CSC Ch 1-5
CIPF account protection:
All accounts are covered either as part of the customer's general account or as a separate account. Accounts such as cash, margin, short sale, options, futures and foreign currency are combined and treated as one account. Separate accounts, such as registered accounts and trusts, receive separate coverage. Maximum coverage is $1M (per category of accounts)
Robo-advisors provide clients with [...]. Portfolios are created using algorithms based on [...]. Advisor support is offered to varying degrees, typically online or by phone. Portfolios are built with [...] and are regularly [...].
1. Goal-based online investment management 2. Modern Portfolio Theory 3. ETFs 4. Rebalanced
The OTC derivatives market is dominated by [...]. One of the attractive features is that [...].
1. Large financial institutions 2. They can be custom designed
When a trade is made, the price represents the [...] price a seller is willing to sell and the [...] price a buyer is willing to buy at.
1. Lowest 2. Highest
An appreciating currency means that this currency has... A depreciating currency means that...
1. More buying power abroad 2. The country's export products are becoming relatively cheaper
MFDA is the [...] responsible for regulating the [...] by its members in Canada. The MFDA [...] the funds themselves
1. Mutual fund industry's SRO 2. Distribution and sales of mutual funds 3. Does NOT regulate
Regulators set [...] for securities dealers and [...].
1. Objectives 2. Allow the firms to decide how best to meet those objectives
Productivity is used to describe [...] There is a link between [...]
1. Output per unit of input 2. Growth in real GDP and productivity gains
Leading indicators [...] The most important leading indicators are [...]
1. Peak and trough before the overall economy 2. - Housing starts - Manufacturers' new orders - Commodity prices - Average hours worked per week - Stock prices and the money supply
If Demand increases (relative to Supply)... If Supply increases (relative to Demand)... Equilibrium price is set where...
1. Prices increase 2. Prices fall 3. Demand = Supply
Securities firms tend to act as [...] in the [...] and in [...]. "Generally, for most secondary trading of debt securities, the investment dealer acts as [...]."
1. Principals 2. Underwriting function (primary market) 3. Secondary trading of non-equity securities 4. Principal
The Canadian securities industry follows a [...] regulatory model, rather than a [...] model.
1. Principles-based 2. Rules-based
The Canadian securities industry is mainly regulated by the [...]. There are [...] such as the Investment Industry Regulatory Organization of Canada (IIROC)
1. Provinces 2. Self-regulatory organizations (SROs)
The clearing system [...] that has to change hands among the various members each day. The clearing system uses a process called [...] to establish and confirm a credit or debit position.
1. Reduces the number of securities and amount of cash 2. Netting
When acting as broker, a securities firm is an agent in a [...]. However, the term "broker" may be used interchangeably to describe an investment dealer acting as a [...].
1. Secondary securities transaction 2. Principal or an agent
If an SRO rule differs from a provincial rule, the more [...] rule applies.
1. Stringent
If government revenues exceed spending, it is running [...] If spending exceeds revenues, it is running a [...]
1. Surplus 2. Deficit
Inflation is measured by... How?
1. The Consumer Price Index (CPI) 2. It measures a shopping basket of goods and services and compares one period's cost to the previous one [(This Year - Last Year) / Last Year] * 100
Banks operate under the Bank Act, which specifies [...]. Banks are the most important player in the Canadian Securities Industry and each Bank is designated as either [...].
1. What they can and cannot do 2. Schedule I, Schedule II or Schedule III
Mr. Huang has $500,000 in a Canadian dollar trading account and $750,000 in an American dollar trading account. As well, he has $450,000 in an RRSP Account. His maximum protection under CIPF would be...
$1.45M The trading accounts would be "combined" to arrive at a total of $1,000,000 in protection and his RRSP Account would receive up to an additional $1,000,000 in protection.
Natural Gas Exchange
Provides electronic trading and clearing to the North American natural gas and electricity markets
Aequital NEO Exchange
Provides listing services and facilitates trading in securities listed on Aequitas NEO Exchange, TSX and TSX Venture Exchange
MarketAxess
Provides market data and a trading platform with access to multi-dealer competitive pricing for a wide range of corporate bonds. It is a member of IIROC and operates in Ontario and Quebec
What do Sales Finance Companies do?
