Supervisor 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

   15%

   This element begins with an understanding of the regulators in the Canadian investment services and the protections offered to consumers by way of legislation, such as the Criminal Code and the Proceeds of Crime (Money Laundering) and Terrorism Financing Act.

   • 1.1the role and authority of the Canadian Securities Administrators (CSA) and provincial/territorial securities and derivatives regulators.
   • 1.10the purpose and implications of the Proceeds of Crime (Money Laundering) and Terrorism Financing Act (PCMLTFA) and Regulations (PCMLTFA Regulations), including:
   • 1.11the purpose and implications of other applicable laws.
   • 1.12the Investment Dealer’s obligations to clients and others.
   • 1.13the client complaint requirements to specific situations relevant to Supervisors.
   • 1.14the recourse available to dissatisfied clients, including OBSI, CIRO arbitration and litigation.
   • + 17 more outcomes

   23 outcomes · 446 practice Q

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2. Element 2

   Supervisory structure: Investment Dealer responsibilities

   Element 2 requires the Supervisor to understand the obligations of an Investment Dealer when providing products and services to clients, including the role of Executives and the compliance department. Supervisors will also be required to analyze and apply to specific situations their general responsibilities, including the role of delegation and automation in supervision.

   • 2.1the requirement for an Investment Dealer to establish a supervisory system to supervise the activities of all its employees and Approved Persons to ensure compliance with CIRO Rules and securities laws. The supervisory system, at a minimum, must:
   • 2.10documented controls for delegation and apply those controls to specific situations relevant to a Supervisor.
   • 2.11the role of automation.
   • 2.12the Investment Dealer’s controls, policies and procedures for automation processes.
   • 2.2the product, due diligence obligations and exemptions, including:
   • 2.3the responsibility of Executives in the oversight of an Investment Dealer’s activities.
   • + 6 more outcomes

   12 outcomes · 230 practice Q

3. Element 3

   Specific supervision responsibilities in relation to the Investment Dealer business and operations

   13%

   In this section, the Supervisor needs to understand how an Investment Dealer’s supervisory structure can change depending on its business model. Element 3 also requires the Supervisor to analyze supervisory risks associated with different account, products and compensation structures.

   • 3.1the Investment Dealer’s responsibility to implement a supervisory system relevant to the scope and complexity of the business.
   • 3.10the supervisory risks associated with negotiated flat fees and referral fees.
   • 3.2the relationship between an Investment Dealer’s supervisory system and its internal controls.
   • 3.3the risks, opportunities and requirements for the Investment Dealer associated with each of the following business models:
   • 3.4the supervisory risks associated with each of the following client types:
   • 3.5the supervisory risks associated with each of the following accounts for both retail and institutional clients as applicable.
   • + 4 more outcomes

   10 outcomes · 205 practice Q

4. Element 4

   Specific supervision responsibilities in relation to account approvals

   29%

   Element 4 requires the Supervisor to understand the requirements for account approvals for a range of accounts, including order execution only (OEO) accounts, discretionary accounts, managed accounts and derivatives accounts. Supervisors will need to apply many of these requirements to specific situations relating to account opening.

   • 4.1account approval requirements.
   • 4.10other matters required by a derivatives trading, clearing or issuing entity.
   • 4.11the client’s cumulative loss limits:
   • 4.12the purpose and content of a Letter of Undertaking as an alternative to trading agreement for institutional clients only.
   • 4.13the requirements for the supervision of managed accounts. Consider the need to:
   • 4.14the purpose and content of the managed account agreement.
   • + 15 more outcomes

   21 outcomes · 320 practice Q

5. Element 5

   Specific supervision responsibilities in relation to account activity

   22%

   Element 5 continues the theme of Element 4 but now requires an understanding of the ongoing risks of different accounts. It requires the Supervisor to analyze situations to identify what risks may be present and apply appropriate procedures to mitigate or respond to those risks.

