Career Planner: Financial Industry

“In this first edition, we will outline what the financial industry is, what are the various fields within it and what specific designations and other forms of education one should consider completing in order to pursue a career in whichever field you hope to pursue”

By David Fung and Jeff Fritz

We all want success, to graduate from school with our options unhindered by obstacles, big or small. And for those interested in pursuing work in finance, the potential for that success can be mind-boggling. We’ve all read stories of those big names, those market tycoons we all hope to follow, with their seven-figure plus salaries, generous stock options, private jets and exclusive parties.

These things and more are all possible to you. But on this winding, yellow brick road of life, there are many forks in the road—choices that if made poorly, may pull you away from your ultimate goals. To protect yourself, to ensure that the choices you make are the right ones for you and your dreams, we at the Arbitrage have developed the Arbitrage Career Planner.

In this first edition, we will outline what the financial industry is, what are the various fields within it and what specific designations and other forms of education one should consider completing in order to pursue a career in whichever field you hope to pursue. In the following editions of this planner, we will further hone and build upon the knowledge imparted in these pages, as well as go in depth into each of the various fields of the finance industry to give you a better idea about what life is really like working in these areas.

In all, it is our hope that by reviewing the information inside this Arbitrage Career Planner, planning out your financial career will become that much easier, helping you to make the right turns along life’s yellow brick road until you reach the point where the world will be yours for the taking … .

The Basics
Self-Reflection
Job Profiles – Management
Job Profiles – Sales Department
Job Profiles – Research Department
Job Profiles – Trading Department
Job Profiles – Underwriting Department
Selection
Training Directory

THE BASICS

What is Finance and the Finance Industry?

This is a doozie of a question. Depending on whom you ask, you’ll be sure to hear a variety of answers. But essentially, finance is the management of money or other assets. Exciting! Well, for those who don’t quite share our level of enthusiasm, bare in mind that money and how it’s managed is what determines much of how the world works. The better an understanding you have of money, and the rules that regulate it (finance and accounting), the more power you will have to determine your own future.

Intrigued? We hope so. Because the next several pages will try to answer the second half of your question: what is the financial industry? To be clear, this is like asking what is food industry or the entertainment industry. The finance industry, just like these two examples, can be very ambiguous, as it covers so many different fields, from business consulting to money & wealth management to commercial banking and even insurance. For the purposes of this first edition of the Arbitrage Career Planner, we will be focusing only on the investment banking industry, since (from our experience) it tends to be the most popular amongst finance graduates.

But not to worry, the Arbitrage Career Planner will slowly expand to cover the many other fields within the financial industry and, in so doing, we hope to do our part in supporting our readership in their future career ambitions.

The Canadian Finance Industry at a Glance:

The finance industry has enabled Canada to be one of the most attractive places to conduct business, as well as to invest. Canada possesses the following characteristics that have help create such a great environment: a relatively stable political environment, stable economic trends, skilled and productive labour force, moderate taxation, and not overly regulated trade barriers, fiscal and monetary policies. Consequently, the finance industry provided Canada with a capital market that is one of the most sophisticated and efficient in the world. This industry runs on the basis of the flow of capital and financial instruments. The following is an informal order, dictated by this flow of capital, which categorizes the affected parties of individuals in the Canadian society.

Users of Capital and Investors:

– Non-financial corporations, such as retailers, food distributors, machinery and electronic manufacturers, raw material extractors, etc

– All levels of the government, including municipalities

– Retail Investors (known as private investors who trade and own financial instruments for their own personal accounts and not for another company or organization)

– Institutional Investors (companies that trade and own large volumes of financial instruments for business purposes)

– Foreign and non-residential investors (including both retail and institutional types)

Financial Intermediaries:

These organizations are the parties that offer all sorts of services to users of capital to help them manage and invest it. They act as a bridge between the investors and the capital markets. Some can also act as brokers for their clients or as investment dealers or both, in primary and secondary securities markets.

– Schedule I, II, & III Chartered Banks

– Investment Funds

– Trust Companies

– Credit Unions

– Insurance Companies

– Sales Finance and Consumer Loan Companies

Capital Markets:

– Stock Exchanges. These are auction markets where buyers and sellers of securities trade with each other, they include: Toronto Stock Exchange (TSX), TSX Venture Exchange, Bourse de Montreal, Winnipeg Commodity Exchange (WCE), Canadian Trading and Quotation System (CNQ)

– Over-the-counter (OTC) markets. They are the unlisted equity markets that are also dealer markets. They consist of a network of dealers who trade with each other, where these dealers act as market makers as only the dealers’ bid and ask quotations are entered. Many of these markets are privately owned, computerized networks that match orders. These trading systems are mostly owned by private brokerage firms. Most bonds and money market securities trade in these OTC markets. Three of the most popular OTC electronic trading systems: Can Deal, CBID, CanPX.

The Clearing System:

All financial intermediaries in Canada are required to clear their securities and financial instruments through the Canadian Depository for Securities (CDS). It is a central clearing system where it handles the daily settlements between the intermediaries. They help reduce the number of certificates and amount of cash that has to change hands among the members. CDS creates and confirms the cash balances for each firm, compiles the clearing settlement sheets and notify their members of the securities that they need to deliver in order to balance their accounts.

Government Regulation:

Securities Commissions (in Ontario, it’s the Ontario Securities Commission), are official government agencies that are responsible for overseeing and supervising the self-regulatory organizations, as well as regulating the Canadian securities industry. These activities fall under provincial jurisdiction; thus, the securities commissions are provincial government agencies. They delegate the authority to make procedures and regulations that governs the financial institutions and capital markets to these self-regulatory bodies.

Office of the Superintendent of Financial Institutions (OSFI) is the regulatory body for all the federally regulated financial institutions. It does not oversee the Canadian securities industry.

Canada Deposit Insurance Corporation (CDIC) is a federal crown corporation that insures eligible deposits up to $100,000 per depositor in each of its member institutions.

Self-Regulatory Organizations include:

– Investment Dealers Association of Canada (IDA)

– Mutual Fund Dealers Association (MFDA)

– Listed Stock Exchanges, such as the TSX

– Canadian Investor Protection Fund (CIPF)

– Mutual Fund Dealers Association Investor Protection Corporation (MFDA IPC)

– Ombudsman for Banking Services and Investments (OBSI)