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CSC Volume 1 > The Canadian Securities Industry > Flashcards

The Canadian Securities Industry Flashcards

Various relationship between various participants in the Canadian Securities industry.

1
Q

What is an agent?

A

An investment dealer that acts on behalf of a buyer or a seller of a security and does not itself own title to the security at any time during the transactions.

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2
Q

What is a broker?

A

An investment dealer or a duly registered individual that is registered to trade in securities in the capacity of an agent or principal and is a member of a Self-Regulatory Organisation.

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3
Q

Define the Canadian Investor Protection Fund.

A

A fund that protects eligible customers in the event of insolvency of an IIROC dealer member.

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4
Q

What does CIPF stand for?

A

Canadian Investor Protection Fund

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5
Q

Describe the sponsorship and funding of the CIPF.

A

The CIPF is sponsored solely by IIROC and funded by quarterly assessments on dealer memberships.

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6
Q

What does CDS stand for?

A

Clearing and Depository Services Inc.

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7
Q

What does the CDS provide?

A
  1. Provides customers with physical and electronic facilities to deposit and withdraw depository-eligible securities and manage their ledger positions (securities accounts)
  2. Provide electronic clearing services both domestically and internationally.
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8
Q

What does the clearing services of the CDS permit its customers to do?

A

To report, confirm and settle securities trade transactions.

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9
Q

What is clearing?

A

The process of confirming and matching security trade details.

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10
Q

What is a closed-end fund?

A

Shares in closed-end investment companies which are readily transferable in the open market and are bought and sold like other shares. Capitalisation is fixed.

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11
Q

What is a consumer finance company?

A

A company that makes direct cash loans to consumers, who are usually unable to secure loans from a bank. They typically charge a higher interest rate than banks.

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12
Q

What is a discount broker?

A

A brokerage house that buys and sells securities for clients at a greater commission discount than full-service firms. Also know as self-directed broker.

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13
Q

What is a self-directed broker?

A

A brokerage house that buys and sells securities for clients at a greater commission discount than full-service firms. Also know as discount broker.

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14
Q

What is a financial intermediary?

A

An institution such as a bank, life insurance company, credit union or mutual fund which receives cash from suppliers of capital and which it invests.

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15
Q

What is fintech?

A

Financial technology companies that take advantage of computer technology to provide more efficient financial products and services.

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16
Q

What is firewall?

A

Policies implemented to separate and isolate persons within a firm who make investments from persons within a firm who are privy to undisclosed material information which may influence those decisions.

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17
Q

Give an example of a firewall.

A

There should be separate fax machines for research departments and sales departments.

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18
Q

What does IPO stand for?

A

Initial Public Offering

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19
Q

What is an IPO?

A

A new issue of securities offered to the public for investment for the very first time. They must adhere to strict government regulations as to how the investments are sold to the public.

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20
Q

What is an institutional firm?

A

An investment dealer that serves institutional clients exclusively.

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21
Q

What is an integrated firm?

A

An investment dealer that offers products and services that cover all aspects of the industry, including full participation in both the institutional and the retail markets.

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22
Q

What is an investment fund??

A

A fund or company that sells units or shares and invests the proceeds in a portfolio of securities.

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23
Q

What does IIAC stand for?

A

Investment Industry Association of Canada

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24
Q

What is the IIAC?

A

A member-based professional association that represents the interests of market participants.

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25
Q

What does IIROC stand for?

A

Investment Industry Association of Canada

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26
Q

What is IIROC?

A

The Canadian investment industry’s national self-regulatory organisation (SRO).

27
Q

How does IIROC carry out its regulatory responsibilities?

A

Setting and enforcing:

  1. Rules regarding the proficiency, business and financial conduct of dealer firms and their registered employees.
  2. Market integrity rules regarding trading activity on the Canadian equity marketplaces.
28
Q

What is a market maker?

