Canadian Securities (CSC) Test-Graded
A
Retail firms - Correct Answers-full service and discount brokerage firms for individuals.
Institutional firms - Correct Answers-includes pension funds, mutual funds, and
insurance companies.
Integrated firms - Correct Answers-contains all aspects of retail and institutional firms.
Front office - Correct Answers-in charge of portfolio management, marketing, sales, and
trading.
Middle office - Correct Answers-in charge of compliance, accounting, audits, and legal.
Back office - Correct Answers-in charge of settlements and clearing.
Schedule I banks - Correct Answers-large domestic banks. There are ownership
restrictions on shares - must be widely held.
Schedule II banks - Correct Answers-large foreign banks. Can do same activities as
domestic banks.
Schedule III banks - Correct Answers-foreign branches of banks. They are limited, with
a more institutional focus.
Trust company - Correct Answers-acts as a trustee.
Auction market - Correct Answers-market in which securities are bought and sold by
brokers acting as agents for their clients (stock exchanges).
Dealer market - Correct Answers-a network of marketplaces. Here, trades are
conducted OTC and consist of bonds and debentures.
Equity electronic trading system - Correct Answers-competes with existing exchanges.
They can only trade stocks that are on an existing exchange. They may have benefits
such as different hours, better commission, etc.
Fixed-income electronic trading system - Correct Answers-where almost all bonds are
traded (such as CanDeal).
, Structured product - Correct Answers-has the characteristics of debt, equity, and the
investment fund (can be in the form of principal-protected notes or index-linked
guarantees).
IIROC (Investment Industry Regulatory Organization of Canada) - Correct Answers-the
Canadian investment industry's SRO. It carries out its responsibilities through setting
and enforcing rules regarding the proficiency, business, and financial conduct of dealer
firms and their registered employees.
MFDA (Mutual Fund Dealers Association) - Correct Answers-the SRO that regulates the
distribution (dealer) side of the mutual fund industry in Canada.
OSFI (Office of the Superintendent of Financial Institutions) - Correct Answers-the
federal regulatory agency whose main responsibilities regarding insurance companies
and segregated funds are to ensure that the companies issuing the funds are financially
solvent.
CDIC (Canadian Deposit Insurance Corporation) - Correct Answers-a federal Crown
Corporation providing deposit insurance against loss (up to $100,000 per depositor)
when a member institution fails.
CIPF (Canadian Investor Protection Fund) - Correct Answers-a fund that protects
eligible customers in the event of the insolvency of an IIROC dealer member.
General acct. = $1M total
Separate acct. = $1M each
MFDA IPC (Mutual Fund Dealers Association Investor Protection Corporation) - Correct
Answers-provides protection for eligible customers of insolvent MFDA member firms.
General acct. = $1M total
Separate acct. = $1M each
Gatekeeper - Correct Answers-protects markets from potentially illegal client activity by
collecting information, monitoring activity, and reporting suspicious behaviour.
"Know your client" rule - Correct Answers-salespersons must use diligence to learn
essential facts about the client (including every account and order) before entering into
the relationship, in order to make appropriate decisions for the client.
Ombudsman for Banking Services and Investments (OBSI) - Correct Answers-an
independent organization that investigates customer complaints against financial
services providers (non binding, but may hurt the company's reputation if it does not
comply).
Front running - Correct Answers-when a broker puts his own account's order in front of
a customer's order, knowing the customer's order will move prices so the broker can
make a profit.
A
Retail firms - Correct Answers-full service and discount brokerage firms for individuals.
Institutional firms - Correct Answers-includes pension funds, mutual funds, and
insurance companies.
Integrated firms - Correct Answers-contains all aspects of retail and institutional firms.
Front office - Correct Answers-in charge of portfolio management, marketing, sales, and
trading.
Middle office - Correct Answers-in charge of compliance, accounting, audits, and legal.
Back office - Correct Answers-in charge of settlements and clearing.
Schedule I banks - Correct Answers-large domestic banks. There are ownership
restrictions on shares - must be widely held.
Schedule II banks - Correct Answers-large foreign banks. Can do same activities as
domestic banks.
Schedule III banks - Correct Answers-foreign branches of banks. They are limited, with
a more institutional focus.
Trust company - Correct Answers-acts as a trustee.
Auction market - Correct Answers-market in which securities are bought and sold by
brokers acting as agents for their clients (stock exchanges).
Dealer market - Correct Answers-a network of marketplaces. Here, trades are
conducted OTC and consist of bonds and debentures.
Equity electronic trading system - Correct Answers-competes with existing exchanges.
They can only trade stocks that are on an existing exchange. They may have benefits
such as different hours, better commission, etc.
Fixed-income electronic trading system - Correct Answers-where almost all bonds are
traded (such as CanDeal).
, Structured product - Correct Answers-has the characteristics of debt, equity, and the
investment fund (can be in the form of principal-protected notes or index-linked
guarantees).
IIROC (Investment Industry Regulatory Organization of Canada) - Correct Answers-the
Canadian investment industry's SRO. It carries out its responsibilities through setting
and enforcing rules regarding the proficiency, business, and financial conduct of dealer
firms and their registered employees.
MFDA (Mutual Fund Dealers Association) - Correct Answers-the SRO that regulates the
distribution (dealer) side of the mutual fund industry in Canada.
OSFI (Office of the Superintendent of Financial Institutions) - Correct Answers-the
federal regulatory agency whose main responsibilities regarding insurance companies
and segregated funds are to ensure that the companies issuing the funds are financially
solvent.
CDIC (Canadian Deposit Insurance Corporation) - Correct Answers-a federal Crown
Corporation providing deposit insurance against loss (up to $100,000 per depositor)
when a member institution fails.
CIPF (Canadian Investor Protection Fund) - Correct Answers-a fund that protects
eligible customers in the event of the insolvency of an IIROC dealer member.
General acct. = $1M total
Separate acct. = $1M each
MFDA IPC (Mutual Fund Dealers Association Investor Protection Corporation) - Correct
Answers-provides protection for eligible customers of insolvent MFDA member firms.
General acct. = $1M total
Separate acct. = $1M each
Gatekeeper - Correct Answers-protects markets from potentially illegal client activity by
collecting information, monitoring activity, and reporting suspicious behaviour.
"Know your client" rule - Correct Answers-salespersons must use diligence to learn
essential facts about the client (including every account and order) before entering into
the relationship, in order to make appropriate decisions for the client.
Ombudsman for Banking Services and Investments (OBSI) - Correct Answers-an
independent organization that investigates customer complaints against financial
services providers (non binding, but may hurt the company's reputation if it does not
comply).
Front running - Correct Answers-when a broker puts his own account's order in front of
a customer's order, knowing the customer's order will move prices so the broker can
make a profit.
