Investor Services Inc. (Investor Services) Trading Policy
First Trade Rule1
First Trade or No "Total Market Value" within the account. For your trade to be accepted electronically, there must be sufficient cash in your Investor Services account to cover the entire purchase price (including commissions). If there is sufficient cash, please select the "Use Cash/Margin" settlement option.
If there is insufficient cash in your Investor Services account, you must arrange for a "Deposit Acceleration" to cover the entire purchase price. Simply contact your CIBC Branch representative and request that your bank account be debited for the appropriate amount and that these funds be forwarded via "Deposit Acceleration" to your Investor Services account. The Branch representative will provide you with an Electronic Journal (EJ) number corresponding to the transaction.
Once this has been arranged, please contact an Investor's Edge trading representative at 1-800-567-3343 Opens your phone app. (option 3) who will place a note on your account with the details of the Electronic Journal (EJ). At this point you can return to the online system to place your trade.
The First Trade Rule applies for both Canadian and U.S. sides of the account.
Penny Stock Rule1
The Penny Stock Rule states that penny stock (i.e., stock trading under $3.00) orders cannot exceed 50% of the "Total Market Value" in the cash account. In order for your trade to be approved online, the market value of an identical penny stock should be excluded from the "Total Market Value" in your portfolio.
Combined "Total Market Value" of both the Canadian and US accounts will be considered, and positions for the same security will be excluded in calculating the Penny Stock Rule equity requirement. If there is insufficient "Total Market Value" in the account, additional funds or securities will need to be deposited prior to placing the trade.
Cash Account Settlement Rule1
Cash accounts require that payment for trades must be made in full by the settlement date (i.e., T+2 for equities or such earlier date as Investor Services may require). Clients can place trades for up to the "Total Market Value" of their account. Clients who fail to pay in a timely manner may have a "Cash up Front" restriction placed on their account. Debit balances are charged interest based on the rates outlined in the Commission, Fees and Interest Schedule.
For your trade to be accepted electronically, when selecting the "Use Cash/Margin" settlement option, there must be sufficient cash or cash equivalents in your Investor Services account to cover the entire purchase (including commissions). "Cash equivalents" are defined as a pending Mutual Fund sale, a pending security sale "at market" or a previously filled security sale.
When selecting the "Debit Bank - Full Amount" settlement option, you must satisfy the Cash Account Equity Rule. THE CASH ACCOUNT EQUITY RULE STATES THAT THE VALUE OF YOUR PURCHASE INCLUDING COMMISSIONS MUST NOT EXCEED THE CURRENT "TOTAL MARKET VALUE" OF YOUR INVESTOR SERVICES ACCOUNT. When using the "Debit Bank - Full Amount" settlement option, your bank account will be debited for the entire purchase price including commissions within three business days.
If the value of your purchase including commissions does not satisfy the Cash Account Equity Rule, you must initiate a same day Cash Transfer from your bank account online prior to placing the trade. Before placing your trade, simply go to the "Trading" tab and select "Cash Transfer". Remember to check "Open Orders" to verify the status of your request.
When selecting the "Sell Money Market Fund" settlement option, you must hold a sufficient amount of Money Market fund or T-Bill fund (CIBC or other Fund companies) in your Investor Services Account to cover the net amount owing after the trade. When selecting the "Sell Money Market Fund" settlement option, sufficient Money Market fund or T-Bill fund will be automatically sold to cover the net amount owing after your trade is filled. The settlement date on the sale of your Money Market fund or T-Bill fund will coincide with the settlement date of your purchase. Please note that you are subject to any redemption or DSC fees charged on the sale of non-CIBC Money Market funds and T-Bill funds.
If cash in your Investor Services account is available only when all currencies are pooled, the buy order will be accepted but NO FUNDS WILL BE CONVERTED UNTIL WE RECEIVE YOUR VERBAL INSTRUCTIONS. To place instructions for the conversion of funds, please speak to an Investor Services representative. Please note you can always choose to have a trade settle in either Canadian or U.S. funds.
Free-riding / Flipping Rule
Free-riding / flipping occurs when a client does not pay for a security he/she has purchased before selling the same security. When a client free-rides they are trading on the firm's capital, a practice that is strictly prohibited by the IIROC.
Our credit department monitors free-riding and notes the practice on the client's account. If this is identified, trading privileges may be limited to cash up front for every trade on the account or suspended.
Margin Account Rule1
In a Margin account, excess margin must be available to cover the margin requirement of an order.
When selecting the "Use Cash/Margin" settlement option, you must have sufficient Margin Excess to cover the margin required for your purchase at the time of trade. Margin Excess is defined as the difference between the loan value granted on securities held in your account and the total amount currently being borrowed.
Note: Minimum equity in a margin account is $2,000.00. Any accounts with less than this amount should be converted to cash when discovered.
If the Investor Services account has insufficient Margin Excess available at the time of trade, you can generate the necessary Margin by one of two methods.
