What is a common characteristic of Dealers under the IIROC?

• A. They do not require licensing for practice
• B. They must engage in trading as an agent or principal
• C. They only operate in mutual funds
• D. They are primarily charitable organizations

Answer: (B)

Dealers under the Investment Industry Regulatory Organization of Canada (IIROC) must engage in trading either as an agent or principal, which highlights a fundamental aspect of their operations in the securities marketplace. Engaging as an agent means they execute transactions on behalf of clients, while acting as a principal involves trading on their own account. This dual capability is essential for providing a range of services, including market making and facilitating client transactions, making it a defining feature of the role of dealers in the investment industry.

Operating under IIROC comes with regulatory requirements, including licensing, capital requirements, and adherence to ethical standards, which is essential to encourage fair, efficient, and transparent markets. The description that dealers must trade in this manner is crucial for maintaining the integrity and functionality of the financial markets they serve.