Trusted Contact Person (TCP): Definition + Case Study

Trusted Contact Person (TCP)

A non-trading contact a client designates so the dealer can address concerns about exploitation or capacity.

Definition

Under CIRO IDPC Rule 3202(4), dealers ask clients to designate a TCP when collecting KYC information. The TCP has no trading authority. The dealer may contact the TCP to address concerns about possible financial exploitation, mental capacity issues, or to confirm contact details for a legal representative. A TCP is distinct from a power of attorney.

Source

CIRO IDPC Rule 3202(4); NI 31-103 s.13.2.01

Where this shows up on the CIRE

Outcome 3.6

Test yourself

Two real CIRE-bank questions on this exact outcome. Click to reveal the answer and the rule citation.

1
A large institutional client asks its investment dealer about 'securities lending' as a service. Which of the following correctly describes securities lending as an institutional service?
Outcome 3.6 · click for answer
A.A lender transfers securities to a borrower for collateral and a fee, keeping economic exposureCorrect
B.A dealer extends credit to retail clients so they can buy securities, holding those as collateral
C.It is the same arrangement as margin lending, since a dealer advances funds against pledged shares
D.UMIR bars dealers from lending out client securities for short sales due to settlement risk
Securities lending is an institutional market service where a securities holder (lender) temporarily transfers securities to a borrower, typically in exchange for collateral (cash or other securities) and a lending fee. The lender retains the economic exposure to the securities and receives manufactured payments in lieu of dividends or coupons during the loan period. Borrowers commonly use borrowed securities for short-selling or to settle failing trades. Securities lending is distinct from margin lending (where a dealer extends credit to a client to purchase securities). It is a regulated but permitted activity in Canada.
2
Under IDPC Rule 3406(2), a Permitted Client may waive the suitability assessment. Which of the following best describes the threshold for Permitted Client status for an individual?
Outcome 3.6 · click for answer
A.An individual with annual income exceeding $200,000 in each of the two preceding years.
B.Any individual client who has held a brokerage account for at least 10 years.
C.An individual registered under applicable securities legislation as an advisor or dealer.
D.An individual with net assets of at least $5 million in financial assets or $25 million in aggregate.Correct
Under the Permitted Client definition (National Instrument 31-103 / incorporated by IDPC Rule 3406), an individual qualifies as a Permitted Client by meeting either of two financial thresholds: (1) net assets of at least $5 million, or (2) net financial assets; cash and securities; of at least $5 million. For entities, an asset threshold of $25 million may also apply. Account longevity and income level alone do not confer Permitted Client status. Registered advisors and dealers are separately enumerated in the Permitted Client list.

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