First, you may sell a security in order to create sufficient Margin Excess. Note that the sale of the security will increase the Margin Excess only by the amount of Margin required to hold that security position and ONLY WHEN THE SALE HAS BEEN FILLED. As an alternate method of generating the necessary Margin Excess, you may initiate a same day "Cash Transfer" from your bank account on-line. Note that the same day "Cash Transfer" will increase the Margin Excess in your account by the full amount of the "Cash Transfer". Before placing your trade, simply go to the "Trading" tab and select "Cash Transfer". Remember to check "Open Orders" to verify the status of your request.
When selecting the "Sell Money Market Fund" settlement option, sufficient Money Market fund or T-Bill fund will be automatically sold to cover the net amount owing after your trade is filled. The settlement date on the sale of your Money Market fund or T-Bill fund will coincide with the settlement date of your purchase. Please note that you are subject to any redemption or DSC fees charged on the sell of non-CIBC Money Market funds and T-Bill funds.
When selecting the "Debit Bank - Full Amount" settlement option, you must have sufficient Margin Excess to cover the margin required for your purchase at the time of trade. Furthermore, your bank account will be debited for the entire purchase including commissions within three business days.
The risks of margin buying are further managed by policies, which restrict margin purchases to maximum borrowing limits for concentrated accounts.
Concentration in Margin Accounts
Concentrated accounts are those which contain a very large margined holding in one security with little or no diversification into other holdings or types of securities. Loan value on a per security basis may be reduced if the account is deemed to be "concentrated".
Restrictions may be set on individual issues, by security type and/or exchange. Limits are generally linked to the historical volatility of the various security types and exchanges. Generally, a margin account is defined as "concentrated" when one security or sector represents a significant percentage (approximately 25% or more) of the total market value of the account. In general, loan value on concentrated accounts will be reduced only if the outstanding loan on the margin account exceeds $25,000.
Investor Services retains absolute discretion to require an increase in your Margin Excess from time to time.
Retirement Account (Cash Requirement Rules)
RSP and RIF accounts are subject to Revenue Canada regulations. For a retirement plan account, cash or near-cash securities must be available in your Investor Services account.
RSP/RIF Qualified Investments
In order to be considered as a Qualified Investment in a CIBC self-directed RSP/RIF, the following criteria have to be met:
- The investment has to fall within the "Qualified Investment Guidelines", set by the Income Tax Act.
- The investment also has to fall within the guidelines of CIBC Trust Corp (the trustee for Investor Services RSP/RIF accounts).
When selecting the "Use Cash/Margin" settlement option, sufficient cash or cash equivalents, must be available in your Investor Services account to cover the entire purchase (including commissions) for your trade to be accepted electronically. "Cash equivalents" are defined as a pending Mutual Fund sale, a pending equity sale at "market" or a previously filled security sale.
For Non-Locked-In RSPs with insufficient cash positions, you may initiate a contribution in the form of a same day "Cash Transfer" from your bank account on-line. Before placing your trade, simply go to the "Trading" tab and select "Cash Transfer". Remember to check "Open Orders" to verify the status of your request.
When selecting the "Sell Money Market Fund" settlement option, you must hold a sufficient amount of Money Market fund or T-Bill fund (CIBC or other Fund companies) in your Investor Services Account to cover the net amount owing after the trade. When selecting the "Sell Money Market Fund" settlement option, sufficient Money Market fund or T-Bill fund will be automatically sold to cover the net amount owing after your trade is filled. The settlement date on the sale of your Money Market fund or T-Bill fund will coincide with the settlement date of your purchase. Please note that you are subject to any redemption or DSC fees charged on the sell of non-CIBC Money Market funds and T-Bill funds.
Note: the "Debit Bank - Full Amount" and the "Debit Bank - Difference" settlement options will not be accepted on any Retirement Account and the order will be rejected. Confirmation of a contribution through Deposit Acceleration or instructions given to an Investment Representative to make a contribution by debiting the bank is acceptable.
Securities on Deposit Rule
For all account types, sell orders may not be accepted unless securities are showing in the account or a confirmation of delivery to CIBC World Markets can be made by the Investment Representative.
Settlement periods are short and all securities must be received and booked into the account by World Markets in Toronto. This does not leave sufficient time for delivery, either by mail or through the Bank's internal mail system. Therefore, Sell orders cannot be accepted for securities deposited at a CIBC Bank Branch until the securities show in the Investor Services account.
Uncleared Funds Policy
Investor Services will apply the following holds on recent deposits made to an Investor Services account:
- 10 business days for Canadian funds (drawn on non-CIBC accounts)
- 10 business days for U.S. funds drawn on a Canadian institution
- 20 business days for U.S. funds drawn on US institutions
Investment Representatives and Customer Service Representatives will not remove funds from the Investor Services account until the funds have both settled and cleared.
In order to prevent holds on recent deposits, clients can arrange to have funds sent to their Investor Services account via "Deposit Acceleration" from their CIBC Branch.
1 Investor’s Edge only.
