account statement
A record of transactions in an account at a financial institution or investment firm, usually provided each month.
accredited investor
A government, financial institution, large company, or individual with a required level of income or assets, permitted to invest in certain types of securities sold without a prospectus.
advisers
Advisers specialize in giving advice to clients about investing in securities, but they do not buy or sell securities for their clients. Advisers are registered with securities regulators to give investment advice.
affinity fraud
A type of scam that usually occurs in a group setting (ethnic groups, clubs, associations, religious groups, etc.). Scammers will gain trust by joining groups that they can share common interests; it is often easier to trust someone who is like you or has similar interests to you. Once trust is gained, it is easier to execute a scam.
Alberta Investment Management Corporation (AIMCo)
AIMCo is an Alberta government agency that is responsible for the investments of 27 pension, endowment and government funds in the province.
Alberta Securities Commission (ASC)
The regulatory agency responsible for administering the province's securities laws.
annuities
Essentially contracts that are usually sold by life insurance companies, typically guaranteeing an income either to the purchaser (the “annuitant”) or their beneficiary (in the event the annuitant predeceases the beneficiary). With annuities, there are different types of income streams such as a lump sum payment or a stream of payments. Refer to the Department of Finance Canada for more information.
ask price
The lowest price a seller is willing to accept for a security.
asset
Something that has a financial value and that could be converted into cash now or in the future.
asset mix
The allocation of assets within a fund or your portfolio that is invested in the major asset classes: cash and equivalents, fixed income, equity, alternative assets.
asset-backed commercial paper
Short-term debt typically issued by banks and financial institutions. This is a kind of commercial paper that is backed by pool of assets, such as credit card receivables, car loans, or mortgages.
back end load
A sales charge or commission investors pay when an investment is sold.
balance sheet or statement of financial position
A financial statement that shows a company's financial condition at a specific point in time. It summarizes a company's assets, liabilities, and shareholders' equity.
balanced portfolio
An investment portfolio that holds an appropriate mix of different types of investments, such as bonds and shares.
benchmark
A market or sector index against which you can measure the performance of an investment (such as a mutual fund).
Better Business Bureau (BBB)
An organization dedicated to fostering fair and honest relationships between businesses and consumers, instilling consumer confidence and contributing to an ethical business environment. Visit the BBB website.
bid price
The highest price a buyer is willing to pay for a security.
bond
An investment in which a government or company promises to repay money borrowed from investors at a specified time and to pay interest at a specified rate.
budget
An estimate of the income and expenses of a person, a family or an organization, over a certain period of time.
call option
A type of option that gives the holder the right to buy an asset at a specified price within a specified time.
callable
A term that applies to bonds and preferred shares where the company may require you to sell back the bonds or shares by a certain date for a specified price. Also known as redeemable.
Canada Deposit Insurance Corporation (CDIC)
A federal government organization that provides insurance to protect money deposited in Canadian banks and certain other financial institutions.
Canadian Investment Regulatory Organization (CIRO)
CIRO is the self-regulatory organization that consolidated the functions of the former Investment Industry Regulatory Organization of Canada (IIROC) and Mutual Funds Dealers Association of Canada (MFDA) at the beginning of 2023. CIRO regulates mutual fund dealers, investment dealers, and acts as the regulation services provider for marketplaces that have retained it as such, including monitoring trading on those marketplaces for compliance with CIRO rules and securities legislation.
Canada Pension Plan (CPP)
A Canadian government system in which you pay a percentage of your earnings to a fund that provides income when you retire.
Canada Revenue Agency (CRA)
The federal government agency that collects taxes and administers Canada's tax laws.
Canada Savings Bond (CSB)
A bond issued by the Government of Canada that can be cashed at most Canadian financial institutions.
Canadian Investor Protection Fund (CIPF)
In the unlikely event that the CIRO member you are dealing with becomes insolvent, CIPF will ensure the securities, cash and other property that are held in your account are returned to you in accordance with their coverage policy. CIPF combines the former Canadian Investor Protection Fund and the MFDA Investor Protection Corporation into a new entity that is independent of CIRO.
Canadian Securities Administrators (CSA)
The 10 provinces and three territories in Canada are
responsible for securities regulations. Securities
regulators from each province and territory have
teamed up to form the CSA. The CSA is primarily
responsible for developing a harmonized approach to
securities regulation across the country.
capital gain
The increase in an investment's value. It is the difference between the amount you initially paid for an investment and the amount you sold it for.
cash account
A trading account where you pay cash for all transactions.
cash equivalent
An investment that can be quickly converted to cash with little risk, such as a treasury bill.
cease trade order (CTO)
An order issued by a provincial or territorial securities commission (or similar regulatory body) against a company for failing to meet disclosure requirements, such as filing a quarterly or annual financial statement, or as a result of an enforcement action that involves an investigation of wrongdoing.
certificate of deposit (CD)
A debt instrument that pays a fixed rate of interest at a certain point in time. Funds must be kept on deposit for a fixed period of time.
Chief Compliance Officer (CCO)
The chief compliance officer (CCO) of a company is the officer primarily responsible for overseeing and managing regulatory compliance issues within an organization.
clearing house
An organization that settles trades and regulates the delivery of securities transactions.
closed end investment fund
A fund that issues a finite number of units or shares, which may trade on a stock exchange.
CSE
Canadian Securities Exchange, a stock exchange for trading the equity securities of emerging companies. Formerly known as CNSX, CNQ, Canadian Trading and Quotation System Inc.
commercial paper
A form of loan you make to a corporation. You buy the investment at a discount and you get the full value back on the maturity date. The time period is less than one year.
commission
A fee you pay to a broker or agent for the service of arranging the purchase or sale ofa security or real estate investment. Commissions vary between brokers.
commodity
A basic good that is used in commerce that is interchangeable with another similar product. Commodity prices are subject to supply and demand. Examples include grain and oil.
commodity pool
A fund that invests in derivatives or commodities that conventional mutual funds are not permitted to invest in.
common share
A share in the ownership of a company, giving the holder a vote in the election of directors and some other major corporate decisions (see equities, shares, stocks).
compound interest
Interest that's paid on the original amount deposited, and also on any interest that's been earned in previous periods (e.g.: in year 1, the bank pays you $5 interest on your $100 deposit; in year 2, it pays you interest on $105).
contingency fund
A fund that exists to provide certain protections if a salesperson or mutual fund distributor becomes insolvent either because of business failure or fraud that leads to insolvency. An example includes CIRO's Canadian Investor Protection Fund (CIPF).
continuous disclosure
The legally required public disclosure by issuers of their financial statements and new releases.
counterparty
A party to a contract, generally the entity or person(s) with whom you negotiate an agreement (the other party to a transaction).
coupon
The interest rate stated on a bond, note, or other fixed income security when it is first sold.
credit union
A financial institution that owned by its depositors and borrowers.
crowdfunding
Crowdfunding refers to raising money online, typically through a website or social media. There are different types of crowdfunding, such as raising money by donation, pre-selling of products or by the sale of securities. Crowdfunding by the sale of
securities such as shares or loans must comply with securities laws. The businesses raising money will typically be subject to the prospectus requirement, but often rely on prospectus exemptions such as the accredited investor, offering memorandum or start up
exemptions. The crowdfunding portal/website that facilitates the securities crowdfunding offering is typically required to be registered as a dealer.
crypto assets
Crypto assets, commonly referred to as cryptocurrencies, coins or tokens, are digitally represented assets that typically rely on blockchain or distributed ledger technology and cryptography.
Crypto assets may act as a method of payment, a store of value (like money), perform a function or represent an interest in an asset or enterprise. Some crypto assets are securities or derivatives and the trading of them would be subject to securities laws.
crypto asset trading platform (CTP)
Crypto asset trading platforms facilitate the buying, selling or transferring of crypto assets. They may be subject to securities and/or derivatives regulations depending on how they operate and the crypto assets
that are available to be traded on the platform.
cryptocurrency
Crypto assets, commonly referred to as cryptocurrencies, coins or tokens, are digitally represented assets that typically rely on blockchain or distributed ledger technology and cryptography. Crypto assets may act as a method of payment, a
store of value (like money), perform a function or represent an interest in an asset or enterprise. Some crypto assets are securities or derivatives and the trading of them would be subject to securities laws.
