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What is in place to protect me as an investor?

In Canada the various provincial governments have assumed responsibility for investor protection. Each province has a securities commission or administrator, which oversees a provincial securities act. This act is a set of laws and regulations that outlines what players in the market can and cannot do.

In addition, many important rules governing industry practices and standards are set by the Self-Regulatory Organizations, which include the TSX, the Montreal Exchange and the Investment Dealers Association of Canada (IDA). In fact, the provincial securities administrators have delegated many of the regulatory and compliance functions to the SROs. These organizations oversee the brokers and investment dealers, as well as the markets themselves. Not all SROs have the same responsibilities. The IDA regulates the activities of investment dealers in terms of capital adequacy and conduct of business. To qualify as a member firm, an organization must meet stringent capital requirements and demonstrate a willingness and ability to conduct business in a manner consistent with the by laws, rules and regulations of the IDA and be subject to ongoing supervision. The exchanges manage all aspects of Canada’s junior and senior capital markets. All firms that are members of an SRO must meet liquidity requirements on an ongoing basis. If a firm becomes insolvent, and your account is with a member of one of the SROs, it is protected by the Canadian Investor Protection Fund. Maximum coverage of $1,000,000 is provided for customers’ general accounts and each separate account. See www.cipf.ca for more details. The key to being a more protected investor is to be a more informed investor. Read as much as you can about the securities and products that interest you. Request and analyze companies’ annual reports. If you are working with an advisor, make sure you have one who takes the time to explain things to you and to fully understand your goals.