Chapter 1 Industry overview

Question 1

What are the three categories of securities firms in Canada?

Answer 1

Retail firms:

Full-service investment dealers that provide a wide variety of products and services and multi level advice.

and self-directed brokers, no advice and discount commissions

Institutional firms:

Question 2

What are the roles of the front office, middle office, and back office of an investment dealer?

Answer 2

Front offices focus is portfolio management including sales, trades, and Marketing

Middle office deals with operational functions including legal, compliance, accounting and audits.

Back office deals with trade settlement

Question 3

What is a Market Maker?

Answer 3

a market makers act as principles negotiating prices for buyer and sellers.

Question 4

What is the role of the CDS clearing and depository services inc?

Answer 4

The CDS clears and settles transactions on the securities markets. Financial institutions exchange cash at the end of the day in a process called netting.

Question 5

How much of a Schedule 1 bank can one person own?

Answer 5

A small bank: 2 billion or less can own 100%
A medium bank: 2-12 billion can own up 65%
A large bank: 12 billion plus can own up to 20%

Question 6

What is the difference between a Schedule 1, 2 and 3 banks?

Answer 6

Schedule 1 banks are domestic banks.

Schedule 2 banks are subsidiaries of foreign banks.

Schedule 3 banks are branches of foreign banks that operate in Canada.

Subsidiaries have the own separate regulation under law than their parent company.

Branches of foreign banks represent their bank.

Question 7

What are the two Canadian government pension plans?

Answer 7

Canadian pension plan and Old age security plan