Option C states the express regulatory requirement. Under CIRO IDPC Rule 3246, when deciding whether to permit a client to trade on margin, the Investment Dealer must ensure that the client understands the associated risks and benefits. Margin magnifies exposure because the client uses borrowed funds to acquire securities. Losses may exceed the client's initial contribution, interest is charged on the debit balance, and the dealer may liquidate assets when required margin is not maintained.

The dealer must also deliver a margin account agreement and obtain the client's signature before opening the account. That agreement explains the client's repayment and margin-maintenance obligations and the dealer's rights concerning collateral and liquidation.

Option A is too broad because margin trading is not automatically prohibited or arbitrarily limited; it must be administered under the account agreement, suitability framework and margin requirements. Option B incorrectly treats obtaining the lowest possible borrowing rate as the dealer's principal regulatory duty. Option D imposes an impossible standard: the dealer cannot certify that a client will always possess sufficient funds to absorb every possible market loss.

The official Retail Securities syllabus covers cash and margin accounts, special margin situations and specialized trading authorizations.

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