Canadian Investor Protection Fund An Overview Presentation at CLS Breakfast Seminar By: Ilana Singer, Vice-President & Corporate Secretary, CIPF Date: November 2, 2017

Contents CIPF Protection 1 CIPF Protection 2 How Does CIPF fit into the Canadian Regulatory System for Investment Dealers? 3 Which firms are CIPF Members? 4 Member Insolvency 5 Fund Size 6 Disclosure Policy 7 Examples 8 Research Findings

CIPF Protection CIPF’s involvement is triggered on member firm insolvency. Member firms are investment dealers that are members of IIROC. These investment firms are also automatically members of CIPF. Currently, there are more than 160 member firms. CIPF covers missing property - this is property held by a member firm on behalf of a client that is not returned to the client following the firm’s insolvency. CIPF does not guarantee the value of the investments, or cover any drop in the value of the investments, even if the investment is in an entity related to the member firm.

How Does CIPF fit into the Canadian Regulatory System for Investment Dealers?

Which firms are CIPF Members? A Member Firm is an investment dealer that is a member of IIROC. A list of member firms is available on the CIPF website. All such IIROC member firms are automatically member firms of CIPF.

Bankruptcy and Insolvency Act (Canada) Customer Name Securities Member Insolvency Part XII Bankruptcy and Insolvency Act (Canada) Customer Name Securities Customer Pool Fund General Fund In a Part XII insolvency, CIPF works with trustee to determine: Assets available in “customer pool” to distribute to clients Clients eligible to share in customer pool Pro rata distribution of customer pool If customer pool not sufficient to satisfy client claims, CIPF will “top up” any clients that are eligible for CIPF coverage but only to the limit of CIPF’s coverage. In insolvency situations where Part XII trustee is not appointed, clients claims are made directly to CIPF.

KEY INPUTS INTO THE MODEL Fund Size CIPF uses a credit based model to determine the size of the Fund required to carry out its mandate. KEY INPUTS INTO THE MODEL Probability of Default - the risk of a Member failing Exposure at Default -initial exposure to CIPF Loss Given Default -CIPF exposure after recoveries

CIPF Disclosure Policy Introduction IIROC Dealer Member Rule 29.14 January 1, 2017 New Dealer Member Rule 29.28 New CIPF Disclosure Policy May 1, 2017 Further amendments to CIPF Disclosure Policy relating to electronic brochure

Key Differences between Rule 29.14 and the new CIPF Disclosure Policy CIPF Official Brochure CIPF Membership Symbol No reference to CIPF risk classification CIPF Membership Symbol optional on written, visual and audio advertising Advance approval from CIPF Alternate CIPF Explanatory Statement General Principles

CIPF’s New Disclosure Policy General Principles Disclose CIPF Membership to clients. No false or misleading or deceptive statement about CIPF. Communicate about CIPF Coverage in same language as other client communication. No reference to CIPF allowed on premises or advertising that relates to activities where CIPF protection is not available. Compliance with General Principles Make reasonable efforts to comply with the General Principles.

Examples of misleading and inaccurate disclosure

Examples of misleading and inaccurate disclosure

Examples of misleading and inaccurate disclosure

Research Findings For investors, advisors are the key source of information about CIPF Most advisors inform clients about CIPF coverage through a mix of printed materials and verbal conversations It is best to inform advisors about CIPF through CE courses and internal firm training Advisors prefer that communication about CIPF be made via compliance officers

Vice-President & Corporate Secretary Questions? Ilana Singer Vice-President & Corporate Secretary Tel: (416) 643-7120 Email: isinger@cipf.ca Website: www.cipf.ca