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| Section | Weight | Objectives |
|---|---|---|
| Topic 1: Overview of Canadian securities regulatory framework | 10% | - Other applicable laws including confidentiality, privacy, anti-spam, company disclosure and shareholder rights - Function and purpose of clearing agencies - Role and authority of the Canadian Investment Regulatory Organization - Function and purpose of other investment industry regulators and agencies - Anti-money laundering and anti-terrorist financing legislation and regulations - Investment Dealer registration and individual approval requirements - Function and purpose of the Canadian Investor Protection Fund - Purpose and implications of the Bank Act and Bankruptcy and Insolvency Act - Role and authority of the Canadian Securities Administrators and provincial and territorial securities and derivatives regulators - Criminal Code and its application to financial crime - Function and purpose of investment industry marketplaces |
| Topic 2: Scope of client relationships | 15% | - Typical services provided by retail Investment Dealers - Trust, agency and fiduciary duty - Systematic approaches to investment management and investment strategies - Account appropriateness versus suitability determination - Requirements for working with clients in the United States and other foreign jurisdictions - Know-your-product obligations - Exemptions from suitability determination requirements - Role of the Investment Representative in providing client service - Institutional client sophistication assessment and suitability exemptions - Internal escalation procedures and subject matter experts - Purpose and content of relationship disclosure - Role of the Registered Representative in providing client service - Investment performance benchmarks - Suitability determination requirements for retail clients - Product due diligence obligations - Account appropriateness obligations - Typical services provided by institutional Investment Dealers |
| Topic 3: Market integrity, trade execution and settlement | 12% | - Order entry, trade management, settlement and delivery - Features of different order types - Order variations, cancellations and corrections - Functions of investment banking, research and corporate finance - Features of different account types - UMIR gatekeeping obligations - Specialized trading agreements for derivative accounts - Gatekeeping requirements for manipulative and deceptive practices, unacceptable activities and front running - Universal Market Integrity Rules - Order confirmation requirements - Reporting obligations to firms and regulators - Margin requirements |
| Topic 4: Client complaint handling and reporting | 5% | - Recourse available to dissatisfied clients - Role of CIRO and provincial regulators in the complaints handling framework - Investment Dealer obligations to clients - Policies and procedures for reporting, handling and maintaining complaint records - Investment Dealer complaint reporting obligations and penalties - Prohibited practices in client settlement agreements - Potential client issues, liability and consequences |
| Topic 5: Prospective client relationships | 10% | - Third parties and other professionals in the client's life - Investment Dealer onboarding process - Client record documentation, filing and maintenance - Differences between retail and institutional clients - Client relationship model - Role of cost in product selection - Impact of fees, turnover and taxes on investment returns - Exemptions under National Instrument 45-106 - Institutional client qualification requirements - Retail client information collection - Required account agreement and Firm Welcome package documents |
| Topic 6: Market and company analysis | 8% | - Basic economic theories - Company performance analysis tools - Basic market theories and stock market behaviour - Rules relating to companies - Technical and statistical analysis tools and information sources - Factors influencing the macroeconomy - Economic indicators and sources of information - Effects of macroeconomic factors on financial markets - Industry performance analysis |
| Topic 7: 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 mutual fund investors - Types of pooled products - Considerations affecting equity investors and potential shareholders - Types, features, risks and returns of equities - Purpose and uses of market indices - Considerations affecting managed product investors - Considerations affecting fixed income investors - Considerations affecting exchange-traded fund investors - Types, features, risks and returns of fixed income securities and products - Features, risks and returns of managed products - Asset classes generally sold and traded at an Investment Dealer |
| Topic 8: Derivatives | 5% | - Features of options contract types - Administrative requirements for derivative trading with clients - Prohibited derivative trading practices - Features of other derivative contract types - Listed versus over-the-counter derivative markets - Basic uses of derivatives - Basic transactional elements of futures and options - Single and multi-legged derivative trading strategies |
| Topic 9: Conflicts of interest and ethics | 15% | - CIRO and other ethical standards of conduct - Ethical principles and standards of conduct for Approved Persons and Investment Dealers - Activities outside an Investment Dealer - Requirements regarding positions of influence - Importance of managing conflicts of interest - Information controls, barriers, firewalls and restricted lists - Inappropriate or prohibited personal financial dealings with clients - Role of cybersecurity in protecting confidential information - Importance of ethics and its relationship to rules - Client confidentiality policies and procedures - Ethical and legal responsibilities to clients - Conflicts of interest management process |
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NEW QUESTION # 26
What information should the Relationship Disclosure specify in relation to benchmarks?
Answer: A
Explanation:
Relationship Disclosure must give the client a general explanation of how investment performance benchmarks may be used to assess investment performance . It is not necessary to provide every conceivable benchmark, a prescribed minimum number of benchmarks, or benchmarks used by competing products. Consequently, B is the correct answer .
