#1 Flashcards
1
Q
Acts
A
The Securities Acts of the provinces or
territories.
2
Q
Advertisement
A
A sales communication that is published or
designed for mass distribution through
public media.
3
Q
Affi liate
A
In the context of insider trading
restrictions, this refers to a parent or
subsidiary or a company with common
ownership with the insider.
4
Q
Agency Transaction
A
A transaction in which a dealer member
buys or sells securities from or to a third
party on behalf of a client.
5
Q
All or None Order (AON)
A
An order that must be executed in its
entirety – partial fi lls will not be accepted
6
Q
Annual Information Form (AIF)
A
A document in which an issuer is required
to disclose information about presently
known trends, commitments, events or
uncertainties that are reasonably expected
to have a material impact on the issuer’s
business, fi nancial condition or results of
operations.
7
Q
Arbitration
A
A method of dispute resolution in which an
independent arbitrator is chosen to assist
aggrieved parties recover damages. It is an
alternative to costly and lengthy litigation.
8
Q
Autorité des marchés fi nanciers
(Financial Services Authority)
(AMF)
A
The body that administers the regulatory
framework surrounding Quebec’s fi nancial
sector: securities sector, the distribution of
fi nancial products and services sector, the
fi nancial institutions sector and the
compensation sector
9
Q
Associate
A
In the context of insider trading
restrictions, this refers to a spouse, relative,
relative of a spouse sharing the same house
as an insider, a partner, trust or estate in
which an insider acts as trustee or has a
substantial benefi cial interest and a
company of which an insider controls more
than 10% of the voting equity in a
company.
10
Q
Benefi cial Owner
A
The real (underlying) owner of an account,
securities or other assets. An investor may
own shares which are registered in the name
of an investment dealer, trustee or bank to
facilitate transfer or to preserve anonymity,
but the investor would be the benefi cial
owner.
11
Q
Best Efforts Basis
A
The attempt by an investment dealer to
fulfi ll a customer’s order or to sell an issue
of securities, to the best of their abilities.
The investment dealer is not held liable to
fulfi ll the order or to sell all of the
securities.
12
Q
Bought Deal
A
An offering in which an underwriter (or
syndicate) buys all of the shares for resale to
its clients, usually by way of a private
placement or short form prospectus
offering. In a bought deal the dealer risks its
own capital.
13
Q
Broker
A
Another term for a duly registered
individual or an investment dealer that is
registered to trade in securities in the
capacity of an agent or principal and is a
member of a Self-Regulatory Organization.
14
Q
Bucketing
A
Confi rming a transaction when no trade
has actually been executed.
15
Q
Canada Business Corporations Act
CBCA
A
The federal Act that governs all aspects of
business corporations, including
incorporation and take-over bids.
16
Q
Canadian Deposit Insurance
Corporation (CDIC)
A
A federal Crown Corporation that insures
eligible deposits at member institutions (up
to $100,000 per depositor) and reimburses
depositors for the amount of their insured
deposits when a member institution fails.
17
Q
CDS Clearing and Depository
Services Inc.
A
CDS Clearing provides customers with
physical and electronic facilities to deposit
and withdraw depository-eligible securities
and manage their related ledger positions
(securities accounts). CDS Clearing also
provides electronic clearing services both
domestically and internationally, allowing
customers to report, confi rm and settle
securities trade transactions.
18
Q
Canadian Derivatives Clearing
Corporation (CDCC)
A
The CDCC is a service organization that clears, issues, settles, and guarantees options, futures, and futures options traded on the Montreal Exchange (Bourse de Montreal).
19
Q
Canadian Investor Protection Fund
CIPF
A
A fund that protects investors against the insolvency of any dealer member. It is fi nanced by the IIROC and the exchanges (except ICE Futures Canada), who are collectively referred to as Sponsoring Self-Regulatory Organizations (SSROs) through quarterly assessments on dealer members
20
Q
Canadian Securities
Administrators (CSA)
A
The CSA is a forum for the 13 securities
regulators of Canada’s provinces and
territories to co-ordinate and harmonize
regulation of the Canadian capital markets.
21
Q
Carrying Broker
A
A securities fi rm that offers back offi ce
services and facilities to dealer members ,
which are known as introducing brokers.
The services provided by a carrying broker
include the execution, clearing and
settlement of trades, the custody of funds
and securities, the maintenance of books
and records of customer transactions and
the fi nancing of customer positions.
