Canadian Securities (CSC) UPDATED
Exam Questions and CORRECT Answers
Retail firms - CORRECT ANSWER- full service and discount brokerage firms for
individuals.
Institutional firms - CORRECT ANSWER- includes pension funds, mutual funds, and
insurance companies.
Integrated firms - CORRECT ANSWER- contains all aspects of retail and institutional firms.
Front office - CORRECT ANSWER- in charge of portfolio management, marketing, sales,
and trading.
Middle office - CORRECT ANSWER- in charge of compliance, accounting, audits, and
legal.
Back office - CORRECT ANSWER- in charge of settlements and clearing.
Schedule I banks - CORRECT ANSWER- large domestic banks. There are ownership
restrictions on shares - must be widely held.
Schedule II banks - CORRECT ANSWER- large foreign banks. Can do same activities as
domestic banks.
Schedule III banks - CORRECT ANSWER- foreign branches of banks. They are limited,
with a more institutional focus.
Trust company - CORRECT ANSWER- acts as a trustee.
Auction market - CORRECT ANSWER- market in which securities are bought and sold by
brokers acting as agents for their clients (stock exchanges).
, Dealer market - CORRECT ANSWER- a network of marketplaces. Here, trades are
conducted OTC and consist of bonds and debentures.
Equity electronic trading system - CORRECT ANSWER- 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 ANSWER- where almost all bonds are
traded (such as CanDeal).
Structured product - CORRECT ANSWER- 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 ANSWER-
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 ANSWER- the SRO that regulates
the distribution (dealer) side of the mutual fund industry in Canada.
OSFI (Office of the Superintendent of Financial Institutions) - CORRECT ANSWER- 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 ANSWER- 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 ANSWER- 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
Exam Questions and CORRECT Answers
Retail firms - CORRECT ANSWER- full service and discount brokerage firms for
individuals.
Institutional firms - CORRECT ANSWER- includes pension funds, mutual funds, and
insurance companies.
Integrated firms - CORRECT ANSWER- contains all aspects of retail and institutional firms.
Front office - CORRECT ANSWER- in charge of portfolio management, marketing, sales,
and trading.
Middle office - CORRECT ANSWER- in charge of compliance, accounting, audits, and
legal.
Back office - CORRECT ANSWER- in charge of settlements and clearing.
Schedule I banks - CORRECT ANSWER- large domestic banks. There are ownership
restrictions on shares - must be widely held.
Schedule II banks - CORRECT ANSWER- large foreign banks. Can do same activities as
domestic banks.
Schedule III banks - CORRECT ANSWER- foreign branches of banks. They are limited,
with a more institutional focus.
Trust company - CORRECT ANSWER- acts as a trustee.
Auction market - CORRECT ANSWER- market in which securities are bought and sold by
brokers acting as agents for their clients (stock exchanges).
, Dealer market - CORRECT ANSWER- a network of marketplaces. Here, trades are
conducted OTC and consist of bonds and debentures.
Equity electronic trading system - CORRECT ANSWER- 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 ANSWER- where almost all bonds are
traded (such as CanDeal).
Structured product - CORRECT ANSWER- 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 ANSWER-
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 ANSWER- the SRO that regulates
the distribution (dealer) side of the mutual fund industry in Canada.
OSFI (Office of the Superintendent of Financial Institutions) - CORRECT ANSWER- 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 ANSWER- 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 ANSWER- 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