CSA Financial Innovation Hub (FinHub)
The FinHub is an initiative intended to support innovation in the Canadian capital markets that presents benefits for investors. Through the FinHub, the CSA takes a proactive approach to considering new technologies and innovative business models, including assessing the scope and nature of regulatory implications and evaluating what may be required to modernize the securities regulatory framework for such innovations.
day trading
The purchase and subsequent sale of a security in the same day. Day traders attempt to make profits by leveraging substantial amounts of capital to benefit from small price movements in highly liquid securities. They often count upon momentum as they enter into trades that can last anywhere from a few seconds to a few minutes. Day trading can be extremely risky and is definitely not for everyone.
dealers
People who are registered to buy or sell securities on behalf of clients and give advice to clients about the purchase or sale of securities. Some dealers are registered with a self-regulatory organization such as the Canadian Investment Regulatory Organization (CIRO).
deepfake
Deepfakes are AI-generated or manipulated videos, audio or images, and have been used to manipulate information resulting in misleading content.
debenture
Similar to a bond; a loan for a specific term where repayment is secured by the general credit of the borrower.
debt
An amount borrowed from lenders. The borrower pays interest for the use of the money and is obliged to repay by a specific date. Examples include bonds, commercial paper, and debentures.
deferred sales charge (DSC)
A sales charge or commission you pay when an investment is sold.
defined benefit pension plan
A pension plan that defines a benefit for an employee upon that employee's retirement. The amount of the benefit depends on factors such as years of contribution to the plan or years of employment. A specific income is guaranteed and known for retirement with no risk but it is set based on earnings and years worked, with no other way to increase it.
defined contribution pension plan
A pension plan with an individual account for each participant with benefits based on the amount contributed to the account, plus or minus income, gains, expenses and losses allocated to the account. This plan often includes the ability for you to control the amount of contributions going in to your plan and even what your plan invests in. The retirement income is totally dependent on income generated on the investments in the plan and the amount contributed to the plan.
deposit insurance
An insurance plan designed to protect the money you deposit if a bank, credit union or trust company fails (see CDIC).
derivative
A financial product (an option, swap, futures contract, forward contract or other financial or commodity contract or instrument) whose market price, value, delivery obligations, payment obligations or settlement obligations are derived from, referenced to or based on an underlying interest, including a price, rate, index, value, variable, event, probability or thing.
disciplinary action
Action taken by a securities regulator to discipline an individual, company or registrant. This can include a fine or a ban from the securities market.
disciplined list (DL)
The Disciplined List is the CSA’s national internet search engine that allows the public to research if a person or company has been disciplined by a Canadian securities regulator or CIRO.
discount brokerage firm
Brokerage firms that charge a lower fee to buy and sell securities, compared to a full-service broker, but provide no investment advice.
discretionary trade
When you give someone else (usually your portfolio manager) the authority to make investment decisions and to trade securities for you without checking with you on each trade.
diversification
A way to reduce portfolio risk and volatility by investing in various types of investments. It is unlikely the value of these securities will move up or down at the same time.
dividend
A portion of a company's profits paid to shareholders.
dividend reinvestment plan (DRIP)
If a company has a DRIP, then dividends may be used to purchase additional shares. Not all DRIPs are identical, but any company that has a DRIP will be able to provide the specifics of their DRIP.
dividend yield
A financial ratio that shows how much a company pays out in dividends relative to the current share price.
dollar cost averaging
A timing strategy that requires investing money at regular intervals regardless of market conditions. Designed to reduce price volatility.
earning per share (EPS)
The portion of a company's profits divided by the number of shares outstanding.
egX Canada Inc.
egX Canada Inc., a subsidiary of Global Financial Group Inc. (GFG), is a fully regulated exchange developed for the listing and trading of real estate securities and related financial products.
environmental, social and governance (ESG)
The acronym ESG stands for environmental, social and governance, which comprises a set of practices and metrics that evaluates a company’s performance beyond financial results.
equities
Shares in a company.
escrow
Securities deposited with a neutral third party and held in trust that are delivered when certain conditions are fulfilled.
exchange traded fund (ETF)
A fund that holds the same mix of investments as a stock or bond market index and trades on a stock exchange.
exempt market
A market where issuers sell their securities under various exemptions from the prospectus requirement to investors that meet specific criteria in National Instrument 45-106 Prospectus Exemptions.
exemption
The Securities Act and Rules provide a number of exemptions from securities law requirements. The criteria for exemptions from the prospectus requirement are contained in National Instrument 45-106 Prospectus and Registration Exemptions and from the registration requirement are contained in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.
expected return
The overall profit you expect to receive from an investment in the future which may be very different from the actual returns that you eventually receive.
face value
The value printed on the face of currency or other financial instruments, like bonds or debentures. The amount that a lender will receive when a bond or debenture is repaid, exclusive of interest.
financial adviser
A person who offers advice about buying or selling investments.
financial institution
A bank, trust company, credit union or other institution that offers financial services such as savings and chequing accounts, loans and credit cards.
financial plan
A written plan that helps you identify your goals and figure out how to manage your money to achieve them.
financial planners
People who determine how individuals can meet their goals through proper management of their financial resources. They offer financial services such as budgeting, cash and debt management, retirement and tax planning. Except in Québec, financial planners are not subject to provincial registration or regulation. Financial planners cannot trade securities or recommend investments to their clients unless they are registered with the provincial securities regulator in their province. Some financial planners are registered to trade in mutual funds and segregated funds (an insurance product), allowing them to trade and advise clients on mutual funds or insurance products only.
financial statements
A formal record of a company’s financial activities for a period of time, usually including a statement of financial position or balance sheet, statement of comprehensive income or income statement, cash flows or a cash flow statement, and notes.
Financial Industry Regulatory Authority (FINRA)
The Financial Industry Regulatory Authority is the largest independent regulator for all US securities firms.
Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
FINTRAC is Canada’s financial intelligence unit. Its mandate is to facilitate the detection, prevention and deterrence of money laundering and the financing of terrorist activities, while ensuring the protection of
personal information under its control.
fixed income investments
Investments that give you fixed interest or dividend income such as government and corporate bonds, debentures and preferred shares.
flow-through partnership
Provides tax-assisted investment in a portfolio of flow-through shares of resource companies (generally oil and gas or mineral exploration) with earnings and capital appreciation for the benefit of the limited partnership.
flow-through share
A special type of common share issued by oil and gas or mineral exploration companies that allows certain tax deductions.
foreign exchange(Forex)
Investing in different currencies to make money on the changes in exchange rates. Also known as FX trading.
forward
A contract where the seller agrees to deliver to the buyer an agreed amount of an asset at a specified price on a specified future date. Forwards are traded in the over-the-counter market.
front-end load
A sales charge or commission investors pay when an investment is initially purchased.
future
A derivative product whereby the seller agrees to deliver to the buyer an agreed amount of an asset at a specified price on a future date. Futures are traded on an exchange.
guaranteed investment certificate (GIC)
An investment in which you deposit money with a financial institution for a fixed period of time and receive a specified rate of interest.
Generally Accepted Accounting Principles (GAAP)
Generally accepted accounting principles are a common set of accounting principles, standards and procedures that issuers must follow when they compile their financial statements. GAAP is
a combination of authoritative standards (set by policy boards) and the commonly accepted ways of recording and reporting accounting information.
Global Financial Innovation Network (GFIN)
The GFIN is an international network of financial regulators and related organizations committed to supporting financial innovation in the best interests of consumers. It seeks to provide a more efficient
way for innovative firms to interact with regulators, helping them navigate between countries as they look to scale new ideas. This includes the ability to apply to join a pilot for firms wishing to test
innovative products, services or business models across more than one jurisdiction.
greenwashing
Greenwashing is the process of making potentially misleading, unsubstantiated or otherwise incomplete claims about business operations or the sustainability of a product or service being offered, conveying a false impression.