22
Q
Cash Account
A
A type of account where an investor is
required to pay for purchases or deliver
securities sold by the settlement date of the
transaction.
23
Q
Cash Account Rule
A
Rule governing settlement of securities transactions in cash accounts. It prescribes settlement dates, payment methods and restrictions on trading if accounts are overdue.
24
Q
Cancel/Change Former Order
CFO
A
An instruction to cancel or change a
previously entered order.
25
Chinese Walls
Procedures and policies that ensure that a
dealer member restricts access between
departments to non-public, material
information, in order to avoid the illegal
use of inside information.
26
Churning
Excessive trading in a client’s account solely
to generate commissions and resulting in
no benefi t to the client.
27
Coat-tail Provision
A provision that allows shares that are not
fully-voting the right to participate in
take-over bids made for the fully-voting
shares of a target company.
28
Code of Ethics
A guiding set of principles that establish
norms geared towards compliance with “the
letter of the law” as well as with the “spirit
of the law.” These norms are based upon
principles such as trust, integrity, justice,
fairness and honesty.
29
Commission
The fee charged by an Investment Advisor for
his/her services in facilitating a transaction,
such as the buying or selling of securities.
30
Complaints and Settlement
| Database (ComSet)
A web-based system that allows dealer
members to relay information to the
IIROC on matters such as client
complaints, securities-related civil claims
and arbitration notices, internal disciplinary
actions and criminal offences.
31
Confi dential Account
An account for which the benefi cial
ownership is on record only at the dealer
member’s head offi ce.
32
Confi dentiality
The ethical principle that a securities
industry professional will hold secret all
information relating to a client and a
client’s account unless the client gives
consent permitting disclosure or a formal
request is made by the appropriate
regulators.
33
Confi rmation
A written statement acknowledging a
securities transaction and confi rming the
details of the trade.
34
Confl ict of Interest
A situation in which the personal or
fi nancial interests of a registrant confl ict
with the interests of a client or the
registrant’s dealer member. In cases of
potential or actual confl ict of interest, a
client’s interests must be given priority and
the confl ict should be disclosed.
35
Constrained Share Companies
```
Companies or institutions that are either
culturally important or fundamentally
important to the Canadian economy (e.g.,
Canadian banks, trust, insurance,
broadcasting and communication
companies) and therefore have foreign
ownership restrictions.
```
36
Contingent Order
An order for the simultaneous purchase of
| one security and the sale of another.
37
Continuous Disclosure
The requirement for issuers of securities
that when a material change occurs a press
release must be issued and fi led immediately
and a material change report must be fi led
with the commission(s) within 10 days
through SEDAR. There is no requirement
to fi le a press release for non-material
changes.
38
Control Position
Ownership of suffi cient voting stock in a
company to materially affect its affairs. In
all provinces except Manitoba, New
Brunswick and Quebec, a 20% holding is
deemed to represent control.
39
Control Stock
The voting stock owned by a shareholder in
| a control position.
40
Day Order
A buy or sell order that automatically
expires if it is not executed on the day it is
entered. All orders are day orders unless
otherwise specifi ed.
41
Dealer Member
A fi rm that engages in the business of
trading in securities in the capacity of an
agent or principal and is a member of the
IIROC.
42
Delayed Delivery Order
A transaction that will not be settled within
| the normal settlement period.
43
Delivery Against Payment (DAP)
A transaction in which the buyer’s payment
for securities is due at the time of delivery
(usually to a bank acting as agent for the
buyer) upon receipt of the securities. The
payment may be made by bank wire,
cheque, or direct credit to an account.
44
Directors’ Circular
A document that must be sent to all
shareholders by the directors of a company
that is the target of a take-over bid. A
recommendation to accept or reject the bid,
and reasons for this recommendation, must
be included.
45
Disclosure
One of the principles of securities
regulation in Canada. This principle entails
full, true and plain disclosure of all material
facts necessary to make reasoned investment
decisions.
46
Discretionary Account
A securities account where the client has
given specifi c written authorization to an
investment dealer to make decisions
regarding the security, price, quantity or
timing of orders in the account.
47
Distribution
An offering of securities, generally by the
issuer from its treasury, which requires the
use of a prospectus or the availability of a
prospectus exemption. In some provinces
this is formally referred to as a primary
distribution.
