Institutional market roles, sell-side structure, trade processing, guidelines, and execution.
Chapter 27 explains how the market looks different when the client is an institution rather than a household. It covers buy-side and sell-side roles, trading-firm structure, revenue sources, clearing and settlement, institutional responsibilities, investment guidelines, and algorithmic trading.
Students should use this chapter to understand scale, specialization, and execution discipline. Institutional questions often test process, mandate control, trade handling, and execution quality rather than retail-style suitability alone.
Exam Focus
Distinguish buy-side and sell-side responsibilities, incentives, and organizational structure.
Understand how institutional trading, clearing, custody, and settlement differ from retail processing.
Apply mandate restrictions, best-execution expectations, and algorithmic-trading considerations in institutional scenarios.
The sell side and the buy side of the market, including institutional clients, core dealer functions, buy-side mandates, with the two sides interact in Canadian capital markets.
The responsibilities of a buy-side portfolio manager and trader, including mandate interpretation, risk control, broker selection, execution quality, and post-trade review.
The organizational structure of a sell-side trading firm, including front-office, middle-office, and back-office functions, with those groups support institutional trading.
The revenue sources for sell-side trading firms, including commissions, spreads, underwriting, financing, and the differences between equity and fixed-income trading economics.
Institutional clearing and settlement, including the trade-processing chain, current T+1 settlement, the role of custodians and CDS, and common operational risks.
The main roles and responsibilities in the institutional market, including analysts, institutional salespeople, sales traders, traders, bankers, and operational support teams.
Investment styles, guidelines, and restrictions, including mandate design, active and passive approaches, benchmark use, concentration and leverage limits, and broker-selection controls.
Algorithmic trading, including execution algorithms, high-frequency trading, dark pools, direct electronic access, and the control framework around institutional electronic trading.