Chapter 3 | Regulatory Environment Flashcards
TRUE OR FALSE?
In Canada, each province and territory is responsible for creating the legislation and regulation under which a business in the securities industry must operate.
ANSWER: TRUE
Provinces delegate the day to day regulation of the securities industry to _ _ _ _ _ _ _
ANSWER: . . . the securities commission in that province
The _ _ _ _ _ _ _ _ _ is an umbrella organization of Canada’s ten provincial and three territorial securities regulators designed to improve, coordinate and harmonize regulation of the Canadian capital markets.
ANSWER: The Canadian Securities Administrators (CSA) is an umbrella organization of Canada’s ten provincial and three territorial securities regulators designed to improve, coordinate and harmonize regulation of the Canadian capital markets.
Self-regulatory organizations (SRO) are private industry organizations to which the provincial regulatory bodies have granted the privilege of regulating their own members. SROs enforce their members’ conformity with securities legislation. They have the power to prescribe their own rules of conduct and financial requirements.
ANSWER:
Self-regulatory organizations (SRO) are private industry organizations to which the provincial regulatory bodies have granted the privilege of regulating their own members. SROs enforce their members’ conformity with securities legislation. They have the power to prescribe their own rules of conduct and financial requirements.
NOTE ONLY
SROs are delegated regulatory functions by the provincial regulatory bodies. SRO by-laws and rules are designed to uphold the principles of securities legislation.
The Canadian Securities Administrators (CSA) monitors the conduct of the SROs and review their rules to ensure that they are in the public’s interest and do not conflict with provincial rules.
SRO regulations apply in addition to provincial securities regulations.
If an SRO rule differs from a provincial rule, the most stringent rule of the two applies.
NOTE ONLY
SROs are delegated regulatory functions by the provincial regulatory bodies. SRO by-laws and rules are designed to uphold the principles of securities legislation.
The Canadian Securities Administrators (CSA) monitors the conduct of the SROs and review their rules to ensure that they are in the public’s interest and do not conflict with provincial rules.
SRO regulations apply in addition to provincial securities regulations.
If an SRO rule differs from a provincial rule, the most stringent rule of the two applies.
Canadian SROs include:
/ LIST 2 /
ANSWER:
Canadian SROs include the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA).
What is the mandate of the Investment Industry Regulatory Organization of Canada (IIROC)?
ANSWER:
IIROC’S mandate is “to set high quality regulatory and investment industry standards, protect investors, and strengthen market integrity while maintaining efficient and competitive capital markets”.
NOTE ONLY:
In its role as regulator, IIROC performs the following functions:
FINANCIAL COMPLIANCE: Dealer members are monitored to ensure that they have enough capital to carry out their operations.
NOTE ONLY:
In its role as regulator, IIROC performs the following functions:
FINANCIAL COMPLIANCE: Dealer members are monitored to ensure that they have enough capital to carry out their operations.
NOTE ONLY:
In its role as regulator, IIROC performs the following functions:
BUSINESS CONDUCT COMPLIANCE: Dealer members are monitored to ensure that policies and conduct procedures are in place to properly supervise the handling of their client accounts.
NOTE ONLY:
In its role as regulator, IIROC performs the following functions:
BUSINESS CONDUCT COMPLIANCE: Dealer members are monitored to ensure that policies and conduct procedures are in place to properly supervise the handling of their client accounts.
NOTE ONLY:
In its role as regulator, IIROC performs the following functions:
ENFORCEMENT: IIROC enforces rules and regulations that cover the sales, business, financial practices, and trading activities of
individuals and firms under IIROC’s jurisdiction.
NOTE ONLY:
In its role as regulator, IIROC performs the following functions:
ENFORCEMENT: IIROC enforces rules and regulations that cover the sales, business, financial practices, and trading activities of
individuals and firms under IIROC’s jurisdiction.
The _ _ _ _ _ _ _ is the mutual fund industry’s SRO responsible for regulating the DISTRIBUTION and SALES of mutual funds by its members in Canada.
ANSWER:
THE MUTUAL FUND DEALERS ASSOCIATION (MFDA)
TRUE OR FALSE?
The MFDA (THE MUTUAL FUND DEALERS ASSOCIATION) does not regulate the mutual funds themselves; this responsibility remains with the provincial securities administrators.
ANSWER: TRUE
This organization is responsible for regulating and supervising the following federally registered institutions:
• Deposit-taking institutions including banks, trust and loan companies
• Insurance companies, including life insurance companies and property and casualty insurance companies
• Federally-regulated pension plans
ANSWER:
THE OFFICE OF THE SUPERINTENDENT OF FINANCIAL INSTITUTIONS
What is the primary role of the CIPF (Canadian Investor Protection Fund)? What is the secondary role of the CIPF?
ANSWER:
The primary role of the CIPF is investor protection; its secondary role is overseeing the self-regulatory system.
The secondary role provides a mechanism to help CIPF contain the risk associated with its primary role.
TRUE OR FALSE?
The CIPF does not cover client losses that result from changing market values, nor does it insure accounts held at mutual fund companies, banks, or any other firms that are not members of IIROC.
ANSWER: TRUE
