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Table Of Contents

Coverage of Material
Know Your Client and Suitability
Fiduciary Duty
I. Registrant Code of Ethics
II. Registrant Standards of Conduct
Standard A – Duty of Care
Standard B – Trustworthiness, Honesty and Fairness
Standard C – Professionalism
Standard D – Conduct in Accordance with Securities Acts
Standard E – Confidentiality
III. Summary
I. General Principles of Securities Regulation
Investigation and Prosecution
II. Key Players Involved in Securities Regulation
The Federal Government
Integrated Market Enforcement Teams (IMETs)
The Provinces
III. Self-Regulatory Organizations (SROs)
The Canadian SROs
The Investment Dealers Association (IDA)
The Exchanges (Marketplaces)
Market Regulation Services Inc. (RS)
The Mutual Fund Dealers Association (MFDA)
IV. Jurisdiction of the Provinces and SROs
VI. Investor Protection Funds
Canadian Investor Protection Fund (CIPF)
Introducing/Carrying Broker Arrangements
III. Exemptions from Registration
Banks and Other Financial Institutions
IV. Registration of an Individual as a Registered Representative
Investment Advisor (IA)
Investment Representative (IR)
Mutual Fund Sales Representative (MFSR)
Restrictions on Unregistered Staff
Dual Licensing for Securities and Life Insurance
National Registration System (NRS)
The National Registration Database (NRD)
Procedures for Individual Registration
Single and Multi-Jurisdiction Submission Types
Renewal of Registration
Notice of Changes
Termination of Registration
Registration After an Absence
Filing Requirements for Proficiency Exemption
Jurisdictional Registration Considerations
Dealing with Clients in Other Canadian Jurisdictions
Dealing with U.S. Residents
Special States
Client Identification Requirements
The New Account Application Form
Client Information
Account Opening Red Flags
Account Information
Registrant Information
Regulatory Section
Banking Information
General Documents
Trading Authorization Documents
Other Documents
Recommendation and Comments
Separate NAAFs and Supporting Documents
Electronic Signatures
II. Client Records
New Account Application Form
Portfolio Record
Security Cross-Reference
Removal of Records
Consolidation of Back Office Activities
Records of Orders
I. Review of Basic Principles
Know Your Client
II. Rules of Conduct
Sales Practices Prohibited by the Securities Acts
Calling at or Telephoning Residences
Sale of Unqualified Securities
Illegal Representations to Effect a Trade
Improper Sales Practices
Manipulative Trading Practices as Defined by SRO Rules
Discretionary Trading
Priority of Client Orders
III. Principal vs Agency Transactions
Principal Transactions
Client Priority Rule
Off-Floor Rule
Agency Transactions
IV. Concerns about Client Trading
Deliveries and Payments
V. Account Activity and Money Laundering Red Flags
VI. Dealing with Confidential Information
Obligation to Maintain Confidentiality
Illegal Insider Trading and Tipping
Who are Insiders?
What is Inside Information?
Prohibition of Insider Trading and Tipping
Insider Reporting Requirements
The System for Electronic Disclosure by Insiders (SEDI)
VII. Commissions and Other Compensation
Gifts to Clients
Mutual Fund Incentives
National Instrument 81-105
Non-monetary Benefits
Soft Dollar Arrangements
Rebate of Commissions
VIII. Personal Financial Dealings
Carrying Accounts at Other Firms
XI. Summary
How Securities are Traded
Trading Units
Minimum Quotation Spreads
I. Placing an Order
II. Types of Orders
Orders Categorized by Duration
Orders Categorized by Price
Orders Categorized by Special Instructions
Other Types of Orders
III. Settlement of Trades
The Clearing System
Advantage with Securities Sold
Accrued Interest to Seller
Trading Ex-Dividends and Ex-Rights
Cash Trades
Rights on Stock
Transfer of Securities
Simple Transfer
Transfer Involving Legal Documentation
Changes in Benenficial and Economic Ownership
Failure to Deliver Listed Securities
IV. Errors
I. Accounting for Client Transactions
II. Cash Accounts
Purchases of Securities
Sale of Securities
Special Cash Accounts
Detailed Rules for Cash Accounts
Dealing with Overdue Cash Accounts
Detailed Rules for DAP/COD Accounts
Overdue DAP/COD Accounts
Exceptions to the Cash Account Rule
III. Margin Accounts
Margin Agreements
Long Margin Accounts
An Introduction to Margin Rates
Securities Eligible for Reduced Margin
Operating a Long Margin Account
Loan Value
Margin Position
Equity Position
Long Margin Account Case Study
More About Margin Rates
Margining Long Positions in Unlisted Equities
Sample Margin Account
Short Margin
Credit Balances
Margin Required
Special Margin Situations
Convertible Bonds/Debentures
Hedge Positions
Unlisted Securities Sold Short
IV. Free Credit Balances
I. General Regulations and Guidelines for Sales Literature
II. Mutual Fund Sales Communications
General Requirements
Use of Performance Data
Standard Performance Data
Other Required Disclosure – Mutual Funds
III. Electronic Communications
Issuer Disclosure and Delivery
Company Websites
Internet Trading and Advising
IV. General Disclosure Requirements
Disclosure When Acting as Principal
Disclosure When Selling Securities Short
Disclosure of Conflicts of Interest
Disclosure Relating to Products
Leverage Disclosure
V. Communicating Trading Information to Customers
Confirmation of Trades
Account Statements
Margin Accounts
Other Information for Clients
Safekeeping, Segregation and Street Name
Portfolio Reporting
VI. Handling Client Complaints
Disputes with Clients
OSC Tipping Program
The Arbitration Process
Client Communication
VII. Summary
I. Bringing Securities to the Market
Securities Distributions
When a Prospectus is Required
New Issues
Sale from a Control Position
Preliminary or Red Herring Prospectus
Permitted Activities During the Waiting Period
Final Prospectus
Details of the Offering
Information on the Business and Affairs of the Issuer
Factors Affecting an Investment Decision
Financial Information
Representations, Declarations and Certificates
Exempt Issues
Purchasers’ Statutory Rights
Right of Withdrawal
Right of Rescission
Right of Action for Damages
Restrictions on Trading
Hot Issues
Conflict of Interest Rules
II. Maintaining Publicly Trading Status
Financial Disclosure
Press Releases and Material Change Filings
Proxies and Proxy Solicitation
Mandatory Proxy Solicitation
Shareholder Communication Procedures
Voting by Dealers
I. Formal Takeover Bids
What Is a Formal Takeover Bid?
Early Warning Rules
Takeover Bid Rules
Takeover Bid Circular
Directors’ Circular
Withdrawal Rights
Fairness Rules
Other Acquirers
II. Insider Bids
III. Statutory Rights of Shareholders
Defenses to Unfriendly Takeover Bids
IV. Exempted Takeover Bids
Stock Exchange Takeover Bids
Normal Course Issuer Bid
Allotment Procedure and Competing Bids
V. Issuer Bids
VI. Exchange Issuer Bids
Case Studies
Case #1 - Gemini Mutual Funds
Case #2 - Luke Picard
Case #3 - The Cheng Accounts
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Conduct and Practices Handbook_MAR06

Conduct and Practices Handbook_MAR06

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Published by staceydicks

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Published by: staceydicks on Nov 22, 2010
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