Conduct and Practices Handbook (CPH) – DR |
Exam Questions & Answers | Latest Update
2026 | Exam Prep PDF | Graded A+
Formal Take-over Bid - correct answerAn offer made to the security holders of a
company to purchase the voting securities of a company which, with the offeror's
already-owned securities, will in total exceed 20% of the outstanding voting securities of
the company.
Compliance - correct answerCompliance is following the rules, whether those rules are
legal and regulatory requirements or internal policies.
Confidentiality - correct answerThe ethical principle that a securities industry
professional will hold secret all information relating to a client and the client's account
unless the client consents to its disclosure, or a formal request is made by the
appropriate regulators
Conflict of Interest - correct answerA situation in which a registrant's personal or
financial interests conflict with those of a client or the registrant's dealer member. In
cases of potential or actual conflict of interest, a client's interests must be given priority
and the conflict should be disclosed.
Discretionary Account - correct answerA securities account for which the client has
given a dealer member specific written authorization to make decisions regarding the
security, price, quantity or timing of orders in the account.
Due Diligence - correct answerInvestigation into and verification of the details of a
potential investment, such as an examination of operations and management, and the
verification of material facts.
Duty of Care - correct answerAn IA's duty to his client to ensure that he/she does
everything "reasonably practicable" to protect the client's assets. This involves devoting
the time and attention necessary to make informed decisions.
Also known as Standard A
Fiduciary Duty - correct answerA legal term that describes a high degree of duty of care.
Know Your Client (KYC) Rule - correct answerThe cardinal rule in making investment
recommendations. The IA must know all relevant information about every client and
every order to ensure that his/her recommendations to clients are suitable.
,Personal Information Protection and Electronic Documents Act (PIPEDA) - correct
answerThe Act that governs each dealer member's information-gathering processes
and regulates how firms may use and disclose the personal information that is collected
in the course of doing business.
Registrant Standards of Conduct - correct answerThe Standards of Conduct amplify the
Code of Ethics and set out certain specifics of required behavior. These requirements
are based in large part on the provincial Securities Acts and the SRO rules.
Suitability - correct answerA registrant's major concern in making investment
recommendations. Unless a suitability exemption applies, all information about a client
and a security must be analyzed to determine whether a particular investment is
suitable for a client.
Unsolicited Order - correct answerAn order entered by a client where neither the client's
IA or his/her dealer member recommended the order.
Autorité des marchés financiers (Financial Services Authority) (AMF) - correct
answerThe body that administers the regulatory framework surrounding Québec's
financial sector securities sector.
Canadian Investor Protection Fund (CIPF) - correct answerA fund that protects
investors against the insolvency of any dealer member.
Disclosure - correct answerOne of the principles of securities regulation in Canada. This
principle entails full, true and plain disclosure of all material facts necessary to make
reasoned investment decisions.
Financial Transactions Reports Analysis Centre of Canada (FINTRAC) - correct
answerFINTRAC receives, analyzes, assesses and discloses financial intelligence on
suspected money laundering, terrorist financing, and threats to the security of Canada.
Integrated Market Enforcement Teams (IMETs) - correct answerAn initiative of the
RCMP and the federal government to detect, investigate and deter capital markets
fraud.
Joint Serious Offences Team (JSOTs) - correct answerJSOT is an enforcement
partnership between the OSC, the RCMP Financial Crime program and the Ontario
Provincial Police Anti-Rackets Branch. JSOT investigates and prosecutes serious
violations of the law using provisions of the Securities Act (Ontario) and Criminal Code.
Investment Industry Association of Canada (IIAC) - correct answerIIAC is a member-
based, advocacy association that advances the growth and development of the
Canadian investment industry.
, Investment Industry Regulatory Organization of Canada (IIROC) - correct answerThe
national self-regulatory organization overseeing all investment dealers and trading
activity on equity and debt marketplaces in Canada. IIROC is responsible for enforcing
the rules and regulations regarding sales, business and financial practices and trading
activities of individuals and firms under IIROC's jurisdiction.