Heads of Agencies (HoA)
The HoA includes the chairs of the four largest provincial securities regulators in Canada (Alberta, British Columbia, Ontario and Quebec), the Governor of the Bank of Canada, the Superintendent of
Financial Institutions and senior government officials from the federal Department of Finance. The HoA serves as a forum for regulators to share information on emerging regulatory issues, financial system
trends and broad market developments that cut across areas of shared responsibility.
hedge
An investment made to reduce the risk of adverse price movements of another asset.
hedge fund
An investment pool that uses advanced investment strategies that are not generally permitted for traditional mutual funds. Examples include various types of derivatives.
hedging
A strategy sometimes used to offset a perceived investment risk. For example, an investor might “short” a stock when he or she believes the price of the stock will decline. By selling a stock short the investor is banking that the price will fall so he or she borrows shares, sells them short, and if the price does fall he or she buys them back at a cheaper price, returns them to their owner and the difference is that investor’s profit.
high yield investment program (HYIP)
An investment that promises high rates of return but is a scam. It is a type of Ponzi scheme where returns are paid with money invested by new investors.
income statement or statement of comprehensive income
A financial statement that measures a company's financial performance by summarizing revenues and expenses for a specific period of time.
incorporated
A firm or company that has formed a legal corporation by completing the required procedures.
index
A statistical composite of securities that measures financial and economic performance. It is used as a performance benchmark.
initial public offering (IPO)
A company’s first sale of stock to the public.
insider disclosure
The legally required public disclosure by insiders of their securities holdings and transactions.
International Financial Reporting Standards (IFRS)
Global accounting standards that provide transparent and comparable information in financial statements. IFRS will apply to most Canadian publicly accountable enterprises for financial years beginning on or after January 1, 2011.
International Monetary Fund (IMF)
The IMF is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic
growth, and reduce poverty around the world. Its primary purpose is to ensure the stability of the international monetary system — the system of exchange rates and international payments that
enables countries (and their citizens) to transact with each other.
International Organization of Securities Commissions (IOSCO)
IOSCO is the international body that brings together the world’s securities regulators and is recognized as the global standard setter for the securities sector. IOSCO develops, implements and promotes
adherence to internationally recognized standards for securities regulation.
inverse ETF (leveraged ETF)
An exchange traded fund that uses derivatives to profit from a decline in the value of an underlying benchmark.
investment
A way to put your money to work in the expectation that it will provide income, increase in value or both.
investment account statement
A record of transactions and balances in an account at an investment form, usually issued monthly.
investment policy statement
Sets out your investment objectives and describes the investment strategies that the portfolio manager should utilize to reach those objectives. Specific information on issues such as asset allocation, risk tolerance, and liquidity requirements (i.e., the need to access the funds on short notice) are often included. This document can outline risk tolerance, investment objectives and so on.
investment firm
A company that buys and sells investments for its clients.
Investment Industry Regulatory Organization of Canada (IIROC)
IIROC was the national self-regulatory organization that oversaw all investment dealers and trading activity on debt and equity marketplaces in Canada. Created in 2008 through the consolidation of the Investment Dealers Association of Canada and Market Regulation Services Inc., IIROC set high quality regulatory and investment industry standards, protected investors and strengthened market integrity while maintaining efficient and competitive capital markets. Effective January 1, 2023, IIROC was amalgamated with the Mutual Fund Dealers Association of Canada (MFDA) to form CIRO.
investor
Someone who makes an investment.
issuer
A company or other entity that has issued or is proposing to issue securities.
Joint Serious Offences Team (JSOT)
JSOT is an enforcement partnership between the ASC and the RCMP. JSOT investigates and prosecutes quasi-criminal cases under the Securities Act (Alberta) and securities-related
offences under the Criminal Code. JSOT targets repeat offenders, serious frauds and breaches of ASC or Court orders or bans.
Know Your Client (KYC) rule
This requirement ensures that advisers know detailed information about their clients' risk tolerance, investment knowledge and financial position. This information is collected on forms designed to protect both clients and advisers.
labour sponsored investment fund
A fund that provides venture capital to new and small businesses and offers tax incentives to investors.
legal advice
Advice from a lawyer on your individual circumstances.
leverage
An investment technique where you use a small amount of your own money to make an investment of much larger value. It involves borrowing money and can result in magnified gains or losses.
limited partnership
An interest in a partnership consisting of a general partner who manages the partnership, and limited partners who provide the investment capital.
liquidity
Ability to sell an investment quickly and at a fair price.
management fee
A service fee you pay the manager of your investments to manage the risk inherent in your portfolio.
management expense ratio (MER)
The management expense ratio (MER) is the total of the management fee and operating expenses expressed as a percentage of the fund's value. Funds show their MER as a percentage of the fund's assets.
management's discussion and analysis (MD&A)
The section of a quarterly or annual financial report in which the issuer's management comments on its financial results.
margin account
A trading account that allows you to borrow money on securities you currently own or intend to purchase.
market maker
A company or individual who buys and sells securities to ensure market liquidity.
market price
The price that buyers and sellers agree to trade the security on the open market. The prevailing price that the security is sold.
market timing
Attempting to buy when the markets will rise, and sell, or short sell when they are going to fall.
maturity date
The date on which a bond, debenture, GIC or term deposit is due to be repaid.
mezzanine investment
Generally described as capital provided to a company in exchange for subordinated debt (e.g., debt that ranks below secured creditors with first priority) or preferred equity (e.g., preferred shares that only outrank common shares). In essence, the investor is providing capital with a higher risk of not getting paid back in exchange for a higher rate of return.
money market fund
Mutual fund that invests in short-term fixed income debt securities, including commercial paper (representing a short-term loan to a corporation) and treasury bills (T-bills), all generally referred to as money-market instruments. Money market funds are usually issued at a fixed price. The return you receive will vary depending on the investments the fund holds.
mortgage backed security
A debt security where the payments to investors are backed by a pool of mortgages, either on residential or commercial properties.
mortgage investment company (MIC)
An investment and lending company that purchases mortgages for investment purposes.
mutual fund
A pool of money that's invested for a large number of investors by a professional money manager.
mutual fund dealer
A company that buys and sells the shares or units of mutual funds for investors.
Mutual Fund Dealers Association of Canada (MFDA)
The MFDA was the national self-regulatory organization (SRO) for the distribution side of the Canadian mutual fund industry. The MFDA regulated the operations, standards of practice and business conduct of its members and their representatives. Effective January 1, 2023, the MFDA was amalgamated with the Investment Industry Regulatory Organization of Canada (IIROC) to form CIRO.
mutual fund unit
Part ownership in a mutual fund.
National Association of Securities Dealers Automated Quotations (NASDAQ)
The largest electronic screen-based equity securities market in the United States; originally founded in 1971.
National Futures Association (NFA)
The NFA is the self regulatory organization for the U.S. derivatives industry, including on-exchange traded futures, retail off-exchange foreign currency and OTC derivatives.
National Registration Database (NRD)
The CSA's national web-based system that permits dealers, advisers and investment fund managers to file registration forms electronically. Investors can check if an individual or firm is registered to sell investments.
net asset value (NAV)
The value of all the assets of a mutual fund, less the fund's liabilities.
new client account form
You are required to complete this form when you open a securities trading account. This form includes basic personal information and your investment preferences.
New Self-Regulatory Organization of Canada (New SRO)
The New SRO regulates mutual fund dealers, investment dealers, and acts as the regulation services provider for marketplaces that have retained it as such, including monitoring trading on those marketplaces for compliance with New SRO rules and securities legislation. The New SRO consolidates the functions of the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada. Effective January 1, 2023, IIROC was amalgamated with the Mutual Fund Dealers Association of Canada (MFDA) to form CIRO.
NGX
Natural Gas Exchange. Was recently granted recognition to operate as an Exchange and Clearing Agency.
Nigerian scam
Also known as “West African letter scam”. Individuals who claim to be high-ranking government officials from a developing nation send an email explaining they need help from you to remove money from an account and deposit it in a mutually accessible bank account or simply provide a bank account number. Although they promise a sum of money for doing this, the individuals drain the bank accounts and are never heard from again.
North American Securities Administrators Association (NASAA)
NASAA is a voluntary association whose membership consists of 67 state, provincial and territorial securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin
Islands, Canada and Mexico. NASAA promotes cooperation in the development and enforcement of securities laws and to assist members in investor protection.
offering document
A document that offers securities for sale, including an offering memorandum or a prospectus.
offering memorandum
A document that describes the business of an issuer prepared by the company itself. This is a legal document about the investment that must contain specific information, including a detailed explanation of the company’s business, its audited financial statements, the risks of the investment, and how the company plans to use the money it raises from investors. An offering memorandum helps potential buyers make an investment decision on exempt-market securities.
