Canadian Securities Course (CSC) Level 1 Practice Exam

What is the role of the Canadian Investor Protection Fund (CIPF)?

1. Mainly focus on market surveillance

2. Provide deposit insurance

3. Primarily ensures investor protection and oversees the self-regulatory system

4. Offer financial advice to investors

The correct answer is: Primarily ensures investor protection and oversees the self-regulatory system

The Canadian Investor Protection Fund (CIPF) plays a crucial role in safeguarding investor assets in the event of a member firm’s insolvency. Its primary function is to provide protection to investors by ensuring that they are compensated for their eligible losses up to a specified limit if their firm fails. This protection serves to boost investor confidence in the Canadian investment marketplace. In addition to this core function, CIPF oversees and collaborates with the self-regulatory organizations (SROs) in Canada, ensuring compliance and proper conduct among the firms that are members of these organizations. This oversight helps maintain the integrity and stability of the Canadian securities industry, further contributing to a robust investor protection framework. The other choices reflect activities that are outside the CIPF's main role. While market surveillance is an important function within the securities industry, it is primarily the responsibility of regulatory bodies such as the Investment Industry Regulatory Organization of Canada (IIROC) rather than CIPF. Regarding deposit insurance, this function is typically associated with the Canada Deposit Insurance Corporation (CDIC), which protects depositors in banks, rather than investors in securities. Lastly, offering financial advice to investors is not within the CIPF's mandate; instead, it focuses on protecting investors rather than providing personalized investment services