Are my investments as safe with a small firm as with a large or bank-owned dealer?

Yes. The securities industry is regulated to ensure that all firms have enough capital for the business that they do. All firms that are members of an SRO must meet capital and liquidity requirements on an ongoing basis.* If a company suddenly can’t meet the test, industry regulators are immediately alerted to the problem. The company must prove that it can meet the capital and liquidity requirements and show what action has been taken to ensure that this takes place quickly. Even if the worst happens and the firm becomes insolvent, your cash and securities must be returned to you by the receiver or trustee. If there is a shortfall and your account was with a member of one of the Self-Regulatory Organizations, your account is protected by the Canadian Investor Protection Fund.

Because of this system, you are just as safe with a small broker as a large one.

*In Quebec, the provincial securities commission monitors capital and liquidity requirements

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