How Stock Markets Are Regulated in the US and Canada: SEC, FINRA, CSA, CIRO, SIPC, and CIPF

In the United States, stock markets are regulated by a federal agency, the Securities and Exchange Commission (SEC), with day-to-day oversight of brokers delegated to a self-regulatory organisation, FINRA. In Canada there is no single national securities regulator: each province and territory has its own, and they coordinate through the Canadian Securities Administrators (CSA), while dealers are overseen by the Canadian Investment Regulatory Organization (CIRO).

In short: securities regulation in both countries has three layers. Government regulators write and enforce the rules (the SEC in the US, provincial and territorial regulators in Canada). Self-regulatory organisations supervise brokers and trading (FINRA in the US, CIRO in Canada). And industry-funded protection funds (SIPC in the US, CIPF in Canada) return customer assets if a member firm fails, up to set limits. None of them protects you from a stock going down.

Why regulation exists

Most modern securities law in the US dates from the aftermath of the 1929 crash (see stock market crashes in history). The core ideas have stayed the same since:

Disclosure. Companies that sell shares to the public must tell investors the truth about their business, and keep doing so.
Fair dealing. The people and firms who handle your orders and money must be registered, qualified, and held to conduct rules.
Fair markets. Exchanges and trading must be orderly, with rules against manipulation and insider trading.
Custody. Firms that hold customers’ assets must keep them separate from their own.

Regulation does not guarantee returns, approve stocks as good investments, or prevent losses from ordinary market moves.

United States

The SEC

The SEC was created by the Securities Exchange Act of 1934, a year after the Securities Act of 1933 set disclosure rules for companies issuing new securities. The SEC:

Requires public companies to file registration statements and periodic reports (10-K, 10-Q, 8-K) on its EDGAR system. See how to read a 10-K.
Registers and oversees exchanges, broker-dealers, clearing agencies, investment advisers, and funds.
Writes market structure rules, such as those governing how orders are routed and how quotes are displayed.
Enforces securities laws through civil actions, and refers criminal cases to the Department of Justice.

Two later laws matter for ordinary investors: the Investment Company Act of 1940, which governs mutual funds and ETFs, and the Investment Advisers Act of 1940, which governs people paid to give investment advice. Since June 30, 2020, brokers recommending investments to retail customers have also been subject to the SEC’s Regulation Best Interest.

FINRA

The Financial Industry Regulatory Authority (FINRA) is a self-regulatory organisation overseen by the SEC. It was formed in 2007 by combining the National Association of Securities Dealers (NASD) with the member regulation arm of the New York Stock Exchange. FINRA:

Licenses and tests registered representatives (the individuals at brokerages).
Writes and enforces conduct rules for broker-dealers, and examines firms.
Surveils trading across markets for manipulation and insider trading.
Runs BrokerCheck, a free public database of brokers’ registration and disciplinary history.
Operates the main arbitration forum for disputes between investors and brokers.

Exchanges such as the NYSE and Nasdaq are also self-regulatory organisations with their own listing standards and trading rules.

The CFTC and the states

The Commodity Futures Trading Commission (CFTC) regulates futures and most options on futures, including stock index futures. It does not regulate ordinary stock trading, but the two markets are tightly linked, which is why the SEC and CFTC coordinate on things like market-wide circuit breakers.

Each state also has a securities regulator, which handles registration of smaller investment advisers and many local fraud cases.

Custody rules

The SEC’s customer protection rule (Rule 15c3-3) requires broker-dealers to keep customers’ fully paid securities in their possession or control and to hold a reserve of cash for customer balances, separate from the firm’s own money. The net capital rule (Rule 15c3-1) requires firms to hold minimum liquid capital. Together, these are why customer assets are usually intact when a broker fails, and why SIPC payouts are rarely needed at scale.

Canada

The provincial and territorial regulators and the CSA

Canada has 13 securities regulators, one for each province and territory, such as the Ontario Securities Commission (OSC), the Autorité des marchés financiers (AMF) in Quebec, the British Columbia Securities Commission, and the Alberta Securities Commission. They coordinate through the CSA, which develops harmonised rules called national instruments.

Key examples:

National Instrument 31-103 sets registration requirements for dealers and advisers, including know-your-client, suitability, and conflict-of-interest obligations, strengthened by the Client Focused Reforms.
Disclosure rules require public companies to file prospectuses, financial statements, and annual information on SEDAR+.

Most provinces use a passport system, so a firm approved by its principal regulator can operate in other passport jurisdictions. Ontario does not participate in the passport system, but recognises decisions under a parallel interface.

