Chapter 3: The Canadian Regulatory Environment

Question 1

CSA Canadian Securities Agency

Answer 1

no federal regulatory body exists in Canada; provinces and territories formed a joint panel known as the CSA.

Question 2

Exam tip:

Answer 2

SROs regulate their own members (in accordance with applicable securities legislation). Self-regulation is a privilege not a right!

Question 3

IIROC (Investment Industry Regulatory Organization of Canada)

Answer 3

national self-regulatory organization for the securities industry, which monitors dealers and their trading activity.

Question 4

MFDA

Answer 4

Mutual Fund Dealers Association. self-regulatory organization for the distribution side of the Canadian mutual fund industry. Important Note: MFDA does not regulate mutual funds themselves; that responsibility remains with the securities commission.

Question 5

OSFI

Answer 5

Office of the Superintendent of Financial Institutions.

• deposit-taking institutions such as banks, trust companies, loan companies and co-operative credit associations.
• insurance companies
• federally regulated pension plans.
• foreign bank offices that are chartered, licensed or registered by the federal government to operate in Canada.

Question 6

CIPF

Answer 6

Canadian Investor Protection Fund. client accounts are protected up to $1,000,000 in their general accounts and $1,000,000 in their non-general (registered) accounts.

Question 7

MFDA IPC

Answer 7

protects clients of MFDA member firms

Question 8

CDIC

Answer 8

Canadian Deposit Insurance Corporation. Protects clients of member deposit-taking institutions.
Coverage is per bank, not per branch.

Question 9

Regulators’ 4 Primary Regulation Objectives are:

Answer 9

1. Consumer protection
2. Fairness
3. Economic Stability
4. Social objective

Question 10

Canadian securities industry uses

Answer 10

principles-based regulation

Question 11

RED

Answer 11

Registration
Enforcement
Disclosure

Question 12

Investment Advisors (IA)

Answer 12

CSC
CPH
6 months of closely monitored training
WME

Question 13

Investment Representative (IR)

Answer 13

more economical to hire cause they can’t give investing advice.

Question 14

NRD National Registration Database

Answer 14

a web-based system used by investment dealers to file a registration request with the SRO.

Question 15

The Gatekeeper Role

Answer 15

the role is to keep undesirable people out.

Question 16

CRM

Answer 16

Client Relationship Model. requires greater disclosure by advisors.

Question 17

Conflicts of Interest

Answer 17

• avoided
• disclosed and agreed to by the client
• conflict of interest should be controlled