CIRO IDPC Rule 3216(5)(ii)(m) expressly requires "a general explanation of how investment performance benchmarks might be used to assess the performance of a client's investments" , together with information concerning any benchmark information the Dealer Member may make available to the client. This requirement is designed to help a retail client understand the purpose of benchmarking rather than overwhelm the client with exhaustive comparative data.
A benchmark provides a reference point against which investment or portfolio performance may be considered. For the comparison to be meaningful, the benchmark should be relevant to the investment's asset class, geographic exposure, market segment and risk characteristics. An equity portfolio, for example, should not normally be evaluated against an unrelated short-term fixed-income benchmark.
The CIRE syllabus separately requires candidates to understand both the purpose and content of relationship disclosure and the use of relevant investment performance benchmarks , reinforcing the importance of appropriate-not exhaustive-benchmark comparison.
Study Guide Reference: CIRE Elements 3.4 and 3.16; IDPC Rule 3216(5)(ii)(m).
NEW QUESTION # 27
Which of the following best describes the key difference between a call option and a put option in an options contract?
Answer: A
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 # 28
What is the best course of action if an Investment Representative (IR) discovers a colleague engaging in what appears to be unethical behaviour?
Answer: D
Explanation:
The correct answer is A . An Investment Representative who observes conduct that appears unethical should escalate the matter through the Investment Dealer's established supervisory or compliance channels .
This allows appropriately authorized personnel to investigate the facts, preserve relevant records and determine whether corrective action or external regulatory reporting is required.
CIRO Rule 1402 requires Regulated Persons to maintain high standards of ethics and conduct, act openly and fairly, and avoid conduct that is unbecoming or detrimental to the public interest. CIRO's current trading- supervision guidance reinforces the broader principle that compliance is a firm-wide responsibility:
employees are expected to act on or escalate compliance issues , and the existence of a compliance department does not permit other employees to ignore suspected misconduct.
B is not ordinarily the first step merely because conduct appears unethical. Whether CIRO or another authority must subsequently be notified depends on the facts and applicable reporting rules; compliance and supervisory personnel determine and execute that process. C is inadequate because confronting the colleague could interfere with an investigation or permit evidence to be altered. D clearly conflicts with the ethical obligation to respond appropriately to suspected misconduct.
Where specific market-integrity violations are suspected, CIRO rules likewise require prompt reporting to a supervisor or compliance department.
Study Guide Reference: CIRE Elements 9.3-9.6 - ethical responsibilities, ethical decision-making and CIRO standards of conduct; IDPC Rule 1402.
NEW QUESTION # 29
A client has an account with their Investment Dealer. The dealer acts as principal in a trade for them at a price that is not as good as the prevailing market price. How would this trade be considered?
Answer: D
Explanation:
The correct answer is C . An Investment Dealer's decision to act as principal -trading from its own inventory against the client's order-does not eliminate its obligation to pursue the most advantageous execution terms reasonably available for the client. CIRO's best-execution framework defines best execution by reference to the overall execution terms reasonably available, with relevant factors including price, transaction costs, speed and certainty of execution.
Client-principal trading involves additional conflict considerations. Under UMIR 8.1, specified client- principal transactions require the Dealer to take reasonable steps to ensure the price represents the best available price under prevailing market conditions ; for covered smaller orders, the client must receive price improvement relative to the marketplace. CIRO's policy explains that where the Dealer sells to its client, the client should pay less than the best ask in the circumstances covered by the rule.
Therefore, deliberately giving the client a price inferior to reasonably available market terms is inconsistent with the best-execution obligation. A is unrelated because no margin deficiency is described. B reverses the regulatory principle: principal capacity does not excuse inferior execution. D requires additional elements of manipulative or deceptive market conduct; an unfavourable principal price alone does not establish market manipulation.
Study Guide Reference: CIRE Element 6.1 - Best Execution and client-principal trading; IDPC Rule
3100 Part C and UMIR 8.1.
NEW QUESTION # 30
Which of the following factors must an Investment Dealer address when executing all client orders?
Answer: B
Explanation:
The correct answer is B . Under CIRO's best-execution framework, Investment Dealers must maintain policies and procedures designed to achieve the most advantageous execution terms reasonably available for clients. IDPC Rule 3121 expressly identifies "the certainty of execution of the client order" as one of the broad best-execution factors that must be addressed.
For listed securities and listed derivatives, the prescribed broad factors are the price of the security or derivative, speed of execution , certainty of execution , and overall transaction cost where those costs are passed on to clients. Best execution therefore involves more than automatically selecting the apparently best displayed price; execution probability, liquidity, order size, market conditions, routing and transaction costs may affect the optimal handling of an order. CIRO guidance reinforces these four central factors.
A is incorrectly phrased because the regulatory factor is the price of the security or derivative in achieving execution , not the security's resulting market price after an order is placed. C confuses speed of reporting with speed of execution . D refers to the Dealer's own execution cost, whereas the rule focuses on overall transaction costs when passed on to the client .
The CIRE syllabus specifically includes best execution within its market-integrity learning outcomes.
Study Guide Reference: CIRE Element 6.1 - Best Execution; IDPC Rules 3120-3121.
NEW QUESTION # 31
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