48
Do Not Call List (DNCL)
The “Unsolicited Telecommunications
Rules and the National Do Not Call List”
(National DNCL) creates a regulatory
framework for telemarketing calls and other
unsolicited telecommunications received by
consumers. Their intent is to prevent undue
inconvenience and nuisance of unsolicited
telecommunications, while still allowing
legitimate uses of such communications.
The Rules and the National DNCL became
effective September 30, 2008.
49
Due Diligence
Investigation into and verifi cation of the
details of a potential investment such as an
examination of operations and management
and the verifi cation of material facts.
50
Duty of Care
The duty an IA has to a client to ensure
that everything ‘reasonably practicable’ is
done to protect the client’s assets. This
involves devoting the necessary time and
attention to be able to make informed
decisions.
51
Early Warning
An initial threshold prior to a take-over bid.
A person or company accumulating
benefi cial ownership or control over 10%
or more of voting or equity securities of a
class of securities must issue a press release
and report to the Administrator
immediately.
52
Effective Delivery By Electronic
| Means
The electronic distribution of information
to the intended recipients that is equivalent
to the information provided in paper form.
53
Enforcement
One of the principles of securities
regulation in Canada. Securities laws and
administrative policies are enforced by the
Administrators and the SROs.
54
Equity Position
The net credit in a client’s account.
55
Excess Margin
The client margin in an account exceeding
| what is required by the dealer member.
56
Exempt Issue
A securities issue for which a prospectus is
not required. Exemptions may be due to
the nature of the securities, the nature of
the distribution or a resale of securities that
were originally exempt.
57
Fails
Securities that are not delivered by
| settlement date.
58
Fiduciary Duty
A legal term that describes a high degree of
duty of care. Criteria that may be used to
determine whether a fi duciary duty is
present in an IA-client relationship include
a high degree of reliance by the client on
the IA’s advice and the vulnerability of the
client. In Quebec, this concept is referred to
as a “Contract of Mandate”.
59
Final Prospectus
A document that contains complete details
of securities being offered for sale. It
provides full, true and plain disclosure of all
material facts relating to the distribution.
The fi nal prospectus contains all of the
information omitted in the preliminary
prospectus (e.g., offering price, proceeds to
the issuer, etc.). A copy must be mailed or
delivered to all purchasers of the securities
by no later than midnight on the second
business day after an agreement of purchase
or sale had been entered into.
60
```
Financial Action Task Force on
Money Laundering (FATF)
```
```
An inter-governmental body whose purpose
is the development and promotion of
policies, both at national and international
levels, to combat money laundering and
terrorist fi nancing.
```
61
Financial Institution
A banking or trust institution, pension
fund, insurance company, credit union or
other entity licensed to do business in the
fi nancial sector.
62
Financial Transactions Reports
Analysis Centre of Canada
(FINTRAC)
FINTRAC receives, analyzes, assesses and
discloses fi nancial intelligence on suspected
money laundering, terrorist fi nancing, and
threats to the security of Canada.
63
Form C
The Shareholder Communication and
Voting Instructions Form. This provides for
written instructions from clients as to the
receipt of proxy-related materials, disclosure
to issuers of the client’s name, address and
number of securities held and the voting of
securities held by the client.
64
Free Credit Balance
Uninvested monies in client accounts that
may be used by dealer members for their
own purposes but are payable on demand
to the clients.
65
Frontrunning
Entering an order with the prior knowledge
of a pending trade that will likely affect the
market price of the security.
66
Fully-Margined
A situation in which the client margin in a
margin account is equal to or greater than
the margin required.
67
Fully-Secured
A positive net equity position in an
account. In other words, the value of
holdings exceeds any debit balance.
68
Good Delivery By Electronic Means
Electronic delivery of information in which
the recipients receive prior notice of
delivery, have easy access to it, it is delivered
unaltered and uncorrupted and the sender
receives evidence of its successful delivery.
69
Grey Areas
Areas where compliance policies are not
clear and ethics play a part in decision
making. An ethical decision in a grey area
depends on the details of the situation.
70
Grey (or Watch) List
```
A limited-circulation list of issuers on
which a dealer member (including any of
its staff) has confi dential information,
distributed for the purpose of watching for
any trading activity suggesting that the
information has been leaked or has been
used inappropriately.
```
71
Hedge
An investment made to reduce the risk of
adverse price movements in a security, by
taking an offsetting position in a related
security, (e.g., an option or a short sale).
72
Initial Public Offering (IPO)
A company’s fi rst sale of stock to the public.
73
Inside Information
Material non-public information about a
| company.
