Volume 1, Chap 1 The Canadian Securities Industry Flashcards
What is a financial intermediary
Is an Institution such as a bank that borrows money from suppliers of capital and lend it to users of capital.
Investors lend funds to the intermediary, and the intermediary, in turn, lend those funds to borrowers in the form of loans, mortgages, and other products.
How is market activity measured
by the variety and size of new issues that are brought to the market, as well as the depth and liquidity of trading those issues.
How is the Canadian Securities industry mainly regulated
by the provinces
What kind of regulations are the provinces allowed to enforce
they can enforce their own laws and refulations through securities commissions. (called securities admin in some provinces.
What do securities commissions delegate
some of their powers to self-regulatory orgs (SRO) such as the investment industry regulatory organization of Canada (IIROC).
What do Self-Regulatory organizations (SRO) do
establish and enforce industry regulations that protect investors and maintain fair, equitable, and ethical practices. Responible for setting the rules that govern many aspects of the investment dealers’ operations, including sales, finance, and trading.
Who are the three industry players
- Suppliers of Capital (Investors)
- Investment Dealers
- Users of Capital (Borrowers)
What are the three Industry support mechanisms
- Self regulatory Orgs
- Markets
- Clearing and settlements
What are the three Self-Regulatory Orgs
- Canadian Securities Institute (Industry Educator)
- Canadian Investor Protection Fund (Industry Insurance Fund)
- Provincial Regulator (Securities Commission)
What are Investment Dealers (brokers)
act as intermediaries by matching investors with the users of capital. Each side of the transaction has its own dealer who matches the trades through the markets.
Where are transactions cleared and settled
Through Orgs such as CDS Clearing and Depository Services Inc. and banks.
What is Clearing
The process of confirming and matching security trade details
What is a settlement
is the irrevocable moment when cash and securities are exchanged.
What does the Canadian Investor Protection Fund do
Provide insurance against dealer insolvency
What is a financial Intermediary
Any org that facilitates the trading or movement of the financial instruments that transfer capital between suppliers and users of capital.
What are some examples of financial intermediarys
Investment dealers
banks
credit unions
trust companies
insurance companies.
What are the main functions of agents and principals
- They help to transfer capital from suppliers to users through the underwriting and distribution of new securities. Takes place in the primary market distribution (or primary offering) When a company goes public and takes to market as IPO.
- They maintain secondary markets in which previously issued or outstanding securities can be traded.
What are the three categories of investment dealers
- Retail Firms
- Instutional Firms
- Integrated firms
What is a retail firm
include full-service investment dealers and self-directed brokers (discount brokers). offer a wide variety of products and services to include various levels of adbise, depending on the financial and wealth management concerns of their invetor clients. Self-directed brokers are considered the do-it-youself approach to investing. execute trades at a reduced rate and do not offer investment advise.
What is an institutional firm
investment dealers that serve exlusively institutional clients, orgs that trade large volumes of securities. clients include pension funds and mutual funds and may be domestic or internation firms.
What are integrated firms
offer products and services across the industry and participate fully in both the retail and institutional markets. Most integrated firms underwrite all types of federal, provincial, and minicipal debt, as well as corp debt and equity issues. Active in secondary markets, including the money market, and Canadian stock exchange, and some foreign.
Who are senior management
usually includes chairperson, a president, an EVP, directors, and departmental vice-presidents. Most work at head office but can be in charge of regional branch offices.
What is front, middle, and back offices
Three level org structure of most investment dealers. Allows them to manage client portfolios effectively and provess trades efficiently, in compliance with regulatory requirements.
What are the roles of front, middle, and back offices
Front office - Performs all staff functions pertaining directly to portfolio management activities.
Middle office - performs functions critical to the efficient operation of the firm.
Back office - settles the firms security transactions
What are the functions of front office
- portfolio management
- trading
- sales
- marketing
What are the functions of the middle office
- compliance
- accounting
- audits
- legal
What are the functions of back office
trade settlement