Ombudsman for Banking Services and Investments (OBSI)
An independent Canadian body that investigates complaints from individuals and small businesses about products and services provided by banks and investment and mutual fund dealers. Its objective is to provide impartial and prompt resolution of complaints. This service is free of charge; however, one must first try to resolve complaints directly with the bank or dealer before contacting OBSI.
open-end mutual fund
A type of mutual fund that does not limit the number of shares or units that can be issued by the fund.
option
The right to buy or sell an asset at a specific price for a specific period of time.
order
A decision issued by a securities regulatory authority under the securities regulation of the relevant province or territory.
Over-the-Counter (OTC)
OTC refers to the trading of commodity derivatives, contracts, or other instruments not listed on any exchange. OTC transactions can occur electronically or over the telephone. Also referred to as
Off-Exchange.
Over-the-Counter Bulletin Board (OTCBB)
A quotation service that displays quotes, last-sale prices and volume information for equity securities trading over-the-counter in the United States. It is where market makers in an issuer's shares publish the prices at which they are prepared to buy or sell those securities.
pension
A regular payment made to a retired or disabled employee, usually from a fund that the employer and employee have contributed to in prior years.
performance fee
An incentive fee paid to the manager of an investment fund that is based on the portfolio's performance.
phishing
Most “phishing” is accomplished by an email purported to be from a firm asking for the client to assist with a security issue by providing their name, account number, password and other information necessary to access the accounts. The “phishing” emails usually adopt or rely upon corporate logos and information derived from the inappropriately used firm’s website.
pink sheets
An electronic system published by Pink Sheets LLC, to display bid and ask quotation prices of securities. It is mainly used by stock brokers trading over-the-counter securities in the United States.
Ponzi/pyramids
These swindles promise high returns on group investments. Each participant is encouraged to bring in new investors. There is no actual investment; money from previous investors is used to pay new investors to make it appear as if money is being made. The only people who make money are the people who started them.
portfolio
The bundle of stocks, bonds or other investments you hold.
portfolio manager
Person who is authorized to make discretionary trades for you. Sometimes investors allow their portfolio manager to make discretionary trades on their behalf.
price-earnings (PE)ratio
The price per earnings of a stock of a company. A high P/E ratio means investors pay more for each unit of income of a company. While a financial ratio is used in the valuation of a company, it is not the only factor used to determine the value of a stock.
prime bank schemes
Scam artists will promise high returns on investments made through the world's most prestigious banks. They lead investors to believe that they can participate in a secret trading regime, typically with the world's major banks. Investors might be required to sign non-disclosure agreements that prevent them from disclosing the identity of the parties involved and the terms of the transactions.
principal
The money originally invested or lent to earn interest or other income.
private company
A private company is one that has 50 or fewer shareholders and which has not otherwise become a reporting company.
private placement
A company issues securities privately rather than offering them to the public. This does not include a formal prospectus and the shares do not trade publicly on a formal stock exchange.
proceeding
An appeal requested under the Act, an application brought before the ASC in relation to Part 5 or Part 14 of the Act, or a request by staff for an order from the ASC under Part 16 of the Act.
promissory notes
These are often sold as an insurance product and are short term loans that promise high returns for borrowing money from you - at no risk. The companies offering the 'investments' are often non-existent.
prospectus
A formal document required by law when a company wants to sell shares to the public.
prospectus exemption
In order to raise capital, the Securities Act (Alberta) requires businesses to provide potential investors with a comprehensive disclosure document called a “prospectus.” A prospectus contains information to help potential investors make informed investment decisions. In some cases, a business can comply with alternative rules known as “prospectus exemptions,” which allow them to raise capital without the cost and time associated with preparing a prospectus.
proxy
A written authorization that allows a person to act for another as agent or substitute.
pump and dump
A scheme where fraudsters heavily promote the purchase of specific company stock, which creates high demand and drives or "pumps" up the prices. The individuals behind the promotion then sell or "dump" their shares at the increased price and stop promoting the stock, which leaves other investors with stock that is worth far less than they paid for it.
put option
A type of option that gives the holder the right to sell an asset at a specified price within a specified time.
real estate investment trust (REIT)
A publicly traded trust that invests in real estate through properties or mortgages.
real return
The return from an investment adjusted for inflation. For example, if your investment earned 6% interest last year, but the cost of everything went up 4%, you are only ahead (your 'real return' is only) 2%.
recidivist
In the securities law context, recidivist means a person who breaches securities laws after having previously been found liable for securities-related misconduct in regulatory, quasi-criminal or
criminal proceedings.
registered
Advisers and investment companies licensed by a securities regulator to buy and sell investments, or provide investment advice. Also, accounts and retirement plans protected by income tax and other laws.
Registered Disability Savings Plan (RDSP)
A savings plan to help parents and others save for the long-term financial security of a person who is eligible for the disability tax credit.
Registered Education Savings Plan (RESP)
A special type of savings plan registered with the government that allows you to reduce the taxes you pay on money you save for post-secondary education expenses.
Registered Retirement Income Fund (RRIF)
A tax deferral investment available to RRSP holders who deregister their plans. The plan holder invests withdrawn RRSP funds in the RRIF and each year must withdraw and pay income tax on a set portion of the fund.
Registered Retirement Savings Plan (RRSP)
A special type of savings plan registered with the government that allows you to reduce the income tax you pay on money you save for retirement. Any income you earn in the RRSP is usually exempt from tax for the time the funds remain in the plan. During retirement, an RRSP can be another source of income for you.
registrant
A firm or individual that is registered under the Securities Act to trade or advise in securities.
regulatory sandbox
The regulatory sandbox is a committee of staff from across the CSA membership that coordinates the efforts to address applications for discretionary exemptive relief from securities laws from parties
intending to provide innovative financial products, services and applications. Through the regulatory sandbox, the CSA endeavours to support innovation while ensuring appropriate investor protection.
Applicants to the CSA regulatory sandbox have included crowdfunding portals, parties conducting initial token offerings, and crypto-asset trading platforms, among others.
return
The profit you make on an investment through interest, dividends or increased value of the investment (see expected return).
return of capital
A return from all, or a portion of, an investment, that is not considered income. It is not a gain because it is simply paying back money you originally invested.
return on capital
This is a rate of return measure. It shows how effectively a company utilizes funds invested in its operations. It is calculated by dividing after-tax operating income by the book value of capital invested in the company.
return on investment
A profitability measure. It is the gain or loss on an investment expressed as a percentage of the total amount invested.
rights
The option to buy additional securities from the company at a certain price within a certain period of time.
risk
Amount of uncertainty about the expected return from an investment, including the possibility that the investment may lose money or become worthless.
risk acknowledgement form
A risk acknowledgement form must accompany an offering memorandum and given to an investor. This form states you are aware of the risks posed by the investment and you must sign it if you decide to invest.
risk tolerance
How willing or comfortable you are to risk losing your money on an investment.
rule of 72
A way to quickly estimate how long it will take an investment to double in value.
savings
Money you have not spent.
savings account
An account with a bank, trust company or credit union that pays interest on the money you deposit and allows you to withdraw your money at any time.
scam
A fraudulent or unethical activity; a fraud or trick.
securities
Transferable certificates of ownership of investment products including bonds, notes, stocks, future contracts and options.
securities regulation
The regulation of the conduct of securities market participants including issuers that raise capital through security offerings, and their directors and officers and securities firms, their directors and officers, and their employees registered to advise and trade in securities. Securities regulation is the responsibility of the Alberta Securities Commission in Alberta.
SEDAR+ - System for Electronic Document Analysis and Retrieval
SEDAR+ is the CSA’s national electronic web-based filing system for disclosure by public companies and mutual funds.