74
Insider
```
All directors and senior offi cers of a
corporation and those who may also be
presumed to have access to non-public or
inside information concerning the
company; also anyone owning more than
10% of the voting shares in a corporation.
```
75
Insider Report
Insiders are required to report their
holdings upon becoming an insider and
they must also report any change in those
holdings within 10 days following such
change. In Canada, insiders fi le these
reports through the System for Electronic
Disclosure by Insiders (SEDI) in electronic
format via the Internet.
76
nsider Trading (Illegal)
Using material non-public information
about a company to effect trades in that
company’s securities or trading in securities
as an insider without reporting the trades to
the regulators.
77
Integrated Market Enforcement
| Teams (IMETs)
An initiative of the RCMP and the federal
government to detect, investigate and deter
capital markets fraud. The teams are
composed of police, lawyers and other
investigative experts through branches in
Toronto, Vancouver, Montreal and Calgary.
They are jointly managed by the RCMP
and Justice Canada and work closely with
securities regulators, such as the IIROC and
MFDA, as well as other federal and
provincial authorities.
78
Introducing Broker
A securities fi rm that does not clear or settle
trades and does not have the facilities to act
as a custodian for client securities or cash,
but relies upon the carrying broker, to
provide these services
79
Investment Advisor (IA)
```
An individual licensed to transact in the full
range of securities. The term refers to
employees of SRO dealer members only.
Also known as a Registrant or Registered
Representative (RR).
```
80
Investment Industry Association of
| Canada (IIAC)
The association that advances the position
of the Canadian investment industry on
regulatory and public policy issues. As the
professional association for the industry,
IIAC’s mandate is to promote effi cient, fair
and competitive capital markets in Canada.
81
Investment Industry Regulatory
| Organization of Canada (IIROC)
The national Self-Regulatory Organization
overseeing all dealer members and trading
activity on equity and debt marketplaces in
Canada. IIROC is responsible for enforcing
the rules and regulations regarding sales,
business and fi nancial practices and trading
activities of individuals and dealer members
under IIROC’s jurisdiction. It also develops
recommendations to amend existing rules,
establishes new rules and interprets existing
rules.
82
Investment Representative (IR)
An individual licensed as an order taker or
sales assistant and strictly prohibited from
providing investment advice to the public.
83
Issuer Bid
An offer by an issuer to security holders to
buy back any of its own shares or other
securities convertible into its shares.
84
Know Your Client (KYC) Rule
The cardinal rule in making investment
recommendations. All relevant information
about every client and every order must be
known to ensure that all recommendations
made by an IA to clients are suitable.
85
Limit Order
A client’s order to buy or sell securities at a
specifi c price or better. The order will only
be executed if the market reaches or betters
that price.
86
Liquid Assets
Assets that can be readily converted into
| cash.
87
Loan Value
The dollar amount of credit that the dealer
member will extend to a client for a
purchase on margin.
88
Management’s Discussion and
| Analysis (MD&A)
```
A document that requires management of
an issuer to discuss the dynamics of its
business and to analyze its fi nancial
statements with the focus being on
information about the issuer’s fi nancial
condition and operations with emphasis on
liquidity and capital resources.
```
89
Manipulative Trading
Any attempt to affect or control the price of
| a security through trading.
90
Margin
Margin is the amount of money paid by a
client when he or she uses credit to buy a
security. It is the difference between the
market value of a security and the amount
loaned by an investment dealer.
91
Margin Account
```
An account that requires only partial
payment from a client for certain purchases.
The dealer member loans the client the
unpaid portion. Margin accounts can be
long or short.
```
92
Margin Agreement
```
A contract that must be completed and
signed by a client and approved by the
dealer member in order to open a margin
account. This sets out the terms and
conditions of the account.
```
93
Margin Call
When an investor purchases securities, or
sells securities short, on margin and share
prices go against the investor, the
investment dealer will demand the deposit
of additional cash or marginable securities
to the account to protect the broker’s loan.
94
Margin Defi ciency
A situation in which a client’s margin in an
account falls below the level required by the
dealer member. This results in a margin call.
95
Margin Position
The amount of client margin and broker
| loan currently in an account.
96
Margin Rate
The percentage of a security’s value that a
client must put up in order to make a
purchase or short sale on margin. The
reciprocal of loan value.
97
Market Order
An order to buy or sell securities at the
prevailing market price. All orders are market
orders unless a price limit is specifi ed.
