Investing and compliance

1st Dec '21 by dcon85

4 comments 484 reads

Hello all,

Are there any private investors here who work (or used to work) at financial companies with compliance rules?

I’d be really interested to hear how you manage your personal portfolios, and what type of investments you are able to make etc (if you are able to discuss it)

I’ve just found myself employed at a company that has a lot of compliance to follow, I’m not sure if I can discuss the limitations placed, I will find out if I am able to do this. However the basic rules are likely to be similar to other places.

I feel I can say that the limitations would place me at risk of losing a large amount of capital in any given stock, especially with the markets as they are. Which is making me want to sell up of all my individual stocks. I think I can say, since I don’t have to declare them, that I can hold ETFs.

I currently hold individual stocks in an ISA, no funds or etfs, and whilst it’s not the biggest amount of money, it would be all of my life savings, so I’m not keen to lose control of it. (I have a rental property so I’m a little bit diversified across asset classes - but I basically consider the ISA to be “all my money” at this time. )

Any help would be greatly appreciated!

Thank you

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Wilbraham

1st Dec '21

Not directly, as in my day there was more latitude - obviously one wouldn't deal in shares of a client or related party.

This may be of interest - it appears Deloittes are becoming uber-restrictive in limiting which IFAs you can operate through, with the restrictions possibly extending to your family. I haven't read the thread in full, but it sounds as though any specific company investments are effectively verboten https://www.pistonheads.com/ga... I expect it's just the price to be paid for having a good job!

dcon85

Thank you that is interesting. I can see some sense in this at Delloitte, not so much the restrictive selection however.

I think it depends on what a company does, and ones role within it. Although I agree that a savvy opportunist or indeed bad actor could be at any level inside a company and gain information that they may be able to misuse.

By the way my job isn't a financial role, I'm in IT. They have pretty good systems in place that mean sensitive information is hard to stumble upon, and also when it pertains to a listed entity further restrictions as to whom may access such material.

I'd probably be a lot less interested in running my own account if I was doing finance for a living.

I'm just trying to get my head round it all as it was the first time this has come up for me. And whilst I absolutely love investing and learning about companies, industries, and generally just the whole thing, being able to focus on my new job is a priority at the moment.

PLS1nve5t

2nd Dec '21

Hmmm sounds like you are a decent person and have too many scruples for the job your in, good for you. But how many others use their privileged position to take advantage through friends or family ?

Now your my friend - I'm sure we can come to some sort of arrangement :-)

Monty Carlo

24th Dec '21

It tends to vary depending on what type of institution you work for.

Fund managers tend to be very restrictive - you need to get compliance sign-off before any purchase or sale in your or any any relative's accounts (index trackers, generic ETFs and some pooled investment vehicles may be excepted). Permission is not instant because they check to see if any funds are buying or selling first - and if they are you can only buy or sell once the funds have finished. In small caps this can prevent you from trading some holdings for months....and massively increases your "liquidity risk". Most fund managers just invest in their own funds as direct holdings become a real hassle.

At smaller places such as IFAs a looser regime can apply - for instance you may only need permission for transactions >£10k.

At banks it gets very complicated indeed, depending on what dept. you are in. Chinese walls between trading & corporate finance, insider dealing and front-running client orders become major concerns for compliance.

But in summary it can be a major hassle and many just stick to index funds or very long term buy & hold.

You will also find that most institutions demand copy trading confirms direct from the platform (so called 3rd party notifications, which most platforms support) so they can see all trades.

Investing and compliance

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Dcon85

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