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| Section | Weight | Objectives |
|---|---|---|
| Securities, managed products, mutual funds and other investments | 19% | - Considerations affecting fixed income investors - Types, features, risks and returns of equities - Types, features, risks and returns of fixed income securities and products - Considerations affecting equity investors and potential shareholders - Purpose and uses of market indices - Types of pooled products - Features, risks and returns of managed products - Considerations affecting managed product investors - Considerations affecting mutual fund investors - Considerations affecting exchange-traded fund investors - Asset classes generally sold and traded at an Investment Dealer - Other investments including hedge funds, structured products, alternative investment funds, crypto assets and ESG-related products |
| Prospective client relationships | 10% | - Differences between retail and institutional clients - Institutional client qualification requirements - Client record documentation, filing and maintenance - Impact of fees, turnover and taxes on investment returns - Investment Dealer onboarding process - Third parties and other professionals in the client's life - Retail client information collection - Exemptions under National Instrument 45-106 - Client relationship model - Role of cost in product selection - Required account agreement and Firm Welcome package documents |
| Market and company analysis | 8% | - Rules relating to companies - Basic market theories and stock market behaviour - Basic economic theories - Company performance analysis tools - Economic indicators and sources of information - Industry performance analysis - Effects of macroeconomic factors on financial markets - Factors influencing the macroeconomy - Technical and statistical analysis tools and information sources |
| Overview of Canadian securities regulatory framework | 10% | - Function and purpose of other investment industry regulators and agencies - Anti-money laundering and anti-terrorist financing legislation and regulations - Function and purpose of investment industry marketplaces - Role and authority of the Canadian Investment Regulatory Organization - Other applicable laws including confidentiality, privacy, anti-spam, company disclosure and shareholder rights - Role and authority of the Canadian Securities Administrators and provincial and territorial securities and derivatives regulators - Function and purpose of the Canadian Investor Protection Fund - Criminal Code and its application to financial crime - Purpose and implications of the Bank Act and Bankruptcy and Insolvency Act - Function and purpose of clearing agencies - Investment Dealer registration and individual approval requirements |
| Client complaint handling and reporting | 5% | - Recourse available to dissatisfied clients - Prohibited practices in client settlement agreements - Investment Dealer complaint reporting obligations and penalties - Investment Dealer obligations to clients - Potential client issues, liability and consequences - Policies and procedures for reporting, handling and maintaining complaint records - Role of CIRO and provincial regulators in the complaints handling framework |
| Conflicts of interest and ethics | 15% | - Role of cybersecurity in protecting confidential information - Importance of ethics and its relationship to rules - Ethical principles and standards of conduct for Approved Persons and Investment Dealers - Requirements regarding positions of influence - Ethical and legal responsibilities to clients - CIRO and other ethical standards of conduct - Client confidentiality policies and procedures - Importance of managing conflicts of interest - Information controls, barriers, firewalls and restricted lists - Conflicts of interest management process - Inappropriate or prohibited personal financial dealings with clients - Activities outside an Investment Dealer |
| Market integrity, trade execution and settlement | 12% | - Order entry, trade management, settlement and delivery - Reporting obligations to firms and regulators - Order variations, cancellations and corrections - UMIR gatekeeping obligations - Order confirmation requirements - Universal Market Integrity Rules - Margin requirements - Functions of investment banking, research and corporate finance - Features of different order types - Gatekeeping requirements for manipulative and deceptive practices, unacceptable activities and front running - Specialized trading agreements for derivative accounts - Features of different account types |
| Scope of client relationships | 15% | - Institutional client sophistication assessment and suitability exemptions - Product due diligence obligations - Role of the Registered Representative in providing client service - Systematic approaches to investment management and investment strategies - Account appropriateness versus suitability determination - Exemptions from suitability determination requirements - Requirements for working with clients in the United States and other foreign jurisdictions - Typical services provided by retail Investment Dealers - Role of the Investment Representative in providing client service - Trust, agency and fiduciary duty - Know-your-product obligations - Investment performance benchmarks - Internal escalation procedures and subject matter experts - Typical services provided by institutional Investment Dealers - Account appropriateness obligations - Suitability determination requirements for retail clients - Purpose and content of relationship disclosure |
| Derivatives | 5% | - Single and multi-legged derivative trading strategies - Prohibited derivative trading practices - Listed versus over-the-counter derivative markets - Administrative requirements for derivative trading with clients - Features of options contract types - Basic uses of derivatives - Basic transactional elements of futures and options - Features of other derivative contract types |
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NEW QUESTION # 17
A risk-averse investor is considering investing in preferred shares. What is one key feature of preferred shares that may appeal to such investors?
Answer: C
Explanation:
The correct answer is A . Preferred shares generally provide investors with regular or fixed-rate dividend income and rank ahead of common shares for dividend payments and claims on residual corporate assets upon liquidation. CIRO's investment glossary describes a preferred share as providing a fixed dividend payable before dividends to common shareholders, together with a preferred claim on assets if the company is liquidated.