98
Market Out Clause
```
A clause in an underwriting agreement
allowing an underwriter to cancel the
agreement without penalty for certain
specifi ed reasons, such as the issue
becoming unsaleable due to changing
market conditions or changes in the affairs
of the issuer.
```
99
Materiality
This relates to the Cash Account Rule, and
basically means that debits relating to such
items as dividends, interest and fees (as
opposed to trading activity) do not trigger
account restrictions.
100
Memorandum of Understanding
A formal agreement between two or more
regulatory bodies to co-operate in certain
aspects of securities regulation.
101
Minimum Quotation Spread
The minimum acceptable range between
bid and ask prices when quotations are
given for securities. This range is
determined by each individual exchange.
102
Money Laundering
The process in which the proceeds of crime
are converted into legitimate funds using
complex transactions, usually through
fi nancial institutions.
103
Multi-jurisdictional Disclosure
| System (MJDS)
```
This system permits public offerings of
securities of U.S. issuers that meet specifi ed
eligibility requirements to be made in
Canada on the basis of U.S. disclosure
documents with additional Canadian
disclosure.
```
104
Mutual Fund Dealer
A fi rm licensed exclusively for the purpose
| of trading in mutual fund securities.
105
Mutual Fund Dealers Association
| MFDA
The Self-Regulatory Organization that
regulates the distribution (dealer) side of
the mutual fund industry in Canada.
106
National Instruments
These are policies that apply in all
Canadian jurisdictions and have the force
of a binding rule.
107
National Policies
These are policies that apply in all
Canadian jurisdictions but do not have the
force of a binding rule. National Policies are
more akin to a guideline as they inform
market participants of the manner in which
a securities commission may exercise its
statutory discretionary authority.
108
National Registration Database
| NRD
A web-based system that permits dealer
members and advisers to fi le registration
forms electronically, reduces the regulatory
burden for industry participants and
harmonizes securities regulations across
jurisdictions.
109
National Registration System (NRS)
A voluntary way of fi ling through NRD so
that a submission is reviewed only by one
reviewer, known as the Principal Regulator
on behalf of all other provinces/territories.
The purpose of NRS is to improve the
current registration system through a
mutual reliance process.
110
Net Worth
Assets less liabilities. This must be included
on the NAAF and taken into account by an
IA when making investment
recommendations to clients.
111
New Account Application Form
| NAAF
A form that is fi lled out by a client and an
IA at the opening of an account. It provides
personal information about the client, their
fi nancial position, risk tolerance,
investment objectives, etc. which assists the
IA in handling the account and (where
applicable) making suitable investment
recommendations. The NAAF must be
completed and approved before (or
promptly thereafter) any trades are executed
in an account.
112
Nominee Account
An account that is in the name of an entity
that is not the benefi cial owner and in
whose name securities are transferred.
113
Non-Client Order (N-C)
An order for the account of an employee of
a dealer member. Client orders are given
priority over non-client orders for the same
securities at the same price and terms.
114
Non-Objecting Benefi cial Owners
| NOBO
The benefi cial owners of securities who do
not object to the release of their names and
related information and permit issuers to
communicate with them directly.
115
Non-Registered Holder
A security holder whose securities are held
in the name of an investment fi rm of whom
the holder is a client. This is also referred to
as being held in “street name”.
116
Normal Course Issuer Bid
```
A take-over bid made by way of the
purchase of not more than 5% of the
outstanding listed voting or equity
securities of a class of securities of a target
company over a 12-month period.
```
117
North American Securities
Administrators Association
(NASAA)
An association of securities Administrators
| from the U.S., Canada, and Mexico.
118
Numbered Account
An account whose ownership is solely
identifi ed by an account number rather
than by a name.
119
Objecting Benefi cial Owners (OBO)
The benefi cial owners of securities who
object to the release of their names and
related information and will not permit
issuers to communicate with them directly.
120
Odd Lot
A number of shares that is less than a
standard trading unit. This usually refers to
an equity trade for less than 100 shares, and
is sometimes called a broken lot.
121
```
Offi ce of the Superintendent of
Financial Institutions (OSFI)
```
The primary regulator of federally chartered
fi nancial institutions and federally
administered pension plans. OSFI
supervises and regulates all banks, and all
federally incorporated or registered trust
and loan companies, insurance companies,
co-operative credit associations, fraternal
benefi t societies and pension plans.
