Chapter 1 Flashcards
Def: Financial intermediary
Borrows money from suppliers of capital and lends it to users of capital.
Def: CSI
- Canadian Securities Industry.
- Regulated by provinces.
- Creates laws and regulations through securities commission.
- Delegates some power to CIRO.
Def: CIRO
- National SFO
- Oversees all investment deals.
- Enforces industry regulations.
Def: SFO
Self -Regulatory Organization.
Def: Clearing
Process of confirming and matching security trade details.
Def: Settlement
Irrevocable moment when cash and securities are exchanged.
Def: Primary Market/Offering
First time issued securities market.
Def: Secondary Market
Preciously issued securities market.
Name 3 types of Investment dealers
- Retail Firms
- Institution Firms
- Integrated Firms
Def: Retail Firms
Clients have option of
- Full service
- Self-directed
Def: Institutional Firms
- Exclusively institutional clients
- Trade in large volumes
Def: Integrated Firms
- Both retail and institutional markets
- Active in secondary markets
Def: Investment Boutiques
- Small retail or institutional dealers
- Specialize in particular market segments
Def: Front Office
Portfolio management activities
Def: Middle Office
Operations of the firm
Def: Back Office
Settles the firm’s security transactions
Def: Acting as Principal
Own the security and profit from the margin
What Services Investment Dealers Provide
Information: Advice on primary and secondary markets and security information
Liquidity: Transactions from their own inventory add liquidity to the market
Market Makers: Taking positions in assigned listed stocks
Competitive Inventory: Accumulation of inventory attracts institutions
Def: CDS
Clearing and Depository Services
- Facilitates trades in equities and debt securities through CDSX
- Banks, investment dealers and trust companies will have access to the CDSX
Def: Netting
Establish and confirm a credit or debit position balance in the form of cash or security for each dealer.
Def: Bank Act
- Sets rules and operating rules and restrictions
- Updated every 5 years
- Designates chartered banks as Schedule I, II, III
Def: Schedule 1 Bank
- Considered a domestic bank (may have international operations)
- Large sch I: Anyone shareholder is restricted to 20%
- Medium sch I: 35% must be publicly traded, anyone shareholder is restricted to 65% and equity must be between 2Bl and 12Bl
- Small sch I: Can be fully owen by 1 person but must have <2Bl
- Deposits are eligible for insurance, provided by CDIC
Def: CDIC
Canada Deposit Insurance Corporation
- Offer deposit insurance to schedule I banks.
Def: Firewalls
Inhibits information sharing across banking business units
