CIRO Institutional Securities flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Permitted Client
- A client category under Canadian securities rules that includes certain institutions, governments, and high-net-worth individuals meeting defined thresholds, allowing reduced regulatory protections.
- Know Your Client
- The obligation to collect and verify a client's identity, investment objectives, risk tolerance, financial circumstances, and authority to trade before recommending or executing transactions.
- Beneficial Ownership
- The identification of individuals who ultimately own or control an account or entity, required for corporate and trust accounts to prevent concealment and money laundering.
- UMIR
- The Universal Market Integrity Rules, which govern trading conduct on Canadian marketplaces, including manipulative practices, order marking, and best execution obligations.
- NI 31-103
- The Canadian national instrument setting registration categories, proficiency, capital, and conduct standards for dealers and advisers, including suitability and KYC obligations.
- Suitability Obligation
- The requirement to take reasonable steps to ensure a recommendation fits the client's objectives, risk tolerance, and circumstances, documented and reviewed periodically.
- T+1 Settlement
- The standard settlement cycle for Canadian equities since May 2024, requiring trade settlement one business day after the trade date.
- Short Sale Marking
- The requirement to mark sell orders as short and to satisfy locate and price restrictions under UMIR before executing a short sale.
- Alternative Trading System
- A marketplace that matches orders outside a recognized exchange, subject to regulatory oversight and best execution considerations when routing client orders.
- Accrued Interest
- Interest accumulated from the last coupon date to settlement date; clean price plus accrued interest equals the dirty or invoice price paid by the buyer.
- Modified Duration
- A measure of a bond's price sensitivity to yield changes, approximating the percentage price change for a one percent change in yield.
- Credit Spread
- The difference between a corporate bond's yield and the yield on a comparable government benchmark, reflecting credit risk and market conditions.
- Treasury Bill
- A short-term government security sold at a discount and maturing at par, typically with maturities of one year or less.
- Repurchase Agreement
- A collateralized short-term loan where one party sells securities and agrees to repurchase them at a specified price and date, effectively a secured borrowing.
- Bankers' Acceptance
- A short-term draft guaranteed by a bank, traded at a discount, and used as a funding tool by Canadian issuers.
- Forward Contract
- A customized bilateral agreement to buy or sell an asset at a future date and price, carrying counterparty credit risk and no exchange clearing.
- Interest Rate Swap
- A derivative exchanging fixed and floating interest payments on a notional amount, used to manage interest rate exposure.
- Option Premium
- The price paid by an option buyer to the seller for the right, but not the obligation, to buy or sell the underlying at the strike price.
- ISDA Master Agreement
- A standardized contract governing derivatives transactions between counterparties, including netting, collateral, and default provisions.
- Spot FX Settlement
- The standard settlement of a foreign exchange spot transaction, typically two business days after the trade date under market conventions.
- CLS Settlement
- A payment-versus-payment system that reduces principal settlement risk in foreign exchange transactions by synchronizing currency exchanges.
- Withholding Tax
- A tax deducted at source on cross-border payments such as dividends and interest, often reduced under tax treaties between jurisdictions.
- Bought Deal
- An underwriting arrangement where the underwriter commits to purchase the entire issue before marketing, bearing the risk of resale.
- Greenshoe Option
- An over-allotment option allowing underwriters to purchase additional shares from the issuer to stabilize the aftermarket following an offering.
- Lock-Up Agreement
- A contractual restriction preventing insiders from selling shares for a defined period after an IPO to support aftermarket price stability.
- Soft Dollar Arrangement
- An arrangement where client commissions pay for research or execution services, requiring disclosure and justification under conduct rules.
- Front-Running
- Trading ahead of a known client order to profit from the anticipated price impact, which is prohibited as a breach of conduct standards.
- Best Execution
- The obligation to use reasonable efforts to obtain the best available price for client orders, considering price, speed, certainty, and cost.
- Order Aggregation
- Combining multiple client orders into a single order, requiring fair and documented allocation of fills among participating accounts.
- Initial Margin
- Collateral posted at the outset of a derivatives position to cover potential future exposure, distinct from variation margin covering current exposure.
- Wrong-Way Risk
- A situation where exposure to a counterparty increases as the counterparty's credit quality deteriorates, amplifying potential losses.
- Spoofing
- Placing orders with no intent to execute, then cancelling them, to create false market depth and move prices; a prohibited manipulative practice.