122
OmbudsNetwork
The OmbudsNetwork provides Canadian
fi nancial services consumers with access to
independent, impartial and effective
complaint resolution services in the
banking, life and health insurance, general
insurance, securities and mutual funds
industries.
123
Open Order
An order that is valid until fi lled or
cancelled. Sometimes called good till
cancelled (GTC) order.
124
Partly-Secured
A negative net equity position in an
account that occurs when the value of
holdings is less than the debit balance.
125
Passport System
The Passport System gives issuers a
streamlined access to the capital markets in
multiple jurisdictions by dealing (and fi ling
documents) with only its Principal Regulator
(PR) and meeting the requirements of one
set of harmonized laws. What this means is
that where an issuer fi les a prospectus in its
principal jurisdiction with its PR, if the PR
issues a receipt and the issuer gave notice to
the local jurisdictions in which it otherwise
would have fi led the prospectus as well, the
other jurisdictions will automatically issue a
deemed receipt.
126
Performance Data
A measurement or description of the
| investment performance of a security.
127
Personal Information Protection and
| Electronic Documents Act (PIPEDA)
```
The Act that governs each fi rm’s
information gathering processes and
regulates what fi rms can do with the
personal information that is collected, used
and disclosed in the course of doing
business.
```
128
Politically Exposed Persons (PEPs)
A person who holds or has held an offi ce or
position in or on behalf of a foreign state,
includes the spouse, common-law partner,
child, mother, father, brother, sister,
spouse’s or common-law partner’s mother
or father of any such person. It should be
noted that the defi nition of a PEP only
covers those holding such positions in a
national state, not those holding offi ces in
provinces or municipalities. Another term
often used for a PEP is a “Politically
Exposed Foreign Person” (PEFP).
129
Portfolio Manager
A person or company that manages the
investment portfolios of clients through
discretionary authority granted by the
clients.
130
Portfolio Record
A document that shows each client’s current
holdings. IAs should have this readily
available at all times.
131
Power of Attorney
A legal document giving authority to an
individual to direct the affairs of another
(usually in the case of an absence).
132
Preliminary Prospectus
The initial document published by an
underwriter of a new issue of securities that
is given to prospective investors to ascertain
the extent of public interest in the issue
while it is being reviewed by a securities
commission.
133
Primary Distribution
A distribution of securities, generally by the
issuer from its treasury. All primary
offerings are distributions which requires
the use of a prospectus or the availability of
a prospectus exemption.
134
Principal
The person for whom a broker executes an
order, or a dealer buying or selling for its
own account. The term may also refer to a
person’s capital or to the face amount of a
bond.
135
Principal Regulator
```
Under the Passport System, the
Administrator with whom an applicant
fi les. This is usually the Administrator of
the jurisdiction in which an individual
resides or where a dealer member’s head
offi ce is located.
```
136
Pro Group
Those considered “non-clients” with regard
to the purchase of certain securities. This
includes (both individually and as a group)
the dealer member, employees of the dealer
member and partners, directors and offi cers
of the dealer member and their associates
and affi liates.
137
Proceeds of Crime (Money
Laundering) and Terrorist Financing
Act
The Act that legislates specifi c measures
aimed at assisting in the detection and
deterrence of money laundering and
facilitating the investigation and
prosecution of money laundering offences.
138
Provincial Policies
Policies that refl ect local differences in
legislation, regulation and procedure
between the provinces.
139
Proxy
A written or electronic authorization given
by a shareholder for someone else, usually
the company’s management, to cast his/her
vote at a shareholder meeting or at another
time.
140
Red Flags
Warning signals and indicators of possible
improper activities that may provide a basis
for further actions.
141
Red Herring Prospectus
Another term for a preliminary prospectus
so called because certain information is
printed in red ink on the front page.
142
Registered Holder
A securityholder whose name is registered
| with the issuer.
143
Registered Representative (RR)
Another term for an Investment Advisor
which is commonly used by regulators. In a
broad sense it includes individuals licensed
to do business in the securities industry.
144
Registered Representative Mutual
| Funds (RRMF)
An individual licensed to transact in mutual
| fund securities only.
145
Registrant
This refers to individuals registered with the
Securities Administrators or Self-Regulatory
Organizations.
146
Registration
One of the principles of securities
regulation in Canada. This principle
requires registration of all securities dealers
and advisors.
147
Regular Delivery
The date that a securities trade usually
settles – i.e., the date that the seller must
deliver the securities.