   • 5.1different approaches to supervision, including:
   • 5.10the direct market access (DMA) account and supervision requirements for institutional clients, including algorithmic trading.
   • 5.11the OEO account services exemptions and requirements.
   • 5.12CIRO requirements for handling derivatives accounts, including the need to appoint one or more alternate Supervisors where continuous supervision of derivatives trading activity is required
   • 5.13to specific situations relevant to a Supervisor the requirements specific to retail clients holding a derivative account to detect:
   • 5.14the use of policies and procedures to specific situations relevant to a Supervisor.
   • + 10 more outcomes

   16 outcomes · 165 practice Q

6. Element 6

   Specific supervision responsibilities in relation to activities of Approved Persons

   12%

   Element 6 requires the Supervisor to analyze specific situations and risks that they may encounter during account opening and ongoing account activities. It also requires them to apply the requirements relating to product due diligence, know-your-client (KYC) and suitability determination to specific situations and understand the importance of client education and information.

   • 6.1specific situations the Supervisor’s responsibility relating to permitted and prohibited activities of Approved Persons.
   • 6.2specific supervisory responsibilities relating to account opening.
   • 6.3to specific situations the Supervisor’s responsibility relating to the suitability determination for retail and institutional clients.
   • 6.4specific supervisory responsibilities relating to account activity once opened.
   • 6.5the product due diligence and KYC obligations on:
   • 6.6the role of the Supervisor in ensuring Approved Persons educate clients in the purpose of:
   • + 2 more outcomes

   8 outcomes · 85 practice Q

7. Element 7

   Specific supervision responsibilities in relation to trading and market rules

   9%

   A Supervisor is expected to understand and be able to apply the obligations under the Universal Market Integrity Rules (UMIR) in Element 7. They are also required to apply the appropriate regulatory standards to the supervision of order placement and gatekeeping responsibilities.

   • 7.1the market rules, including UMIR,
   • 7.2the applicable regulatory standards with respect to the review, acceptance and approval of orders to specific situations relevant to a Supervisor.
   • 7.3the obligations on the Investment Dealer regarding its trading supervisory systems.
   • 7.4the obligations on the Investment Dealer regarding its regular review of compliance with respect to the following provisions for trading on a marketplace, where applicable to their lines of business:
   • 7.5the obligations on the Investment Dealer regarding its risk-based supervision system, which reflects:
   • 7.6the gatekeeping responsibilities and applicable regulatory requirements to specific situations relevant to a Supervisor, including:

   6 outcomes · 65 practice Q

8. Element 8

   Specific supervision responsibilities in relation to advertisements, sales literature and communications

   This element requires a Supervisor to understand the requirements when an Investment Dealer or Approved Person communicates with a client, advertises products and services or produces research documentation. It also requires the Supervisor to apply these requirements to specific situations relevant to a Supervisor.

   • 8.1the requirements that specifically address the review and supervision of advertisements, sales literature and client correspondence relating to its business.
   • 8.2to specific situations, relevant to a Supervisor, the requirements for an Investment Dealer to ensure that the following items are approved by a designated Supervisor before use or publication:
   • 8.3the requirements relating to research report disclosures to specific situations relevant to a Supervisor. Consider the following disclosures:
   • 8.4specific situations relating to the supervision of conduct of Investment Dealers and relevant individuals when producing research reports.

   4 outcomes · 45 practice Q

9. Element 9

   Specific supervision responsibilities in relation to risks

   Element 9 requires a Supervisor to analyze a variety of risk factors relevant to the Investment Dealer and apply supervisory requirements to a variety of retail distribution risks.

   • 9.1the guidelines for business location supervision, including:
   • 9.2additional risk factors and the potential impact on the Investment Dealers and its clients of using different business locations.
   • 9.3supervisory requirements to retail distribution risks, including advisory services and fully discretionary managed products to specific situations relevant to a Supervisor.

   3 outcomes · 35 practice Q