© 帮写paper CSI Global Education Inc. (2008)
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Chapter 2
The Canadian Securities
Industry
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2
The Canadian Securities
Industry
Chapter outline
O
verview of the Canadian Securities Industry
T
he Role of Financial Intermediaries
• Types of Firms
• Organization Within Firms
• How Securities Firms Are Financed
• Dealer, Principal and Agency Functions
• The Clearing System
• Business Development Bank of Canada
• Trends in the Securities Industry
Banks as Financial Intermediaries
• Schedule I Chartered Banks
• Schedule II and Schedule III Banks
• Trends in the Role of Banks
T
rust Companies, Credit Unions and Life Insurance Companies
• Trust and Loan Companies
• Credit Unions and Caisses Populaires
• Insurance Companies
• Trends in Insurance
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I
nvestment Funds, Savings Banks, Pension Plans, Sales Finance and Consumer Loan Companies
• Investment Funds
• Savings Banks
• Pension Plans
• Sales Finance and Consumer Loan Companies
Summary
L
earning Ob jectives
By the end of this chapter, you should be able to:
Summarize the state of the Canadian securities industry today.1.
Distinguish among the three categories of securities firms,explain how they are organized,and compare and 2. contrast dealer,principal and agency transactions.
Describe the roles of the chartered banks in the capital market.3.
Describe the roles of trust companies,credit unions and insurance companies in thecapital market.4.
Describe the roles of investment,savings,loan companies and pension plans in the capital market.5.
participants in the securities industry
What do the following individuals have in common? A couple needs to borrow money to finance the purchase of a home. An entrepreneur needs to raise funds to help with financing the development of a new product. An investor would like to set up a regular savings program to save for her children’s education. The common strand is that all of these individuals require some form of intermediary to help meet their goals.
Simply described, savers (lenders) give funds to a financial intermediary (such as a bank) that intern gives those funds to spenders (borrowers) in the form of loans or mortgages, among other products. Alternatively, the intermediary can play a direct role in bringing a new issue of securities to financial markets.
More specifically for our purposes, a typical example occurs when a company needs money to operate or expand its business. One way to generate the necessary capital is by issuing securities, such as stocks and bonds. A financial intermediary, or investment dealer, can help the company issue the securities and sell them to investors. By buying the securities, the investors temporarily transfer their money to the company and, in return, receive securities representing claims on the company’s real assets.
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If the firm does well, it earns a profit. Its securities may rise in value, yielding a profit for the investor when the security is sold in the marketplace. But investors are not the only ones to profit. Part of the money earned by the company may be reinvested in the firm, spurring further economic development.
In the previous chapter, we learned about the various financial markets and instruments that have evolved to meet the expanding needs of financial consumers. The focus here is the role played by the financial intermediaries, the last piece of the capital transfer puzzle. Their role is important because they have established efficient and reliable methods of channelling funds between lenders and borrowers.
key Terms
Agent Primary distribution
Canadian Depository for Securities (CDS) Principal
Closed-end funds Segregated funds
Demutualization Self-Regulatory Organizations (SROs)
Market-out clause Underwriting
Open-end fund
In the on-line Learning Guide for this module, complete the Getting
