Chapter 3 Flashcards
What are CSAs?
Canadian Securities Administrators, umbrella organization of all province and territories, to coordinate and harmonize regulations of Canadian Capital markets.
What is SRO
Self-regulatory industries are private industry which provincial regulatory bodies grant the privilege of regulating their members. CSA monitors SRO and reviews rules to ensure they align with the public interest and do not break provincial rules. Include IIROC and MFDA
What is IIROC
Investment Industry Regulatory Organization of Canada. They oversee all investment dealers and activity on debt/equity in Canada. Enfores and sets rules for member dealers and their employees.They ensure financial compliance, business conduct compliance, registration of employees and educational programs, enforce rules and regulations and carry out market surveillance.
What are MFDA and its equivalents for Quebec?
Mutual Fund Dealer Association. SRO is responsible for regulating the distribution and sale of mutual funds. Does not regulate mutual funds, this is up to provincial securities administrators. Everywhere except quebec where the Autorite des Marches Financiers (AMF). Agreement between MFDA and AMF to ensure there isn’t conflicts. Chambre de la Security Financier is Quebec’s SRO which monitors continuing education and enforces the code of ethics.
What is the office of the superintendent of financial institutions
(OSFI) The regulatory body for all financial institutions. DOES NOT regulate Canadian securities industry
What is CIPF
Canadian investor protection fund. They are funded quarterly by IIROC dealer members. Cash, margin, shorts, options, futures, TFSA and foreign currency are all treated as one account, for a max of $1million. Seperate accounts are RRSP, RESP and trusts, each eligible for $1million.
What is MFDA IPC
Mutual fund dealer association investor protection corporation. Covers only MFDA members. Each account is eligible for up to $1million. NOT RECOGNIZED FOR QUEBEC!
What is CDIC
Canadian Deposit Insurance Corporation is federal crown corporation which ensures eligible deposits up to $100,000 per depositor in each member institutions, and reimburses depositors if the institution fails. Ensures Savings, chequing, GIC and term deposits as one account. Also insured RRSP, RRIF, TFSA, FHSA, and trusts as seperate accounts Some provinces also have provincial insurances under different names.
What is the principals based regulations.
Sets objectives for dealers and allows firms to decide how to best meat those objectives, no detailed rules to entire clarity and legal certainty but regulators often hold security dealers to the rules.
What is the general principal underlying Canadian securities legislation in regards to Disclosure?
Prospectus must be “Full, true and plain disclosure”
What is the National registration database and the rules surrounding changes in answers to questions.
Allows investment dealers and employees to file registration when applying for approval for stock exchange, CSA or IIROC. Mandatory, only 1 for all of Canada investment advisors and representatives AND the dealer must advise applicable SRO if any material changes to questions on NRD questionnaire. Dealer member must also notify if registrant no longer works there.
What is gatekeeper function
Guarding the markets from possible wrongdoing. Collect info, monitor activities and report suspicious transactions/proposed transactions,
What are Cleint-focused reforms
CFR is based on the fact that clients’ interests must come first.
- Know your client (KYC) if you don’t know your client, how can you recommend a suitable investment strategy? Take reasonable steps to confirm accurate info and review at minimum intervals of 36 months
- Know your product (KYP): Take reasonable steps to understand any securities thatare purchased/sold/recommended for clients.
What disclosures are necessary for any identified conflicts.
- Nature and extend of conflict
- impact and risk it may pose to client
- Way in which it will/is addressed
Describe Arbitration
method of resolving disputes with an independent arbitrator, must be accepted by dealer if less than $500 000. Both parties must sign an agreement to give up the right to pursue further in court. Amounts above $500 000 can be arbitrated if accepted by both parties.
