Trusted Contact Person (TCP): Definition + Case Study

Trusted Contact Person (TCP)

A non-trading contact a client designates so the dealer can address concerns about exploitation or capacity.

Definition

Under CIRO Rule 3276, dealers ask clients to designate a TCP at account opening. The TCP has no trading authority. The dealer may contact the TCP to address concerns about possible financial exploitation, mental capacity issues, or to confirm contact details for a legal representative. A TCP is distinct from a power of attorney.

Source

CIRO IDPC Rule 3276; CSA Notice 31-368

Where this shows up on the CIRE

Outcome 3.6

Test yourself

Two real CIRE-bank questions on this exact outcome. Click to reveal the answer and the rule citation.

1
A large institutional client asks its investment dealer about 'securities lending' as a service. Which of the following correctly describes securities lending as an institutional service?
Outcome 3.6 · click for answer
A.Securities lending is prohibited in Canada under UMIR because it facilitates short-selling.
B.Securities lending is a service primarily offered by institutional dealers whereby securities are temporarily transferred from a lender to a borrower in exchange for collateral and a fee; the lender retains economic exposure and the borrower can use the securities for short-selling or other purposes.Correct
C.Securities lending is a retail service where individual investors temporarily transfer ownership of their securities to the dealer.
D.Securities lending is the same as margin lending; both involve the dealer extending credit secured by securities.
Securities lending is an institutional market service where a securities holder (lender) temporarily transfers securities to a borrower, typically in exchange for collateral (cash or other securities) and a lending fee. The lender retains the economic exposure to the securities and receives manufactured payments in lieu of dividends or coupons during the loan period. Borrowers commonly use borrowed securities for short-selling or to settle failing trades. Securities lending is distinct from margin lending (where a dealer extends credit to a client to purchase securities). It is a regulated but permitted activity in Canada.
2
Under IDPC Rule 3406(2), a Permitted Client may waive the suitability assessment. Which of the following best describes the threshold for Permitted Client status for an individual?
Outcome 3.6 · click for answer
A.Any individual client who has held a brokerage account for at least 10 years.
B.An individual registered under applicable securities legislation as an advisor or dealer.
C.An individual with net assets of at least $5 million in financial assets or $25 million in aggregate.Correct
D.An individual with annual income exceeding $200,000 in each of the two preceding years.
Under the Permitted Client definition (National Instrument 31-103 / incorporated by IDPC Rule 3406), an individual qualifies as a Permitted Client by meeting either of two financial thresholds: (1) net assets of at least $5 million, or (2) net financial assets; cash and securities; of at least $5 million. For entities, an asset threshold of $25 million may also apply. Account longevity and income level alone do not confer Permitted Client status. Registered advisors and dealers are separately enumerated in the Permitted Client list.

AI case study

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