Purchase instalment sales contracts from retailers and dealers at a discount
Indirect Investing
Purchase of securities issued by government or corporations. An investor buying stocks or bonds, a parent investing in an educational savings plan, and a couple depositing savings in a bank. etc
The Philips Curve argues that...
That unemployment and inflation have an inverse relationship. - Lower unemployment is achieved by increasing inflation. - Lower inflation is achieved by increasing unemployment and slower economic growth
Identifying Recessions
Depth: decline must be of substantial depth Duration: must last more than a couple of months Diffusion: must be a feature of the whole economy
The Nodal Exchange
Derivatives exchange that provides contracts to participants in the North American energy markets
If the BoC wants to lower int. rates, it will... If the BoC wants to increase int. rates, it will...
1. Effect a redeposit, moving funds into the Chartered Banks. 2. Effect a drawdown, which takes funds from the Chartered Bank system.
First step in complying with KYC is completion of...
New Account Application Form. A partner, director, officer or branch manager must approve the application prior to or promptly after the first transaction.
The Mutual Fund Dealers Association Investor Protection Corporation (MFDA IPC) provides...
Protection for eligible customers of insolvent MFDA member firms. Coverage provided is limited to $1M per account
Ombudsman for Banking Services and Industry (OBSI)
Independent of the financial services industry and its final decision is NOT binding for either the investor or the financial services provider (like and unofficial arbitrator).
Microeconomics applies to...
Individual markets of goods and services Looks at how businesses decide what to produce and who to produce it for How individuals and households decide what to buy
Lagging indicators [...] The most important lagging indicators are [...]
1. Change after the entire economy as a whole changes 2. - Unemployment - Inflation - Labour costs - Private sector PP&E spending - Business loans and interest on such borrowings
Coincident indicators [...] The most important coincident indicators are [...]
1. Change at the same time and direction as the whole economy 2. - Personal income - GDP - Industrial production - Sales
The BoC can also influence ST int. rates with [...], moving federal government money [...].
1. Drawdowns and deposits 2. To an from the BoC and Chartered Banks
The general principle underlying Canadian securities legislation:
"Full, true and plain disclosure" of all pertinent facts
Main role of the Bank of Canada is...
"To promote the economic and financial welfare of Canada"
Assume that you have $80,000 cash on deposit in your name and $120,000 on deposit in an RRSP. In the institution were to fail, CDIC would insure up to...
$180k $80,000 is fully covered for the cash deposit, and $100,000 or the $120,000 in the RRSP
Money functions as:
- A medium of exchange - A unit of account - A store of value
CRM Guidelines require that the suitability of an investment decision be conducted whenever any of these trigger events occur:
- A recommendation is made - securities are transferred or deposited to an account - There is a change of representative or portfolio manager - There is a material change to the KYC information for the account
Fixed Income Electronic Trading Systems
- CanDeal - CBID and CIBD Institutional - MarketAxess - CanPx
BoC carries out monetary through...