SEDI - System for Electronic Disclosure by Insiders
SEDI is the CSA’s national electronic web-based system that facilitates the filing and public dissemination of insider reports.
segregated fund
An insurance product that combines investment products with insurance coverage.
self-regulatory organizations
Organizations like the Canadian Investment Regulatory Organization (CIRO) that ensure member firms meet standards set by provincial securities laws.
share
Stock, a certificate that represents part ownership of a company.
share dilution
Occurs when a company requiring new financing issues additional common shares for purchase, increasing the number of outstanding shares. Can also occur through "exercise of options” or conversion of other securities.
shareholder
Someone who owns shares in a company.
shareholder communication form
A form shareholders complete to indicate their instructions on the communication they wish to receive from companies on investments they own and how they wish to receive the communication.
short selling
The buying and selling of stocks with the assumption that the share price will decrease.
simple interest
Interest that is paid only on the amount of the initial deposit and not on any interest the deposit earns over time, unlike compound interest (e.g.: in year 1, the bank pays you $5 interest on your $100 deposit; in year 2, it again pays you interest only on the original $100 deposit).
spot market
A commodities or securities market where goods are traded for cash and delivered immediately.
statement of cash flows or cash flow statement
A financial statement that shows a company’s cash receipts and payments during a specified period.
stock
A share in the ownership of a company.
stock exchange
A place where shares and some other types of investments can be bought and sold.
stockholder
Someone who owns shares in a company.
stock spam
Unsolicited email that promotes a company's stock.
strip bonds
Also called zero coupon bonds. An investment firm purchases a block of high-quality bonds and “strips” or separates the individual future-dated interest coupons from the rest of the bond and then sells each part separately. The firm usually sells each coupon as well as the principal bond separately at discounts to the face value. Purchasers receive no interest payments but they provide a certain compounded rate of return when they mature.
suitability
Every registered securities advisor in Canada is required by law to recommend only investments that are appropriate for an investor’s goals and financial situation.
suitable investment
An investment that is appropriate to your risk tolerance and investment goals when considered in the context of your life circumstances and entire portfolio.
swap
A derivative product whereby two parties agree to exchange an asset, cash flow, or some other liability for another.
takeover bid
An offer that a shareholder or prospective shareholder makes to acquire at least 20% of the shares of a company.
term deposit
A type of deposit with a financial institution that is repaid to you at a specified time (for example, 90 days or one year) and at a specified interest rate.
thinly traded
A term that describes an inactive or infrequently traded security.
TMX group
A public company that operates several markets including the Toronto Stock Exchange, TSX Venture Exchange, and the Montreal Exchange.
Toronto Stock Exchange (TSX)
The TSX is Canada’s senior equities market, providing domestic and international investors with access to the Canadian marketplace. A subsidiary of TSX Group.
trade
A trade is the disposition of a security for valuable consideration. It does not include the purchase of a security or a transfer, pledge or mortgage or other encumbrance of a security for the purpose of giving collateral for debt.
trailer fees
A commission or fee paid monthly or quarterly to salespeople for advice and other services.
transfer agent
A trust company, bank, or financial institution that a company appoints to maintain records of investors and account balances and transactions.
trust company
A financial institution, similar to a bank, that can take deposits and make loans; trust companies often provide other specialized services that banks cannot, like administering estates and pension plans.
TSX Group
A public company that owns the Toronto Stock Exchange and TSX Venture Exchange.
TSX Venture Exchange (TSXV)
The TSXV is the largest Canadian junior market, providing companies in the early stages of growth the opportunity to raise capital. A subsidiary of TSX Group.
Ultimate Designated Person (UDP)
The most senior officer of an investment dealer who is responsible for promoting a culture of compliance and overseeing the effectiveness of the firm's compliance system.
venture capital funds
Investment funds that pool money from investors seeking private equity stakes in “start-ups” and small and medium-size enterprises with robust growth potential. Generally, venture capital funds are characterized as high-risk/high-reward opportunities.
venture issuer
A venture issuer means a reporting issuer that, as at the applicable time, did not have any of its securities listed or quoted on any of the Toronto Stock Exchange, Aequitas NEO Exchange Inc., a U.S.
marketplace, or a marketplace outside of Canada and the United States of America other than the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS
Markets Group plc.
warrant
The right to buy additional securities from the company at a certain price within a certain period of time. Usually included with a new issue of securities as an inducement for investors to buy the securities.
West African letter scam
An email is sent by individuals who claim to be high-ranking government officials from a developing nation. They explain that due to complications, they are unable to remove millions of dollars from an account and need help. In return, they offer a sum of money. They ask people to show good faith by depositing money in a mutually accessible bank account or to provide a bank account number, in which they will deposit the money. The individuals then drain the bank accounts and are never heard from again. A common form is the Nigerian Scam.
account statement
A record of transactions in an account at a financial institution or investment firm, usually provided each month.
accredited investor
A government, financial institution, large company, or individual with a required level of income or assets, permitted to invest in certain types of securities sold without a prospectus.
advisers
Advisers specialize in giving advice to clients about investing in securities, but they do not buy or sell securities for their clients. Advisers are registered with securities regulators to give investment advice.
affinity fraud
A type of scam that usually occurs in a group setting (ethnic groups, clubs, associations, religious groups, etc.). Scammers will gain trust by joining groups that they can share common interests; it is often easier to trust someone who is like you or has similar interests to you. Once trust is gained, it is easier to execute a scam.
Alberta Securities Commission (ASC)
The regulatory agency responsible for administering the province's securities laws.
annuities
Essentially contracts that are usually sold by life insurance companies, typically guaranteeing an income either to the purchaser (the “annuitant”) or their beneficiary (in the event the annuitant predeceases the beneficiary). With annuities, there are different types of income streams such as a lump sum payment or a stream of payments. Refer to the Department of Finance Canada for more information.
ask price
The lowest price a seller is willing to accept for a security.
asset
Something that has a financial value and that could be converted into cash now or in the future.
asset mix
The allocation of assets within a fund or your portfolio that is invested in the major asset classes: cash and equivalents, fixed income, equity, alternative assets.
asset-backed commercial paper
Short-term debt typically issued by banks and financial institutions. This is a kind of commercial paper that is backed by pool of assets, such as credit card receivables, car loans, or mortgages.
back end load
A sales charge or commission investors pay when an investment is sold.
balance sheet or statement of financial position
A financial statement that shows a company's financial condition at a specific point in time. It summarizes a company's assets, liabilities, and shareholders' equity.
balanced portfolio
An investment portfolio that holds an appropriate mix of different types of investments, such as bonds and shares.
benchmark
A market or sector index against which you can measure the performance of an investment (such as a mutual fund).
Better Business Bureau (BBB)
An organization dedicated to fostering fair and honest relationships between businesses and consumers, instilling consumer confidence and contributing to an ethical business environment. Visit the BBB website.
bid price
The highest price a buyer is willing to pay for a security.
bond
An investment in which a government or company promises to repay money borrowed from investors at a specified time and to pay interest at a specified rate.
budget
An estimate of the income and expenses of a person, a family or an organization, over a certain period of time.
call option
A type of option that gives the holder the right to buy an asset at a specified price within a specified time.
callable
A term that applies to bonds and preferred shares where the company may require you to sell back the bonds or shares by a certain date for a specified price. Also known as redeemable.
Canada Deposit Insurance Corporation (CDIC)
A federal government organization that provides insurance to protect money deposited in Canadian banks and certain other financial institutions.
Canadian Investor Protection Fund (CIPF)
In the unlikely event that the CIPF Member you are dealing with becomes insolvent, CIPF will ensure the securities, cash and other property that are held in your account are returned to you in accordance with their coverage policy.
Canada Pension Plan (CPP)
A Canadian government system in which you pay a percentage of your earnings to a fund that provides income when you retire.
Canada Revenue Agency (CRA)
The federal government agency that collects taxes and administers Canada's tax laws.
Canada Savings Bond (CSB)
A bond issued by the Government of Canada that can be cashed at most Canadian financial institutions.
capital gain
The increase in an investment's value. It is the difference between the amount you initially paid for an investment and the amount you sold it for.
cash account
A trading account where you pay cash for all transactions.
cash equivalent
An investment that can be quickly converted to cash with little risk, such as a treasury bill.
cease trade order (CTO)
An order issued by a provincial or territorial securities commission (or similar regulatory body) against a company for failing to meet disclosure requirements, such as filing a quarterly or annual financial statement, or as a result of an enforcement action that involves an investigation of wrongdoing. See Enforcement Terms.
certificate of deposit (CD)
A debt instrument that pays a fixed rate of interest at a certain point in time. Funds must be kept on deposit for a fixed period of time.
