1. Are both cash balances and securities held in an account at a Member eligible for CIPF coverage?
Yes. CIPF coverage applies to any combination of assets
, as long as it is held in an account at a CIPF Member
2. I hold cash and securities denominated in foreign currency in an account at a CIPF Member. Are those assets eligible for CIPF coverage?
Yes, account balances denominated in foreign currencies are eligible for CIPF protection. The Canadian dollar equivalent of the account is calculated for purposes of the CIPF coverage.
3. Are mutual funds and GICs protected by CIPF?
Yes, if they appear as positions on the account statements issued to you by the CIPF Member
, indicating that the Member is holding the positions on your behalf. If the positions do not appear on your account statements, they are probably being held for you directly by the issuing company and CIPF coverage is not applicable as you can deal directly with the issuer. CIPF does not protect investors against losses due to the default of an issuer of a GIC or a decline in the market value of a GIC. Please contact the CDIC for information regarding coverage of GIC issuers at 1-800-268-8099.
4. I hold GICs in an account at a CIPF Member that is a subsidiary of the bank that issued my GICs. Are my GICs covered by CIPF if the bank becomes insolvent?
CIPF coverage is for the return of assets, not loss in value, and is only applicable if the CIPF Member is also insolvent. Assuming the Member is insolvent, CIPF's primary role would be to ensure your account (including the GIC of the insolvent bank) is returned to you. In such case, where the GIC is returned to you, you would not have a claim against CIPF. CIPF does not protect you against any decline in value of that asset after you bought it.
If the CIPF Member is not insolvent, you would not have a claim against CIPF. However, the GIC may be protected by the compensation scheme for deposit taking institutions.
5. I hold shares of XYZ Corporation in my account. XYZ Corporation is now bankrupt. Does CIPF protect me against this type of loss?
No. CIPF protects customers of a Member against loss due to the insolvency of the Member, not against loss due to market fluctuations, or from the bankruptcy of an issuer of a security or deposit instrument held in your account.
6. When I opened my RRSP, I signed a trust agreement. If my RRSP assets are held in trust, why is CIPF protection necessary?
RRSPs will typically include cash and securities. The CIPF Member is required to deposit all RRSP cash in trust with the RRSP trustee. RRSP securities, however, are typically held in segregation for the customer by the CIPF Member. The CIPF Member is not permitted to use segregated securities in the conduct of its business. CIPF coverage would protect you in the event that your cash or securities were not available to be returned to you.