- Changes in the Target for the Overnight Rate - Open market operations - Drawdowns and redeposits
The following factors are widely accepted as influencing the exchange rate, although the weight ascribed to each factor is widely debated:
- Commodities (higher commodity prices lead to an appreciation of the Canadian dollar) - Inflation (lower inflation rates leads to appreciation) - Interest rates (high domestic interest rates attract investment capital) - Trade (surpluses lead to an appreciation of the Canadian dollar) - Economic performance (strong relative performance leads to appreciating currencies) - Public debts and deficits (large debts and deficits lead to a lower Canadian dollar) - Political stability (stable politics leads to a stronger currency)
Regulators have four primary objectives in imposing regulation:
- Consumer protection - Fairness - markets must perceive that markets are fair - Economic stability - efficient flow of capital - Social objectives
Types of Unemployment
- Cyclical - Seasonal - Frictional - Structural
Examples of Unethical Practices:
- Deceiving the public about the price or value of any security -Creating the misleading appearance of active public trading to make a profit - Manipulating or attempting to manipulate the market - Making a fictitious trade that involves no change of beneficial ownership - Using high-pressure or otherwise undesirable selling techniques - Violating any statutes or laws - Misleading a client as to the risk involved in a security - Trading in one's own account before effecting the same trade (front-running) - Conducting oneself in a way that would bring the securities business, the exchange or IIROC into disrepute
Solutions to High Inflation in Fiscal Policy: - Reduce consumer spending and investment with contractionary policies
- Decrease government spending - Increase taxes
Solutions to High Inflation in Monetary Policy: - Reduce consumer spending and investment with contractionary policies
- Decrease money supply - Increase interest rates
Determinants of interest rates:
- Demand and supply of capital - Default risk (the higher it is, the more expensive that money becomes) - Foreign interest rates and the exchange rate - Central bank credibility (the Bank can act to lower or raise short-term rates directly and influence long-term rates in the process) - Inflation (the higher the expected inflation rate, the higher the interest rates)
Peak
- Demand begins to outstrip the economy's capacity to supply it - Labour and product shortages cause wage increases and inflation - Interest rates rise and bond prices fall - Business investment is dampened - Retail sales decline (particularly of big-ticket items like cars and houses) - Leading to falling profits and declining stock prices
Causes of Inflation
- Demand-pull inflation - Cost-push inflation - Disinflation - Deflation
OSFI is responsible for regulating and supervising the following institutions:
- Deposit-taking institutions including banks, trust and loan companies, and co-operative credit associations - Insurance companies, including life and property and casualty - Foreign bank representative offices licensed or chartered by the federal government - Federally-regulated pension plans
Financial Intermediary (definition):
- Describes any organization that facilitates the trading or movement of financial instruments - Investment dealers that act on their clients' behalf as agents and sometimes act as principals, risking their own capital
Costs of inflation:
- Erodes the standard of living of those on fixed incomes - Reduces the real value of investments such as fixed-rate loans - Distorts the price signals to participants in market economies - Accelerating inflation generally leads to rising interest rates and recessions
Business Cycle:
- Expansion - Peak - Contraction - Trough - Recovery
The exchanges and the SROs have extensive rules and regulations that govern trading on an exchange and industry practices in general. Infractions may lead to...
- Fines - Suspensions - Expulsions - Criminal Charges
Financial Instruments
- Fixed-income Securities - Equities - Derivatives - Managed Products (Mutual Funds, ETFs, etc.) - Structured Products (Principal-protected notes and index-linked guaranteed investment certificates)
Organization Within Investment Firms
- Front Office Portfolio Management, Trading, Sales, Marketing - Middle Office Compliance, Accounting, Audits, Legal - Back Office Trade Settlement
Recovery
- GDP returns to its previous peak, beginning with the purchase of interest-rate sensitive items like cars and houses - Capacity utilization is still low so prices remain stable - Unemployment is still high so wage pressures are restrained
Advantages of Fiscal Policy:
- Government spending can be targeted to specific regions - Tax cuts and increased benefits are popular - Consumers can more easily understand and experience the impact
Financial Intermediary (functions):
- Help transfer capital from suppliers to users through the underwriting and distribution of new securities (primary market distribution) - Maintain secondary markets in which previously issued or outstanding securities can be traded
Microeconomic concerns include:
- How are prices for goods and services established? - Why did the price of bread go up? - How do minimum wage laws affect the supply of labour and company profit margins? - How would a tax on softwood lumber imports affect growth prospects in the forestry industry? - If a government places a tax on the purchase of mutual funds, will consumers stop buying them?