Canadian Investment Regulatory Organization (CIRO)
CIRO regulates mutual fund dealers, investment dealers, and acts as the regulation services provider for marketplaces that have retained it as such, including monitoring trading on those marketplaces for compliance with CIRO rules and securities legislation. CIRO, which had temporarily been known as the New Self-Regulatory Organization of Canada, consolidated the functions of the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada.
clearing house
An organization that settles trades and regulates the delivery of securities transactions.
closed end investment fund
A fund that issues a finite number of units or shares, which may trade on a stock exchange.
commercial paper
A form of loan you make to a corporation. You buy the investment at a discount and you get the full value back on the maturity date. The time period is less than one year.
commission
A fee you pay to a broker or agent for the service of arranging the purchase or sale ofa security or real estate investment. Commissions vary between brokers.
commodity
A basic good that is used in commerce that is interchangeable with another similar product. Commodity prices are subject to supply and demand. Examples include grain and oil.
commodity pool
A fund that invests in derivatives or commodities that conventional mutual funds are not permitted to invest in.
common share
A share in the ownership of a company, giving the holder a vote in the election of directors and some other major corporate decisions (see equities, shares, stocks).
compound interest
Interest that's paid on the original amount deposited, and also on any interest that's been earned in previous periods (e.g.: in year 1, the bank pays you $5 interest on your $100 deposit; in year 2, it pays you interest on $105).
contingency fund
A fund that exists in to provide certain protections if a salesperson or mutual fund distributor becomes insolvent either because of business failure or fraud that leads to insolvency. Examples include the IIROC's Canadian Investor Protection Fund (CIPF) and the MFDA's Investor Protection Corporation (IPC).
continuous disclosure
The legally required public disclosure by issuers of their financial statements and new releases.
counterparty
A party to a contract, generally the entity or person(s) with whom you negotiate an agreement (the other party to a transaction).
coupon
The interest rate stated on a bond, note, or other fixed income security when it is first sold.
credit union
A financial institution that owned by its depositors and borrowers.
CSA
Canadian Securities Administrators: a council of the securities regulators of Canada's 13 provinces and territories.
day trading
The purchase and subsequent sale of a security in the same day. Day traders attempt to make profits by leveraging substantial amounts of capital to benefit from small price movements in highly liquid securities. They often count upon momentum as they enter into trades that can last anywhere from a few seconds to a few minutes. Day trading can be extremely risky and is definitely not for everyone.
dealers
People who are registered to buy or sell securities on behalf of clients and give advice to clients about the purchase or sale of securities. Some dealers are registered with a self-regulatory organization like the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada.
debenture
Similar to a bond; a loan for a specific term where repayment is secured by the general credit of the borrower.
debt
An amount borrowed from lenders. The borrower pays interest for the use of the money and is obliged to repay by a specific date. Examples include bonds, commercial paper, and debentures.
deferred sales charge (DSC)
A sales charge or commission you pay when an investment is sold.
defined benefit pension plan
A pension plan that defines a benefit for an employee upon that employee's retirement. The amount of the benefit depends on factors such as years of contribution to the plan or years of employment. A specific income is guaranteed and known for retirement with no risk but it is set based on earnings and years worked, with no other way to increase it.
defined contribution pension plan
A pension plan with an individual account for each participant with benefits based on the amount contributed to the account, plus or minus income, gains, expenses and losses allocated to the account. This plan often includes the ability for you to control the amount of contributions going in to your plan and even what your plan invests in. The retirement income is totally dependent on income generated on the investments in the plan and the amount contributed to the plan.
deposit insurance
An insurance plan designed to protect the money you deposit if a bank, credit union or trust company fails (see CDIC).
derivative
A financial contract that gives you the right to buy and sell at specified prices. Examples include call and put options.
disciplinary action
Action taken by a securities regulator to discipline an individual, company or registrant. This can include a fine or a ban from the securities market.
discount brokerage firm
Brokerage firms that charge a lower fee to buy and sell securities, compared to a full-service broker, but provide no investment advice.
discretionary trade
When you give someone else (usually your portfolio manager) the authority to make investment decisions and to trade securities for you without checking with you on each trade.
diversification
A way to reduce portfolio risk and volatility by investing in various types of investments. It is unlikely the value of these securities will move up or down at the same time.
dividend
A portion of a company's profits paid to shareholders.
dividend reinvestment plan (DRIP)
If a company has a DRIP, then dividends may be used to purchase additional shares. Not all DRIPs are identical, but any company that has a DRIP will be able to provide the specifics of their DRIP.
dividend yield
A financial ratio that shows how much a company pays out in dividends relative to the current share price.
dollar cost averaging
A timing strategy that requires investing money at regular intervals regardless of market conditions. Designed to reduce price volatility.
earning per share (EPS)
The portion of a company's profits divided by the number of shares outstanding.
egX Canada Inc.
egX Canada Inc., a subsidiary of Global Financial Group Inc. (GFG), is a fully regulated exchange developed for the listing and trading of real estate securities and related financial products.
equities
Shares in a company.
escrow
Securities deposited with a neutral third party and held in trust that are delivered when certain conditions are fulfilled.
exchange traded fund (ETF)
A fund that holds the same mix of investments as a stock or bond market index and trades on a stock exchange.
exempt market
A market where private companies sell their securities under various exemptions from the prospectus requirement to investors that meet specific criteria in National Instrument 45-106 Prospectus and Registration Exemptions.
exemption
The Securities Act and Rules provide a number of exemptions from securities law requirements. The criteria for exemptions from the prospectus requirement are contained in National Instrument 45-106 Prospectus and Registration Exemptions and from the registration requirement are contained in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.
expected return
The overall profit you expect to receive from an investment in the future which may be very different from the actual returns that you eventually receive.
face value
The value printed on the face of currency or other financial instruments, like bonds or debentures. The amount that a lender will receive when a bond or debenture is repaid, exclusive of interest.
financial adviser
A person who offers advice about buying or selling investments.
financial institution
A bank, trust company, credit union or other institution that offers financial services such as savings and chequing accounts, loans and credit cards.
financial plan
A written plan that helps you identify your goals and figure out how to manage your money to achieve them.
financial planners
People who determine how individuals can meet their goals through proper management of their financial resources. They offer financial services such as budgeting, cash and debt management, retirement and tax planning. Except in Québec, financial planners are not subject to provincial registration or regulation. Financial planners cannot trade securities or recommend investments to their clients unless they are registered with the provincial securities regulator in their province. Some financial planners are registered to trade in mutual funds and segregated funds (an insurance product), allowing them to trade and advise clients on mutual funds or insurance products only.
financial statements
A formal record of a company’s financial activities for a period of time, usually including a statement of financial position or balance sheet, statement of comprehensive income or income statement, cash flows or a cash flow statement, and notes.
FINRA
The Financial Industry Regulatory Authority is the largest independent regulator for all US securities firms.
fixed income investments
Investments that give you fixed interest or dividend income such as government and corporate bonds, debentures and preferred shares.
flow-through partnership
Provides tax-assisted investment in a portfolio of flow-through shares of resource companies (generally oil and gas or mineral exploration) with earnings and capital appreciation for the benefit of the limited partnership.
flow-through share
A special type of common share issued by oil and gas or mineral exploration companies that allows certain tax deductions.
foreign exchange(Forex)
Investing in different currencies to make money on the changes in exchange rates. Also known as FX trading.
forward
A contract where the seller agrees to deliver to the buyer an agreed amount of an asset at a specified price on a specified future date. Forwards are traded in the over-the-counter market.
front-end load
A sales charge or commission investors pay when an investment is initially purchased.
future
A derivative product whereby the seller agrees to deliver to the buyer an agreed amount of an asset at a specified price on a future date. Futures are traded on an exchange.
guaranteed investment certificate (GIC)
An investment in which you deposit money with a financial institution for a fixed period of time and receive a specified rate of interest.
hedge
An investment made to reduce the risk of adverse price movements of another asset.
hedge fund
An investment pool that uses advanced investment strategies that are not generally permitted for traditional mutual funds. Examples include various types of derivatives.
hedging
A strategy sometimes used to offset a perceived investment risk. For example, an investor might “short” a stock when he or she believes the price of the stock will decline. By selling a stock short the investor is banking that the price will fall so he or she borrows shares, sells them short, and if the price does fall he or she buys them back at a cheaper price, returns them to their owner and the difference is that investor’s profit.
high yield investment program (HYIP)
An investment that promises high rates of return but is a scam. It is a type of Ponzi scheme where returns are paid with money invested by new investors.
income statement or statement of comprehensive income
A financial statement that measures a company's financial performance by summarizing revenues and expenses for a specific period of time.
incorporated
A firm or company that has formed a legal corporation by completing the required procedures.
index
A statistical composite of securities that measures financial and economic performance. It is used as a performance benchmark.
initial public offering (IPO)
A company’s first sale of stock to the public.
insider disclosure
The legally required public disclosure by insiders of their securities holdings and transactions.
international financial reporting standards (IFRS)
Global accounting standards that provide transparent and comparable information in financial statements. IFRS will apply to most Canadian publicly accountable enterprises for financial years beginning on or after January 1, 2011.
inverse ETF (leveraged ETF)
An exchange traded fund that uses derivatives to profit from a decline in the value of an underlying benchmark.
investment
A way to put your money to work in the expectation that it will provide income, increase in value or both.
investment account statement
A record of transactions and balances in an account at an investment form, usually issued monthly.
investment policy statement
Sets out your investment objectives and describes the investment strategies that the portfolio manager should utilize to reach those objectives. Specific information on issues such as asset allocation, risk tolerance, and liquidity requirements (i.e., the need to access the funds on short notice) are often included. This document can outline risk tolerance, investment objectives and so on.
investment firm
A company that buys and sells investments for its clients.