148
Regulator
A general term referring to the Securities
Administrators and Self-Regulatory
Organizations (SROs) collectively.
149
Reporting Issuer
A corporation that has issued securities to
the public and is subject, among other
things, to continuous disclosure
requirements.
150
Responsible Designated Trader
| RDT
A trader who is responsible for carrying out
| Market Making duties.
151
Restricted List
```
A list of issuers with whom a dealer
member has a current, publicly disclosed
involvement requiring restrictions on the
dealer member’s trading or advising
activities.
```
152
Right of Action for Damages
Most securities legislation provides that
those who sign a prospectus may be liable
for damages if the prospectus contains a
misrepresentation. This right of action for
damages extends to experts (i.e.: lawyers,
auditors, geologists, etc.) who report or give
opinions within the text of the document.
This right of action for damages is also
applicable in a director’s circular during a
takeover.
153
Right of Rescission
The right of a purchaser of a new issue to
withdraw from the purchase agreement
within the specifi c province’s applicable
time limits if the prospectus contains an
untrue statement or omitted a material fact.
154
Right of Withdrawal
The right of a purchaser of a new issue to
withdraw from the purchase agreement
within two business days after receiving the
prospectus.
155
Safekeeping
A safeguarding service provided by a dealer
member for its clients’ fully paid-for
securities registered in the clients’ own
names. The practice entails the use of vault
space to store securities certifi cates until
they are withdrawn or sold.
156
Sales Assistant
An Investment Representative (IR)
| employed with a full-service dealer member.
157
Sales Communication
Any type of oral or written communication
| used to induce the purchase of securities.
158
Secondary Offering
The resale by a holder of securities
previously issued by the issuer. Under
certain specifi c conditions a secondary
offering could also be a “distribution”.
159
Securities Acts
Provincial Acts that are administered by the
securities commission in each province,
which set the rules under which securities
may be issued and traded in that province.
160
Securities Administrator
A general term referring to the provincial
regulatory authority (e.g., securities
commission or provincial registrar)
responsible for administering a provincial
Securities Act.
161
Securities and Exchange
| Commission (SEC)
The federal securities regulatory agency in
| the United States.
162
Securities Eligible for Reduced
| Margin
Securities which demonstrate suffi ciently
high liquidity and low price volatility based
on meeting specifi c price risk and liquidity
risk measures.
163
Security Cross-Reference
An alphabetical listing of securities held by
clients, with the clients’ names listed
underneath each security.
164
Segregated Securities
Client-owned securities, fully paid for or
representing excess collateral in margin
accounts, that are locked away and cannot
be used to conduct a securities dealer
member’s business. Segregated securities
may be registered in street name.
165
Self-Regulatory Organization (SRO)
An organization recognized by the
Securities Administrators as having powers
to establish and enforce industry
regulations. Its main functions are to
protect investors, maintain fair, equitable
and ethical practices in the industry and
ensure conformity with securities
legislation. In Canada, the SROs include:
the Investment Industry Regulatory
Organization of Canada, the Mutual Fund
Dealers Association, the Montreal Exchange
(in Quebec), the Toronto Stock Exchange,
the TSX Venture Exchange and ICE
Futures Canada (in Manitoba).
166
Selling Away
Dealing in securities outside of the normal
business of the dealer member. These
dealings are known as outside deals.
167
Settlement Date
The date on which a securities buyer must
pay for a purchase or a seller must deliver
the securities sold. For stock transactions,
settlement must be made on or before the
third business day following the transaction
date.
168
Shelf Distribution
A securities distribution where the required
disclosure documents have been cleared by the regulators in advance of the proposed distribution and a prospectus supplement containing among other things, a description of the securities being offered is filed with the appropriate securities
commission(s).
169
Shell Bank
A shell bank refers to a foreign fi nancial
institution that does not have a physical
presence in any country, unless it is
controlled by or is under common control
with a depository institution, credit union
or foreign fi nancial institution that
maintains a physical presence in Canada or
in a foreign country. Under IIROC rules,
no dealer member shall open or maintain
an account for a shell bank.
170
Short Form Prospectus System
This system allows certain reporting issuers
quicker access to the capital markets via a
short form prospectus that basically only
provides details of the offering. The short
form prospectus contains by reference the
material fi led in the issuer’s Annual
Information Form.