Two approaches to determining GDP:
- Income Approach Looks at total income earned - Expenditure Approach C + I + G + NX
Solutions to Unemployment and Recession in Monetary Policy: - Increase consumer spending and investment with expansionary policies
- Increase money supply - Decrease interest rates
Solutions to Unemployment and Recession in Fiscal Policy: - Increase consumer spending and investment with expansionary policies
- Increase spending - Decrease taxes
Examples of Suppliers of Capital
- Individual and non-financial domestic corporations - Government and foreign investors
Users of Capital
- Individuals - Businesses - Governments
Disadvantages of Monetary Policy:
- It can be difficult to target a specific region - Lowering interest rates may not have any impact if the consumer doesn't feel confident enough to spend - If interest rates are already too low, lowering them even more may have no impact
Contraction
- Level of economic activity declines as measured by real GDP - Layoffs occur - Business failures outnumber start-ups - Higher defaults of corporate borrowers
An independent arbitrator must...
- Listen to the facts - Decide how the disputes are settled - Decides what remedy/penalty should be imposed.
Capital characteristics:
- Mobility - Sensitivity to its environment - Scarcity
The BoC has four main areas of responsibility:
- Monetary Policy (designed to preserve the value of the Canadian dollar by keeping inflation low, stable, and predictable) - The Canadian financial system (BoC is the ultimate source of liquidity and is referred to as the lender of last resort) - Physical currency (designs, prints, and distributes Canadian bank notes) - Funds management (manages the government's accounts and government's foreign currency reserves)
Labour Market Indicators:
- Participation rate (Labour Force / Working Age Pop.) * 100 - Unemployment Rate (Not working but actively looking for work / Labour Force) * 100
Country Risk Evaluation
- Political Environment - Economic Trends - Fiscal Policy - Monetary Policy - Investment Opportunities - Labor Force
Services provided by the investment dealer include:
- Providing informed advice about the terms and features for new issues in the primary market - Adding liquidity to the market - Acting as market makers in assigned listed stocks - buying listed stocks as principals
Securities acts use three methods to protect investors:
- Registration of securities dealers and advisors - Disclosure of facts necessary to make reasoned investment decisions - Enforcement of laws and policies
Examples of Sources of Capital
- Retail Investors - Institutional Investors - Foreign Investors
Financial Intermediary / Investment Dealers (categories):
- Retail firms which include full-service investment dealers and self-directed brokers (discount brokers) - Institutional firms that service clients like pension funds and mutual funds - Integrated firms
The two main open market operations are:
- Special Purchase and Resale Agreements (SPRAs) - Sale and Repurchase Agreements (SRAs)
Major participants in the Investment Industry include:
- Suppliers of Capital - Investment Dealers - Users of Capital (Borrowers) - Self-regulatory Organizations - Markets - Clearing and Settlement - Canadian Securities Institute - Canadian Investor Protection Fund - Provincial Regulators
List of Exchanges in Canada
- TSX - TSX Venture Exchange - TSX Alpha Exchange - Montreal Exchange - Natural Gas Exchange - Canadian Securities Exchange - ICE Futures Canada - Aequitas NEO Exchange - Nodal Exchange
Growth in GDP results from...
- Technological advances - Population growth - Improvements in training, education and skills
Advantages of Monetary Policy:
- The effect on the economy may be more immediate - The initiative (e.g., lower or higher interest rates) can be reversed once the objective is achieved - It is independent of political considerations
Trough
- The recessionary conditions lead to falling inflation which leads to lower interest rates which triggers a bond rally. - Consumers who postponed purchases are spurred by lower interest rates to invest - Stock prices rally
How Interest rates affect the economy:
- They reduce business investment. The higher, the less likely businesses are going to borrow and invest for the future - They encourage savings. Higher interest rates lead people to save more money - They reduce consumption. Higher interest rates discourage consumers from spending on big ticket items like cars and houses
Challenges of Gov. Policy
- Timing lags (both fiscal policy and monetary policy have lags for a variety of reasons) - Political considerations - Future expectations (these can cause a policy to fail) - Coordination of federal, provincial, and municipal policies - High federal debt - Impact of international economics
Other Investment Industry Players:
- Trust and Loan Companies - Credit Unions and Caisses Populaires - Insurance Companies - Investment Funds - Savings Banks - Consumer finance companies - Sales finance companies - Pension plans
Macroeconomic concerns include:
- Why did the economy stop growing last quarter? - Why have the number of jobs fallen in the last year? - Will lower interest rates stimulate growth in the economy? - How can a nation improve its standard of living: 1. Why do stock prices rise when the economy is growing? 2. How is inflation controlled?