Investment Industry Regulatory Organization of Canada (IIROC)
IIROC was the national self-regulatory organization that oversaw all investment dealers and trading activity on debt and equity marketplaces in Canada. Created in 2008 through the consolidation of the Investment Dealers Association of Canada and Market Regulation Services Inc., IIROC set high quality regulatory and investment industry standards, protected investors and strengthened market integrity while maintaining efficient and competitive capital markets. Effective January 1, 2023, IIROC was amalgamated with the Mutual Fund Dealers Association of Canada (MFDA) to form CIRO.
investor
Someone who makes an investment.
issuer
A company or other entity that has issued or is proposing to issue securities.
Know Your Client (KYC) rule
This requirement ensures that advisers know detailed information about their clients' risk tolerance, investment knowledge and financial position. This information is collected on forms designed to protect both clients and advisers.
labour sponsored investment fund
A fund that provides venture capital to new and small businesses and offers tax incentives to investors.
legal advice
Advice from a lawyer on your individual circumstances.
leverage
An investment technique where you use a small amount of your own money to make an investment of much larger value. It involves borrowing money and can result in magnified gains or losses.
limited partnership
An interest in a partnership consisting of a general partner who manages the partnership, and limited partners who provide the investment capital.
liquidity
Ability to sell an investment quickly and at a fair price.
management fee
A service fee you pay the manager of your investments to manage the risk inherent in your portfolio.
management expense ratio (MER)
The management expense ratio (MER) is the total of the management fee and operating expenses expressed as a percentage of the fund's value. Funds show their MER as a percentage of the fund's assets.
management's discussion and analysis (MD&A)
The section of a quarterly or annual financial report in which the issuer's management comments on its financial results.
margin account
A trading account that allows you to borrow money on securities you currently own or intend to purchase.
market maker
A company or individual who buys and sells securities to ensure market liquidity.
market price
The price that buyers and sellers agree to trade the security on the open market. The prevailing price that the security is sold.
market timing
Attempting to buy when the markets will rise, and sell, or short sell when they are going to fall.
maturity date
The date on which a bond, debenture, GIC or term deposit is due to be repaid.
mezzanine investment
Generally described as capital provided to a company in exchange for subordinated debt (e.g., debt that ranks below secured creditors with first priority) or preferred equity (e.g., preferred shares that only outrank common shares). In essence, the investor is providing capital with a higher risk of not getting paid back in exchange for a higher rate of return.
money market fund
Mutual fund that invests in short-term fixed income debt securities, including commercial paper (representing a short-term loan to a corporation) and treasury bills (T-bills), all generally referred to as money-market instruments. Money market funds are usually issued at a fixed price. The return you receive will vary depending on the investments the fund holds.
mortgage backed security
A debt security where the payments to investors are backed by a pool of mortgages, either on residential or commercial properties.
mortgage investment company (MIC)
An investment and lending company that purchases mortgages for investment purposes.
mutual fund
A pool of money that's invested for a large number of investors by a professional money manager.
mutual fund dealer
A company that buys and sells the shares or units of mutual funds for investors.
Mutual Fund Dealers Association of Canada (MFDA)
The MFDA was the national self-regulatory organization (SRO) for the distribution side of the Canadian mutual fund industry. The MFDA regulated the operations, standards of practice and business conduct of its members and their representatives. Effective January 1, 2023, the MFDA was amalgamated with the Investment Industry Regulatory Organization of Canada (IIROC) to form CIRO.
mutual fund unit
Part ownership in a mutual fund.
National Association of Securities Dealers Automated Quotations (NASDAQ)
The largest electronic screen-based equity securities market in the United States; originally founded in 1971.
National Registration Database (NRD)
The CSA's national web-based system that permits individuals who are dealers or advisers to file registration forms electronically. Investors can check if an individual or firm is registered to sell investments.
net asset value (NAV)
The value of all the assets of a mutual fund, less the fund's liabilities.
new client account form
You are required to complete this form when you open a securities trading account. This form includes basic personal information and your investment preferences.
NGX
Natural Gas Exchange. Was recently granted recognition to operate as an Exchange and Clearing Agency.
Nigerian scam
Also known as “West African letter scam”. Individuals who claim to be high-ranking government officials from a developing nation send an email explaining they need help from you to remove money from an account and deposit it in a mutually accessible bank account or simply provide a bank account number. Although they promise a sum of money for doing this, the individuals drain the bank accounts and are never heard from again.
North American Securities Administrators Association (NASAA)
An association that consists of Canadian provincial, American state and Mexican federal securities regulators. NASAA promotes cooperation in the development and enforcement of securities laws and to assist members in investor protection.
offering document
A document that offers securities for sale, including an offering memorandum or a prospectus.
offering memorandum
A document that describes the business of an issuer prepared by the company itself. This is a legal document about the investment that must contain specific information, including a detailed explanation of the company’s business, its audited financial statements, the risks of the investment, and how the company plans to use the money it raises from investors. An offering memorandum helps potential buyers make an investment decision on exempt-market securities.
Ombudsman for Banking Services and Investments (OBSI)
An independent Canadian body that investigates complaints from individuals and small businesses about products and services provided by banks and investment and mutual fund dealers. Its objective is to provide impartial and prompt resolution of complaints. This service is free of charge; however, one must first try to resolve complaints directly with the bank or dealer before contacting OBSI.
open-end mutual fund
A type of mutual fund that does not limit the number of shares or units that can be issued by the fund.
option
The right to buy or sell an asset at a specific price for a specific period of time.
order
A decision issued by a securities regulatory authority under the securities regulation of the relevant province or territory.
Over-the-Counter Bulletin Board (OTCBB)
A quotation service that displays quotes, last-sale prices and volume information for equity securities trading over-the-counter in the United States. It is where market makers in an issuer's shares publish the prices at which they are prepared to buy or sell those securities.
pension
A regular payment made to a retired or disabled employee, usually from a fund that the employer and employee have contributed to in prior years.
performance fee
An incentive fee paid to the manager of an investment fund that is based on the portfolio's performance.
phishing
Most “phishing” is accomplished by an email purported to be from a firm asking for the client to assist with a security issue by providing their name, account number, password and other information necessary to access the accounts. The “phishing” emails usually adopt or rely upon corporate logos and information derived from the inappropriately used firm’s website.
pink sheets
An electronic system published by Pink Sheets LLC, to display bid and ask quotation prices of securities. It is mainly used by stock brokers trading over-the-counter securities in the United States.