A

A trader employed by a securities firm who is authorised and required by applicable SRO to maintain reasonable liquidity in securities markets.

29
Q

How does a market maker ensure reasonable liquidity in securities markets?

A

By making firm bids and offers for one or more designated securities.

30
Q

What is a money market?

A

The part of the capital market in which short-term financial obligations are bought and sold.

31
Q

Name the obligations that are part of the money market?

A
  1. Treasury bills
  2. Federal government securities and commercial papers
  3. Banker’s acceptance
  4. Any other instruments with one year or less to maturity
32
Q

Are longer term securities traded in the money market?

A

Yes, when their term shortens to the limit mentioned

33
Q

What is a mutual fund?

A

An investment fund operated by a company that uses the proceeds from shares and units sold to investors to invest in stocks, bonds, derivatives and other financial securities. Capitalisation is not fixed.

34
Q

What are the advantages of a mutual fund?

A

Diversification and professional management.

35
Q

How are mutual fund shares redeemable?

A

On demand

36
Q

At what value is a mutual fund share redeemed?

A

At the fund’s current net asset value per share (NAVPS)

37
Q

What is an open-end fund?

A

Same as a mutual fund.

38
Q

What is a pension fund?

A

A regular payment made to a retired employee from an investment fund that the employee and/or employer has contributed to during the working life of the employee.

39
Q

What is the primary market?

A

The market for new issues of securities.

40
Q

To whom do the proceeds of the sales of securities in the primary market go?

A

Directly to the company issuing the securities.

41
Q

What is primary market distribution?

A

The original sale of any issue of a company’s securities.

42
Q

What is a principal?

A

The person for whom a broker executes an order, or a dealer buying or selling for its own accounts.

43
Q

What is a retail firm?

A

An investment dealer that serve only retail clients.

44
Q

What is a robo-advisor?

A

An online investment service that provides clients with automated investment advice.

45
Q

What is a sales finance company?

A

Purchases at a discount instalment sales contract from retailers and dealers when such items as new cars and appliances are bought on instalment plans.

46
Q

What is a savings bank?

A

A financial institution whose main role is to accept savings deposit and pay interests on those deposits. Similar to a Credit Union.

47
Q

What is a Schedule I bank?

A

Canada-owned banks.

48
Q

What regulates Schedule I banks?

A

The Bank Act

49
Q

What is a Schedule II bank?

A

Banks that are incorporated and operate in Canada as federally regulated foreign bank subsidiaries.

50
Q

What regulates Schedule II banks?

A

The Bank Act

51
Q

What is a Schedule III bank?

A

Banks that are federally regulated foreign bank branch of foreign institutions.

52
Q

What regulates Schedule III banks?

A

The Bank Act

53
Q

What is a self-directed broker?

A

Brokers that offer discounted transaction costs and do not provide investment advice to investors. Also known as discount broker.

54
Q

What does SRO stand for?

A

Self-Regulatory Organisation

55
Q

What is an SRO?

A

An organisation recognised by the Securities Administrators as having powers to establish and enforce industry regulations.

56
Q

What is the purpose of an SRO?

A

To maintain fair, equitable, and ethical practices in the industry and ensure conformity with securities legislation.

57
Q

Name the canadian SROs

A

IIROC and MFDA

58
Q

What does MFDA stand for?

A

Mutual Fund Dealers Association

59
Q

Describe the MFDA.

A

The SRO that regulates the distribution side of the mutual fund industry in Canada.

60
Q

What is the secondary market?

A

The market where securities are traded through an exchange or over-the-counter subsequent to a primary offering.

61
Q

To whom do the proceeds of sale sin the secondary market go?

A

The selling dealers and investors.

62
Q

What is settlement?

A

The moment of irrevocable exchange of cash and securities.

63
Q

What is underwriting?

A

The purchase for resale of a security issue by one or more investment dealers or underwriters.

CSC Volume 1 (1 decks)

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