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| Section | Weight | Objectives |
|---|---|---|
| Market integrity, trade execution and settlement | 12% | - Features of different order types - Reporting obligations to firms and regulators - Gatekeeping requirements for manipulative and deceptive practices, unacceptable activities and front running - Order confirmation requirements - Specialized trading agreements for derivative accounts - Order entry, trade management, settlement and delivery - Universal Market Integrity Rules - Margin requirements - Features of different account types - Order variations, cancellations and corrections - Functions of investment banking, research and corporate finance - UMIR gatekeeping obligations |
| Market and company analysis | 8% | - Basic market theories and stock market behaviour - Factors influencing the macroeconomy - Economic indicators and sources of information - Rules relating to companies - Company performance analysis tools - Effects of macroeconomic factors on financial markets - Technical and statistical analysis tools and information sources - Basic economic theories - Industry performance analysis |
| Client complaint handling and reporting | 5% | - Investment Dealer obligations to clients - Policies and procedures for reporting, handling and maintaining complaint records - Potential client issues, liability and consequences - Recourse available to dissatisfied clients - Investment Dealer complaint reporting obligations and penalties - Role of CIRO and provincial regulators in the complaints handling framework - Prohibited practices in client settlement agreements |
| Prospective client relationships | 10% | - Client relationship model - Required account agreement and Firm Welcome package documents - Retail client information collection - Third parties and other professionals in the client's life - Exemptions under National Instrument 45-106 - Impact of fees, turnover and taxes on investment returns - Investment Dealer onboarding process - Role of cost in product selection - Client record documentation, filing and maintenance - Differences between retail and institutional clients - Institutional client qualification requirements |
| Conflicts of interest and ethics | 15% | - Ethical and legal responsibilities to clients - Client confidentiality policies and procedures - Role of cybersecurity in protecting confidential information - Importance of ethics and its relationship to rules - Information controls, barriers, firewalls and restricted lists - Ethical principles and standards of conduct for Approved Persons and Investment Dealers - Inappropriate or prohibited personal financial dealings with clients - CIRO and other ethical standards of conduct - Activities outside an Investment Dealer - Importance of managing conflicts of interest - Requirements regarding positions of influence - Conflicts of interest management process |
| Scope of client relationships | 15% | - Institutional client sophistication assessment and suitability exemptions - Systematic approaches to investment management and investment strategies - Investment performance benchmarks - Role of the Registered Representative in providing client service - Account appropriateness obligations - Product due diligence obligations - Typical services provided by retail Investment Dealers - Account appropriateness versus suitability determination - Internal escalation procedures and subject matter experts - Suitability determination requirements for retail clients - Exemptions from suitability determination requirements - Requirements for working with clients in the United States and other foreign jurisdictions - Purpose and content of relationship disclosure - Typical services provided by institutional Investment Dealers - Know-your-product obligations - Trust, agency and fiduciary duty - Role of the Investment Representative in providing client service |
| Securities, managed products, mutual funds and other investments | 19% | - Considerations affecting fixed income investors - Considerations affecting mutual fund investors - Features, risks and returns of managed products - Types of pooled products - Considerations affecting equity investors and potential shareholders - Considerations affecting managed product investors - Purpose and uses of market indices - Types, features, risks and returns of equities - Types, features, risks and returns of fixed income securities and products - Other investments including hedge funds, structured products, alternative investment funds, crypto assets and ESG-related products - Considerations affecting exchange-traded fund investors - Asset classes generally sold and traded at an Investment Dealer |
| Overview of Canadian securities regulatory framework | 10% | - Role and authority of the Canadian Securities Administrators and provincial and territorial securities and derivatives regulators - Other applicable laws including confidentiality, privacy, anti-spam, company disclosure and shareholder rights - Investment Dealer registration and individual approval requirements - Purpose and implications of the Bank Act and Bankruptcy and Insolvency Act - Function and purpose of investment industry marketplaces - Function and purpose of clearing agencies - Function and purpose of other investment industry regulators and agencies - Function and purpose of the Canadian Investor Protection Fund - Role and authority of the Canadian Investment Regulatory Organization - Anti-money laundering and anti-terrorist financing legislation and regulations - Criminal Code and its application to financial crime |
| Derivatives | 5% | - Prohibited derivative trading practices - Features of other derivative contract types - Single and multi-legged derivative trading strategies - Features of options contract types - Basic uses of derivatives - Administrative requirements for derivative trading with clients - Basic transactional elements of futures and options - Listed versus over-the-counter derivative markets |
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NEW QUESTION # 71
A shareholder owns shares in a company that announces a 2-for-1 stock split. Which of the following most accurately describes the impact of this stock split?
Answer: B
Explanation:
The correct answer is A . In a 2-for-1 stock split , each existing share is divided into two shares. Immediately following the mechanical adjustment, the shareholder owns twice as many shares, while the price per share is approximately halved. Consequently, neither the investor's proportional ownership interest nor the aggregate market value of the position changes solely because of the split.
The Canada Revenue Agency explains the effect directly: in a 2-for-1 split, the number of shares doubles and the price per share decreases by 50% . Its example shows 100 shares at $60 becoming 200 shares at
$30, leaving the total holding worth $6,000 in either case.
For tax purposes, the shareholder's total adjusted cost base is likewise spread across the larger number of shares. Thus, if an investor's total ACB was $1,000 before the split, that total does not become $2,000 merely because the number of shares doubles; instead, the ACB per share falls proportionately .
B and C incorrectly treat additional shares as newly created economic wealth. D reverses the effect because the proportional price adjustment means that company market capitalization does not automatically shrink.
Study Guide Reference: CIRE Element 7 - equities, share characteristics and corporate actions; Canadian tax treatment of stock splits and consolidations.
