1.3 Financial Market Trends

Canadian Securities Course CSC

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1 Introduction & Exam Overview

About the CSC Exams

2 Chapter 1: The Canadian Investment Marketplace

1.1 The Canadian Securities Industry & the Investment Dealer's Role 1.2 Financial Intermediaries: Banks, Trusts, Credit Unions, Insurers & Pension Funds 1.3 Financial Market Trends 1.4 Investment Capital, Financial Instruments & Financial Markets 1.5 Canadian Exchanges, ATSs, Dark Pools & the Order Protection Rule 1.6 Canadian Securities Regulators, the CSA & CIRO 1.7 Investor Protection: OSFI, CIPF and CDIC 1.8 Ethics, Standards of Conduct & the Client Focused Reforms 1.9 Conflicts of Interest, Complaint Handling & Remediation

3 Chapter 2: The Economy

2.1 Economics Foundations & Measuring Economic Growth 2.2 The Business Cycle & Economic Indicators 2.3 Inflation & Interest Rates 2.4 The Labour Market & Unemployment 2.5 The Bank of Canada & the Inflation-Control Target 2.6 Implementing Monetary Policy: The Operating Band, Market Operations & Transmission 2.7 Fiscal Policy, Deficits & the Challenges of Government Policy 2.8 International Finance & Trade: The Balance of Payments and the Canadian Dollar

4 Chapter 3: Features and Types of Fixed-Income Securities

3.1 The Fixed-Income Marketplace, Bond Terminology & Security 3.2 Protective Covenants, Retirement Provisions & Extendible/Retractable Features 3.3 Government of Canada Securities: T-Bills, Marketable Bonds & RRBs 3.4 Provincial & Municipal Debt and Strip Bonds 3.5 Corporate Bonds, Credit Spreads & Bond Ratings 3.6 Money Market Instruments, Floating-Rate Notes & International Bonds 3.7 Other Fixed-Income Securities & Reading Bond Quotes

5 Chapter 4: Pricing and Trading of Fixed-Income Securities

4.1 Bond Pricing, Price–Yield Relationships & Accrued Interest 4.2 Yield Calculations & Return Measures 4.3 The Term Structure of Interest Rates & Yield Curve Theories 4.4 Fundamental Bond Pricing Properties: Volatility Rules, Duration & Convexity 4.5 Bond Market Trading & Bond Indexes

6 Chapter 5: Common and Preferred Shares

5.1 Common Shares: Ownership Rights, Voting & Restricted Shares 5.2 Dividends, DRIPs, Stock Splits & Consolidations 5.3 Preferred Shares: Features, Cumulative Dividends & Taxation 5.4 Preferred Share Variations: Convertible, Callable, Retractable, Floating & Rate-Reset 5.5 Fundamental Equity Metrics & Ratios 5.6 Stock Indexes & Averages

7 Chapter 6: Equity Transactions

6.1 Order Types, Execution & Market Mechanics 6.2 Margin Trading: Long Accounts & Borrowing 6.3 Short Selling & Short-Margin Requirements 6.4 Trading & Settlement Procedures: T+1, CDS & Confirmations

8 Chapter 7: Derivatives

7.1 Derivatives: Role, Underlying Assets & Users 7.2 Options Fundamentals: Calls, Puts & Moneyness 7.3 Option Strategies & Risk Management 7.4 Forward & Futures Contracts 7.5 Rights & Warrants

9 Chapter 8: Corporations and their Financial Statements

8.1 Corporate Structures & Corporate Governance 8.2 The Annual Report, Accounting Standards & the Auditor's Report 8.3 The Balance Sheet & Income Statement 8.4 The Cash Flow Statement & Earnings Quality 8.5 Public Company Disclosure, Investor Rights, Take-Over Bids & Insider Trading

10 Chapter 9: Financing and Listing Securities

9.1 Government & Corporate Financing: Underwriting and Syndicates 9.2 The Prospectus Process, Stabilization & Purchaser Rights 9.3 The Exempt Market & Private Placements 9.4 The Listing Process: TSX, TSXV & Capital Pool Companies 9.5 Continuous Disclosure, Material Changes & Insider Reporting

