Hi – for anyone here that works on the buy-side here, can you trade in your personal portfolio? Or does your firm have strict compliance limiting how much you can trade, if at all?
I’m a buy-side equity analyst, and the hedge fund I recently joined has some very restrictive trading rules. They’re designed to be almost prohibitive to investing in your personal account. I understand that you don’t want to be front-running your fund or taking opposing positions. However, given that I already had a number of positions before entering the firm and not all of these positions are companies the firm invests in, I feel very confined by the rules we have in place.
Anyway, I’m curious to hear anybody’s experiences in this area. Also, have compliance restrictions on trading ever been a factor in your employment decision process or are they essentially a non-factor?
Worked at a Pension Fund. Just sent in trade requests to compliance for approval, and once approved had a minimum holding period of ~2 months. Could trade the index as much as you wanted, without need for approval.
Here you need to get prior approval and minimum holding period is 3months approx. Analysts (or any fund employee for that matter) have to disclose all their holdings when asked and can not invest in any stock which can be bought for the fund (i.e. which fulfill the mandate of the fund).
Work at a large bank, and we submit our trades for approval. We’ll get blocked if there’s been a recent change in opinion on the company. The blackout period is 7 days but we have no minimum holding period. Options are also allowed except on our own company. I’m on the credit side, so I’m free to trade equities on the companies I cover. However, I don’t feel comfortable doing so and will usually stick to companies outside my coverage. We also can trade indexes all we want without approval.
We have a policy but not really enforced. Everyone pretty much follows the honor system and there is too much at stake to bother making a few bucks on the side…
Mine are so prohibitive that I simply choose not to trade on the side and instead investment more in 401k and savings (mostly real estate). I think that is good, because my human capital is already tied up in my picks so no reason to double down by tying up my financial capital as well.
I can buy anything on our buy list and must get okay by compliance dept for anything outside buy list and must include reason why it is appropriate for my portfolio but not our clients. I have never bought anything outside our buy list, because if it was that good, it would likely be on our buy list.
My clients appreciate that fact that my equity portfolio looks almost exactly like theirs.
So at my new job, they just instituted a revised policy with a minimum holding period of 6 months. Free to trade any index or ETF like product, or stocks outside of our industry. I’m in research.
My question to my AFers is this: how can any of these policies be policed, other then just asking employees something like “Please certify your compliance with the trading policy.” Is is basically just that + the honor system? I was talking to a guy on my team and he implied that people generally don’t discuss personal investments at work, so maybe most people operate under a general don’t ask, don’t tell approach?
Like as a regular thing, you have to send in copies every month? Way around this is could have a 2nd brokerage account. Make company approved trades in one, non approved trades in another.
Way too simple my friend. If it were allowed/possible then the requirement of submitting statement of personal trades would be pointless. Don’t know how it works in U.S., but I used to work for a local brokerage firm here and employees were allowed to hold trading account only at the firm so that they can monitor what you are buying/selling (no need for asking for trading accounts etc.). I found it annoying. People say one way around it is to open trading account in parent’s or wife’s name. Slippery slope…
I just signed on with a large asset manager (haven’t started yet). I was told that I am not allowed to make any stock-specific investments. However, those rules wouldn’t extend to any ETFs, which I would be allowed to trade as often as I’d like.
I have no problem with firms restricting the trading/investing of individual stocks. Just let me invest my monthly paycheck into SPY, GLD and Bonds and I’m happy.
We’re allowed to do this as well, which I think is strict though not as strict / unreasonable as I’d thought when I first posted this forum. I understand why it’s important not to trade in and out of the names the fund is in, but I don’t see why I can’t invest after my fund has already bought in and sell after my fund has already sold. I guess it’s just to make things easier on compliance, or to keep myself focused on the job rather than managing my PA - the idea is that if the fund does well, all employees will benefit.
That said, I’m also aware of plenty of funds that don’t have such draconian rules in place about trading and this is definitely something I’ll have to ask about at my next future employer. My PA will become an increasingly relevant proportion of my net worth as I move up in my career and I don’t want to cede that to the compliance team without resistance.