Segregation

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1. My account statement shows that my securities are segregated. What does that mean?

Segregated securities are held apart from the assets of the Member and cannot be used by the Member. CIPF Members are required to segregate all fully paid securities. Conversely, if any of your securities are not fully paid, the Member is lending you money to purchase those securities and is entitled to use them as collateral. (i.e. they do not have to be held in segregation.)

2. Does that mean that my segregated securities will be returned to me if the CIPF member is insolvent?

The segregation rules imposed by industry regulations, along with the provisions of Part XII of the Canadian Bankruptcy and Insolvency Act and the protection offered by CIPF, are designed to ensure you will receive your securities back. It is not technically correct however, to say that because your securities are segregated they will be returned directly to you.

For bankruptcies administered under Part XII of Canada's Bankruptcy and Insolvency Act, there would be a proportionate allocation of any missing customer assets to all customers based on their net equity at the Member. This is done by determining the amount owed to all customers and the amount available to be returned to all customers. Part XII includes all customer assets, whether segregated or not, in the amount available to be returned, as well as the Member’s inventory, cash, and certain other investments. If there is still a shortfall, after the trustee's distribution (for example, if your securities are not transferred to a new account at a solvent CIPF member), you will have a claim against CIPF in accordance with the CIPF Coverage PolicyView example.