CSC Chapter 2

alternative trading system

An electronic marketplace (ATS) that provides automated matching and execution of trades in both the equity and fixed-income markets. An ATS must be registered as an investment dealer and a member of CIRO; it can trade securities listed on traditional exchanges but cannot itself list securities.

ask price

The lowest price a seller will accept for the security being quoted. Also called the offer.

auction market

A market in which securities are bought and sold by investors, with investment dealers typically acting as agents to execute buy and sell orders on their clients' behalf. Orders are channelled to a single central market where a trade executes only when a bid matches an offer.

bid-ask spread

The amount by which the ask price exceeds the bid price (Ask Price − Bid Price = Bid-Ask Spread).

bid price

The highest price a buyer is willing to pay for the security being quoted.

Canadian Securities Exchange

An exchange that lists equities of emerging companies.

Canadian Unlisted Board Inc.

The web-based system through which the Ontario Securities Act requires trades of unlisted securities and unquoted equity securities to be reported in Ontario.

CanDeal

A member of CIRO and a joint venture between Canada's six largest bank-owned investment dealers, operated by TMX Group Limited. Recognized as both a debt ATS and an investment dealer, it offers institutional investors access to government securities and money market instruments.

CanPX

A joint venture between several Canadian investment dealers and inter-dealer brokers that combines digital feeds from participating dealers to provide a composite display of real-time bid and offer quotations, in price and yield terms with volume information, covering Government of Canada bonds and Treasury bills.

capital

Wealth, both real (land, buildings, and other material goods) and representational (money, stocks, and bonds), representing the invested savings of individuals, corporations, governments, and other organizations.

CBID

An alternative trading system that operates a retail fixed-income marketplace, accessible by registered dealers on behalf of retail clients.

CBID Institutional

The institutional fixed-income marketplace operated by CBID, accessible by registered dealers, institutional investors, governments, and pension funds.

Cboe Canada

An exchange that provides listing services and facilitates trading in public companies, exchange-traded funds, Canadian Depositary Receipts, special purpose acquisition companies, and closed-end funds. Approximately 15% of all volume traded in Canadian-listed securities trades through Cboe Canada.

common share

A type of equity security (also called common stock) that represents an ownership stake in the company that issued it.

dealer market

A negotiated market, also called an over-the-counter (OTC) market, consisting of a network of banks and investment dealers where market makers post bid-and-ask quotations via electronic platforms; investment dealers typically act as principals in this market.

equity securities

Securities (commonly called stocks, equities, or shares) that represent some form of ownership stake in the company that issued them. If the company's value increases, the owner of the stock receives a capital gain upon selling it.

ICE NGX Canada

A provider of electronic trading, central counterparty clearing, and data services to the North American natural gas and electricity markets.

institutional investor

An organization, such as a pension or mutual fund company, that trades in large-share quantities or dollar amounts and typically has a steady flow of money to invest.

investment advisor

An intermediary in the retail or institutional sales department of a securities firm who normally helps facilitate indirect investment on behalf of clients.

last price

The price at which the last trade occurred on a stock. It fluctuates between the bid and ask prices as orders are filled and is simply the latest price at which a transaction occurred, not necessarily the current buy or sell price.

liquidity

A property fundamental to the operation of exchanges, characterized by frequent trades, a narrow price spread between bid and ask prices, and small price fluctuations from trade to trade.

MarketAxess

A provider of market data and a trading platform with access to multi-dealer competitive pricing for a wide range of corporate bonds and other fixed-income instruments. It is a member of CIRO and operates in Ontario and Quebec.

market maker

An investment dealer that quotes its own bid and ask prices and holds an inventory of the securities in which it has agreed to make a market, selling from and adding to that inventory as it trades with buyers and sellers.

money market

The market in which only short-term fixed-income securities with a term of one year or less are traded.

Montréal Exchange

The exchange that trades all financial and equity futures and options listed for trading in Canada.

over-the-counter market

Also called a dealer market; consists of a network of banks and investment dealers who negotiate prices and post bid-and-ask quotations via electronic platforms, rather than trading through a centralized marketplace.

preferred share

A type of equity security, alongside common shares, that represents an ownership stake in the issuing company.

primary market

The market in which newly issued securities are sold directly by companies and governments to investors; companies raise capital by selling stocks or bonds, while governments sell bonds only. These newly issued distributions are known as IPOs, or initial public offerings.

retail investor

An individual client who buys and sells securities for their personal account.

secondary market

The market in which investors trade securities that have already been issued by companies and governments, trading among each other at a mutually beneficial price. The issuing company does not receive any proceeds from secondary market transactions.

stock exchange

An auction market where buyers and sellers of securities meet to trade with each other and where prices are established according to the laws of supply and demand.

stocks

Another name for equity securities; represent an ownership stake in the company that issued them.

Toronto Stock Exchange

The exchange (TSX) that lists equities, some debt instruments convertible into a listed equity, income trusts, and exchange-traded funds.

TSX Alpha Exchange

An exchange that offers trading in securities listed on the TSX and the TSX Venture Exchange.

TSX Venture Exchange

An exchange that lists equities and a few debenture issues.

unlisted market

Another name for a dealer market, so called because the securities that trade on it are not listed on an organized exchange, unlike securities on auction markets.