Know-your-client

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Investment Industry Regulatory Organization of Canada (IIROC) Dealer Member rules impose know-your-client (KYC) and suitability requirements on Dealer Members and Registered Representatives.[1]

Most investment firms are required to determine the suitability of each proposed transaction in your account. This applies whether or not the trades are the result of recommendations by the firm’s staff.

Determining suitability

To determine suitability, your firm and advisor need to fully understand your financial situation, investment needs, objectives, investing experience and tolerance for risk. These can only be assessed by collecting from you accurate information about your personal and financial circumstances. This requirement, part of the Know-Your-Client rule, is one of the cornerstones of securities regulation.[2]

Information required

In order for your firm and advisor to comply with the Know-Your-Client rule, you will be asked to provide and keep up to date the following information:

  • martial status
  • date of birth (to determine age)
  • occupation
  • income and net worth
  • number of dependents
  • risk tolerance
  • investment objectives
  • investment knowledge and experience

References

  1. Investment Industry Regulatory Organization of Canada, Request for comments on draft Guidance Note: “Know-your-client and Suitability Guidelines”, viewed June 18, 2012
  2. IIROC, Opening Your Retail Account, What your investment dealer needs from you – and why, viewed June 18, 2012

External links