Statistics Canada defines the working-age population as people over age [...]. It further divides the population into three groups [...]
1. 15 2. - Those who are unable to work - Those who are not working by choice - The labour force
Most of the time, securities firms act as [...], buying and selling on behalf of clients [...] to those securities. Synonym: [...]
1. Agents 2. Without taking title (ownership) 3. Broker
Frictional and structure factors will [...]. The natural unemployment rate is where [...].
1. Always exist 2. The economy is operating at full capacity
[...] is an option for clients who feel that they have been treated unfairly. To be eligible for it, one must [...]
1. Arbitration 2. Have first tried to have resolved the issue and the claim is $500k or less. Decisions are binding on both parties.
A country's economic transactions with the rest of the world are captured in its [...] There are two elements to it [...]
1. Balance of Payments 2. The Current Account & The Capital and Financial Account
Securities in Canada are cleared through [...]. Marketplaces like the TSX and TSX Venture and ATSs report trades to [...]. Participants with access to the clearing system include [...].
1. CDS Clearing and Depository Securities 2. CDSX clearing and settlement 3. Banks, investment dealers and trust companies
"Average" economic growth is...
3.0% per year But this growth does not occur at a constant rate. Rather, it varies over the business cycle
Number of Schedule I banks and examples:
30 Royal Bank, CIBC, TD, Bank of Nova Scotia, Bank of Montreal and National Bank
Operating band for the overnight rate:
50 basis points of 0.5%
ICE Futures Canada
Agricultural futures and options
The Canada Deposit Insurance Corporation (CDIC) is...
A Federal Crown Corporation that provides deposit insurance. Up to $100k per depositor in each member institution To be eligible, deposits must be held with a member institution in CAD and payable in Canada. Term deposits must be repayable no later than five years from the date of deposit.
Disinflation is...
A decline in the rate of inflation
IIROC is involved with...
Financial compliance, business conduct compliance, registration, enforcement and market surveillance
If productivity growth exceeds increases in the unit costs of production...
Firms are able to lower the prices of the goods and services they sell
The National Registration Database (NRD) is...
A web-based system to file registration forms electronically. It is designed to enable a single electronic submission satisfy all jurisdictions in Canada. Both the IA and dealer member are required to notify the applicable SROs in writing of any material changes in the original answers to the questions on the NRD application (such as change of address)
Canadian Securities Administrators (CSA)
An umbrella organization of Canada's ten provincial and three territorial securities regulators. Improve, coordinate and harmonize regulation of the Canadian capital markets.
Exchange rates can be either...
Fixed or Floating
Markets can be divided into...
Auction and dealer markets (OTC or Unlisted Markets)
The Balance of Payments must...
Balance for every country. If one has a surplus in its current account, then it must have a deficit in its capital account... and vice-versa
Macroeconomics focuses on...
Broader issues such as employment level, interest rates, inflations, recessions, government spending, and the overall health of the economy
CanDeal
Fixed-income trading system, a joint venture between Canada's six largest investment dealer, both and ATS and an investment dealer. Offers institutional investors access to government securities and money market instruments.
The two biggest Pension Plans in Canada and its coverage:
CPP & QPP, cover all Canadian workers. Other workplace sponsored retirement plans and trusteed pension plans also included.
Schedule III Banks
Foreign bank branches of foreign institutions. These banks tend to focus on corporate and institutional finance and investment banking.
Examples of Schedule II Banks
Citibank Canada, AMEX Bank of Canada and BNP Paribas (Canada).
Credit Unions and Caisses Populaires are...
Co-operatively owned institutions, organized along employment, neighborhood or ethnic-origin lines
A gatekeeper of the securities industry must:
Collect and record client information to identify potentially suspicious clients; monitor activity in client accounts for possible illegal transactions; and report any transactions or proposed transactions in client accounts that are suspicious.
When governments run deficits, they must...
Compete for capital with private institutions
IIROC ensures that dealer members...
Comply with the timely disclosure of information by publicly traded companies, and carries out trading analysis and compliance with trading rules.
