CTP(CD) Canadian Exam flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Lynx

Canada's real-time gross settlement system operated by Payments Canada for large-value and time-critical payments; it settles each payment individually and irrevocably, replacing the LVTS in 2021.

ACSS

The Automated Clearing and Settlement System processes retail batch payment items such as cheques and pre-authorized debits on a deferred net settlement basis under Payments Canada rules.

Bank of Canada corridor

The operating band for the overnight rate, bounded below by the deposit rate on settlement balances and above by the bank rate charged on overnight loans.

CDIC coverage limit

Eligible deposits are insured up to CAD 100,000 per depositor per insured category per member institution, so separate categories can each receive the limit.

CET1 ratio

Common Equity Tier 1 capital divided by risk-weighted assets; it is the highest-quality capital measure under Basel III as implemented by OSFI in Canada.

CPA Standard 005

The Payments Canada standard that defines the structure of payment items, including routing transit numbers, institution codes, and account number formats.

ISO 20022

A global messaging standard using a structured data model; it supports richer remittance data and is replacing legacy SWIFT MT formats through the MT-to-MX migration.

UETR

The Unique End-to-End Transaction Reference added by SWIFT gpi, enabling end-to-end tracking of a cross-border payment and transparency on fees and timing.

Nostro account

An account a bank holds in a foreign currency at another bank; the mirror account held by the foreign bank for the domestic bank is a vostro account.

Bid-offer spread

The difference between the price at which a dealer buys a currency (bid) and sells it (offer); it compensates the dealer for risk and service.

Charge code SHA

In a cross-border payment, a charge code where the sender pays its own bank's fees and the beneficiary pays correspondent and receiving bank fees.

Documentary letter of credit

A trade finance instrument in which the issuing bank commits to pay the beneficiary against compliant documents, shifting payment risk from buyer to bank.

Cross-rate calculation

A rate between two currencies derived from their USD quotes; multiply or divide depending on whether USD is the base or quote in each leg.

Value at Risk

The maximum loss expected over a horizon at a given confidence level; under a normal approximation, VaR = value × z-score × volatility × square root of horizon.

Expected shortfall

The average loss conditional on losses exceeding VaR; unlike VaR it is sub-additive and therefore a coherent risk measure.

Modified duration

A measure of a bond's price sensitivity to yield; percentage price change approximates negative modified duration times the change in yield, with convexity as a second-order correction.

Repricing gap

Rate-sensitive assets minus rate-sensitive liabilities over a defined bucket; a positive gap benefits from rising interest rates.

Liquidity Coverage Ratio

High-quality liquid assets divided by net cash outflows over a 30-day stress period; the minimum requirement is 100 percent under Basel III.

Expected loss formula

Probability of default multiplied by loss given default multiplied by exposure at default; unexpected loss beyond this is covered by economic capital.

Current exposure

For counterparty credit risk, the greater of the mark-to-market value and zero; potential future exposure adds an add-on for future market moves.

Cash conversion cycle

Days inventory outstanding plus days sales outstanding minus days payables outstanding; a shorter cycle frees working capital for other uses.

Notional pooling

A cash management structure that offsets positive and negative balances across accounts to compute interest without physically transferring funds between them.

Zero-balance account

A physical pooling structure where balances are swept automatically to a header account, leaving a zero end-of-day balance in the sub-account.

WACC formula

Weighted average cost of capital equals equity weight times cost of equity plus debt weight times cost of debt times one minus the tax rate.

Money market hedge

A hedge that borrows in one currency and invests in the other to replicate the outcome of a forward contract, locking in a future exchange rate.

Bankers' acceptance

A short-term money market instrument in Canada drawn on and guaranteed by a bank; BA rates serve as a benchmark for corporate short-term funding.

Float components

Mail float, processing float, and availability float; collection float increases funds in transit while disbursement float delays the outflow.

Treasury management system

Software supporting cash positioning, bank account management, payments, reconciliation, debt and investment tracking, and reporting for a corporate treasury function.

Straight-through processing rate

Payments processed without manual intervention divided by total payments; a key operational efficiency metric for treasury payment operations.

SWIFT SCORE

A shared connectivity infrastructure offered by SWIFT that lets institutions connect through a shared secure network rather than a dedicated closed user group.

Recovery time objective

The acceptable duration of downtime before a treasury system must be restored after failure; the recovery point objective defines acceptable data loss.

Segregation of duties

A control requiring payment initiation, approval, and release to be assigned to different users, enforced through role-based access in treasury systems.