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| Section | Weight | Objectives |
|---|---|---|
| Prospective client relationships | 10% | - Institutional client qualification requirements - Client relationship model - Role of cost in product selection - Exemptions under National Instrument 45-106 - Retail client information collection - Third parties and other professionals in the client's life - Impact of fees, turnover and taxes on investment returns - Required account agreement and Firm Welcome package documents - Client record documentation, filing and maintenance - Investment Dealer onboarding process - Differences between retail and institutional clients |
| Scope of client relationships | 15% | - Product due diligence obligations - Typical services provided by institutional Investment Dealers - Suitability determination requirements for retail clients - Investment performance benchmarks - Typical services provided by retail Investment Dealers - Role of the Investment Representative in providing client service - Account appropriateness versus suitability determination - Systematic approaches to investment management and investment strategies - Institutional client sophistication assessment and suitability exemptions - Account appropriateness obligations - Role of the Registered Representative in providing client service - Purpose and content of relationship disclosure - Requirements for working with clients in the United States and other foreign jurisdictions - Internal escalation procedures and subject matter experts - Trust, agency and fiduciary duty - Know-your-product obligations - Exemptions from suitability determination requirements |
| Market integrity, trade execution and settlement | 12% | - Gatekeeping requirements for manipulative and deceptive practices, unacceptable activities and front running - UMIR gatekeeping obligations - Reporting obligations to firms and regulators - Order confirmation requirements - Order variations, cancellations and corrections - Functions of investment banking, research and corporate finance - Universal Market Integrity Rules - Margin requirements - Features of different account types - Order entry, trade management, settlement and delivery - Features of different order types - Specialized trading agreements for derivative accounts |
| Overview of Canadian securities regulatory framework | 10% | - Purpose and implications of the Bank Act and Bankruptcy and Insolvency Act - 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 - Function and purpose of other investment industry regulators and agencies - Investment Dealer registration and individual approval requirements - Other applicable laws including confidentiality, privacy, anti-spam, company disclosure and shareholder rights - Function and purpose of investment industry marketplaces - Role and authority of the Canadian Investment Regulatory Organization - Anti-money laundering and anti-terrorist financing legislation and regulations - Function and purpose of clearing agencies |
| Client complaint handling and reporting | 5% | - Potential client issues, liability and consequences - Policies and procedures for reporting, handling and maintaining complaint records - Prohibited practices in client settlement agreements - Investment Dealer obligations to clients - Investment Dealer complaint reporting obligations and penalties - Recourse available to dissatisfied clients - Role of CIRO and provincial regulators in the complaints handling framework |
| Conflicts of interest and ethics | 15% | - CIRO and other ethical standards of conduct - Ethical and legal responsibilities to clients - Information controls, barriers, firewalls and restricted lists - Requirements regarding positions of influence - Client confidentiality policies and procedures - Inappropriate or prohibited personal financial dealings with clients - Activities outside an Investment Dealer - Importance of managing conflicts of interest - Importance of ethics and its relationship to rules - Ethical principles and standards of conduct for Approved Persons and Investment Dealers - Role of cybersecurity in protecting confidential information - Conflicts of interest management process |
| Market and company analysis | 8% | - Company performance analysis tools - Basic market theories and stock market behaviour - Basic economic theories - Factors influencing the macroeconomy - Industry performance analysis - Rules relating to companies - Technical and statistical analysis tools and information sources - Effects of macroeconomic factors on financial markets - Economic indicators and sources of information |
| Securities, managed products, mutual funds and other investments | 19% | - Considerations affecting exchange-traded fund investors - Considerations affecting equity investors and potential shareholders - Types, features, risks and returns of fixed income securities and products - Considerations affecting managed product investors - Other investments including hedge funds, structured products, alternative investment funds, crypto assets and ESG-related products - Features, risks and returns of managed products - Considerations affecting fixed income investors - Types of pooled products - Purpose and uses of market indices - Types, features, risks and returns of equities - Asset classes generally sold and traded at an Investment Dealer - Considerations affecting mutual fund investors |
| Derivatives | 5% | - Prohibited derivative trading practices - Features of other derivative contract types - Features of options contract types - Single and multi-legged derivative trading strategies - Administrative requirements for derivative trading with clients - Basic transactional elements of futures and options - Basic uses of derivatives - Listed versus over-the-counter derivative markets |
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NEW QUESTION # 72
When an employee of an Investment Dealer engages in an outside business activity what must they do?
Answer: D
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
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 # 74
Which of the following best describes the key difference between a call option and a put option in an options contract?
Answer: D
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 # 75
Which of the following scenarios best illustrates the use of derivatives for risk management through hedging?
Answer: D
Explanation:
The correct answer is B . Hedging is the use of a derivative to reduce or offset an existing or reasonably anticipated financial exposure. The CIRE syllabus expressly identifies "Risk management/mitigation through hedging" as one of the three fundamental uses of derivatives, alongside speculative trading and arbitrage. It also identifies forwards as a principal derivative contract candidates must understand.
A company expecting to make or receive a foreign-currency payment faces exchange-rate risk because the Canadian-dollar value of that future transaction can change before settlement. By entering into a currency forward today, the company establishes the exchange rate that will apply at the future date, thereby reducing uncertainty. Bank of Canada materials confirm that Canadian corporations commonly use FX forwards for hedging and that forward markets allow businesses to manage foreign-exchange exposure by locking in exchange-rate levels.
A is principally a speculative bullish position because the investor is seeking to profit from an anticipated price rise. C expressly describes speculation. D employs leverage to magnify returns, which increases rather than principally mitigates risk.
Study Guide Reference: CIRE Elements 8.2-8.3 - Forwards; basic derivative uses: hedging, speculation and arbitrage.
NEW QUESTION # 76
What is a futures contract?
Answer: D
Explanation:
The correct answer is D . A futures contract is a standardized derivative agreement under which the parties undertake obligations concerning an underlying asset at an agreed price for settlement or delivery at a specified future time. In a conventional futures position, the buyer is obligated to take the long-side economic position , while the seller assumes the corresponding short-side obligation, subject to settlement rules and possible closing transactions before expiry.
CIRO regulatory materials define a futures contract as a contract to make or take delivery of a specified quantity and quality of a commodity during a designated future month at a price agreed when the contract is entered into, under standardized exchange terms.
D therefore captures the essential distinction between futures and options . C describes a call option , which grants its holder the right, but not the obligation, to purchase the underlying asset at the strike price. B similarly describes an optional exercise right rather than the bilateral obligation inherent in a futures contract.
A concerns borrowing or margin financing, not the definition of a derivative contract.
Futures can be used for hedging, speculation and arbitrage, and their values are marked to market as the underlying price changes. The CIRE syllabus expressly requires candidates to understand futures, forwards, swaps and their transactional characteristics.
Study Guide Reference: CIRE Elements 8.2-8.4 - Futures and Other Derivatives; underlying interest, expiry, margin and mark-to-market.
NEW QUESTION # 77
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