Investors

Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z 

A B C
accredited investor  An individual with at least $1million in financial assets (cash and securities only, not real estate) before taxes, net of any debts. Individuals also qualify as accredited investors if their net income before taxes is more than $200,000, or $300,000 when combined with the income of a spouse, in each of the two most recent years, and who expects to have the same net income in the current year. Accredited investors can also be an individual, either alone, or with a spouse, who has net assets of at least $5 million.
account statement A record of transactions in an account at a financial institution or investment firm, usually provided each month.
advisors/advisers Advisors specialize in giving advice to clients about investing in securities, but they do not buy or sell securities for their clients. Advisors are registered with the 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.
annual information form (AIF)  An AIF is a legally required disclosure document to provide material information about a company and its business at a particular point in time based on its historical and possible future development.
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balanced portfolio An investment portfolio that holds an appropriate mix of different types of investments, such as bonds and shares.
BC Securities Commission (BCSC)  The independent provincial government agency that regulates trading in securities (like stocks and bonds) and protects investors in BC.
benchmark A market or sector index against which you can measure the performance of an investment (such as a mutual fund). For example, if a fund invests mainly in Canadian stocks, the benchmark might be the S&P/TSX Composite Index, which tracks companies trading on the Toronto Stock Exchange.
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 new window.
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.
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Canada Deposit Insurance Corporation (CDIC) A federal government organization that provides insurance to protect money deposited in Canadian banks and certain other financial institutions.
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.
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.
category Used when referring to mutual funds, categories help investors make meaningful comparisons between funds.The Canadian Investment Funds Standard Committee developed fund categories for all Canadian mutual funds. Mutual funds with similar objectives and risks are included in the same category.
cease trade order (CTO) An order issued by a provincial or territorial securities commission or similar regulatory body against a company, management of a company or any individual for a breach or an alleged breach of the Securities Act. Most CTOs are issued as a result of a filing deficiency, such as the failure to file a proper quarterly or annual financial statement, but may also be issued as a result of an enforcement action that involves a proven or admitted breach of the Securities Act.
CNQ Canadian Trading and Quotation System Inc., a Canadian stock exchange for trading the equity securities of emerging companies.
commission A fee you pay to a broker or agent for the service of arranging the purchase or sale of a security or real estate investment. Commissions vary between brokers.
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 theIIROC's Canadian Investor Protection Fund (CPF) and the MFDA's Investor Protection Corporation (IPC). 
continuous disclosure The legally required public disclosure by issuers of their financial statements and new releases.
credit union A financial institution that owned by its depositors and borrowers.
Credit Union Deposit Insurance Corporation (CUDIC)  A government organization that provides insurance to protect money deposited in British Columbia credit unions.
 CSA  Canadian Securities Administrators: a council of the securities regulators of Canada's 13 provinces and territories.
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D E F G
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 Dealers Association of Canada 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.
decision A direction, decision, order or ruling or requirement made under a power or right given by the Securities Act or the regulations.
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 and CUDIC).
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 rule of conservative investing is not putting all of your investment eggs in one basket. You can reduce risk and volatility in your portfolio by investing in different types of securities such as stocks, bonds and short-term investments. It is unlikely the value of these securities will move up or down at the same time. Within each security type, you can diversify among different corporations, industries or geographic locations.
dividend A portion of a company's profits paid to shareholders.
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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.
exemption

The BCSC provides a number of exemptions from the registration and prospectus requirements. If you purchase securities using these exemptions, the securities are subject to resale restrictions. This means that the securities may not be resold (transferred) unless certain conditions are met. In almost all cases, the securities are subject to a "seasoning period" or a "hold period" - a specified period of time during which the purchaser cannot sell the securities.
expected return The overall profit you expect to receive from an investment in the future; may be very different from the actual returns that you eventually receive.
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financial advisor

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. They 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
fixed income investments Investments that give you fixed interest or dividend income such as government and corporate bonds, debentures and preferred shares.
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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.
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H I J K
Investment Dealers Association of Canada (IDA) Now known as IIROC. The national self-regulatory organization in Canada for firms that trade and advise in securities.
Investment Industry Regulatory Organization of Canada (IIROC) The national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada. Formerly the IDA and RS.
incorporated A firm or company that has formed a legal corporation by completing the required procedures.
insider disclosure 

The legally required public disclosure by insiders of their securities holdings and transactions.
Integrated Market Enforcement Team (IMET)  A partnership initiative between the federal Ministry of Justice, the Royal Canadian Mounted Police, the Vancouver Police and the BCSC to improve policing in the securities markets.
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 firm A company that buys and sells investments for its clients.
investor Someone who makes an investment.
issuer A company or other entity that has issued or is proposing to issue securities.
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L M N O
legal advice Advice from a lawyer on your individual circumstances.
liquidity Ability to sell an investment quickly and at a fair price.
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Management 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.
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. Fund's show their MER as a percentage of the fund's assets.
Margin Account A trading account that allows you to borrow money on securities you currently own or intend to purchase.
Market Regulation Services Inc (RS)  Now known as IIROC. The self-regulatory organization that oversees equity trading on exchanges and other markets.

maturity date

The date on which a bond, debenture, GIC or term deposit is due to be repaid.
mutual fund A pool of money that's invested for a large number of investors by a professional money manager.

