The Canadian Securities Industry and Financial Markets
Structure and regulation
Canada’s securities industry is built around provincial and territorial securities commissions, which are the primary regulators; together they work through the Canadian Securities Administrators (CSA) to harmonize rules. Self-regulatory organizations, now consolidated into the Canadian Investment Regulatory Organization (CIRO), oversee dealer and marketplace conduct, while the Canadian Investor Protection Fund (CIPF) protects eligible client assets if a member firm becomes insolvent. Exchanges provide secondary-market trading; clearing and settlement run through clearing agencies. Understand primary vs. secondary markets: issuers raise capital in primary distributions, while investors trade existing securities in secondary markets. Dealers act as principal or agent, and order types (market, limit, stop) have different execution risks.
Macro and market mechanics
Candidates must connect economic releases and policy to security prices: central-bank policy affects short rates and the yield curve; fiscal policy affects aggregate demand and issuance; inflation and employment data move expectations. In fixed income, prices and yields move inversely. Equity indices differ by weighting method and coverage, so index performance is not interchangeable.
Traps
Questions often confuse regulators with SROs, CIPF protection with deposit insurance, and principal with agent trades. A limit order guarantees price, not execution; a market order favors execution, not price. Bid–ask spread is a trading cost, not a guarantee of fair value.
Worked rule
If a dealer buys at the bid and sells at the ask, the spread is compensation/liquidity cost. For example, bid $19.95 and ask $20.05 gives a $0.10 spread, or about 0.5% of the $20 midpoint. Treat CIPF as insolvency protection, not protection against market losses.