Mutual Fund Dealers Association (MFDA) - correct answerThe Self-Regulatory
Organization that regulates the distribution (dealer) side of the mutual fund industry in
Canada.
Office of the Superintendent of Financial Institutions (OSFI) - correct answerThe primary
regulator of federally chartered financial institutions and federally administered pension
plans. OSFI supervises and regulates all banks, and all federally incorporated or
registered trust and loan companies, insurance companies, co-operative credit
associations, fraternal benefit societies and pension plans.
Regulator - correct answerA general term referring to the Securities Administrators and
Self-Regulatory Organizations (SROs) collectively.
Self-Regulatory Organization (SRO) - correct answerAn organization recognized by the
Securities Administrators as having powers to establish and enforce industry
regulations. Its main functions are to protect investors, maintain fair, equitable and
ethical practices in the industry and ensure conformity with securities legislation.
Universal Market Integrity Rules (UMIR) - correct answerA common set of equities
trading rules designed to ensure fairness and maintain investor confidence. These rules
create the framework for the integrity of trading activity on marketplaces and allow for
the competitive operation of exchanges, quotation and trade reporting systems (QTRSs)
and alternative trading systems (ATSs) in Canada.
Advisor - correct answerA portfolio manager or restricted portfolio manager. Categories
or registration include: Portfolio Manager and Restricted Portfolio Manager.
Carrying Broker - correct answerDealer members that offer back-office services and
facilities to other dealer members, which are known as introducing brokers.
Dealer - correct answerA person or company who is in the business of grading in
securities in the capacity of a principal or agent.
Dealer Member - correct answerA firm that engages in the business of trading in
securities in the capacity of an agent or principal and is a member of the IIROC.
Dual Licensing - correct answerA salesperson who is dually licensed an Investment
Advisor (IA) and as a life insurance representative.
Exam Questions & Answers | Latest Update
2026 | Exam Prep PDF | Graded A+
Formal Take-over Bid - correct answerAn offer made to the security holders of a
company to purchase the voting securities of a company which, with the offeror's
already-owned securities, will in total exceed 20% of the outstanding voting securities of
the company.
Compliance - correct answerCompliance is following the rules, whether those rules are
legal and regulatory requirements or internal policies.
Confidentiality - correct answerThe ethical principle that a securities industry
professional will hold secret all information relating to a client and the client's account
unless the client consents to its disclosure, or a formal request is made by the
appropriate regulators
Conflict of Interest - correct answerA situation in which a registrant's personal or
financial interests conflict with those of a client or the registrant's dealer member. In
cases of potential or actual conflict of interest, a client's interests must be given priority
and the conflict should be disclosed.
Discretionary Account - correct answerA securities account for which the client has
given a dealer member specific written authorization to make decisions regarding the
security, price, quantity or timing of orders in the account.
Due Diligence - correct answerInvestigation into and verification of the details of a
potential investment, such as an examination of operations and management, and the
verification of material facts.
Duty of Care - correct answerAn IA's duty to his client to ensure that he/she does
everything "reasonably practicable" to protect the client's assets. This involves devoting
the time and attention necessary to make informed decisions.
Also known as Standard A
Fiduciary Duty - correct answerA legal term that describes a high degree of duty of care.
Know Your Client (KYC) Rule - correct answerThe cardinal rule in making investment
recommendations. The IA must know all relevant information about every client and
every order to ensure that his/her recommendations to clients are suitable.
,Personal Information Protection and Electronic Documents Act (PIPEDA) - correct
answerThe Act that governs each dealer member's information-gathering processes
and regulates how firms may use and disclose the personal information that is collected
in the course of doing business.
