CSC

• What is the role of brokers (investment dealers)

  Match borrowers and investors of capital. Each side has their own broker who matches trades through the markets
• What is the role of SROs

  Self-Regulatory Organizations set and enforce rules that govern market activity to ensure fairness and transparency.
• What is clearing

  Process of confirming and matching security trade details
• What is settlement

  The irrevocable moment when cash and securities are exchanged.
• What is the role of the Canadian Investor Protection Fund?

  An organization that provides insurance against broker insolvency.
• What is a financial intermediary

  Any organization that facilitates trading between suppliers and users of capital
• what are the 3 types of investments dealers (brokers)

  Retail firms, institutional firms, Integrated firms
• What type of brokers are retail firms composed of?

  Full-service investment dealers and self-directed brokers (a.k.a discount brokers)
• Difference between full-service and self-directed brokers?

  Full service will provide various levels of advice whereas self-directed will execute trades for clients at reduced rates.
• What are institutional firms primarily used for

  Exclusively used for institutional clients that trade large volumes of securities such as pension funds, mutual funds, etc. (can be foreign or domestic firms)
• How do integrated firms compare to retail and institutional firms?

  They operate in both retail and institutional markets, are active in secondary markets, and often underwrite many types of debt and equity issues.
• Firm organization: What is front office?

  Front office pertains to any direct involvement with portfolio managment activites. Trading, sales, marketing, and portfolio management.
• Firm organization- What is middle office?

  The critical functions of the firms' operation. Compliance, accounting, audits, legal. Any booking keeping.
• Firm organization- What is back office?

  Settlement of security transactions. Trade settlements.
• Difference between principal transactions and agency transactions of an investment dealer?

  Principal transactions: when dealers own the securities as part of their inventory at some stage of the buying and selling transaction with their investors. At type of principal transaction os underwriting. Agency transactions- Dealers acting on the behalf of buyers and sellers. They at no point in time own the securities
• What is underwriting

  When investment dealers use their own capital to buy an issue and sell it for a profit in the primary market
• What types of services do investment dealers provide?

  Provide advice about primary market.Add liquidity to the market by making transactions with their inventory (without the need to match buy/sell orders). Adding liquidity into the secondary market enhances primary market confidence (buyers in primary market are assured of good exit price in future). Act as market makers by taking positions in listed stocks (reduces volatility). They buy listed stocks as principal to serve/fulfill large institutional clients.
• What is the Clearing and Depository service (CDS)?


  The system of trading between members of a firm to avoid separate settlements by a body not considered a financial intermediary. It is accessible by banks, investment dealers, and trust companies. CDS uses a netting process.
• What is netting?


  Netting is a process of offsetting the value of multiple positions or payments due to be exchanged between two or more parties. This reduces the amount of cash exchanged among hands each day.
• What are the big 6 bank?

  TD, RBC, BMO, Scotia, CIBC, National
• What does the bank act entail

  Adds a level of control on investment dealer activities, self directed investing, and insurance product sales. Particularly the sharing of customer information
• Give example of bank act

  A customer opening a self-directed account is sent to the bank's investment dealer subsidiary. The subsidiary has no information on the customer's bank account or any loans.
• Schedule 3 banks are...

  Focused on corporate and institutional finance and investment banking. i.e. Barclays
• Schedule 2 banks are...

  Incorporated and operate in Canada as a federally-regulated FOREIGN bank subsidiaries.
• Schedule 1 banks are...

  not a. subsidiary of a foreign bank. They are domestic bank even if they have foreign shareholders. This includes the big 6.
• What body governs credit unions

  CCAA Cooperative Credit Associations act. They provide financial services to their members, entities in which they have substantial investments, and some cooperative institutions.
• Who would prevent overexposure of associations to real property and equity securities and what is this rule called?

  CCAA's prudent portfolio approach prohibits associations from acquiring substantial investments in entities other than a list of authorized financial entities.
• What falls under the category of life insurance?

  RRSP, pensions, annuities, life insurance, health and disability insurance
• According to the Insurance Bureau of Canada, what aspect of insurance is most profitable?

  The largest aggregate premium in the Property and casualty line od business are generated by auto insurance, then property insurance and lastly liability insurance.
• Can schedule 1 banks sell insurance?

  No, the bank act forbids them from selling through their branch networks outside of their own insurance subsidiaries with the exception of insurance related to money, such as loan and mortgage insurance.
• What are closed end funds

  An investment fund that only issues shares at the start-up or at other infrequent periods.
• What are open ended funds?

  Open ended funds are called mutual funds which continually issue shares to investors and redeem these shares on demand. Mutual funds make up 95% of all aggregate funds invested.
• What are consumer finance companies


  Companies that make direct cash loans to consumers that are unable to get a bank loan. They charge higher interest rates.
• What are sales finance companies?


  Companies that purchase installment sales contract (payment plans) from retailers and dealers at a discount on items such as cars, appliances or home improvements.
• what are defined benefit pension plans vs defined contribution pension plans

  DB: A plan that provides employees a pre-determined specified payment amount of funds when they retire. DC: Allows employers and employees to contribute to a plan that invests funds. DB is risier for employer.