Started activity.
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OVERVIEOVERVIE OVERVIE
W OF THE CANADIAN SECURITIE S INDU STRY TRY
In this, and subsequent sections, we turn our attention to the securities industry.
The Canadian securities industry is a regulated industry. Provinces have the power to create and to enforce their own laws and regulations through securities commissions (also called securities administrators in some provinces). Securities commissions delegate some of their powers to self-regulatory organizations (SROs), which establish and enforce industry regulations to protect investors and to maintain fair, equitable, and ethical practices. In that capacity, SROs are responsible for setting rules governing many aspects of investment dealers’ operations, including sales, finance, and trading.
The major participants in the industry and their relationships are illustrated in Chart 2.1. The chart highlights the workings of the industry by showing the major participants and their relationships with one another. Investors and users of capital trade financial instruments through the various financial markets (stock exchanges, money markets, etc.). Brokers and investment dealers act as intermediaries by matching investors with the users of capital and each side of a transaction will have their own broker or dealer who match the trades through the markets. Trades and other transactions are settled through organizations like CDS Clearing and Depository Services Inc. and banks. The SROs monitor the markets to ensure fairness and transparency, and they set and enforce rules that govern market activity. Organizations like the Canadian Investor Protection Fund (CIPF) provide insurance against insolvency while provincial regulators oversee the markets and the SROs. Organizations like CSI provide education for industry participants.
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Chart 2.1 securiti es i ndustr y flowchart flowchart flowchart
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okers & Investment Dealers Investors Users of Capital Clearing & Settlement Markets Self-RegulatoryOrganizationsInvestment Industry Regulatory Organization of CanadaMutual Funds Dealers AssociationBourse de MontréalThe Toronto Stock ExchangeTSX Venture ExchangeCSI Global Education Inc. (Industry Educator) Canadian Investor Protection Fund (Industry Insurance Fund) Provincial Regulator (Securities Commission) Market Flow Ancillary Services
Table 2.1 shows indicators for the securities industry for the past three years. The table shows that there were 203 firms in the securities industry that were members of the Investment Industry Regulatory Organization of Canada (IIROC). Total employment improved over the three-year period, and continues to surpass levels above those recorded in 2000, which represented a peak year in employment levels for the industry.
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2.1 SECURITIES INDUSTRY INDICATORS
Characteristic 2007 2006 2005
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umber of E mployees 42,329 41,985 39,174
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umber of Firms 203 198 201
Source: Investment Industry Association of Canada website, March 2008.
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Still, the industry is small compared to other segments of the financial services sector or even to some companies operating within competing segments. For instance, Canada’s largest bank, Royal Bank of Canada, employed over 70,000 people in 2007 and had total assets of $548 billion. The entire Canadian securities
