Director and Executive Exam

Blueprint

Element-by-element breakdown

Parsed directly from the official CIRO syllabus. Every learning outcome maps to a specific element and weighted question count.

1. Element 1

   Free

   General regulatory framework

   13%

   In Element 1, candidates are expected to show an understanding of the key regulators in the Canadian investment industry, including the Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organization (CIRO). Element 1 also covers the key legislation that governs and impacts the investment industry, with detailed focus on the prevention of using the investment industry for money laundering and other criminal activities.

   • 1.1the role and authority of the CSA and provincial/territorial securities and derivatives regulators.
   • 1.2the role and authority of CIRO.
   • 1.3the role and authority of exchanges and other marketplaces.
   • 1.4the role of the Canadian Investor Protection Fund (CIPF).
   • 1.5the function and purpose of other financial regulators and agencies.
   • 1.6the purpose of the following federal statutes:
   • + 1 more outcomes

   7 outcomes · 180 practice Q

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2. Element 2

   Investment Dealer business models and related areas

   Element 2 covers the Investment Dealer in detail and the role of the Directors and Executives in recognizing and analyzing the risk, opportunities and requirements that the Investment Dealer’s activities create. Specific focus is applied to the Investment Dealer’s business model, the services they provide, the client types they deal with, the accounts and investments that they offer and the compensation structures they create for their representatives.

   • 2.1the risks, opportunities and requirements associated with each of the following client types:
   • 2.10the requirements for development, evaluation and delivery of products and services.
   • 2.11the product due diligence requirements and exemptions.
   • 2.12the requirements for product due diligence policies and procedures, which reflect:
   • 2.2the risks, opportunities and requirements associated with each of the following business models:
   • 2.3the risks, opportunities and requirements associated with each of the following services:
   • + 6 more outcomes

   12 outcomes · 312 practice Q

3. Element 3

   Offering and distribution of securities

   13%

   Element 3 requires the candidate to understand the responsibilities that apply to a public company, including the offering of securities to the public and the requirement for sufficient information through the prospectus. Candidates will be tested on analyzing the relevant information required and the situations where a prospectus is not needed, as well as the role of the Investment Dealer when underwriting offers.

   • 3.1the requirements under National Instrument 41–101 (General Prospectus Requirements), National Instrument 44–101 (Short Form Prospectus Distributions) and the role of provincial and territorial securities legislation relating to the offering and distribution of securities.
   • 3.2where information and filing relating to securities issuance can rely on selective disclosure.
   • 3.3the commonly used exemptions for prospectus requirements under National Instrument 45–106 Prospectus Exemptions.
   • 3.4the information and protections available to the investor in relation to the issuance of securities.
   • 3.5the rights and obligations of the Investment Dealer when underwriting securities issuers.
   • 3.6the requirements for public company relating to continuous disclosures.
   • + 2 more outcomes

   8 outcomes · 211 practice Q

4. Element 4

   Corporate governance and ethics

   21%

   Element 4 requires the candidate to be able to identify, analyze and draw conclusions from internal behavioural factors that pose a risk to the Investment Dealer. It begins by covering the role of corporate governance from the role and the composition of the Board to the relationship with company stakeholders.

   • 4.1the components of effective corporate governance.
   • 4.10the requirements for the containment of confidential and material non-public information policies and procedures.
   • 4.2the impact of a company setting its own corporate bylaws.
   • 4.3the relevance and impact of environmental, social and governance (ESG) considerations.
   • 4.4situations for Directors and Executives that involve the role of ethics and integrity in the securities industry.
   • 4.5situations for Directors and Executives that involve the role of ethics and integrity in corporate governance.
   • + 4 more outcomes

   10 outcomes · 288 practice Q

5. Element 5

   Duties, liabilities and defences

   14%

   This element requires the candidate to analyze the duties of Directors, the liabilities that they could face and the defences owed to them. Questions will challenge candidates to interpret information and draw appropriate conclusions to a range of situations. The questions will also draw on the difference in responsibilities in these areas between the role of Director and the roles of Executives.

   • 5.1factors relating to strategic company objectives and positions.
   • 5.2situations and obligations relating to a Director or Executive’s duties.
   • 5.3situations relating to legal obligations as corporate Directors or Executives as fiduciary.
   • 5.4situations and potential legal liabilities that may arise from:
   • 5.6limitation of liability (e.g. indemnity). Defences: Directors
   • 5.7legal defences available to officers and Directors in specific situations.

   6 outcomes · 147 practice Q

6. Element 6

   Risk management and internal controls

   21%

   Element 6 covers the objectives of risk management and internal controls as well as the regulatory requirements on these. Candidates will need to identify, analyze and determine methods to manage risks as well as evaluate the effectiveness of policies and procedures used. Element 6 is another element where questions will draw on the difference in responsibilities in these areas between the role of Director and the roles of Executives.

   • 6.1the definition and objectives of risk management.
   • 6.10risk identification, measurement, monitoring, control and reporting considerations.
   • 6.11the effectiveness of risk management tools.
   • 6.12the requirements relating to credit risk management policies and procedures.
   • 6.2risk management in a principles-based regulatory environment.
   • 6.3the regulatory expectations of risk management
   • + 6 more outcomes

   12 outcomes · 291 practice Q

7. Element 7

   Significant areas of risk

   18%

   The section requires an understanding of significant areas of risk for an Investment Dealer and analysis of how Directors and Executives should respond to these. Element 7 is another element where questions will draw on the difference in responsibilities in these areas between the role of Director and the roles of Executives.

   • 7.1the definition of significant areas of risk.
   • 7.2to specific scenarios the requirements relating to managing significant areas of risk.
   • 7.3significant areas of risk specific to the Investment Dealer and its business lines, which may include the following:
   • 7.4the impact of the significant areas of risk mentioned above on the Investment Dealer and ways to mitigate these risks.

   4 outcomes · 117 practice Q

8. Element 8

   Ultimate Designated Person (UDP) responsibilities

   Element 8 covers the oversight responsibilities that fall on the Ultimate Designated Person (UDP). This section will test the candidate’s ability to analyze specific situations in respect of the UDP’s responsibilities, including their role in the monitoring and supervision of the organization as a whole.

   • 8.1situations relevant to an Investment Dealer that highlight the specific UDP responsibilities:
   • 8.2situations that highlight the UDP monitoring and supervision responsibilities, including:
   • 8.3the role of the UDP in overseeing Executives (including CCO and CFO) in managing significant areas of risk, including:
   • 8.4to specific situations the impact of and risks associated with early warning rules, including:
   • 8.5the requirement for the UDP to ensure that issues raised by examination reports are responded to and addressed.
   • 8.6the purpose of annual risk questionnaires and risk trend reports:

   6 outcomes · 173 practice Q