3 Stages of Money Laundering:

A

Placement - Involves the physical disposal or deposit of cash proceeds derived from an illegal activity within the legitimate financial system.

Layering- Involves separating illicit proceeds from their source by creating complex layers of financial transactions. The transactions are designed to obscure the audit trail and hide the original source, thereby providing anonymity.

Integration- Integration involves placing the laundered proceeds back into the economy in such a way that they appear to be normal business funds.

59
Q

What is PCMLTFA?

A

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act and Regulations.

60
Q

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act and Regulations were implemented with the following goals:

A

To detect and deter money laundering and terrorist financing activity

To respond to threats posed by organized crime

To assist in fulfilling Canada’s international commitments to fighting transnational crime

61
Q

What is the maximum penalty for offences under the securities Act (Ontario)?

A

$5,000,000

62
Q

_____________ provides a cooperative forum for securities regulators around the world.

A

International organization of securities commissions (IOSCO)

CPH (9 decks)

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