Week 3: Canadian Regulatory Environment

Question 1

What are examples of Regulatory Organizations? What do they do?

Answer 1

The Office of the Superintendent of Financial Institutions (OSFI)
- Regulates and supervises banks, insurance, trust and loan companies, pension plans

Canadian Deposit Insurance Corporation (CDIC)
- Federal Crown corporation
- Insures deposits up to $100k per depositor in each financial institution for each “account” (bank, mortgage)

Question 2

What is Ontario’s securities commission?

Answer 2

Ontario Securities Commission (OSC)

Question 3

Why was The Canadian Securities Association formed?

Answer 3

It was formed by 13 securities comissions (one for each province) to provide a national umbrella group to coordinate provincial activities.

Also worth noting that there have been efforts to set up a national one, but efforts have been resisted by some provincial commissions.

Question 4

What is an SRO? And list examples

Answer 4

A Self-Regulatory Organization (SRO). It is an organization owned by its members that regulate and police themselves.

For example: TSX, Mutual Funds Dealers Assocation (MFDA), Investment Industry Regulatory Organization of Canada (IIROC)

Question 5

What does IIROC do [3 things]?

Answer 5

• They oversee all investment dealer and trading activitiy in Canadian debt/equity markets
• Monitor member firms for capital adequacy [amt of capital set aside by firms when holding bank deposits/making loans/raising capital for corps.) and business conduct
• Services as the securities industry regulator
  > Formulates standards and policies for Canada’s debt/equity markets
  > Monitors sales and trading activities of member firms
  > Illegal trading activity > Meet IIROC

Question 6

What does the Canadian Investor Protection Fund (CIPF) do? What is their role?

Answer 6

• Protects from losses due to bankruptcy of member firms
• Role is to anticipate and solve financial difficulties at member firms before bankruptcy occurs

Question 7

How is there regulaton and investor protection?

Answer 7

• Sellers of securities and investment advisors (IA) must be registered
  > IAs must operate to best interest of their clients

Question 8

*** ON MT:
What are insiders of a company defined as?

Answer 8

• Directors or senior officers
• A person/company controlling greater than 10% of the voting securities
• An issuer that has bought back their own shares
• A director or senior officer of a company owning greater than 10% of the voting securities of the company

Question 9

*** ON MT:
What are insiders required to do?

Answer 9

File reports reporting their trading activity in the company which they are the insider in.