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CIRO Derivatives Exam — Information & Free Practice

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About CIRO Derivatives Exam

CIRO Derivatives Exam · CA

Key exam facts

Provider
Canadian Investment Regulatory Organization (CIRO), with Fitch Learning as exam design and delivery partner
Format
Multiple choice
Exam questions
Total questions: 120.
Time limit
3 hours
Passing score
Not published; passing grades vary by exam version.
Exam fee
$475 for the first attempt; $300 for each second and third attempt in an enrollment period.

Topics covered

  • The client relationship

    • Understand the product’s due diligence obligation in relation to derivatives
    • Analyze know-your-product obligations for derivative investments purchased, sold or recommended for a client
    • Apply the account appropriateness obligation to specific situations relevant to a derivatives account
    • Apply know-your-client rules to clients seeking derivative trading services
    • Apply client suitability determination requirements to clients seeking derivative trading services
    • Analyze internal escalation or delegation procedures to appropriately registered persons for derivative trading services
    • Apply CIRO requirements when communicating with clients and/or the public in relation to derivative products
    • Understand requirements for documenting, filing and maintaining client records

  • Regulatory documentation

    • Apply regulatory requirements relating to client interactions in derivative contracts
    • Understand regulatory requirements governing reporting in derivative contracts
    • Apply regulatory requirements governing prohibited derivative trading practices
    • Apply regulatory requirements governing client margin and treatment of different derivative product positions
    • Understand requirements governing opening, managing and monitoring derivative accounts
    • Understand requirements governing client statements for derivatives trading
    • Understand the application of NI 93-101 and other relevant legislation including the Quebec Derivatives Act

  • Types and features of derivatives

    • Analyze types and features of futures, forwards and similar derivative contracts
    • Analyze types and features of options and similar derivative contracts
    • Analyze types and features of futures contract options contracts
    • Analyze types and features of contracts for difference
    • Analyze types and features of swaps contracts
    • Analyze characteristics of futures, forwards and similar derivative contracts
    • Analyze characteristics of options and similar derivative contracts
    • Apply requirements relating to leverage in derivative contracts
    • Understand the role of derivatives in structured products

  • Derivative pricing

    • Understand the impact of underlying asset price on derivative pricing
    • Apply the fair-value pricing method of a future, including calculations
    • Understand option pricing terminology
    • Understand option Greeks and their application
    • Understand key differences between option pricing models
    • Apply basic pricing theory to calculate time value and intrinsic value given underlying price, strike and premium
    • Understand the impact of corporate actions on option contract terms
    • Apply put-call parity theory to fair value calculations
    • Understand price forecasting techniques
    • Understand tax implications for investors in derivatives

  • Derivative trading, clearing and settlement

    • Analyze differences between listed derivatives and over-the-counter derivatives
    • Apply features of different types of order to derivatives
    • Analyze benefits and disadvantages of algorithmic trading
    • Understand trade execution and settlement process for futures
    • Understand trade execution and settlement process for options
    • Apply trading rules and mechanics of over-the-counter derivative contracts
    • Understand the nature of various trading desks
    • Understand types of trading account
    • Understand requirements for order designations and identifiers and their implications
    • Apply requirements on managing client orders to derivative services
    • Understand accurate documentation of client discussions and client confirmation
    • Understand rules and procedures for derivative-clearing corporations
    • Understand Canadian Depository for Securities delivery procedures for underlying interests
    • Understand characteristics of margin
    • Apply margin calculations for different strategies and situations

  • Speculating, hedging and other investment strategies

    • Understand uses of derivatives in specific situations
    • Analyze speculative strategies using futures, forwards and similar derivatives, including profit or loss
    • Analyze hedging strategies using futures, forwards and similar derivatives, including number of contracts
    • Analyze arbitrage strategies using futures, forwards and similar derivatives, including opportunities and profits
    • Analyze other strategies using futures, forwards and similar derivatives
    • Analyze speculative strategies using options and similar derivatives, including profit or loss
    • Analyze hedging strategies including delta hedging using options and similar derivatives
    • Analyze arbitrage strategies using options and similar derivatives
    • Analyze other strategies using options and similar derivatives

  • Integrity in the derivative markets

    • Apply Universal Market Integrity Rules to situations relevant to derivative trading services
    • Apply gatekeeping responsibilities to situations relevant to derivative trading services

  • Standards of conduct and conflicts of interest

    • Analyze standards of conduct in situations relevant to derivative trading services
    • Analyze regulatory requirements governing management of conflicts of interest
    • Analyze regulatory requirements relating to outside activities
    • Analyze requirements relating to personal financial dealings with clients

How to prepare

Work through the topics, read the explanation after each answer, and revisit the areas where you miss questions. Use the official outline and reference materials below to guide your study.

These independent practice questions are not actual exam items and do not guarantee a passing result.

Frequently asked questions

What is the exam format?

Multiple choice

How many questions are on the exam?

Total questions: 120.

How long is the exam?

3 hours

What is the passing score?

Not published; passing grades vary by exam version.

How much does the exam cost?

$475 for the first attempt; $300 for each second and third attempt in an enrollment period.

Official sources and references

Confirm current exam arrangements with the exam provider.