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CCO Exam > Chapter 6 - Key Issues and Processes > Flashcards

Chapter 6 - Key Issues and Processes Flashcards

1
Q

Does the NAAF require a client signature?

A

NO - firm must confirm with the client the correct information and document the confirmation.

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2
Q

What is the threshold for identifying beneficial owners of trusts and coporations

A

10% ownership or more

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3
Q

Name 2 requirements that go along with opening an account for a PEP

A

1) Account must be approved by Senior Management

2) attempts must be made to identify the source of funds being deposited

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4
Q

How frequently must the Firm’s AML Regime be reviewed

A

Every 2 years the firm must review the AML Regime.

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5
Q

How many days after account opening must a firm take positive action for missing account agreements?

A

Firm has 25 days to receive the documents before taking Positive Action.

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6
Q

What disclosures MUST be presented to All Clients

A

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

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7
Q

Under what circumstances does a dealer have NO suitability obligation?

A

When dealing with other Registered Entities such as dealer members and portfolio managers.

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8
Q

What is the maximum number of days for an ATON account transfer?

A

10 Business Days for completing the account transfer.

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9
Q

Under what circumstances can an account be transferred in Bulk?

A

IIROC only permits bulk transfers when the accounts cannot stay where they are.

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10
Q

CRM is designed to address what 2 gaps?

A
  1. Requirement to provide relationship disclosure information
  2. Requirement to provide account performance reporting
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11
Q

What is the retention requirement for Sales Literature (research)

A

2 years

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12
Q

What is the retention requirement for Supervision Material?

A

7 years - including 1 year onsite.

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13
Q

What is the retention requirement for correspondence related documents? (including email)

A

5 years

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14
Q

What is the retention period for account identity verification information?

A

5 years after the closing of an account.

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15
Q

What does the Soft Dollar Policy of OSC Policy 1.9 mandate?

A

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).

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16
Q

What does CDS stand for?

A

Clearing and Depository Services Inc.

17
Q

What are the 3 stipulations of the Margin Agreement

A

1 - maintain adequate margin in the account
2 - repay the amount loaned upon demand
3 - pay interest on the margin loan

18
Q

How many business days can an account be under margined before being restricted

A

20 business days

19
Q

What is the definition of a “Partial-Block” when speaking about concentration & margin lending.

A

A sufficient number of shares to materially affect control of that issues.

20
Q

How is an overdue Cash Account treated for 6 days or more after settlement:

A

Treated as a Margin account with any margin deficiencies becoming a charge to the firms capital.

21
Q

How is an overdue Cash Account treated for when 1-5 Business days after settlement

A

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.

22
Q

What are 3 factors of a Firm’s Liquidity Risk?

A
  1. Market Risk
  2. Credit Risk
  3. Operational Risk
23
Q

How are Counterparty, Liquidity and Price Risk Addressed?

A

Margin Requirements handle this

24
Q

How is Concentration Risk addressed?

A

Capital Formula’s Security Concentration Charge

25
Q

Under what circumstances does it take for a firm to fall under Early Warning Level 1

A

When EWR (early warning reserve) is less than 0

26
Q

Under what circumstances does it take for a firm to fall under Early Warning Level 2

A

when EWE (early warning Excess) is less than 0

27
Q

What is the minimum $$ amount to qualify for Minimum Investment Exemption?

A

$150,000

28
Q

Define Right of Withdrawal

A

An investor can cancel an agreement to buy a fund for any reason at all within two business days of signing the purchase agreement

29
Q

Define Right of Recision

A

allows an investor to cancel the agreement to buy a fund if the OM contains a misrepresentation.

30
Q

What is meant by “Sprinkle” for an IC/PM

A

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.

CCO Exam (13 decks)

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