NEW QUESTION # 72
When an employee of an Investment Dealer engages in an outside business activity what must they do?
Answer: A
Explanation:
The correct answer is B . An Approved Person cannot independently commence an outside activity without the sponsoring Investment Dealer being informed and approving the activity before it begins . IDPC Rule
2554 requires the Approved Person to inform the Dealer of the outside activity and obtain the Dealer's prior approval . CIRO guidance further requires Dealers to maintain robust pre-approval procedures, consider potential client confusion and conflicts of interest, implement effective controls and qualified supervision, and retain supporting records.
Thus, among the available choices, B accurately expresses the required advance Dealer authorization . The current IDPC rule itself uses the term "prior approval"; documented firm approval procedures give effect to this requirement. The CIRE syllabus specifically requires candidates to apply requirements governing activities outside an Investment Dealer, including conflict assessment, effective controls, supervision, due diligence for approvals and appropriate recordkeeping.
A is incorrect because monitoring and compliance supervision remain responsibilities of the Dealer rather than being left exclusively to the employee. C is not a requirement; an outside activity can be unrelated to securities business provided it satisfies regulatory and Dealer conditions. D is unrelated to whether an outside activity may be conducted.
Outside activities that create material conflicts that cannot be appropriately controlled in the client's best interest should not be permitted.
Study Guide Reference: CIRE Element 9.9 - Activities outside an Investment Dealer; IDPC Rule 2554.
NEW QUESTION # 73
If reasonably foreseeable material conflicts of interest cannot be avoided, an Investment Dealer must ensure which of the following?
Answer: B
Explanation:
The correct answer is C . CIRO's conflict-of-interest framework requires material conflicts to be identified and addressed in the best interest of the client . Where a conflict is not avoided but can appropriately be controlled, the Investment Dealer must apply effective measures to address the conflict and provide the required disclosure to affected clients. IDPC Rule 3112 requires Dealers to address material conflicts in the client's best interest. Rule 3113 further requires written disclosure where a reasonable client would expect to be informed.
Timing is critical. Rule 3113 requires a conflict identified after account opening to be disclosed "in a timely manner" upon identification where it has not previously been disclosed. Waiting until an annual review, as D suggests, would therefore not satisfy the prescribed timing standard.
B is incorrect because conflict disclosure remains required in circumstances where a reasonable client would expect disclosure; moreover, disclosure alone does not satisfy the duty to address the conflict. A is incomplete because merely giving the client choices does not discharge the Dealer's regulatory obligation.
A technical distinction is important: if a material conflict cannot be addressed in the client's best interest at all , CIRO requires the Dealer to avoid it. Where the relationship or activity proceeds because effective controls are possible, best-interest management plus timely disclosure is required.
Study Guide Reference: CIRE Elements 9.1-9.2 - identification, avoidance, management and disclosure of conflicts; IDPC Rules 3110-3113.
NEW QUESTION # 74
What should a Registered Representative (RR) do if they unintentionally receive insider information about a publicly traded company?
Answer: A
Explanation:
The correct answer is C . Once an RR becomes aware of material non-public information (MNPI) , the information must not be used to trade, recommend trades, tip clients or otherwise obtain an advantage before it becomes generally disclosed. The RR must maintain confidentiality and escalate the matter through the Dealer's prescribed internal controls, typically the compliance department or control room .
CIRO's guidance on supervision of MNPI states specifically that Dealer employees who become aware of MNPI have an obligation to report it to the appropriate department within the firm , such as compliance or the control room. Current IDPC Rule 3508 defines material non-public information and requires Dealer policies and procedures to specifically address maintaining its confidentiality. The rule also restricts disclosure to others except in the necessary course of business.
A constitutes potential insider trading and is prohibited even if the RR believes the transaction benefits clients. B is incomplete because retaining confidentiality is necessary, but the RR must also follow the Dealer's escalation procedures. D risks unlawful tipping ; information must not be casually shared with colleagues simply to obtain advice.
The CIRE syllabus explicitly requires candidates to identify and escalate possible insider-trading activity and violations as part of CIRO's market-integrity and gatekeeping framework.
Study Guide Reference: CIRE Element 6.3 - insider trading and gatekeeping; IDPC Rule 3508 - Inside Information.
NEW QUESTION # 75
Following two recent annual reviews it was determined that a client's commission-based account is appropriately balanced. The advisor recommends trades that are unnecessary to fulfil the client's investment goals, and describes the key features of the product including the costs. Which of the following is true?
Answer: D
Explanation:
The correct answer is A . Recommending unnecessary transactions in a commission-based account creates a serious conflict because each additional trade can generate compensation for the advisor without advancing the client's investment objectives. CIRO enforcement decisions characterize excessive trading or "churning" as trading that is excessive relative to the nature of the account and client's objectives, particularly where transactions generate commissions for the representative rather than economic benefit for the client. CIRO has stated that such conduct is inconsistent with the high ethical standards expected of a Registered Representative.
The CIRE syllabus specifically requires candidates to understand trust, agency and fiduciary duty and when those concepts apply . Where the circumstances establish a fiduciary relationship-particularly through client reliance, trust or advisor control-the advisor must put the client's interests ahead of personal compensation interests.
B is incorrect because disclosure of costs does not make economically unnecessary transactions appropriate.
C is incorrect because the account's prior appropriate balance strengthens, rather than eliminates, concern about unnecessary trading. D is incorrect because best execution concerns how an order is executed , including price, cost, speed and certainty-not whether the recommendation to trade should have been made.
Study Guide Reference: CIRE Elements 3.3 and 9 - trust, agency, fiduciary duty, conflicts of interest, ethics and standards of conduct.
NEW QUESTION # 76
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