The Canada Deposit Insurance Corporation (CDIC) insures your bank deposits, but how are your investments covered? While you\u2019re never fully shielded from the risk of investment losses, the Canadian Investor Protection Fund (CIPF) protects the money in your investment accounts.<\/p>\n\n\n\n
CIPF coverage gives both seasoned and beginner investors<\/a> peace of mind that if the institution holding their investments fails, and investors’ assets are missing or at risk, the CIPF will step in to provide financial protection up to a certain amount.<\/p>\n\n\n\n The CIPF is a not-for-profit organization that follows a mandate established by Canada\u2019s provincial and territorial securities regulators. It is sponsored by members of the Investment Industry Regulatory Organization of Canada (IIROC), the self-regulatory organization for firms registered as investment dealers in Canada.<\/p>\n\n\n\n CIPF provides coverage to eligible clients, ensuring that the securities, cash or other assets<\/a> they hold with an investment dealer are protected if the dealer becomes insolvent and fails to return their property.<\/p>\n\n\n\n CIPF coverage is automatically applied when you open your account with a member firm, doesn\u2019t cost an investor anything, and doesn\u2019t depend on an investor\u2019s residency or citizenship. More than 170 investment dealers are members of the CIPF. A directory of CIPF member firms is available online<\/a>.<\/p>\n\n\n\n CIPF coverage extends to cash balances, securities, commodities, futures contracts and segregated insurance funds held in accounts with an IIROC member firm that are not returned to you after that firm becomes insolvent<\/a>.<\/p>\n\n\n\n CIFP\u2019s objective is to return the property to the client, but the fund makes it clear that it doesn\u2019t guarantee the value of an investment.<\/p>\n\n\n\n For example, say you\u2019ve decided to invest in stocks<\/a> and purchased 100 shares of Company XYZ for $100 two years ago, but the stock was worth $75 per share on the day your broker became insolvent. The CIFP would aim to return the 100 shares to you \u2014 and it would compensate you at $75 per share, based on their value on the date of insolvency.<\/p>\n\n\n\n Limits on CIPF protection for individuals:<\/p>\n\n\n\n Corporations, partnerships, unincorporated organizations and trusts are subject to slightly different limitations, but it is typically $1 million for all accounts combined.<\/p>\n\n\n\n While the CIPF will cover investor losses in cases where an investment firm becomes insolvent, it\u2019s also important to be aware of the things CIPF won\u2019t reimburse.<\/p>\n\n\n\n For example, CIPF coverage does not apply to<\/p>\n\n\n\n Both the CIPF and the Canada Deposit Insurance Corporation (CDIC)<\/a> offer financial protection for individuals in the event of financial institution insolvency, but the two types of coverage are unrelated.<\/p>\n\n\n\n The CIFP is designed to protect the property within an investment account<\/strong> held by IIROC member firms if the investment dealer becomes insolvent.[1]<\/a><\/p>\n\n\n\n In contrast, CDIC coverage applies to eligible deposits<\/strong> in case of any failure of member financial institutions, including banks, credit unions<\/a> and trust companies.[2]<\/a><\/p>\n\n\nWho is the CIPF?<\/h2>\n\n\n\n
CIPF coverage rules<\/h2>\n\n\n\n
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CIPF vs. CDIC: What is and isn\u2019t covered<\/h2>\n\n\n\n