©THESTAR 2024/2025 ALL RIGHTS RESERVED 3:09PM.
Conduct and Practices Handbook (CPH)
Exam Questions And Answers |Latest 2025 |
Guaranteed Pass.
Formal Take-over Bid - Answer✔An 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 - Answer✔Compliance is following the rules, whether those rules are legal and
regulatory requirements or internal policies.
Confidentiality - Answer✔The 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 - Answer✔A 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 - Answer✔A 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 - Answer✔Investigation 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 - Answer✔An 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.
1
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 3:09PM.
Also known as Standard A
Fiduciary Duty - Answer✔A legal term that describes a high degree of duty of care. Criteria that
may be used to determine whether a trust exists in an IA-client relationship include a high
degree of reliance by the client on the IA's advice and the vulnerability of the client. A similar
concept, "Contract of Mandate", exists in Quebec under civil law.
Know Your Client (KYC) Rule - Answer✔The 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) - Answer✔The 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 - Answer✔The 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 - Answer✔A 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 - Answer✔An 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) - Answer✔The body that
administers the regulatory framework surrounding Québec's financial sector securities sector,
the distribution of financial products and services sector, the financial institutions sector and
the compensation sector.
Canadian Investor Protection Fund (CIPF) - Answer✔A fund that protects investors against the
insolvency of any dealer member. It is financed by the IIROC and the exchanges (except ICE
Futures Canada), who are collectively referred to as Sponsoring Self-Regulatory Organizations
(SSROs) through quarterly assessments on dealer members.
Disclosure - Answer✔One 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) - Answer✔FINTRAC
receives, analyzes, assesses and discloses financial intelligence on suspected money laundering,
terrorist financing, and threats to the security of Canada.
2
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 3:09PM.
Integrated Market Enforcement Teams (IMETs) - Answer✔An initiative of the RCMP and the
federal government to detect, investigate and deter capital markets fraud. IMETs are composed
of police, lawyers and other investigative experts through branches in Toronto, Vancouver,
Montreal and Calgary. They are jointly managed by the RCMP and Justice Canada, and work
closely with securities regulators such as the IIROC and the MFDA, as well as other federal and
provincial authorities.
Joint Serious Offences Team (JSOTs) - Answer✔JSOT 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. Staff work with police agencies and the Ministry of
the Attorney General to bring more cases before the courts and to send a strong message to
those who might harm the public.
Investment Industry Association of Canada (IIAC) - Answer✔IIAC is a member-based, advocacy
association that advances the growth and development of the Canadian investment industry. It
is not a regulatory body. Its member firms range in size from small regional firms to large
organizations that employ thousands of individuals across the country The IIAC's mandate is
fourfold: Advocacy, Industry Profile, Member Support, and Market Advancement.
Investment Industry Regulatory Organization of Canada (IIROC) - Answer✔The 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. It also develops recommendations to amend existing rules,
establishes new rules and interprets existing rules.
Mutual Fund Dealers Association (MFDA) - Answer✔The Self-Regulatory Organization that
regulates the distribution (dealer) side of the mutual fund industry in Canada.
Office of the Superintendent of Financial Institutions (OSFI) - Answer✔The 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 - Answer✔A general term referring to the Securities Administrators and Self-
Regulatory Organizations (SROs) collectively.
Self-Regulatory Organization (SRO) - Answer✔An 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.
3
Conduct and Practices Handbook (CPH)
Exam Questions And Answers |Latest 2025 |
Guaranteed Pass.
Formal Take-over Bid - Answer✔An 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 - Answer✔Compliance is following the rules, whether those rules are legal and
regulatory requirements or internal policies.
Confidentiality - Answer✔The 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 - Answer✔A 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 - Answer✔A 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 - Answer✔Investigation 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 - Answer✔An 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.
1
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 3:09PM.
Also known as Standard A
Fiduciary Duty - Answer✔A legal term that describes a high degree of duty of care. Criteria that
may be used to determine whether a trust exists in an IA-client relationship include a high
degree of reliance by the client on the IA's advice and the vulnerability of the client. A similar
concept, "Contract of Mandate", exists in Quebec under civil law.
Know Your Client (KYC) Rule - Answer✔The 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) - Answer✔The 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 - Answer✔The 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 - Answer✔A 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 - Answer✔An 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) - Answer✔The body that
administers the regulatory framework surrounding Québec's financial sector securities sector,
the distribution of financial products and services sector, the financial institutions sector and
the compensation sector.
Canadian Investor Protection Fund (CIPF) - Answer✔A fund that protects investors against the
insolvency of any dealer member. It is financed by the IIROC and the exchanges (except ICE
Futures Canada), who are collectively referred to as Sponsoring Self-Regulatory Organizations
(SSROs) through quarterly assessments on dealer members.
Disclosure - Answer✔One 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) - Answer✔FINTRAC
receives, analyzes, assesses and discloses financial intelligence on suspected money laundering,
terrorist financing, and threats to the security of Canada.
2
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 3:09PM.
Integrated Market Enforcement Teams (IMETs) - Answer✔An initiative of the RCMP and the
federal government to detect, investigate and deter capital markets fraud. IMETs are composed
of police, lawyers and other investigative experts through branches in Toronto, Vancouver,
Montreal and Calgary. They are jointly managed by the RCMP and Justice Canada, and work
closely with securities regulators such as the IIROC and the MFDA, as well as other federal and
provincial authorities.
Joint Serious Offences Team (JSOTs) - Answer✔JSOT 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. Staff work with police agencies and the Ministry of
the Attorney General to bring more cases before the courts and to send a strong message to
those who might harm the public.
Investment Industry Association of Canada (IIAC) - Answer✔IIAC is a member-based, advocacy
association that advances the growth and development of the Canadian investment industry. It
is not a regulatory body. Its member firms range in size from small regional firms to large
organizations that employ thousands of individuals across the country The IIAC's mandate is
fourfold: Advocacy, Industry Profile, Member Support, and Market Advancement.
Investment Industry Regulatory Organization of Canada (IIROC) - Answer✔The 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. It also develops recommendations to amend existing rules,
establishes new rules and interprets existing rules.
Mutual Fund Dealers Association (MFDA) - Answer✔The Self-Regulatory Organization that
regulates the distribution (dealer) side of the mutual fund industry in Canada.
Office of the Superintendent of Financial Institutions (OSFI) - Answer✔The 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 - Answer✔A general term referring to the Securities Administrators and Self-
Regulatory Organizations (SROs) collectively.
Self-Regulatory Organization (SRO) - Answer✔An 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.
3
