Hi all,
I've heard that investment banks make it difficult / ban their S&T employees from investing their own savings in stocks.
To what extent is this true & how difficult is it? For example, is it possible to have a job in structured solutions & invest in growth stocks with a 5 year time horizon?
Thanks!
IBs don't straight-out stop their trading staff from investing their cash - at least, not all IBs do. It's general practice that: i) You can't invest in the same asset class you trade (so if you do rates, equities are fine); ii) You declare whatever investments you intend to make (and whenever you close a position); iii) You can't exit a position before a certain period of time (i.e. you have to keep your position on for a certain period of time, usually 6-12mos minimum).
I heard minimum position window was like 30 days... Also what are the policies around options? If I buy a call expiring Friday, I can only hold it through expiry...
Yeah, have heard 30 days as well. Think you're right and that is a more common stipulation, but it does vary from firm to firm. If it were the hypothetical situation of buying a call expiring on Friday that same week, I'm pretty confident the bank would simply bar you outright from trading similar options. Basically, anything within their power to mitigate market abuse as much as possible.
At a BB, can't trade options.
Edit: I'm stupid and out of touch... we can trade options but again, in a limited manner.
At ALL? If it's firm positions that's one thing, but no options period? That's some bullshit if so. Sorry, not going to mince words. Anti-insider trading rules I can agree with. The usual rules on how compliance gets copies of your statements to me is a little creepy, but I understand the world in which we live so it is what it is and I comply. But no trading options at all?
Sorry my bad.
We can trade options. Per the expiry question above I'm not 100% sure what the rule on that would be.
But there is a limit in that we also must pre-clear / etc. and no uncovered puts... basically almost impossible to be bearish.
Actually, let me pull all of my comments. Genuinely curious, looking into our policy right now. I'll update you later today.
I haven’t been at a BB in a long time, but when I was we had a pre-authorization line that we had to call and then we were required to use an in-house broker to execute the trade. It was much worse than compliance getting copies of our statements.
50% of the time the name I wanted to trade was on a black list because they were somehow involved in a deal somewhere in the firm. We were also only able to write covered calls. This was all before 2009/10 so things have probably changed some.
???
May be a dumb question but I seriously have never heard of this before and I'm genuinely curious: let's say I do S&T for equities. Or fixed income. Doesn't matter. Can I trade ETFs on those asset classes at least, or what are the limitations if so? I assume even if we do S&T in equities that buy and hold mutual funds (or ETFs?) that own equities are permitted? If not, how are you expected to save for retirement, or anything for that matter?
If not, and if the other poster is correct that options aren't allowed either, that total compensation better be pretty damn good.
Not S&T but at a BB and we have restrictions, specific equity lock out periods, are required to pre-clear trades (this is a click of a button and almost instantaneous though) and, the kicker, must hold for 30 days min. So a lot of short - term speculative trading is rendered moot.
I can only imagine S&T division has to follow similar rules, perhaps longer hold times and stricter rules on specific asset classes depending on the desk they are on. It's a combination of 1. MNPI 2. Employers don't want you worried about / trading your own portfolio, especially on company time, so they ban it / make it more difficult for individual traders to trade.
The idea is that if you actively trade, you’ll neglect your job. Most will prohibit you from actively trading, and same asset class trades will be strictly prohibited because you’re an insider.
I would comment - but my best answer is: get a job first and worry about PA trading later, it's pretty fucking straightforward the policy.... Funny story though, one of the rare time I traded I got stuck in a position that was losing 5% a day for 10 days - you do the math, but I was not allowed to close it.
Or if you are dying to trade PA go work in PE - I trade on the daily in my new job.
Risk of insider trading and/or taking the opposite position of clients.
Opposite position just sounds bad but wouldn’t be bad unless you advise them to enter the position. But if they did A and you did the opposite because you disagreed then fine. Some times would make a lot of sense to take the other side sort of facilitating client order flow. Like Mexico hedges their oil production every summer. So big seller. Taking the other side of the flow would make a lot of sense. Non economic seller. Front running would be a bigger issue. Plenty of things you can do that would be unethical.
That being said I’ve never met a trader that isn’t doing some side stuff.
yup yup eveyrone loves a good PA idea
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