Canadian Securities Course ®
Condensed slides for study review
Developed by Dazia Consulting Inc.
Chapter 2
The Capital Market
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Disclaimer
• The trade-marks AFP, BCO, CSI, CSC, CPH, DFOL, FP1, FP2, FPSU, IFC, NEC, OLC, PFP, PFSA, WME,
Wealth Management Essentials, Branch Compliance Officer, Canadian Securities Course, Conduct
and Practices Handbook Course, Investment Fund in Canada, New Entrants Course, Wealth
Management Essentials, Personal Financial Services Advice Reading, Financial Planning 1,
Financial Planning 2, Financial Planning Supplement, Applied Financial Planning, and Personal
Financial Planner are owned by the Canadian Securities Institute (CSI®). The Canadian Securities
Institute (CSI®) does not sponsor, license or necessarily recommend these notes and study
material for any of its courses. Dazia Consulting Inc. is an independent supplier of educational
services. Exam preparation materials are not sponsored by any other industry organization.
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1 2 3 4 5
Lesson 1. Lesson 2. Lesson 3. Lesson 4. Lesson 5.
The Canadian The Capital Market The Canadian Overview of Economic Policies
Securities Market Regulatory Economic
Environment Principles
COURSE OUTLINE
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Capital: Real (land, building, goods), representational (money,
bonds, stocks)
• Capital is scarce, mobile and sensitive to its environment.
• Country risk factors
• Political environment
• Economic trends : Gross domestic product, inflation, employment
• Fiscal policy : taxes & Government spending
• Monetary policy : money supply & foreign exchange
• Investment opportunities
• The labor Force : percent skilled and productive
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Capital Sources & Users
Sources of Capital Users of Capital
• Individuals • Individuals
• Non-financial domestic • Business
corporations (retained • Governments
earnings) • Foreign
• Government
• Foreign investors
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3 key components of financial industry:
Instruments Market Intermediaries
• Fixed income • Primary = Initial
• Equities, stocks public offering
• Derivatives • Secondary =
• Managed Exchanges
products
• Structured
products
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Senior equities and
TSX: some debt instrument
TSX Venture: Junior equities
TSX Alpha Exchange
Stock exchanges (Auction market):
Montreal Exchange Financial future and
(ME): options
Natural Gas Exchange
Canadian Securities
Exchange
ICE Futures (Winnipeg Agricultural futures
Commodity Exchange): and options
Aequitas NEO Exchange
Nodal exchange Energy
7
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Dealer Market
Auction market vs Dealer market:
◼ Prices are publicly shown to clients via system for auction market.
Dealer market:
- The unlisted
equity market
- ON requires
- Dealer acts as : Much smaller
- Large in unlisted equity be
market maker for volume
transaction reported through
a particular comparing to
volume Canadian Unlisted
security Stock market.
Board Inc. (CUB)
Mostly junior
issues.
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Trading system:
• Alternative Trading System (ATS) or Proprietary Electronic
Trading System (PETS) or Non-SRO-Trading System (NETS):
• privately own computerized network allowing brokers to
facilitate their institutional investors.
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Fixed income Trading system:
• CanDeal: Allows institutional investors an
access to federal bond bid and offers.
• CBID: Operates 2 distinct retail and
institutional market for fixed income products
• Market Axess: Member of IIROC in Ontario &
Quebec
• CanPX: provides data of real-time bid and offer
prices and hourly trade of Gov, provincial
bonds,
• T-Bills and some corp bonds
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