Chapter 1 | The Canadian Securities Industry Flashcards
A _ _ _ _ _ _ is an institution such as a bank that borrows money from suppliers of capital and lends it to users of capital.
A financial intermediary is an institution such as a bank that borrows money from suppliers of capital and lends it to users of capital.
TRUE OR FALSE?
The Canadian securities industry is mainly regulated by the provinces.
ANSWER
TRUE
Canadian provinces have the power to create and enforce their own laws and regulations through _ _ _ _ _ _
Canadian provinces have the power to create and enforce their own laws and regulations through SECURITIES COMMISSIONS.
COMPLETE THE SENTENCE:
Securities commissions delegate some of their powers to _ _ _ _ _ _ _ such as the Investment Industry Regulatory Organization of Canada (IIROC).
**ANSWER:
Securities commissions delegate some of their powers to self-regulatory organizations (SRO) such as the Investment Industry Regulatory Organization of Canada (IIROC).**
NOTE ONLY /
A Self Regulatory Organizations (SROs) is a non-governmental organization that regulates the operations, standards of practice, and business conduct of its members with a view to promoting the public interest.
The BRITISH COLUMBIA SECURITIES COMMISSION (BCSC) has the statutory power to recognize SROs. The BCSC currently recognizes the Mutual Fund Dealers Association (MFDA), the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Public Accountability Board (CPAB) as SROs.
NOTE ONLY /
A Self Regulatory Organizations (SROs) is a non-governmental organization that regulates the operations, standards of practice, and business conduct of its members with a view to promoting the public interest.
The BRITISH COLUMBIA SECURITIES COMMISSION (BCSC) has the statutory power to recognize SROs. The BCSC currently recognizes the Mutual Fund Dealers Association (MFDA), the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Public Accountability Board (CPAB) as SROs.
List 2 Self Regulatory Organizations (SROs)
ANSWER:
Mutual Fund Dealers Association (MFDA), the Investment Industry Regulatory Organization of Canada (IIROC)
NOTE ONLY
The BRITISH COLUMBIA SECURITIES COMMISSION (BCSC) is the independent provincial government agency reporting to the Legislature through the minister responsible for the administration of the Securities Act.
NOTE ONLY
The BRITISH COLUMBIA SECURITIES COMMISSION (BCSC) is the independent provincial government agency reporting to the Legislature through the minister responsible for the administration of the Securities Act.
The term _ _ _ _ _ _ describes any organization that facilitates the trading or movement of financial instruments that transfer capital between suppliers and users of capital.
ANSWER:
The term FINANCIAL INTERMEDIARY describes any organization that facilitates the trading or movement of financial instruments that transfer capital between suppliers and users of capital.
Give 3 examples of financial intermediaries?
ANSWER:
investment dealers, banks, credit unions, trust companies, and insurance companies.
_______ is the procedure by which financial trades settle - that is, the correct and timely transfer of funds to the seller and securities to the buyer.
ANSWER:
CLEARING is the procedure by which financial trades settle - that is, the correct and timely transfer of funds to the seller and securities to the buyer.
_______ is the irrevocable moment when cash and securities are exchanged.
ANSWER:
Settlement is the irrevocable moment when cash and securities are exchanged.
The _ _ _ _ _ Fund and similar organizations provide insurance against dealer insolvency.
ANSWER:
The Canadian Investor Protection Fund and similar organizations provide insurance against dealer insolvency.
_____ trading occurs when a brokerage buys securities in the secondary market, holds these securities for a period of time and then sells them.
PRINCIPAL trading occurs when a brokerage buys securities in the secondary market, holds these securities for a period of time and then sells them.
Explain Agency Trading?
**ANSWER:
An agency transaction is the other popular method for executing a client’s orders. More complicated than regular principal transactions, these deals involve the search for and transfer of securities between clients of different brokerages.**
EXPLAIN WHAT AN INITIAL PUBLIC OFFERING IS?
What is an Initial Public Offering - IPO?
The process of offering shares in a private corporation to the public for the first time is called an initial public offering (IPO).
Growing companies that need capital will frequently use IPOs to raise money, while more established firms may use an IPO to allow the owners to exit some or all their ownership by selling shares to the public.
In an initial public offering, the issuer, or company raising capital, brings in underwriting firms or investment banks to help determine the best type of security to issue, offering price, amount of shares and time frame for the market offering.
Retail firms include _ _ _ _ _ and _ _ _ _ _ .
ANSWER:
Retail firms include full-service investment dealers and self-directed brokers (also known as discount brokers).
_ _ _ _ _ _ brokers, are considered the do-it-yourself approach to investing. They execute trades for clients at reduced rates, but they do not provide investment advice.
SELF-DIRECTED BROKERS are considered the do-it-yourself approach to investing. They execute trades for clients at reduced rates, but they do not provide investment advice.
_ _ _ _ _ _ are investment dealers that serve organizations that trade large volumes of securities.
**ANSWER:
INSTITUTIONAL FIRMS are investment dealers that serve exclusively institutional clients, organizations that trade large volumes of securities.**
Institutional clients include pension funds and mutual funds, and may be domestic or foreign institutional firms.
In Canada, foreign firms account for about one-third of all institutional clients. Foreign firms include affiliates of many of the major U.S. and European securities dealers.
_______ firms offer products and services across the industry and participate fully in both the retail and institutional markets.
ANSWER:
INTEGRATED FIRMS offer products and services across the industry and participate fully in both the retail and institutional markets.
Most integrated firms underwrite all types of federal, provincial, and municipal debt, as well as corporate debt and equity issues. They are active in secondary markets, including the money market, as well as on all Canadian stock exchanges and some foreign exchanges.