Operations Flashcards
Where does the KYC rule come from ?
Comes from:
- IIROC Rule 1300
- CSI handbook
- CFA Standards III
What is the KYC rule ?
IIROC Rule 1300:
- identity and creditworthiness
- Business conduct
- Suitability generally
- advise againt proceeding unsuitable orders
CFA Standard of conduct: Members and Candidates have a duty of loyalty to their clients and must act with reasonable care and exercise prudent judgment. Members and Candidates must act for the benefit of their clients and place their clients’ interests before their employer’s or their own interests.
CSI Handbook
What are the rules of the NAAF ?
New Account Application Form:
- Identitfy Client
- Verify or money laundering
- Verify creditworthiness
- Verify offshore accounts
- Verify corporation owners Identity
- Identify owners of more than 10%
- Approval of NAAF by supervisor
- Update NAAF
- Identify mailing address
- Client correspondence becomes property of the firm
What account types are there ?
- Cash account
- Margin accounts (buy or sell at credit)
- Options accounts (very supervised)
- Registered accounts (no credit or short positions)
- TFSAccounts
- Discretionary accounts (carte blanche)
- Managed accounts (managed by a portfolio manager)
What is the client margin of margin accounts ?
The client margin is the portion of the cost of the security that the client is required to deposit and it varies based on the type of security and its market price.
What is the credit balance and load value of margin accounts ?
Deposit or withdrawal of securities will not have an impact on the cash balance of the account but will have an impact on the loan value of the securities in the account.
What is a short sale of margin accounts ?
The client must leave the proceeds of the sales in the margin account, plus an additional amount in the case of the securities rises.
What is a short position and margins of margin accounts ?
With a short position, it is the client who is lending the money to the dealer member.
What is a margin call of a margin account?
If the market value of securities in a margin account falls to the extent that the loan value is below the debit balance, the dealer will do a margin call (will deposit funds).
What is a Margin rate of a margin account?
The standard margin rate for stocks is 50%. A reduced margin of 30% (loan value of 70 %) applies on more liquid stocks.
What are the types of orders ?
- Day order (default)
- Open order or Good til Cancelled
- Good til date order
- Market order (market price)
- Limit order (specific price)
- Stop loss order (stop at specific price)
- Stop buy order
- All or nothing (x qty at y price)
- Fill of Kill order (liveee ou rien)
- Immediate or cancel order (buy what u can, and cancel the rest)
- Short sale order
- Pro order (client given priority)
What are the important date for stocks ?
- Declaration date (dividend or not)
- Ex-dividend date (2days before record date, need to be owner to get dividend)
- Record date (list of owners)
- Dividend payment date
