CIRO Supervisor flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- CIRO mandate
- Canada's self-regulatory organization for investment and mutual fund dealers; it sets and enforces conduct, capital, and supervisory rules under securities commission oversight.
- Three pillars of supervision
- Written policies and procedures, a designated supervisor with defined authority, and documented evidence that supervisory review actually occurred.
- Ultimate designated person
- The senior officer accountable to the regulator for the firm's compliance with securities law and for the effectiveness of its compliance system.
- Reportable event
- A specified change in a registrant's circumstances, such as bankruptcy or criminal charge, that must be disclosed to the regulator within the required timeframe.
- New account approval
- Supervisory review of identity verification, signed agreement, KYC completeness, and suitability of the account type before trading is permitted.
- Third-party authority
- Written authorization allowing another person to trade or act on an account; requires signed documentation, identity verification, and supervisory approval.
- Dormant account
- An account with no client-initiated activity for a defined period; reactivation requires refreshed KYC and suitability reassessment before trading resumes.
- KYC core elements
- Identity, financial situation, investment knowledge, objectives, risk tolerance, time horizon, and liquidity needs, documented and kept current.
- Risk tolerance versus capacity
- Tolerance is the client's willingness to accept volatility; capacity is the financial ability to absorb loss given income, assets, and obligations.
- Suitability trigger event
- A material KYC change, product change, or shift in circumstances that requires the recommendation to be reassessed before further trading.
- Unsolicited trade
- A client-directed transaction outside the KYC profile; the firm documents the instruction, warns the client, and applies specific controls.
- Best execution
- Reasonable efforts to obtain the best available result for a client order, weighing price, speed, certainty, cost, and order size.
- Front-running
- Trading for a proprietary or personal account ahead of a known client order to profit from the expected price impact.
- Churning indicators
- High turnover, excessive cost-to-equity ratio, and frequent switching that suggest trading was driven by compensation rather than client benefit.
- Order audit trail
- A record capturing receipt time, entry time, execution time, quantity, price, client identifier, and routing venue for each order.
- Product due diligence
- Pre-approval review of a product's structure, fees, liquidity, risk, and target client segment before it is added to the shelf.
- Accredited investor verification
- Documented confirmation that a client meets the financial thresholds permitting purchase of prospectus-exempt securities, with signed risk acknowledgment.
- Product shelf review
- Periodic reassessment of approved products; products no longer suitable are removed and existing client holdings are evaluated for remediation.
- Balanced performance advertising
- Marketing that states the time period, whether returns are net of fees, and the benchmark, and does not imply guaranteed future results.
- Marketing pre-approval
- Required supervisory sign-off before any advertising or client-facing sales communication is published or distributed.
- Social media supervision
- Digital and social communications are subject to the same pre-review, retention, and monitoring standards as traditional print sales material.
- Material conflict
- A conflict that could affect the advice given; it must be managed or avoided in the client's interest, since disclosure alone is insufficient.
- Outside business activity
- Any external business role or financial dealing with clients; requires prior written approval and ongoing supervisory monitoring.
- Personal trading pre-clearance
- Employee and family account trades require approval before execution and are subject to restricted lists and minimum holding periods.
- Gift and entertainment log
- A record of benefits received or given, assessed against firm limits and whether they could improperly influence a recommendation.
- Enhanced due diligence
- Additional scrutiny applied to high-risk clients, politically exposed persons, and unusual relationships, including source-of-funds verification.
- Structuring
- Breaking transactions into smaller amounts to evade reporting thresholds; a suspicious indicator requiring escalation and possible reporting.
- Tipping off
- Informing a client that a suspicious transaction report has been or may be filed; prohibited by anti-money-laundering law.
- Complaint handling
- Logging, acknowledging, investigating, and resolving client dissatisfaction within defined timelines, with the outcome communicated to the client.
- Enforcement sanctions
- Penalties including fines, suspension, conditions on registration, disgorgement, and revocation, graded by harm, benefit, and history.
- Record retention
- Accurate, complete client and order records kept for the period set by securities law and producible to the regulator on request.
- Electronic record archive
- Business communications stored in a non-rewritable, searchable format so supervisory review and regulatory production are possible.