Hi all,
This topic has been discussed in the past, albeit on an old thread from 2009 (what I could find) and only covered stocks on exchanges. I wanted to get the opinion of the current full time personnel in the Investment Banking and related fields, on whether similar rules (preclearing trades, 30 day hold times, no naked option shorts, etc) even when trading stock indices instead of individual stocks?
Specifically, my trading involves pretty much futures market, where there's no bias towards an individual stock since most of them are determined by global factors (import, export, weather, crop plantation, forex/inflation, etc).
Would trading in commodity futures and futures options expose me to same rules as individual stocks?
I highly doubt that any information one receives when working on a deal could be considered inside information, as an example, on how the next year's corn crop will do or how the coffee harvest in Brazil will be. Nevertheless, I still want to be in the clear in terms of not breaking any rules. Wondering if anyone working at banks (and if you wouldn't mind naming the banks, that'd be very helpful) deal or view this? Also, perhaps more critically, how your banks view these? Have you ever come across language which talks about trading anything outside stocks/equity markets? I've heard banks typically do allow trading indices but have rules pertaining to individual company's stocks/options.
I'm not at a bank currently in front office, so would really appreciate any insights.
Thanks!
Another thing to keep in mind:
My MD has to approve if I want to execute a trade. Not sure how it is handled at other banks.
Obv no one is doing it ...
Thanks for the note, I wasn't aware that the approval goes to MD, I always thought it goes to a compliance team or something else central.
Did you mean this for a stock trade? Have you heard of anyone having issues with futures? Say, indices S&P500, Nasdaq, DJ30 or physical commodities such as meats, grains, coffee, metals, etc
My bank circulates internal memos regarding restricted securities and all trades we make must be relayed to compliance.
It depends on the bank. The MM that I was at did not require approval at the time of the trade, but the assumption was that you were not insider trading and had asked compliance first. If you work at a bank that requires a senior banker to sign off, you really don't want to be that guy.
It's something I would not want to risk...
At my BB all trades must get cleared through compliance and there is a 15 day hold (have heard that this is pretty common at most BBs). Now ETFs and indices that are "diversified" can be traded w/o compliance approval but still have a 15 day hold, which if playing options/futures may crush your strategy
At my BB every trades are subject to compliance clearing and 30 day hold, except for etf/indices stuffs where you basically cant have any insider knowledge because of their construct. We also cant buy equities from our coverage group (makes sense) and cant short
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