11 Chapter 10: Investment Analysis

10.1 Methods of Equity Analysis & Macroeconomic Analysis 10.2 Fundamental Industry Analysis 10.3 Company Analysis: Competitive Advantages, Governance & the Dividend Discount Model 10.4 Discounted Cash Flow & Relative Valuation Multiples 10.5 Financial Statement Ratio Analysis 10.6 Assessing Preferred Share Investment Quality 10.7 Technical Analysis: Charts, Trends & Patterns 10.8 Technical Indicators, Volume, Breadth & Sentiment

12 Chapter 11: Portfolio Analysis

11.1 Measuring Investment Return 11.2 Measuring Risk: Types of Risk, Standard Deviation & Downside Measures 11.3 Portfolio Risk & Return: Correlation and Diversification 11.4 Beta, the Capital Asset Pricing Model & the Security Market Line 11.5 Portfolio Manager Styles: Equity & Fixed Income 11.6 The Portfolio Management Process: Objectives, Constraints & the IPS 11.7 Asset Mix, Monitoring, Performance Evaluation & Rebalancing

13 Chapter 12: Alternative Investments, Other Managed, and Structured Products

12.1 Alternative Investments: Structures, Fees & Liquid Alternatives 12.2 Alternative Strategies, Performance Measurement & Due Diligence 12.3 Segregated Funds, Labour-Sponsored Funds & Listed Private Equity 12.4 Income Trusts, REITs & Closed-End Funds 12.5 Structured Products: PPNs & Market-Linked GICs 12.6 Split Shares & Asset-Backed Securities

14 Chapter 13: Mutual Funds

13.1 Managed Products & Mutual Fund Structure 13.2 Pricing Mutual Fund Units: NAVPS & Forward Pricing 13.3 Mutual Fund Fees, Sales Charges & Unit Series 13.4 Mutual Fund Regulation, Fund Facts & Account Opening 13.5 Types of Mutual Funds & Fund Management Styles 13.6 Redemptions, Withdrawal Plans & Measuring Fund Performance

15 Chapter 14: Exchange-Traded Funds (ETFs)

14.1 ETF Origins, Structure, Tax Efficiency & ETF Facts 14.2 ETF Creation, Redemption & Arbitrage 14.3 Types of ETFs & Advanced Strategies 14.4 Comparing ETFs, Mutual Funds & Individual Securities

16 Chapter 15: Working with the Institutional Client

15.1 The Institutional Marketplace & Institutional Clients 15.2 Institutional Investment Guidelines, Styles & Restrictions 15.3 Buy Side & Sell Side: Trading Desks, Revenue, Clearing & Best Execution 15.4 Block Trading, Dark Pools & Algorithmic Trading

17 Chapter 16: Fee-Based Accounts and Working with the Retail Client

16.1 Fee-Based Accounts: Managed & Non-Managed Models 16.2 Fee Transparency, CRM2 & Total Cost Reporting, and MWRR vs. TWRR 16.3 The Financial Planning Approach & the Life Cycle 16.4 Behavioral Finance, Sequence-of-Returns Risk & Client Coaching 16.5 Estate Planning Basics

18 Chapter 17: Canadian Taxation

17.1 The Canadian Taxation System 17.2 Taxation of Investment Income 17.3 Capital Gains, Losses & The Superficial Loss Rule 17.4 Registered vs Non-Registered Tax-Advantaged Accounts 17.5 Tax Planning Strategies, Pension Plans & the RDSP

1.3 Financial Market Trends

Key Takeaways Explain This Topic AI

Since the late 1980s, Canada's large banks have owned most of the major investment dealers, creating integrated financial groups.

Technology has brought online order-execution-only brokers, robo-advisors and electronic trading, and has pushed fees down.

ETFs and fee-based accounts have grown as investors focus on costs and as embedded commissions face tighter rules.

Recent reforms include the Client Focused Reforms (2021), the DSC ban (2022), CIRO's creation (2023), T+1 settlement (2024), CDOR's end (2024), and total cost reporting and CIRO's new proficiency model (2026).

An aging population is shifting demand toward retirement income, estate planning and the transfer of wealth to younger generations.

Last updated: October 2026

The securities industry changes constantly, and the CSC expects you to understand the main trends and why they matter to clients and firms. Several of these trends reappear throughout this guide.

