Chaper 1 Flashcards
Agent
An investment dealer operates as an agent when it acts on behalf of a buyer or a seller of a security and does not own title to the securities at any time during the transaction
Broker
An investment dealer or a duly registered individual that is registered to trade in securities in the capacity of an agent or principal and is a member of the Canadian Investment Regulatory Organization (CIRO)
Canadian Investment Regulatory Organization (CIRO)
National self-regulatory organization (SRO) that oversees all investment dealers, mutual funds dealers, and trading activity in Canada’s debt, equity, and mutual fund marketplace
Capital Markets
Financial markets where debt and equity securities trade. Include organized exchanges as well as private placement sources of debt and equity
CDS Clearing and Depository Services Inc.
Provides customers with physical and electronic facilities to deposit and withdraw securities and manage their ledger positions. Also provides electronic clearing services both domestically and internationally, allowing customers to report confirm and settle securities
Clearing
Process of confirming and matching security trade details
Closed-end fund
Shares in closed-end investment companies are readily transferable in the open market and are bought and sold like other shares. Capitalization is fixed.
Consumer Finance Company
Makes direct cash loans to consumers, who usually are unable to secure a loan from a bank. Consumer finance companies typically charge a higher interest rate than banks.
Discount Broker/Self-Directed Brokers
Brokerage house that buys and sells securities for clients at a greater commission discount than full-service firms.
Financial Intermediary
An institution such as a bank, life insurance company, credit union or mutual fund which receives cash, which it invests, from suppliers of capital.
Fintech
Financial technology companies that take advantage of computer technology to provide more efficient financial products and services.
Firewall
Policies implemented to separate and isolate persons within a firm who make investment decisions from persons within a firm who are privy to undisclosed material information which may influence those decisions. For example, there should be separate fax machines for research departments and sales departments.
Institutional Firm
Investment dealer that serves institutional clients exclusively.
Integrated Firm
Investment dealer that offers products and services that cover all aspects of the industry, including full participation in both the institutional and the retail markets.
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 CIRO.
Investment Fund
A fund or company that sells units or shares and invests the proceeds in a portfolio of securities. There are two principal types: closed-end and open end/mutual fund. Shares in closed end investment companies are readily transferable in the open market and are bought and sold like other shares. Capitalization is fixed. Open-end funds sell their own new shares to investors, buy back their old shares, and are not listed. Open-end funds are so-called because their capitalization is not fixed; they normally issue more shares or units as people want them.
Investment Industry Association of Canada
A member-based professional association that represents the interests of market participants
Mutual Fund/Open end fund
An investment fund operated by a company that uses the proceeds from shares and units sold to investors to invest in stocks, bonds, derivatives and other financial securities. Mutual funds offer investors the advantages of diversification and professional management and are sold on a load or no-load basis. Mutual fund shares/ units are redeemable on demand at the fund’s current net asset value per share (NAVPS).
Pension Fund
A pension fund is a pool of assets managed with the goal of supplying its beneficiaries with income during their retirement years.
Primary Market Distribution
The issuance of securities in the primary market.
Principal
The person for whom a broker executes an order, or a dealer 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.
Retail Firm
Retail firms are investment dealers that serve only retail clients. Retail firms include full-service firms and discount brokers. Full-service firms offer a wide variety of products and services for the retail investor. Discount brokers execute trades for retail clients at a reduced rate, but do not provide investment advice.
Robo-advisor
An online investment service that provides clients with automated investment advice.
Sales Finance company
Purchases, at a discount, instalment sales contracts from retailers and dealers when such items as new cars and appliances are bought on instalment plans.
Savings Bank
A financial institution whose main role is to accept savings deposits and pay interest on those deposits. Usually set up by a government and is similar in function to a credit union.
Schedule 1 Bank
Canadian-owned banks. The largest 6 banks in Canada out-distance the asset size of other Canadian-owned banks. Schedule I banks are regulated by the Bank Act.
Schedule 2 Bank
Banks that are incorporated and operate in Canada as federally regulated foreign bank subsidiaries. Schedule II banks are regulated by the Bank Act.
Schedule 3 Bank
Banks that are federally regulated foreign bank branches of foreign institutions that have been authorized under the Bank Act to do banking business in Canada.
Self directed Broker
Also known as discount brokers. Self-directed brokers offer discounted transaction costs and do not provide investment advice to investors.
Settlement
The moment of irrevocable exchange of cash and securities.
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