CIRO

The Canadian Investment Regulatory Organization (CIRO) is the national self-regulatory organisation for investment dealers and mutual fund dealers, and for trading on Canada’s equity and debt marketplaces. It was created when the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA) combined on January 1, 2023, and took the name CIRO on June 1, 2023.

CIRO:

Registers and supervises dealer firms and their advisers.
Sets dealer rules, including capital and margin requirements.
Surveils trading on Canadian stock marketplaces under its market integrity rules.
Investigates and disciplines member firms and individuals.

OBSI

If you have a complaint a firm won’t resolve, the Ombudsman for Banking Services and Investments (OBSI) is a free, independent dispute service. As of November 2026, OBSI can recommend compensation of up to $350,000, but its recommendations are not legally binding on firms. The CSA has proposed giving OBSI binding authority, but as of November 2026 that change is not in force.

Investor protection: SIPC and CIPF

Both countries have an industry-funded protection fund for one specific risk: your brokerage firm fails and your assets are missing.

SIPC (United States)

The Securities Investor Protection Corporation (SIPC) was created by the Securities Investor Protection Act of 1970. When a member firm fails and customer assets are missing, SIPC protects each customer up to $500,000, including a maximum of $250,000 in cash.

The limit applies per customer per separate capacity. Accounts held in different legal capacities, such as an individual account, a joint account, and an IRA, are generally protected separately at the same firm. Multiple accounts in the same capacity are combined.

SIPC does not cover:

Declines in market value.
Worthless securities, or losses from bad advice.
Commodity futures (outside special portfolio margining accounts), foreign exchange trades, and most unregistered investment contracts.
Crypto assets that are not registered securities.

Cash swept from a brokerage account into a partner bank may instead be covered by FDIC deposit insurance, which is separate and has its own limits and rules.

CIPF (Canada)

The Canadian Investor Protection Fund (CIPF) protects customers of CIRO member firms (investment dealers and mutual fund dealers) if the firm becomes insolvent. It combined with the MFDA Investor Protection Corporation on January 1, 2023.

As of November 2026, CIPF coverage is up to $1 million per account category, per member firm:

CIPF category	Examples	Limit
General accounts	Cash and margin accounts, TFSAs, FHSAs	$1 million combined
Registered retirement accounts	RRSPs, RRIFs, LIRAs, LIFs	$1 million combined
Registered education savings plans	RESPs where you are the subscriber	$1 million combined

Note that a TFSA and a regular margin account at the same firm share one $1 million limit, because both are general accounts. An RRSP and a RRIF at the same firm also share one limit.

CIPF does not cover market losses, unsuitable investments, or the failure of the company that issued a security. Crypto assets are excluded. Account types are explained in Canadian registered accounts explained.

A worked example

US. You hold, at one failed broker, an individual account with $400,000 in stocks and $200,000 in cash, plus an IRA with $300,000 in stocks. Assume none of it can be found.

Individual account: $600,000 total, above the $500,000 limit. Cash of $200,000 is under the $250,000 cash cap. SIPC protects up to $500,000; $100,000 becomes a general creditor claim against the failed firm’s estate.
IRA (a separate capacity): $300,000, protected in full.

Canada. At one failed dealer, you hold a margin account with $700,000, a TFSA with $400,000, and an RRSP with $600,000, all missing.

General category: margin + TFSA = $1.1 million; CIPF covers up to $1 million.
Retirement category: RRSP $600,000, covered in full.

In practice, because of segregation rules, most customer property at a failed firm is usually still there and is transferred to another firm; the protection fund covers the shortfall.

What can go wrong

Confusing protection with insurance against losses. SIPC and CIPF return missing assets after a firm fails. A stock falling 90% is not a claim.
Dealing with an unregistered firm. Neither fund covers firms that are not members. Check FINRA BrokerCheck or the CSA’s aretheyregistered.ca, and see common stock market scams.
Assuming all accounts are separate. In Canada, a TFSA and a non-registered account share a CIPF limit at the same firm.
Expecting a fast payout. Liquidations take time, and access to your assets can be frozen for weeks or longer.

The short version

In the US, the SEC writes and enforces securities law and FINRA supervises brokers, with the CFTC overseeing futures. In Canada, 13 provincial and territorial regulators coordinate through the CSA, and CIRO supervises dealers and trading. If a brokerage fails, SIPC covers up to $500,000 per separate capacity including $250,000 in cash, and CIPF covers up to $1 million per account category, as of November 2026. Neither covers market losses or fraud by unregistered firms.

This is general education, not tax or legal advice. Rules, coverage limits, and regulatory structures change over time and differ by province and state. For decisions about your own situation, consult a qualified professional or the relevant regulator directly.