Underemployed people are those who...
Could be working part-time (instead of full-time) or are in jobs that do not make good use of their skills
Each province and territory is responsible for...
Creating the legislation and regulation under which a business in the securities industry must operate In Quebec: Autorite des marches financiers Outside Quebec: Office of the Superintendent of Financial Institutions (OSFI)
A recent trend in Insurance Companies is...
Demutualization where the policyholders of the company and the owners of the the company are two different groups. Life insurance companies tend to invest in mortgages and long-term bonds. Underwriting, the business of evaluating risk, is the most important aspect of the insurance business in Canada.
Gatekeepers in the securities industry include...
Dealers and all of their employees, particularly in front line roles.
Inflation
Defined as a generalized, sustained trend of higher prices A one-time jump in prices is not inflationary unless it feeds into wages and other costs.
Fiscal Policy
Defined as the use of government's power to tax and spend to pursue social goals such as full employment and long-term sustained economic growth
In a market economy, prices are established by...
Demand and Supply
Real GDP is...
Dollar value of all goods and services valued at prices in some base year.
Alternative Trading Systems (ATSs)
Electronic marketplaces that provide automated matching and execution of trades in both the equity and fixed-income markets. ATSs and exchanges are subject to regulatory filings.
TSX Venture Exchange
Equities and a few debentures
Canadian Securities Exchange
Equities of emerging companies
During the day, an exchange member will buy and sell many different listed stocks. A designated clearing systems handles the daily settlement process between members, which means [...].
Exchanging securities for cash
Montreal Exchange
Financial and equity futures and options
Not working by choice includes...
Full-time students, homemakers, retirees and discouraged workers
Schedule II Banks
Incorporated and operate in Canada, but are owned by a foreign parent. By law, may engage in all types of business permitted to a Schedule I Bank. However, most derive their greatest share of revenue from retail banking and electronic financial services.
Client Relationship Model (CRM)
IIROC introduced new requirements for dealers in 2012, requiring greater disclosure requirements for advisors.
Firms are required to develop and maintain policies to...
Identify, disclose and address existing and potential material conflicts involving clients. Firms must either: - Avoid the conflict - Disclose the conflict - Otherwise control the conflict of interest situation
Expansion
In times of normal growth: - The economy is steadily expanding - Inflation is stable - Businesses are investing in new capacity - Corporate profits are rising - Business start-ups outnumber bankruptcies - Stock market is strong - Good job creation with steady or falling unemployment - Growth rate of real GDP is rising
Overnight rate:
Interest rate set in the overnight market, where major Canadian financial institutions lend each other money on a short-term basis.
The analysis of long-term trends in GDP growth is important. Countries with higher expected growth rates can provide...
Investors with superior investment returns
Deflation is...
Is a sustained fall in prices where the annual CPI is negative. The potential costs of inflation and disinflation is captured by the Philips Curve that says when unemployment is low, then inflation must be high, and vice-versa
The Office of the Superintendent of Financial Institutions (OSFI) is...
The regulatory body for all federally regulated financial institutions
Bank Rate
Is the minimum rate at which the Bank of Canada will lend money on a short-term basis to the Chartered Banks and other members of the Canadian Payments Association (CPA). The Bank Rate is the upper limit of the operating band for the Overnight Rate
CanPX
Joint venture between several Canadian investment dealers. It combines digital feeds from participating dealers to provide a composite display of real-time bid and offer quotations.
TSX Alpha Exchange
Lists equities, debentures, ETFs and structured products
TSX
Lists equities, some convertible debt instruments, income trusts and ETFs
What do Consumer Finance Companies do?
Make direct loans to consumers, typically charging higher rates of interest than banks
Capital and Financial Account
Measures financial flows between Canadians and foreigners.
Current Account
Measures the exchange of goods and services between Canadian and foreigners. The largest element of the current account is merchandise trade.