Registrant Standards of Conduct - correct answerThe Standards of Conduct amplify the
Code of Ethics and set out certain specifics of required behavior. These requirements
are based in large part on the provincial Securities Acts and the SRO rules.
Suitability - correct answerA registrant's major concern in making investment
recommendations. Unless a suitability exemption applies, all information about a client
and a security must be analyzed to determine whether a particular investment is
suitable for a client.
Unsolicited Order - correct answerAn order entered by a client where neither the client's
IA or his/her dealer member recommended the order.
Autorité des marchés financiers (Financial Services Authority) (AMF) - correct
answerThe body that administers the regulatory framework surrounding Québec's
financial sector securities sector.
Canadian Investor Protection Fund (CIPF) - correct answerA fund that protects
investors against the insolvency of any dealer member.
Disclosure - correct answerOne of the principles of securities regulation in Canada. This
principle entails full, true and plain disclosure of all material facts necessary to make
reasoned investment decisions.
Financial Transactions Reports Analysis Centre of Canada (FINTRAC) - correct
answerFINTRAC receives, analyzes, assesses and discloses financial intelligence on
suspected money laundering, terrorist financing, and threats to the security of Canada.
Integrated Market Enforcement Teams (IMETs) - correct answerAn initiative of the
RCMP and the federal government to detect, investigate and deter capital markets
fraud.
Joint Serious Offences Team (JSOTs) - correct answerJSOT is an enforcement
partnership between the OSC, the RCMP Financial Crime program and the Ontario
Provincial Police Anti-Rackets Branch. JSOT investigates and prosecutes serious
violations of the law using provisions of the Securities Act (Ontario) and Criminal Code.
Investment Industry Association of Canada (IIAC) - correct answerIIAC is a member-
based, advocacy association that advances the growth and development of the
Canadian investment industry.
, Investment Industry Regulatory Organization of Canada (IIROC) - correct answerThe
national self-regulatory organization overseeing all investment dealers and trading
activity on equity and debt marketplaces in Canada. IIROC is responsible for enforcing
the rules and regulations regarding sales, business and financial practices and trading
activities of individuals and firms under IIROC's jurisdiction.
Mutual Fund Dealers Association (MFDA) - correct answerThe Self-Regulatory
Organization that regulates the distribution (dealer) side of the mutual fund industry in
Canada.
Office of the Superintendent of Financial Institutions (OSFI) - correct answerThe primary
regulator of federally chartered financial institutions and federally administered pension
plans. OSFI supervises and regulates all banks, and all federally incorporated or
registered trust and loan companies, insurance companies, co-operative credit
associations, fraternal benefit societies and pension plans.
Regulator - correct answerA general term referring to the Securities Administrators and
Self-Regulatory Organizations (SROs) collectively.
Self-Regulatory Organization (SRO) - correct answerAn organization recognized by the
Securities Administrators as having powers to establish and enforce industry
regulations. Its main functions are to protect investors, maintain fair, equitable and
ethical practices in the industry and ensure conformity with securities legislation.
Universal Market Integrity Rules (UMIR) - correct answerA common set of equities
trading rules designed to ensure fairness and maintain investor confidence. These rules
create the framework for the integrity of trading activity on marketplaces and allow for
the competitive operation of exchanges, quotation and trade reporting systems (QTRSs)
and alternative trading systems (ATSs) in Canada.
Advisor - correct answerA portfolio manager or restricted portfolio manager. Categories
or registration include: Portfolio Manager and Restricted Portfolio Manager.
Carrying Broker - correct answerDealer members that offer back-office services and
facilities to other dealer members, which are known as introducing brokers.
Dealer - correct answerA person or company who is in the business of grading in
securities in the capacity of a principal or agent.
Dealer Member - correct answerA firm that engages in the business of trading in
securities in the capacity of an agent or principal and is a member of the IIROC.
Dual Licensing - correct answerA salesperson who is dually licensed an Investment
Advisor (IA) and as a life insurance representative.
