Chapter Two - The Canadian Securities Industry

Question 1

What are SRO’s?

Answer 1

Self-regulatory organizations - they establish and enforce industry regulations to protect investors and to maintain fair, equitable, and ethical practices.

Question 2

What are the names of the organization that settle trades and other transactions?

Answer 2

CDS - clearing and depository services inc. and Banks

Question 3

What is the CIPF?

Answer 3

Canadian Investor Protection Fund - organizations that provide insurance against insolvency

Question 4

IIROC stand for?

Answer 4

Investment Industry Regulatory Organization of Canada

Question 5

What does the term intermediary mean?

Answer 5

this term describes any organization that facilitates the trading or movement of the financial instruments that transfer capital between suppliers and users.

Question 6

What are the 3 types of firms that make the Canadian Securities Industry ?

Answer 6

Integrated Firms, Institutional Firms, and Retail Firms

Question 7

What are integrated firms?

Answer 7

They are firms that offer products and services that cover all aspects of the industry - full participation in retail and institutional markets

Question 8

institutional firms? look me up..

Answer 8

specialize in stock trading, bond trading , research on particular industries, trade ONLY with institutional clients

Question 9

What are Retail Firms?

Answer 9

remainder of the industry . they include full service firms and discount brokers.

Question 10

Investment Dealers can act as Principle or Agent. Explain the difference

Answer 10

Principle- securities firm owns securities as part of its own inventory. The diff between buying and selling prices is the dealer’s gross proft.
Agent- the broker acts for or on behalf of a buyer or a seller but does not own title. Brokers profit is agents commission charged for each transaction.

Question 11

What is underwriting?

Answer 11

aka financing - the purchase from a government body or a company of a new issue of securities on a given date at a specified price.

Question 12

What is a broker?

Answer 12

When acting as a broker, a securities firm is an agent in a secondary securities transaction. A broker acts as the agent and never owns the securities themselves.

• the term may also be used for investment dealers acting as a principal or an agent.*

Question 13

What is CDS?

Answer 13

In Canada, securities are cleared through CDS - Clearing and Depository Services Inc.
(banks, investment dealers and trust companies)

Question 14

Describe the term intermediary?

Answer 14

Used to describe any organization that facilitates the trading or movement of the financial instruments that transfer capital between suppliers and users.

Question 15

What are schedule I banks?

Answer 15

they are the giants of the capital market. There are 23 Schedule I Banks.

Question 16

Describe the term “Chinese Walls”

Answer 16

The control that inhibit information sharing between various business units are commonly known as this.

Question 17

What are Schedule II Banks?

Answer 17

they are incorporated and operate in Canada as federally regulated foreign bank. Greatest revenue from retail banking.

Question 18

What are Schedule III Banks?

Answer 18

are federally regulated foreign bank branches of foreign institutions that have been authorized under the Bank Act to do banking business in Canada.

Question 19

True or False: Trust Companies are the only corporations in Canada authorized to engage in a trust business (i.e. to act as a trustee in charge of corporate or individual assets such as property, stocks and bonds)

Answer 19

True

Question 20

What provinces are credit unions most predominant in?

Answer 20

Ontario, Saskatchewan and British Columbia

Question 21

What is a caisses populaires?

Answer 21

“people’s bank”- This is what a credit union is called in Quebec

Question 22

In regards to Credit Unions- The Cooperate Credit Associations Act enforces they use what approach?

Answer 22

‘prudent portfolio’ approach?

Question 23

The Canadian Insurance Industry includes?

Answer 23

Agents, Appraisers and Adjusters

Question 24

Two main businesses of Insurance are ?

Answer 24

Life Insurance and Property & Casualty Insurance.

Question 25

Life Insurance include insurance against?

Answer 25

Loss of life, livelihood or health, disability insurance, term and whole life insurance, pension plans, RRSPs and annuities.

Question 26

What does Property & Casualty Insurance encompass?

Answer 26

protection against loss of property, including home, auto and commercial business insurance.

Question 27

Historically, Life Insurance companies have invested their funds in what type of securities?

Answer 27

high yielding, longer-term securities.

Question 28

What is underwriting operations?

Answer 28

most important aspect of insurance business- it is evaluating the risk an insurance company is willing to take from a client in exchange for insurance premiums , followed by acceptance of the associated responsibility for fulfilling the terms of the contract.

Question 29

Insurance regulation is controlled by what?

Answer 29

Insurance Companies Act