Trader 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

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   The regulatory environment

   4%

   In Element 1, the candidate is expected to show an understanding of the regulatory framework for the Canadian investment industry, including applicable knowledge of the Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organization (CIRO). Candidates will also be required to show an understanding of the scope and purpose of a range of provincial/territorial regulatory requirements.

   • 1.1the role and authority of the CSA, and the provincial/territorial securities and derivatives regulators.
   • 1.2the role and authority of CIRO.
   • 1.3the requirements for Investment Dealer registration and individual approvals, and the roles of the CSA and CIRO in this process.
   • 1.4the scope and purpose of provincial/territorial securities and derivatives laws and regulatory requirements, including:

   4 outcomes · 74 practice Q

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2. Element 2

   Capital formation

   4%

   Candidates are expected to show an understanding of the capital markets and the process of capital formation. This element will also test candidates’ understanding of the types of financial instruments that can be traded, as well as the rights and obligations that come with being a shareholder.

   • 2.1the functions of capital markets, including:
   • 2.2the process of capital formation, including:
   • 2.3the types of financial instruments, including:
   • 2.4the requirements for securities ownership.

   4 outcomes · 75 practice Q

3. Element 3

   Role of Traders and trade execution

   11%

   In this element, candidates are tested on the role of the Trader in capital markets and are expected to apply trade execution requirements to specific scenarios.

   • 3.1the CIRO definition of Trader:
   • 3.10to specific situations methods of self-trade prevention, including:
   • 3.2the role of the Trader as it relates to other CIRO Approved Persons involved in a marketplace trade.
   • 3.3the types of traders, including:
   • 3.4the different account types, including:
   • 3.5the trade execution requirements to specific situations, including:
   • + 4 more outcomes

   10 outcomes · 181 practice Q

4. Element 4

   Marketplaces

   15%

   Element 4 requires a candidate to show a detailed understanding of the marketplaces on which financial instruments can be traded. The element begins by providing key definitions relating to marketplaces in general. It then requires a more detailed look at specific types of marketplaces and the relevant requirements and provisions. The specific types of marketplaces include, exchanges, alternative trading systems (ATS), over-the-counter (OTC) markets and crypto asset markets.

   • 4.1the requirement to become a member or subscriber of a marketplace before trades can be placed.
   • 4.10which CIRO Marketplace Members can be required to register as ATS operators, including:
   • 4.11the rules that apply to ATS, including:
   • 4.12the securities that are permitted securities on ATS:
   • 4.13the activities generally prohibited for ATS, including:
   • 4.14how a quotation and trade reporting system (QTRS) differs from an ATS
   • + 15 more outcomes

   21 outcomes · 359 practice Q

5. Element 5

   Methods of trading

   18%

   In Element 5, candidates are tested on their understanding of order book trading and the different stages of the trading day. They are required to understand the features of order types and apply this knowledge to specific situations. Other methods of trading, such as block trades, market maker program and odd lots trading system, are also tested.

   • 5.1the function of electronic order books, including:
   • 5.10market maker program and odd lot dealer system, including:
   • 5.2the different trading stages and actions that can occur at those stages.
   • 5.3the relevance of order durations, including:
   • 5.4the relevance of price types, including:
   • 5.5to specific situations different order types, including:
   • + 4 more outcomes

   10 outcomes · 160 practice Q

6. Element 6

   Trading rules

   22%

   Element 6 tests the trading rules under the Universal Market Integrity Rules (UMIR), and other applicable rules, including the Investment Dealer and Partially Consolidated (IDPC) Rules and relevant Canadian Securities Administrators (CSA) regulatory instruments. Candidates are expected to be able to apply the applicable rules and requirements to a range of situations, including short selling, order entry, trading halts and prohibited practices.

   • 6.1to specific situations the requirements relating to short selling and settlement obligations.
   • 6.10the role and/or application of:
   • 6.11to specific situations the requirements relating to prohibited trading practices, including:
   • 6.12the gatekeeper obligations and responsibilities of Directors, officers, and employees of marketplace participants and access persons, including:
   • 6.14the role of other CIRO Approved Persons and staff concerning market integrity and gatekeeping with respect to trades.
   • 6.15the requirements relating to policies and procedures for best execution.
   • + 11 more outcomes

   17 outcomes · 276 practice Q

7. Element 7

   Trade desk function, supervision and compliance

   Following on from the trading rules, Element 7 tests the role of the trading desk at an Investment Dealer. Candidates are required to understand key definitions and the range of policies and procedures in place for the trading desk. Element 7 ends by testing an understanding of the Investment Dealer’s complaints procedures and the processes around internal investigations.

   • 7.1the application of the following within the context of trading:
   • 7.2the different types of marketplace participants, including:
   • 7.3that participants that offer direct electronic access must conditionally subject their clients to:
   • 7.4the policies, procedures and other documentation for a trading supervisory system, including:
   • 7.5surveillance and reporting requirements for trading, including:
   • 7.6specific considerations for debt markets.
   • + 3 more outcomes

   9 outcomes · 163 practice Q

8. Element 8

   Specific requirements for derivatives

   10%

   Derivatives are complex instruments, and additional requirements are in place to ensure that this is understood and that the associated risks are clear. In this section, candidates will be tested on their understanding of the additional requirements relating to derivatives trading.

   • 8.1the difference between listed derivative markets and over-the- counter (OTC) markets.
   • 8.2the rules and requirements for listed derivatives trading, including:
   • 8.3the risks and obligations resulting from derivatives trades, including:
   • 8.4the Investment Dealer’s duty to report derivatives data, including:
   • 8.5the relevant factors in conducting fair pricing when acting as principal in over-the-counter derivative trades, including:
   • 8.6the need for trading agreements for derivatives transactions, positions and accounts.
   • + 3 more outcomes

   9 outcomes · 163 practice Q

9. Element 9

   Clearing and settlement

   7%

   Once the trade is complete, clearing, settlement and the safe custody of assets is required. This element tests candidates understanding of these post-trade processes.

   • 9.1the roles of Clearing and Depository Services (CDS) and the Canadian Derivatives Clearing Corporation (CDCC), including:
   • 9.2marketplace rules and guidelines for trading and post-trade settlement, including:
   • 9.3the process involved in clearing arrangements, including:
   • 9.4the definition of custody of assets and applicable controls, including:

   4 outcomes · 87 practice Q

10. Element 10

    Ethics, conflicts of interest and confidentiality

    9%

    The ability to act ethically and professionally in activities in the investment industry is fundamental to any candidate’s role. This element requires candidates to understand the content and application of the CIRO standards of conduct, applying these in the context of managing conflicts of interest, outside activities and personal investment dealings with clients.

    • 10.1to specific situations the role of ethics and integrity in the investment industry.
    • 10.2to specific situations the consequences and risks of unethical behaviour.
    • 10.3the application of the Investment Dealer’s policies and procedures relating to the management of conflicts of interest.
    • 10.4to specific situations the regulatory requirements governing the management of conflicts of interest in the best interests of the client.
    • 10.5to specific situations the requirements relating to outside activities.
    • 10.6to specific situations the requirements relating to personal financial dealings with clients.
    • + 2 more outcomes

    8 outcomes · 166 practice Q