Consolidation and Integration

Before 1987, Canada's "four pillars" (banks, trust companies, insurers and investment dealers) were kept separate. Changes to federal and provincial rules in 1987 and the 1992 Bank Act revisions let banks buy investment dealers and trust companies. Today most large dealers are owned by the big banks, which offer banking, brokerage, wealth management, insurance and trust services under one roof. Consolidation brings scale and convenience but also concentrates market power and creates conflicts of interest (for example, a pressure to sell a group's own funds), which is one reason regulators focus on conflict management.

Globalization

Capital moves across borders easily. Large Canadian companies list on U.S. exchanges as well as the TSX, Canadian investors hold large amounts of foreign securities, and foreign investors buy Canadian bonds and shares. Global integration gives issuers access to more capital and investors access to more opportunities, but it also links Canadian markets to foreign shocks, exchange rates and U.S. policy. Coordination with U.S. markets explains why Canada moved to T+1 settlement on May 27, 2024, one day before the United States.

Technology and Digital Advice

Development Effect on the industry

Online order-execution-only (OEO) brokers Self-directed investors trade at low or zero commissions without advice

Robo-advisors Automated portfolios of low-cost ETFs with online KYC and rebalancing

Electronic and algorithmic trading Faster, cheaper execution across many venues; growth of high-frequency trading

• Data and artificial intelligence New tools for research, compliance and client service
• Digital onboarding Remote account opening and electronic delivery of documents

Technology lowers costs and widens access, but it also raises issues such as cybersecurity, the quality of automated suitability decisions, and whether self-directed investors understand the risks they take.

The Shift Toward Low-Cost and Fee-Based Investing

Investors have moved money toward exchange-traded funds and index products , and toward fee-based accounts in which advice is paid for openly as a percentage of assets rather than through commissions. Regulation reinforced the shift: deferred sales charges were banned and trailing commissions to order-execution-only dealers were prohibited on June 1, 2022, and total cost reporting from January 1, 2026 requires dealers to show clients the dollar cost of the funds they hold.

Demographics and Client Needs

Canada's population is aging. Large numbers of baby boomers are retiring, so demand is shifting from accumulating wealth to producing retirement income, managing longevity risk and planning estates. A large intergenerational transfer of wealth is under way, and advisors increasingly need to serve heirs and families, not only individual clients. These themes connect to the retail client chapter of this guide.

Regulatory Reform

The past few years brought an unusual amount of regulatory change:

2021: the Client Focused Reforms strengthened KYC, KYP, suitability and conflict rules.

2022: DSC ban and OEO trailer ban.

2023: IIROC and the MFDA combined into a single self-regulatory organization, renamed CIRO , and the Canadian Investor Protection Fund merged with the MFDA's protection plan.

2024: T+1 settlement (May 27) and the end of the CDOR benchmark (after June 28), with markets moving to CORRA .

2026: total cost reporting takes effect, and CIRO introduces an exam-based proficiency model for investment dealer representatives.

Crypto Assets and Responsible Investing

Crypto assets moved into the regulated market. Canada approved some of the first bitcoin and ether ETFs in 2021, and crypto trading platforms serving Canadians must register with securities regulators and meet investor protection terms. Crypto remains volatile and risky, and suitability rules apply.

Responsible investing , which considers environmental, social and governance (ESG) factors, has grown in fund offerings and institutional mandates. Regulators have warned against greenwashing (overstating ESG features), and climate-related disclosure rules for public companies remain under discussion: in April 2025 the CSA paused its work on a mandatory climate-disclosure rule.

Cybersecurity and Operational Resilience

As more trading, onboarding and client communication moves online, firms face greater risks from cyberattacks, fraud and system outages. Regulators expect dealers to protect client data, report significant cybersecurity incidents, and maintain business continuity plans. Advisors are often the first line of defence: they verify unusual instructions by phone, watch for impersonation and phishing, and look for signs that a vulnerable client is being exploited.

What the Trends Mean for Advisors

Trend Practical effect

Lower product costs and fee transparency Advisors must show the value of their advice, not just the products they sell

Consolidation Larger firms with integrated banking, insurance and investment services compete on the breadth of their advice

Technology Routine tasks are automated, freeing time for planning but raising client expectations for digital service

Demographics More demand for retirement income, estate and tax planning as baby boomers retire and transfer wealth

Regulation Higher standards for know-your-client, know-your-product, suitability and conflict management

The common thread is a shift from selling transactions to giving advice. The CSC is the foundation for that work: it gives advisors the product, market and regulatory knowledge that later specializations build on.