CSC Chapter 2 Questions and Answers

CSC Chapter 2 Questions and Answers What is SRO? Self-Regulatory Organization that establishes & enforce industry regulations to protect investors. The SRO monitors the market to ensure fairness in the market & governs the market activities What is an CDS? Clearing & Depositary Service where trades are settled Previous Play Next Rewind 10 seconds Move forward 10 seconds Unmute 0:00 / 0:15 Full screen Brainpower Read More What are financial intermediaries? Are organizations that facilitates trade & movement of financial instruments. They transfer capital between buyers & sellers. They can act as agents & principals What are agents? Dealers acting as agents trade securities between clients & issuers What are principals? Dealers acting as principals buy issues from the issuers & sells them in the market. The take the risk of ownership. The spread is the profit. What is underwriting? Dealers transfer capital buy purchasing new securities for resale in the primary market. They sign & accepts the risks then maintains the trades in the secondary market What are subsidiaries? A company's voting stock is 50% controlled by another company What are the 3 types of intermediaries firm? Integrated Firm, Institutional Firms, and Retail Firms What is an integrated firm? Offer products & services that covers both institutional & retail firms. Most of its underwriting securities are sold on the secondary market What is an institutional firm? More than 70 domestic & foreign firms serve institutional clients with stocks & MF. They mainly deal with big clients What is a retail firm? includes full-service & discount brokers What is a discount broker? Execute trades on a low commission fee. But they provide no investment advice. What is an investment boutique? Specializes in stocks, bonds, unlisted stocks, portfolio management What is a front office? Deal directly with clients. Some pertain portfolio MGMT, trades, Sales and Marketing How to become an advisor? Advisors must be registered to the Provincial Securities Commission, be legal age, pass CSC and Conduct and Practical Handbook exam. They must participate in a 90 day training program & complete Wealth MGMT Essential Course within 30 months of registering What is a middle office? Deal with the paper work, accounting, audits and legalities. They ensure the products are in accordance with the regulations What is a back office? Their duty is to settle the transactions. They ensure all transactions are settled in the correct amount & account. It usually takes 3 days to complete. What is a schedule 1 bank? Widely held by foreign investors no more than 20% holdings. They're domestic banks and consists of 6 large Canadian banks and 23 schedule 1 banks. They eligible for CDIC and limits foreign ownership What is a schedule 2 bank? Federally regulated foreign banks subsidiaries whose voting stock 50% controlled. They can engage in all type of business like schedule 1 banks. But focuses mainly on retail banking. They're eligible for CDIC What is a schedule 3 bank? Federally regulated foreign bank branches of foreign banks. By allowing foreign banks to operate in Canada, it has allowed Canadian banks to operate internationally What is reinsurance? Allows to transfer a portion of risk between corporations to reduce the risk of paying a lump-sum. What is an closed-end fund? Issued shares by a company to raise capital through IPO What is an open-end fund? A type of mutual fund that does not have restrictions on the amount of shares will issue