Ontario Securities Commission investor education similarly states that preferred stock generally offers regular income through fixed dividends, that preferred dividends are paid before common-share dividends, and that preferred shareholders have priority over common shareholders if the company is liquidated. This relative priority and greater income orientation may appeal to comparatively risk-averse equity investors.
However, preferred shares are not risk-free . Dividends may be suspended depending on the issuer and share terms, and preferred shareholders rank behind creditors and bondholders in insolvency. Therefore D is incorrect. B is incorrect because preferred shares normally carry limited or no voting rights. C is incorrect because preferred shares generally offer less capital-growth potential than common shares.
The CIRE syllabus specifically requires candidates to understand the features, risks and returns of common and preferred shares .
Study Guide Reference: CIRE Element 7.2 - Equities: common shares and preferred shares; Element
7.3 - advantages and disadvantages of share ownership.
NEW QUESTION # 18
Which of the following reflects the CIRO standards of conduct in relation to client interaction?
Answer: C
Explanation:
The best answer is A , because it reflects CIRO's fundamental requirement that Regulated Persons conduct business openly and fairly . IDPC Rule 1402 requires a Regulated Person, in the transaction of business, to observe high standards of ethics and conduct and to "act openly and fairly and in accordance with just and equitable principles of trade." A should be understood subject to securities-law confidentiality and insider-trading requirements: a representative must never selectively disclose material non-public information merely because it is price- sensitive. Rather, where information is lawfully required or permitted to be communicated to a client, dealings and disclosure must be accurate, balanced, fair and consistent with applicable confidentiality rules.
B directly contradicts Rule 1402 because an unreasonable departure from expected standards may constitute a standards-of-conduct violation even if the conduct is isolated. C is incorrect because protecting the firm's commercial interests does not justify concealing material risks necessary for an informed client decision. D is also inconsistent with fair dealing; selectively emphasizing positive characteristics while minimizing material risks can mislead clients and undermine rather than preserve market confidence.
CIRO specifically identifies negligence, regulatory non-compliance, unreasonable departures from expected standards, and conduct likely to diminish investor confidence as potentially contrary to its standards.
Study Guide Reference: CIRE Elements 9.3-9.6 - Ethics, Client Interaction and CIRO Standards of Conduct; IDPC Rule 1402.
NEW QUESTION # 19
When an employee of an Investment Dealer engages in an outside business activity what must they do?
Answer: B
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 # 20
An Investment Dealer supplies its clients with specific information about its client account reporting.
Which of the following is true regarding the provision of information about client reporting?
Answer: C
Explanation:
The correct response is D . Information describing the client account reporting that an Investment Dealer will provide is not merely useful or recommended; it forms part of the required relationship disclosure framework . Current CIRO IDPC Rule 3216 requires prescribed relationship disclosure information for retail clients. Rule 3216(5)(ii)(e) specifically requires "a description of the client account reporting that the Dealer Member will provide." The disclosure must address when trade confirmations and account statements will be sent, the Dealer's minimum obligations regarding performance information, when account position cost and account activity information will be provided, and whether percentage-return information is available as part of the account service offering.
The distinction is important. A particular reporting feature may, in some circumstances, be optional-for example, the rule requires disclosure of whether percentage-return information is an available option.
However, the Dealer's obligation to provide the prescribed information about its client reporting is mandatory . Therefore, A, B, and C understate the regulatory status of the disclosure requirement.
The CIRE syllabus expressly requires knowledge of relationship disclosure content, including the description of client account reporting that the Investment Dealer will provide .
Study Guide Reference: CIRE Element 3.4 - purpose and content of relationship disclosure; IDPC Rule 3216(5)(ii)(e).
NEW QUESTION # 21
An Investment Dealer wants to set up and operate a new alternative trading system (ATS). What must they ensure to be compliant?
Answer: A
Explanation:
The intended answer is C . An alternative trading system operates within the Canadian securities regulators' marketplace regulatory framework , principally National Instrument 21-101, Marketplace Operation , together with National Instrument 23-101 and CIRO marketplace oversight. An ATS is legally a type of marketplace and cannot simply be operated as an ordinary internal Dealer trading facility without satisfying the applicable marketplace requirements.
Technically, the Canadian ATS regime generally requires the ATS to be registered as a dealer , become a member of the applicable self-regulatory organization-currently CIRO-and comply with NI 21-101 and NI
23-101. CIRO confirms that an ATS must be a CIRO Dealer Member and, where CIRO oversees its trading, a CIRO Marketplace Member under a Regulation Services Agreement. Thus C most accurately represents the regulatory-marketplace approval concept among the available choices.
A is incorrect because NI 21-101 permits ATS trading in specified categories that can include exchange- traded securities, government and corporate debt, and qualifying foreign exchange-traded securities. B is incorrect because ATS participation is not universally restricted to institutional investors. D is incorrect because FINTRAC reporting applies to prescribed reportable or suspicious transactions-not every client transaction-and FINTRAC does not authorize marketplaces.
Study Guide Reference: CIRE Element 1.4 - function and purpose of marketplaces, including Alternative Trading Systems; NI 21-101 and CIRO marketplace regulation.
NEW QUESTION # 22
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