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Investment institutions

Region: Ontario Answer # 1253

What is an investment institution?

An investment institution is a corporation or trust company that manages, sells and markets investment products to the public. They can be privately or publicly owned (listed on the stock market).

What services do investment institutions offer?

The main function of an investment company is investing, administering or managing funds or money on behalf of their clients. However, they can offer a variety of other investment services, such as;

  • portfolio management, selecting and overseeing a group of investments,
  • record keeping,
  • legal,
  • accounting, and
  • tax management services.

Types of investment institutions

There are different kinds of investment institutions. These include:

  • banks and trust companies,
  • credit unions,
  • investment firms.

Types of investment products

There are a number of different investment products that investment companies offer. These include:

  • Cash investments such as savings accounts, GICs, currency, ad money market funds;
  • Fixed income investments such as government and corporate bonds, and preferred shares;
  • Equity investments include common stocks and bonds, and convertible preferred shares;
  • Mutual Funds: a collective investment vehicle that consist of a variety of investments.

Are investment companies regulated?

Federal regulation

All investment dealers are regulated by the national Regulatory Organization of Canada (IIROC). IIROC oversees all investment dealers in Canada.

What does IIROC do?

Along with regulating investment institutions, IIROC is also responsible for:

  • Writing rules and regulations that set regulatory and investment industry standards, including those that determine what products and customers an investment dealer can deal with;
  • Screening all investment advisors employed by IIROC-regulated firms to ensure they are “of good character, are properly trained and have successfully completed all the required educational courses, background checks and programs”;
  • Conducting financial compliance reviews and setting minimum capital requirements to ensure that firms have enough capital for the specific nature and volume of their business; and
  • Investigating possible dealer or marketplace misconduct by its dealer firms, approved persons and other market participants. IIROC can bring disciplinary proceedings which may result in penalties that include fines, suspensions and permanent bans or terminations for individuals and firms.

Provincial regulation

Anyone selling securities or offering investment advice must also be registered with the securities regulator in the provinces and territories where they operate. Investment regulators, such as the Ontario Securities Commission (OSC), The PEI Office of the Superintendent of Securities, the Saskatchewan Financial and Consumer Affairs Authority (FCAA), Securities Division, and the New Brunswick Financial and Consumer Services Commission (FCNB) will only register people or companies that are qualified to sell investments or offer advice to the public.

Provincial regulators administer and enforce compliance with the provisions of the provincial securities laws, such as the Securities Act in BC, Nova Scotia, NWT and other provinces and territories in Canada.

What is an investment advisor?

Investment Advisors (IAs), also sometimes referred to as financial advisors or investment brokers, are people who are trained to provide investment advice and buy and sell securities on behalf of investment companies. For more information, refer topic 276 What is an Investment Advisor and how do you choose one?

For more information about investment institutions and products, visit the Investment and Securities section of Legal Line, or refer to our Links and Resources.





								

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