CIRO RSE Exam - Topic 4 Question 9 Discussion

An order execution only account is the appropriate account model for a knowledgeable retail investor who expressly wishes to make independent investment decisions. In an OEO relationship, the dealer executes the client's orders but does not provide recommendations or perform the conventional portfolio suitability assessment. Before opening the account, the dealer must clearly disclose that the client is solely responsible for investment decisions and obtain the client's acknowledgement of that arrangement.

Options A and B describe investment products or strategies rather than account-service models. Neither automatically gives the client responsibility for selecting and trading securities across the market. A direct electronic access account is materially different from a standard retail OEO account. DEA provides direct marketplace connectivity and is normally associated with sophisticated, high-volume or specialized trading activity. CIRO guidance indicates that granting DEA to a retail client should occur only in exceptional circumstances and under more stringent standards.

The client's age, stable income, investment knowledge, high risk profile and desire for self-directed investing support the OEO model. Nevertheless, the dealer must still determine that establishing the client relationship is appropriate and meet applicable identification, anti-money-laundering and account-opening requirements. The Retail Securities syllabus expressly tests OEO accounts, account appropriateness and the advantages and disadvantages of different account types.

===============