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| Section | Weight | Objectives |
|---|---|---|
| Topic 1: Prospective client relationships | 10% | - Institutional client qualification requirements - Third parties and other professionals in the client's life - Required account agreement and Firm Welcome package documents - Exemptions under National Instrument 45-106 - Impact of fees, turnover and taxes on investment returns - Role of cost in product selection - Investment Dealer onboarding process - Client relationship model - Client record documentation, filing and maintenance - Differences between retail and institutional clients - Retail client information collection |
| Topic 2: Derivatives | 5% | - Single and multi-legged derivative trading strategies - Administrative requirements for derivative trading with clients - Listed versus over-the-counter derivative markets - Basic uses of derivatives - Prohibited derivative trading practices - Features of other derivative contract types - Features of options contract types - Basic transactional elements of futures and options |
| Topic 3: Scope of client relationships | 15% | - Suitability determination requirements for retail clients - Typical services provided by retail Investment Dealers - Exemptions from suitability determination requirements - Purpose and content of relationship disclosure - Account appropriateness obligations - Investment performance benchmarks - Account appropriateness versus suitability determination - Trust, agency and fiduciary duty - Typical services provided by institutional Investment Dealers - Internal escalation procedures and subject matter experts - Role of the Investment Representative in providing client service - Systematic approaches to investment management and investment strategies - Institutional client sophistication assessment and suitability exemptions - Requirements for working with clients in the United States and other foreign jurisdictions - Know-your-product obligations - Role of the Registered Representative in providing client service - Product due diligence obligations |
| Topic 4: Market and company analysis | 8% | - Economic indicators and sources of information - Technical and statistical analysis tools and information sources - Company performance analysis tools - Effects of macroeconomic factors on financial markets - Industry performance analysis - Factors influencing the macroeconomy - Basic market theories and stock market behaviour - Rules relating to companies - Basic economic theories |
| Topic 5: Client complaint handling and reporting | 5% | - Potential client issues, liability and consequences - Investment Dealer obligations to clients - Role of CIRO and provincial regulators in the complaints handling framework - Recourse available to dissatisfied clients - Prohibited practices in client settlement agreements - Policies and procedures for reporting, handling and maintaining complaint records - Investment Dealer complaint reporting obligations and penalties |
| Topic 6: Conflicts of interest and ethics | 15% | - Importance of ethics and its relationship to rules - Client confidentiality policies and procedures - Information controls, barriers, firewalls and restricted lists - CIRO and other ethical standards of conduct - Requirements regarding positions of influence - Conflicts of interest management process - Role of cybersecurity in protecting confidential information - Inappropriate or prohibited personal financial dealings with clients - Ethical principles and standards of conduct for Approved Persons and Investment Dealers - Ethical and legal responsibilities to clients - Importance of managing conflicts of interest - Activities outside an Investment Dealer |
| Topic 7: Market integrity, trade execution and settlement | 12% | - Order variations, cancellations and corrections - Order entry, trade management, settlement and delivery - UMIR gatekeeping obligations - Functions of investment banking, research and corporate finance - Specialized trading agreements for derivative accounts - Margin requirements - Gatekeeping requirements for manipulative and deceptive practices, unacceptable activities and front running - Universal Market Integrity Rules - Order confirmation requirements - Features of different order types - Reporting obligations to firms and regulators - Features of different account types |
| Topic 8: Overview of Canadian securities regulatory framework | 10% | - Function and purpose of investment industry marketplaces - Function and purpose of other investment industry regulators and agencies - Role and authority of the Canadian Investment Regulatory Organization - Function and purpose of clearing agencies - Anti-money laundering and anti-terrorist financing legislation and regulations - Function and purpose of the Canadian Investor Protection Fund - Criminal Code and its application to financial crime - Role and authority of the Canadian Securities Administrators and provincial and territorial securities and derivatives regulators - Purpose and implications of the Bank Act and Bankruptcy and Insolvency Act - Investment Dealer registration and individual approval requirements - Other applicable laws including confidentiality, privacy, anti-spam, company disclosure and shareholder rights |
| Topic 9: Securities, managed products, mutual funds and other investments | 19% | - Other investments including hedge funds, structured products, alternative investment funds, crypto assets and ESG-related products - Considerations affecting fixed income investors - Purpose and uses of market indices - Types, features, risks and returns of fixed income securities and products - Asset classes generally sold and traded at an Investment Dealer - Considerations affecting equity investors and potential shareholders - Features, risks and returns of managed products - Types of pooled products - Considerations affecting mutual fund investors - Considerations affecting exchange-traded fund investors - Considerations affecting managed product investors - Types, features, risks and returns of equities |
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NEW QUESTION # 20
Which of the following best describes the key difference between a call option and a put option in an options contract?
Answer: C
Explanation:
The correct answer is C . An option gives its holder a right, but not an obligation , relating to an underlying asset. A call option gives the holder the right to buy the underlying asset at the predetermined exercise or strike price. A put option gives the holder the right to sell the underlying asset at the strike price. CIRO states this distinction directly: a call provides the right to buy, while a put provides the right to sell, at a specified price within the applicable period.
This distinction determines the basic market exposure. A call buyer generally benefits when the underlying asset increases sufficiently above the strike price, whereas a put buyer generally benefits when the underlying falls sufficiently below the strike price, subject in each case to the premium paid and other contractual terms.
A and B reverse the rights associated with calls and puts. D is incorrect because dividend entitlement is not the defining right of a put option. Options concern contractual purchase or sale rights rather than direct shareholder rights.
The CIRE syllabus expressly requires candidates to remember the main characteristics of puts and calls , American- and European-style options, and transactional elements including the underlying interest, premium, strike price and expiry.