Ponzi/pyramids
These swindles promise high returns on group investments. Each participant is encouraged to bring in new investors. There is no actual investment; money from previous investors is used to pay new investors to make it appear as if money is being made. The only people who make money are the people who started them.
portfolio
The bundle of stocks, bonds or other investments you hold.
portfolio manager
Person who is authorized to make discretionary trades for you. Sometimes investors allow their portfolio manager to make discretionary trades on their behalf.
price-earnings (PE)ratio
The price per earnings of a stock of a company. A high P/E ratio means investors pay more for each unit of income of a company. While a financial ratio is used in the valuation of a company, it is not the only factor used to determine the value of a stock.
prime bank schemes
Scam artists will promise high returns on investments made through the world's most prestigious banks. They lead investors to believe that they can participate in a secret trading regime, typically with the world's major banks. Investors might be required to sign non-disclosure agreements that prevent them from disclosing the identity of the parties involved and the terms of the transactions.
principal
The money originally invested or lent to earn interest or other income.
private company
A private company is one that has 50 or fewer shareholders and which has not otherwise become a reporting company.
private placement
A company issues securities privately rather than offering them to the public. This does not include a formal prospectus and the shares do not trade publicly on a formal stock exchange.
proceeding
An appeal requested under the Act, an application brought before the ASC in relation to Part 5 or Part 14 of the Act, or a request by staff for an order from the ASC under Part 16 of the Act.
promissory notes
These are often sold as an insurance product and are short term loans that promise high returns for borrowing money from you - at no risk. The companies offering the 'investments' are often non-existent.
prospectus
A formal document required by law when a company wants to sell shares to the public.
proxy
A written authorization that allows a person to act for another as agent or substitute.
pump and dump
A scheme where fraudsters heavily promote the purchase of specific company stock, which creates high demand and drives or "pumps" up the prices. The individuals behind the promotion then sell or "dump" their shares at the increased price and stop promoting the stock, which leaves other investors with stock that is worth far less than they paid for it.
put option
A type of option that gives the holder the right to sell an asset at a specified price within a specified time.
real estate investment trust (REIT)
A publicly traded trust that invests in real estate through properties or mortgages.
real return
The return from an investment adjusted for inflation. For example, if your investment earned 6% interest last year, but the cost of everything went up 4%, you are only ahead (your 'real return' is only) 2%.
registered
Advisers and investment companies licensed by a securities regulator to buy and sell investments, or provide investment advice. Also, accounts and retirement plans protected by income tax and other laws.
Registered Disability Savings Plan (RDSP)
A savings plan to help parents and others save for the long-term financial security of a person who is eligible for the disability tax credit.
Registered Education Savings Plan (RESP)
A special type of savings plan registered with the government that allows you to reduce the taxes you pay on money you save for post-secondary education expenses.
Registered Retirement Income Fund (RRIF)
A tax deferral investment available to RRSP holders who deregister their plans. The plan holder invests withdrawn RRSP funds in the RRIF and each year must withdraw and pay income tax on a set portion of the fund.
Registered Retirement Savings Plan (RRSP)
A special type of savings plan registered with the government that allows you to reduce the income tax you pay on money you save for retirement. Any income you earn in the RRSP is usually exempt from tax for the time the funds remain in the plan. During retirement, an RRSP can be another source of income for you.
registrant
A firm or individual that is registered under the Securities Act to trade or advise in securities.
return
The profit you make on an investment through interest, dividends or increased value of the investment (see expected return).
return of capital
A return from all, or a portion of, an investment, that is not considered income. It is not a gain because it is simply paying back money you originally invested.
return on capital
This is a rate of return measure. It shows how effectively a company utilizes funds invested in its operations. It is calculated by dividing after-tax operating income by the book value of capital invested in the company.
return on investment
A profitability measure. It is the gain or loss on an investment expressed as a percentage of the total amount invested.
rights
The option to buy additional securities from the company at a certain price within a certain period of time.
risk
Amount of uncertainty about the expected return from an investment, including the possibility that the investment may lose money or become worthless.
risk acknowledgement form
A risk acknowledgement form must accompany an offering memorandum and given to an investor. This form states you are aware of the risks posed by the investment and you must sign it if you decide to invest.
risk tolerance
How willing or comfortable you are to risk losing your money on an investment.
rule of 72
A way to quickly estimate how long it will take an investment to double in value.
savings
Money you have not spent.
savings account
An account with a bank, trust company or credit union that pays interest on the money you deposit and allows you to withdraw your money at any time.
scam
A fraudulent or unethical activity; a fraud or trick.
securities
Transferable certificates of ownership of investment products including bonds, notes, stocks, future contracts and options.
securities regulation
The regulation of the conduct of securities market participants including issuers that raise capital through security offerings, and their directors and officers and securities firms, their directors and officers, and their employees registered to advise and trade in securities. Securities regulation is the responsibility of the Alberta Securities Commission in Alberta.
SEDAR+ - System for Electronic Document Analysis and Retrieval
SEDAR+ is the CSA’s national electronic web-based filing system for disclosure by public companies and mutual funds.
SEDI - System for Electronic Disclosure by Insiders
The CSA's national web-based system that facilitates the filing and public dissemination of "insider reports".
segregated fund
An insurance product that combines investment products with insurance coverage.
share
Stock, a certificate that represents part ownership of a company.
share dilution
Occurs when a company requiring new financing issues additional common shares for purchase, increasing the number of outstanding shares. Can also occur through "exercise of options” or conversion of other securities.
shareholder
Someone who owns shares in a company.
shareholder communication form
A form shareholders complete to indicate their instructions on the communication they wish to receive from companies on investments they own and how they wish to receive the communication.
short selling
The buying and selling of stocks with the assumption that the share price will decrease.
simple interest
Interest that is paid only on the amount of the initial deposit and not on any interest the deposit earns over time, unlike compound interest (e.g.: in year 1, the bank pays you $5 interest on your $100 deposit; in year 2, it again pays you interest only on the original $100 deposit).
spot market
A commodities or securities market where goods are traded for cash and delivered immediately.
statement of cash flows or cash flow statement
A financial statement that shows a company’s cash receipts and payments during a specified period.
stock
A share in the ownership of a company.
stock exchange
A place where shares and some other types of investments can be bought and sold.
stockholder
Someone who owns shares in a company.
stock spam
Unsolicited email that promotes a company's stock.
strip bonds
Also called zero coupon bonds. An investment firm purchases a block of high-quality bonds and “strips” or separates the individual future-dated interest coupons from the rest of the bond and then sells each part separately. The firm usually sells each coupon as well as the principal bond separately at discounts to the face value. Purchasers receive no interest payments but they provide a certain compounded rate of return when they mature.
suitability
Every registered securities advisor in Canada is required by law to recommend only investments that are appropriate for an investor’s goals and financial situation.
suitable investment
An investment that is appropriate to your risk tolerance and investment goals when considered in the context of your life circumstances and entire portfolio.
swap
A derivative product whereby two parties agree to exchange an asset, cash flow, or some other liability for another.
takeover bid
An offer that a shareholder or prospective shareholder makes to acquire at least 20% of the shares of a company.
term deposit
A type of deposit with a financial institution that is repaid to you at a specified time (for example, 90 days or one year) and at a specified interest rate.
thinly traded
A term that describes an inactive or infrequently traded security.
TMX group
A public company that operates several markets including the Toronto Stock Exchange, TSX Venture Exchange, and the Montreal Exchange.
trade
A trade is the disposition of a security for valuable consideration. It does not include the purchase of a security or a transfer, pledge or mortgage or other encumbrance of a security for the purpose of giving collateral for debt.
trailer fees
A commission or fee paid monthly or quarterly to salespeople for advice and other services.
transfer agent
A trust company, bank, or financial institution that a company appoints to maintain records of investors and account balances and transactions.
trust company
A financial institution, similar to a bank, that can take deposits and make loans; trust companies often provide other specialized services that banks cannot, like administering estates and pension plans.
TSX
Toronto Stock Exchange - TSX is a subsidiary of TSX Group.
TSX Group
A public company that owns the Toronto Stock Exchange and TSX Venture Exchange.
TSX Venture Exchange
The national junior Equity exchange, a subsidiary of TSX Group.
venture capital funds
Investment funds that pool money from investors seeking private equity stakes in “start-ups” and small and medium-size enterprises with robust growth potential. Generally, venture capital funds are characterized as high-risk/high-reward opportunities.
warrant
The right to buy additional securities from the company at a certain price within a certain period of time. Usually included with a new issue of securities as an inducement for investors to buy the securities.
West African letter scam
An email is sent by individuals who claim to be high-ranking government officials from a developing nation. They explain that due to complications, they are unable to remove millions of dollars from an account and need help. In return, they offer a sum of money. They ask people to show good faith by depositing money in a mutually accessible bank account or to provide a bank account number, in which they will deposit the money. The individuals then drain the bank accounts and are never heard from again. A common form is the Nigerian Scam.