Mutual Fund Dealers Association of Canada (MFDA)

 The national self-regulatory organization (SRO) for the distribution side of the Canadian mutual fund industryself. The MFDA regulates the operations, standards of practice and business conduct of its Members and their representatives.
mutual fund dealer A company that buys and sells the shares or units of mutual funds for investors.
mutual fund unit Part ownership in a mutual fund.
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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 CTO Database Real-time dissemination system of Cease Trade Order (CTO) information operated and maintained by the CSA. The national CTO database includes outstanding CTOs against issuers, management and individuals from the securities regulatory authorities in most provinces.
National Registration Database (NRD) The CSA's national web-based system that permits individuals who are dealers or advisors to file registration forms electronically.
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.
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.
notice of hearing If BCSC staff decide to pursue a case against someone, the executive director of the BCSC issues a notice of hearing. It contains the name of the respondents, the penalties staff are seeking from the panel of commissioners, the staff's allegations of conduct that contravenes the Securities Act or that is contrary to the public interest and the time, date and place of the hearing. The BCSC publishes notices of hearing on its website.
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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-ended mutual fund An open-end mutual fund continuously issues and redeems units, so the number of units outstanding varies from day to day. The value of their shares, or units, changes with the underlying value of the securities in the fund. Each share or unit represents a portion of the underlying portfolio.
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.
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P Q R
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.
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.
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 are authorized to make discretionary trades for you. Sometimes investors allow their porfolio manager to make discretionary trades on their behalf.
principal The money originally invested or lent to earn interest or other income.
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.
private company A private company is one that has 50 or fewer shareholders and which has not otherwise become a reporting company. Securities of a private company are not traded or owned by the public.
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.
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.
private company A company whose securities are not traded or owned by the public.
public company A public company in British Columbia is most commonly one this is a reporting issuer and has issued securities under a prospectus in British Columbia or has at any time been listed on the TSX Venture.
pump and dump A scheme where fraudsters heavily promote the purchase of specific company stock, which creates high demand and drives up the prices. The individuals behind the promotion then sell 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.
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real return The return from an investment after taking inflation into account (e.g.: if your investment earned 6% interest last year, but the cost of everything went up 4%, you are only ahead by 2%; your "real return" is only 2%).
redeem A mutual fund may redeem or repurchase your mutual fund security at the net asset value per security.
registered Advisors and investment companies license by a securities regulator to buy and sell investments or advise on investments. Also, accounts and retirment plans protected by income tax and other laws.
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.
reporting issuer A reporting issuer in British Columbia is most commonly one that has issued securities under a prospectus in British Columbia or has at any time been listed on the TSX Venture. These issuers, often called "public companies," are subject to the Continuous Disclosure (CD) requirements of securities laws.
return The profit you make on an investment through interest, dividends or increased value of the investment (see expected return).
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 ths 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.
RS Now known as IIROC. See Market Regulation Services Inc.
rule of 72 A way to quickly estimate how long it will take an investment to double in value.
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S T U V
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 Act, RSBC 1996, c. 418 The Securities Act in BC regulates buying and selling stocks, bonds and other securities.
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 BC Securities Commission in British Columbia. 
Securities Rules, BC Reg. 194/97 Specific requirements under the Act, approved by government and issued by the BCSC.
SEDAR - System for Electronic Document Analysis and Retrieval The CSA' s national electronic 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".
self-regulatory organizations Organizations like the Investment Dealers Association of Canada and the Mutual Fund Dealers Association of Canada who make sure their member firms meet standards set by provincial laws for securities.
settlement agreement A settlement agreement is a signed document between the executive director of the BCSC and a person who agrees the allegations against them under the Securities Act are true. The respondent agrees to a statement of facts, including an admission of wrongdoing, penalties, which can include a reprimand, restrictions on access to the securities market, or participation with those operating in the securities market, and financial penalties. The respondent also agrees to comply with the Securities Act, to waive all reviews and appeals and to consent to reciprocal orders (for non-financial penalties) in other Canadian jurisdictions and pay investigation and hearing preparation costs.
settlement If the BCSC staff make allegations against someone which are true, the person can seek a settlement with staff and they may receive lesser penalties and will avoid the costs and inconvenience of a hearing. Staff will settle if it is in the public interest. If they settle, a settlement agreement will be signed.
share Stock, a certificate that represents part ownership of a company.
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.
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).
statement of allegation A statement of allegation is made by the staff of the BCSC when they have found conduct that contravenes the Securities Act or is otherwise contrary to the public interest. Staff state their allegations in a notice of hearing. Staff must then prove the allegations in a public hearing before a panel of commissioners.
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. Check out our SpamWatch program for more information about stock spam, including a list of spammed stocks.
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.
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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.
term deposit A type of deposit with a financial institution that's repaid to you at a specified time (e.g., 90 days or one year) and at a specified interest rate.
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 Venture Exchange The national junior Equity exchange, a subsidiary of TSX Group.
TSX Group A public company that owns the Toronto Stock Exchange and TSX Venture Exchange.
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W X Y Z
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.
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