Chapter 6 - Key Issues and Processes Flashcards
Does the NAAF require a client signature?
NO - firm must confirm with the client the correct information and document the confirmation.
What is the threshold for identifying beneficial owners of trusts and coporations
10% ownership or more
Name 2 requirements that go along with opening an account for a PEP
1) Account must be approved by Senior Management
2) attempts must be made to identify the source of funds being deposited
How frequently must the Firm’s AML Regime be reviewed
Every 2 years the firm must review the AML Regime.
How many days after account opening must a firm take positive action for missing account agreements?
Firm has 25 days to receive the documents before taking Positive Action.
What disclosures MUST be presented to All Clients
o Disclosure relating to NP 41 – Shareholder Communication
o Statement of Polices (respecting Connected Issuers)
o Privacy Brochure
o Information relating to Arbitrage
o Fee Schedule
Under what circumstances does a dealer have NO suitability obligation?
When dealing with other Registered Entities such as dealer members and portfolio managers.
What is the maximum number of days for an ATON account transfer?
10 Business Days for completing the account transfer.
Under what circumstances can an account be transferred in Bulk?
IIROC only permits bulk transfers when the accounts cannot stay where they are.
CRM is designed to address what 2 gaps?
- Requirement to provide relationship disclosure information
- Requirement to provide account performance reporting
What is the retention requirement for Sales Literature (research)
2 years
What is the retention requirement for Supervision Material?
7 years - including 1 year onsite.
What is the retention requirement for correspondence related documents? (including email)
5 years
What is the retention period for account identity verification information?
5 years after the closing of an account.
What does the Soft Dollar Policy of OSC Policy 1.9 mandate?
Policy requires that such payments be restricted to “order exception services” exclusively. (in practice, such services extend to research and database services - but not computer hardware or similar goods).
What does CDS stand for?
Clearing and Depository Services Inc.
What are the 3 stipulations of the Margin Agreement
1 - maintain adequate margin in the account
2 - repay the amount loaned upon demand
3 - pay interest on the margin loan
How many business days can an account be under margined before being restricted
20 business days
What is the definition of a “Partial-Block” when speaking about concentration & margin lending.
A sufficient number of shares to materially affect control of that issues.
How is an overdue Cash Account treated for 6 days or more after settlement:
Treated as a Margin account with any margin deficiencies becoming a charge to the firms capital.
How is an overdue Cash Account treated for when 1-5 Business days after settlement
firms determines what credit to extend based on a weighted average of the holdings in the account to be used as collateral - taking into account he marketability of those holdings.
What are 3 factors of a Firm’s Liquidity Risk?
- Market Risk
- Credit Risk
- Operational Risk
How are Counterparty, Liquidity and Price Risk Addressed?
Margin Requirements handle this
How is Concentration Risk addressed?
Capital Formula’s Security Concentration Charge
Under what circumstances does it take for a firm to fall under Early Warning Level 1
When EWR (early warning reserve) is less than 0
Under what circumstances does it take for a firm to fall under Early Warning Level 2
when EWE (early warning Excess) is less than 0
What is the minimum $$ amount to qualify for Minimum Investment Exemption?
$150,000
Define Right of Withdrawal
An investor can cancel an agreement to buy a fund for any reason at all within two business days of signing the purchase agreement
Define Right of Recision
allows an investor to cancel the agreement to buy a fund if the OM contains a misrepresentation.
What is meant by “Sprinkle” for an IC/PM
When an IC/PM purchases an issue under OM minimum size and then distributes it to clients in managed accounts in small amounts. THIS IS ALLOWED.