171
Short Sale
The sale of a security which the seller does
not own but which is loaned to the seller by
the investment dealer. This is done when an
investor believes that the price of a stock is
going to fall and he or she intends to cover
the sale by buying the stock back at a lower
price. Short sales must be declared at the
time the order is entered.
172
Short Tendering
The practice of tendering more shares in
response to a tender offer than an investor
owns.
173
Soft Dollar Arrangements
Non-cash payments received in exchange
for services such as research and computer
equipment used to assist in making
investment decisions.
174
Special Relationship
Any relationship which gives an individual
| access to material, non-public information.
175
Sponsoring Self-Regulatory
| Organization (SSRO)
```
An SRO that sponsors the Canadian
Investor Protection Fund. The SSROs are
the Investment Industry Regulatory
Organization of Canada, the Montreal
Exchange, the Toronto Stock Exchange and
the TSX Venture Exchange.
```
176
SRO Member Firm
Any fi rm that is a current member of a
Self-Regulatory Organization (SRO).
Members of IIROC are referred to as dealer
members.
177
Standard Performance Data
A calculation of current and effective yield
for money market funds and total return
for other mutual funds.
178
Standard Trading Unit
The replacement term for a “board lot”
under UMIR, which recognizes that
different marketplaces may use different
sizes for board lots.
179
Stop Buy Order
An order to buy a security only after it has
reached a certain price. This may be used to
protect a short position or to ensure that a
stock is purchased while its price is rising.
According to TSX rules these orders
become limit orders when the stop price is
reached.
180
Stop Loss Order
The opposite of a stop buy order. An order
to sell a security after its price falls to a
certain amount, thus limiting the loss or
protecting a paper profi t. According to TSX
rules these orders become limit orders when
the stop price is reached.
181
Street Name
Securities registered in the name of an
investment dealer or its nominee, instead of
the name of the real or benefi cial owner, are
said to be “in street name.” Certifi cates so
registered are known as street certifi cates.
182
Suitability
A IA’s major concern in making investment
recommendations. All information about a
client and a security must be analyzed to
determine if an investment is suitable for
the client in accounts where a suitability
exemption does not apply.
183
Switch Order
An order to sell one security and use the
| proceeds to purchase another security.
184
```
System for Electronic Disclosure
by Insiders (SEDI)
```
SEDI facilitates the fi ling and public
dissemination of “insider reports” in
electronic format via the Internet.
185
System for Electronic Document
| Analysis and Retrieval (SEDAR)
SEDAR facilitates the electronic fi ling of
securities information as required by the
securities regulatory agencies in Canada and
allows for the public dissemination of
information collected in the fi ling process.
186
Take-over Bid
An offer made to the security holders of a
company to purchase the voting securities
of a company which, with the offeror’s
already owned securities, will in total exceed
20% of the outstanding voting securities of
the company. For federally incorporated
companies, the equivalent requirement is
more than 10% of the outstanding voting
shares of the target company.
187
Tipping
```
When someone possessing inside
information knowingly conveys that
information, while also knowing that there
is a risk that the recipient will use the
information to buy or sell, directly or
indirectly, a security to which the
information relates or convey the
information to someone else who may do
so.
```
188
Trading Unit
The name given to each single, indivisible
amount in a transaction. The unit of
trading for stocks is a share while the unit
of trading for options is a contract.
189
Transfer Agent
An agent employed by a corporation or
mutual fund to maintain shareholder
records, including purchases, sales, and
account balances.
190
Undermargined
A margin account that has a margin
| defi ciency (i.e., insuffi cient funds).
191
Uniform Act Policies
Policies that only apply in Ontario and the
| four Western Provinces.
192
Universal Market Integrity Rules
| UMIR
A common set of equities trading rules
enforced by IIROC and designed to ensure
fairness and maintain investor confi dence.
These rules create the framework for the
integrity of trading activity on marketplaces
and allow for the competitive operation of
exchanges, quotation and trade reporting
systems (QTRSs) and alternative trading
systems (ATSs) in Canada.
193
Unsolicited Order
An order entered by a client where there
was no recommendation made by the
client’s IA or his/her dealer member.
194
Uptick Rule
This applies to short sale orders. These
orders can only be executed at a price that is
higher than the preceding price.
195
Waiting Period
The period of time between the issuance of
a receipt for a preliminary prospectus and
receipt for a fi nal prospectus from the
securities administrators.
196
Wash Trade
A trade in which there is no change of
benefi cial ownership of a security. This may
be done to give an impression of false
trading activity in a security.
