CIRO Trader key terms

The duty to take all reasonable steps to obtain the best possible result for a client order, considering price, cost, speed, likelihood of execution and settlement, size, and any other relevant factor.

The obligation to ensure a recommended trade or strategy fits the client's investment objectives, risk tolerance, financial situation, knowledge, and experience before advising or executing it.

The process of collecting and verifying a client's identity, financial profile, investment goals, and risk appetite so that advice and account permissions are appropriate.

Trading or order activity intended to distort, mislead, or artificially influence the price, supply, or demand of a financial instrument, including wash trades, spoofing, and marking the close.

Entering orders with no intention of executing them, then cancelling before execution, to create a false impression of supply or demand and move prices in the trader's favor.

Placing multiple non-bona-fide orders at different price levels on one side of the book to induce others to trade, while a genuine order sits on the opposite side.

A transaction where the buyer and seller are the same person or colluding parties, creating the appearance of trading volume without any real change in beneficial ownership.

Trading or disclosing inside information about an issuer or instrument to others, or encouraging trading on it, in breach of a duty of confidentiality owed to the source.

Precise, non-public information that, if made public, would likely significantly affect the price of a financial instrument or related derivative.

Umbrella term covering insider dealing, unlawful disclosure of inside information, and market manipulation, plus attempted or suspected forms of these behaviors.

Trading ahead of a known client order to profit from the anticipated price impact, abusing access to non-public order flow rather than genuine market information.

The principle that client orders must be handled promptly, fairly, and in the client's interest, without using knowledge of them to benefit the firm or its staff.

Procedures requiring firms to record, timestamp, route, and execute client orders promptly and accurately, and to prevent misuse of order information.

Any regulated market, multilateral or organized trading facility, systematic internaliser, or other platform where orders can be matched or executed.

The electronic record of outstanding buy and sell orders for an instrument, showing price levels and available quantities at each level.

A firm that, on an organized and frequent basis, executes client orders against its own inventory outside a trading venue, subject to transparency and best execution duties.

A participant that continuously quotes two-way prices in an instrument, providing liquidity and standing ready to buy and sell within disclosed size and spread parameters.

The difference between the highest price a buyer will pay and the lowest price a seller will accept, a common measure of liquidity and trading cost.

The ease of buying or selling an instrument quickly at or near prevailing prices without materially moving the market, reflecting depth and trading activity.

The difference between the expected execution price and the actual fill price, often caused by market movement, thin liquidity, or delay in order routing.

A method of measuring execution quality by comparing achieved prices against benchmarks such as arrival price, VWAP, or closing price, including explicit and implicit costs.

Volume-weighted average price, calculated by dividing total traded value by total volume over a period; used as an execution benchmark and trading strategy reference.

The obligation to report details of executed transactions to the relevant authority or approved reporting mechanism within prescribed timeframes and formats.

The post-trade process of confirming, matching, and novating trades to a central counterparty that guarantees performance and manages counterparty risk.

The final transfer of securities against payment, completing a trade and transferring legal ownership to the buyer on the agreed settlement date.

An entity that interposes itself between trade counterparties, becoming buyer to every seller and seller to every buyer, and collecting margin to cover default risk.

Collateral posted to cover potential losses on a position, including initial margin at trade inception and variation margin to reflect daily mark-to-market changes.

The standard period between trade execution and final settlement, commonly two business days (T+2) for many cash equity and bond markets.

A financial contract whose value depends on an underlying asset, rate, index, or event, including futures, options, swaps, and forwards.

A standardized exchange-traded agreement to buy or sell an underlying asset at a specified price on a future date, settled daily through variation margin.

A contract giving the buyer the right, but not the obligation, to buy (call) or sell (put) an underlying asset at a set strike price before or on expiry.

An over-the-counter agreement to exchange cash flows or returns between parties, such as fixed for floating interest payments or total return versus a reference rate.

Using borrowed funds, margin, or derivatives to control a position larger than the capital committed, magnifying both potential gains and losses.

The risk that the other party to a trade or contract fails to meet its obligations, most relevant in over-the-counter and bilateral transactions.

A measure of a bond's price sensitivity to interest rate changes, expressed in years and reflecting the weighted timing of its cash flows.

The total return an investor earns by holding a bond to maturity, assuming all coupons are reinvested at that same rate.

The yield difference between a corporate bond and a comparable government benchmark, reflecting the issuer's perceived default risk and liquidity.

An independent agency's assessment of an issuer's or issue's creditworthiness, expressed on an alphanumeric scale from investment grade to speculative grade.

The risk that changes in market interest rates reduce the value of a fixed income position or alter the cost of funding and hedging.

Situations where a firm's or employee's own interests, or those of another client, could improperly influence decisions made on behalf of a client.

A fee, commission, or non-monetary benefit paid or received by a firm in connection with client business that may compromise the duty to act in the client's best interest.

Classifying clients as retail, professional, or eligible counterparty, which determines the level of protection, disclosure, and suitability obligations owed.

A client who does not meet the criteria for professional or eligible counterparty status and therefore receives the highest level of regulatory protection.

The natural person who ultimately owns or controls an account, security, or entity, identified for anti-money-laundering and transparency purposes.

A compliance-maintained list of issuers or securities on which trading is limited or prohibited because the firm holds inside information or has an active advisory mandate.