Two branches of economics:
Microeconomics and Macroeconomics
Primary Market
Money flows from investors to issuing companies or issuing government unit
Secondary Market
Money flows from investors to other investors
[...] are of particular concern to gatekeepers
Money laundering, terrorist financing, financial fraud and illegal trading
Schedule I Banks
Most Canadian owned banks are designated as such. There are ownership rules - voting shares must be widely held and subject to no more than 20% ownership by any individual or group. There are 30 of these banks altogether.
Dealer Markets (OTC or Unlisted Markets)
Network of banks and investment dealers. Market makers post bid-and-ask quotations via electronic platforms, with the investment dealer typically acting as principal. This provides liquidity to the system. Almost all bonds and debentures are sold through dealer markets.
Demand-pull Inflation
Occurs when actual output is greater than potential output, or there are more dollars in the hands of consumers than there are goods and services to meet that demand
Cost-push Inflation
Occurs when there are shocks to the supply side of the economy - such as sharply higher commodity prices.
Interest Rates are...
One of the most important financial variables affecting securities markets
CBID and CBID Institutional
Operates as an ATS. Operates two distinct fixed-income markets: - Retail - Institutional
Self-regulatory Organizations (SROs)
Private industry orgs. to which the provincial regulatory bodies have granted the privilege of regulating their own members. Investment Industry Regulatory Organization of Canada (IIROC) Mutual Fund Dealers Association (MFDA)
Unable to work includes...
People in psychiatric hospitals and correctional facilities
The labour force includes...
People who are working & People who are not working but are actively looking for work
IIROC's market surveillance includes...
Real time monitoring of trading activities on stock exchanges, the Natural Gas Exchange, and ATSs.
Frictional Unemployment
Result of normal labour turnover. Part of a normal, healthy economy
IIROC's mandate is to...
Set high quality regulatory and investment standards, protects investors, and strengthen market integrity.
Seasonal Unemployment
Some industries operate only during part of the year ex: The agriculture industry.
Larger Trusts and Loan Companies are typically...
Subsidiaries of Schedule I Banks
Financial Technology companies, known collectively as fintech...
Take advantage of computer technology to support or enable a variety of banking and financial products and services.
Open market operations are...
Voluntary transactions conducted between the BoC and Chartered Banks to influence the level of interest rates.
Compliance with gatekeeper obligations begins with...
The Know Your Client (KYC) rule. 1. Learn the essential facts relative to every client and to every order or account accepted 2. Verify that the acceptance of any order for any account is within the bounds of good business practice 3. Verify that the recommendations made for any account are appropriate for the client's investment objectives, personal circumstances, and tolerance to risk
The spread is...
The difference between the bid and ask prices.
Shifting demographics are reshaping the Canadian economy. An important trend is...
The growth of the segment of Canadians over age 65
The Law of Supply states:
The higher the price, the higher the supply
The Law of Demand states:
The higher the price, the lower the demand
The bid is...
The highest price a buyer is willing to pay
The Canadian Investor Protection Fund (CIPF) protects eligible customers in the event of...
The insolvency of an IIROC dealer member But it does not protect against "normal" market losses.
The offer (or ask) is...
The lowest price a seller is willing to accept
The exchange rate is...
The price that one currency can be exchanged for another currency.
Economics is...
The process of understanding the financial choices that people make.
Nominal GDP is...
The value of all goods and services produced in that year at that year's prices.
Gross domestic product (GDP) is...
The value of all the goods and services produced in a country in a given time period, usually in a quarter or year
Cyclical Unemployment
Tied directly to the business cycle - High during recessionary conditions - Lower during periods of expansion
SRAs are used by the Bank to relieve...
Undesired downward pressure on interest rates. Decreases short term money supply and increases short term interest rates.
SPRAs are used by the Bank to relieve...
Undesired upward pressure on interest rates. Increases short term money supply and decreases short term interest rates
Direct Investing
When investments are made in "hard" assets. Couple investing savings in a home. Government investing in a new highway. A company paying start-up costs for a new plant. etc.
Structural Unemployment
When workers are unable to find jobs because: - They lack the necessary skills - Do not live where the jobs are available - Choose not to work at that wage rate Structural unemployment tends to last longer than frictional unemployment and is part of a normal, healthy economy
