Chapter 1 Terms Flashcards
Canadian Securities Industry
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 itself own title to the securities at any time during the transactions.
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 a Self-Regulatory Organization.
Canadian Investor Protection Fund (CIPF)
Canadian Investor Protection Fund (CIPF)
A fund that protects eligible customers in the event of the insolvency of an IIROC dealer member. It is sponsored solely by IIROC and funded by quarterly assessments on dealer members.
CDS Clearing and Depository Services Inc. (CDS)
CDS provides customers with physical and electronic facilities to deposit and withdraw depository-eligible securities and manage their related ledger positions (securities accounts). CDS also provides electronic clearing services both domestically and internationally, allowing customers to report, confirm and settle securities trade transactions.
Clearing
Clearing
The 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 Brokers
Discount Brokers
Brokerage house that buys and sells securities for clients at a greater commission discount than full-service firms. Also known as self-directed brokers.
Financial Intermediary
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
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.
Initial Public Offering (IPO)
Initial Public Offering (IPO)
A new issue of securities offered to the public for investment for the very first time. IPOs must adhere to strict government regulations as to how the investments are sold to the public.
Institutional Firm
Institutional Firm
Investment dealer that serves institutional clients exclusively.
INTEGRATED FIRM
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
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 IIROC.
INVESTMENT FUND
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 or 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 Regulatory Organization of Canada (IIROC)
Investment Industry Regulatory Organization of Canada (IIROC)
The Canadian investment industry’s national self-regulatory organization. IIROC carries out its regulatory responsibilities through setting and enforcing rules regarding the proficiency, business and financial conduct of dealer firms and their registered employees and through setting and enforcing market integrity rules regarding trading activity on Canadian equity marketplaces.
MARKET MAKER
market maker
A trader employed by a securities firm who is authorized and required, by applicable self-regulatory organizations (SROs), to maintain reasonable liquidity in securities markets by making firm bids or offers for one or more designated securities.
MONEY MARKET?
money market
That part of the capital market in which short-term financial obligations are bought and sold. These include treasury bills and other federal government securities, and commercial paper, and bankers’ acceptances and other instruments with one year or less left to maturity. Longer term securities, when their term shortens to the limits mentioned, are also traded in the money market.
MUTUAL FUND?
mutual 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?
pension fund A regular payment made to a retired employee from an investment fund that the employee and/or employer has contributed to during the working life of the employee.
PRIMARY MARKET?
primary market
The market for new issues of securities. The proceeds of the sale of securities in a primary market go directly to the company issuing the securities.
PRINCIPAL
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 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.