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| Section | Weight | Objectives |
|---|---|---|
| Topic 1: Overview of Regulatory Framework | ~10% | - Market Infrastructure and Protection Funds - Securities Legislation and Regulators (CSA, CIRO, FINTRAC) |
| Topic 2: Derivatives Fundamentals | ~5–8% | - Options, Futures and Forwards Basics - Risk and Suitability for Derivatives |
| Topic 3: Market Integrity, Trade Execution and Settlement | ~12% | - Order Types, Execution and Settlement Processes - UMIR and Market Integrity Rules |
| Topic 4: Securities and Managed Products | ~19% | - Equities, Fixed-Income and Managed Products - Fund Structures and Product Characteristics |
| Topic 5: Market and Company Analysis | ~8% | - Fundamental and Technical Analysis - Investment Performance Benchmarks |
| Topic 6: Client Complaint Handling and Reporting | ~5% | - Complaint Management Framework - Escalation, Recordkeeping and Reporting |
| Topic 7: Scope of Client Relationship, KYC and Suitability | ~15–18% | - Suitability Assessment and Obligations - Know Your Client (KYC) Requirements |
| Topic 8: Conflicts of Interest and Ethics | ~14–15% | - Conflict Identification, Disclosure and Management - Client-Focused Reforms and Ethical Standards |
| Topic 9: Prospective Client Relationships | ~10% | - Know Your Prospect (KYP) and Disclosures - Relationship Discovery and Qualification |
Question 1
An Investment Dealer rewards Registered Representatives (RRs) when they meet monthly goals for asset accumulation. An RR is close to achieving a key threshold and offers to rebate management fees for 3 months if a new client signs on. The RR has not notified the Investment Dealer of this arrangement. Has the RR done anything wrong?
A. No, because management fee rebates are a standard practice in the industry
B. Yes, because the RR made a financial arrangement without Investment Dealer approval
C. No, because the rebate benefits the client and helps the RR meet their Investment Dealer's goals
D. Yes, because the RR should offer rebates to all clients, not just new ones, to ensure fairness
Question 2
An Investment Representative (IR) at an Investment Dealer notices that a long-standing client, who typically trades conservative blue-chip stocks in moderate amounts, has suddenly started making frequent large trades in high-volatility penny stocks. What is the IR's best course of action under gatekeeping regulatory requirements?
A. Monitor the transactions and wait for a regulatory authority to raise concerns
B. Recognize the client has changed their trading strategy and take no further action
C. Detail the client's activity and report it to a Supervisor or compliance
D. Freeze the client's account immediately and report the activity as fraudulent
Question 3
A risk-averse investor is considering investing in preferred shares. What is one key feature of preferred shares that may appeal to such investors?
A. Preferred shares typically pay fixed dividends and provide significant voting rights to shareholders
B. Preferred shares provide fixed dividends and have a priority claim on company assets over common shares
C. Preferred shares guarantee the highest potential for capital gains among all equity investments
D. Preferred shares offer no risk of dividend suspension under any market conditions
Question 4
How do iceberg orders help reduce market impact and promote liquidity?
A. It executes within private dark pool trading venues
B. It displays full size of the order to improve execution
C. It hides the order from the trading market participants
D. It displays a small portion while hiding the rest
Question 5
The Ombudsman for Banking Services and Investments (OBSI) has recommended that a firm compensate a client. If the firm refuses to comply, what action can OBSI take?
A. Make a public statement about the Investment Dealer
B. Enforce the recommendation via the Canadian courts
C. Do nothing as the recommendation is not binding
D. Revoke the Investment Dealer's registration
Solutions:
| Question 1 Answer: B | Question 2 Answer: C | Question 3 Answer: B | Question 4 Answer: D | Question 5 Answer: A |
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