Study Guide Reference: CIRE Elements 8.1 and 8.4 - Puts, Calls, Strike Price, Premium and Expiry.
NEW QUESTION # 21
An investment analyst is explaining the characteristics of principal-protected notes (PPNs) to a client.
Which of the following is a key feature of a PPN?
Answer: C
Explanation:
The correct answer is B . A principal-protected note (PPN) is a structured debt product designed so that, subject to the terms of the note and the creditworthiness of the guarantor or issuer, the investor's original principal is protected if the note is held to maturity . CSA investor material describes a PPN as consisting partly of an investment that promises the return of the investor's original amount after the specified term, with a guarantor supporting that amount.
The second component typically provides exposure to an index, fund or other market-based investment, creating the potential for additional return. Importantly, that additional return is not guaranteed . CIRO guidance also emphasizes that principal protection is normally dependent on holding the PPN until maturity; early redemption may cause the investor to lose the protection and incur additional charges.
B is therefore the defining feature. A overstates the risk because principal protection distinguishes PPNs from direct equity ownership, although PPNs still involve liquidity, credit, complexity and opportunity-cost risks. C is incorrect because returns above principal are not guaranteed. D directly contradicts the product's defining characteristic.
Within the CIRE syllabus, PPNs fall within structured products , for which candidates must know their features, risks, returns, costs and disclosure requirements.
Study Guide Reference: CIRE Element 7.12 - Structured Products, including principal-protected structures.
NEW QUESTION # 22
A Registered Representative (RR) determines that an investment strategy is not suitable for a retail client. The client decides that they want to invest anyway. Which of the following should the RR do?
Answer: C
Explanation:
The correct answer is B . A client-directed order does not eliminate the Registered Representative's suitability obligation. When an RR determines that a proposed investment action is unsuitable or does not put the client's interest first, CIRO requires the RR to inform the client of that determination and recommend a suitable alternative action .
CIRO's suitability guidance specifically states that where a client wants to make an unsuitable trade, the Registered Individual must advise the client against proceeding and "recommend an alternative action." Current joint CSA/CIRO guidance further confirms the required sequence: explain why the proposed trade is unsuitable, recommend an alternative that is suitable and puts the client's interest first, and, if the client still insists on proceeding, confirm and document the client's instruction.
Accordingly, D is too absolute. CIRO states that an RR is not obligated to accept an unsuitable order, but outright refusal is not automatically required in every situation. The mandatory initial regulatory response is the suitability warning and alternative recommendation. A is unnecessary because the matter is handled under established Dealer procedures and suitability rules. C is not the prescribed regulatory treatment.
The CIRE syllabus requires understanding of retail-client suitability and the RR's responsibility for applying suitability requirements.
Study Guide Reference: CIRE Elements 3.1 and 3.10-3.13 - Registered Representative duties and retail-client suitability; IDPC Rule 3402(5).
NEW QUESTION # 23
When assessing client suitability, what is the difference between risk tolerance and risk capacity?
Answer: D
Explanation:
The correct answer is C . CIRO distinguishes two separate components of a client's risk profile. Risk tolerance refers to the client's psychological or behavioural willingness to accept investment risk , including potential fluctuations and losses. Risk capacity , by contrast, refers to the client's financial ability to endure potential financial loss without materially compromising the client's financial obligations, objectives or standard of living. CIRO's KYC guidance states this distinction expressly.
Risk capacity is assessed using objective financial factors such as income, assets, debts, liquidity requirements, age, life stage and the proportion of the client's overall wealth represented by the investment account. Risk tolerance is more subjective and examines how much uncertainty or loss the client is genuinely comfortable accepting.
The two measures can differ substantially. For example, a wealthy client may have considerable financial capacity to withstand losses but very little personal willingness to accept volatility. Conversely, a client may be willing to pursue aggressive returns while lacking the financial resources to absorb significant losses.
CIRO guidance indicates that the overall risk profile should appropriately reflect these limitations rather than simply adopting the more aggressive measure.
The CIRE syllabus expressly includes "Risk profile: risk tolerance and risk capacity" in mandatory retail KYC information.
Study Guide Reference: CIRE Element 2.6 - Retail client KYC information and risk profile.
NEW QUESTION # 24
Once the know-your-client (KYC) information has been collected what should an Investment Dealer do with that information?
Answer: C
Explanation:
The correct answer is C . Once required KYC information has been collected, the Investment Dealer must take reasonable steps to obtain the client's confirmation that the information is accurate . CIRO guidance interpreting IDPC Rule 3202(3) states directly that the Dealer must obtain client confirmation of the accuracy of information collected under the KYC requirements, including significant subsequent changes.
Confirmation does not necessarily require the specific formal certification contemplated in A. Depending on the circumstances and the Dealer's procedures, confirmation may be evidenced by handwritten, electronic or digital signatures, email confirmation, or appropriately documented client instructions and file notes. Recent joint CSA/CIRO guidance reiterates that confirmation should occur within a reasonable time and that firms must retain adequate evidence of meaningful client interaction.
B is incorrect because the regulatory requirement is not for the Dealer to independently substitute its own judgment for the client's confirmation of personal KYC facts. The Dealer must exercise due diligence, but the collected information must ultimately be confirmed with the client. D is plainly incorrect because KYC records are subject to recordkeeping and updating requirements rather than immediate destruction.
Accurate KYC information is essential because it underpins suitability determinations, including investment objectives, financial circumstances, risk profile and time horizon.
Study Guide Reference: CIRE Element 2.6 - KYC Information and Client Confirmation; IDPC Rule
3202(3).
NEW QUESTION # 25
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