Everyone at my firm is literally castrated by our compliance policies - no single name equities, everything else needs clearance. Don't even get me started on the clearance process...
For those already working, curious what your firm's policy is. For those who are still in college - stock up on all that shit before you get cockblocked.
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It's the same at every firm. The intended purpose is that most employees simply don't trade. It sucks but if we're working there, it's because we need jobs, and even if we didn't need jobs there still isn't a guarantee we'd be good at trading anyway. Looking at things from a quantitative perspective, I laugh at anyone who thinks they can seriously make money without either experience as a trader and/or a decent algo-driven strategy.
Exactly. Our hands are very tied at my firm. All trades must be cleared by Compliance. Then we need to wait 24 hours after clearance to actually execute the trade.
The only thing we're allowed to trade freely is mutual funds, and even then, there's a select list. So it goes.
It's really like this at every [financial?] firm? And it's the same across all divisions, like nobody in IB, ER, or S&T can freely trade? And same rules for small firms? JW because I had no ideas such restrictions existed.
At both BB's I've worked at and those my friends are at, pretty much. Compliance has a stranglehold on things, often with good reason.
I mean the restrictions in terms of what we can do suck... I work at a BB for reference. Only long equities, no shorting, ETFs fair game (compliance dude made a joke that we can day trade ETF as much as we want, good luck...), any purchases or sales need to be pre-cleared... generally clearance goes through in about 10-20 minutes, once cleared the trade you requested has a 24 hour green-light. Thereafter you need to request again. All of this has to be done with an approved brokerage as well.
So yeah, most of the anlaysts have personal accounts... not because any of us think we'll get rich trading a few times a month but more because it keeps us interested in the markets and lets us have some skin in the game. Honestly, I think anyone that isn't under financial burden should throw a couple grand into a personal account and learn about the markets / trading / researching companies that interest them, etc.
Are you allowed to buy your competitors stock?
Yes, of course.
Curious, what is the restriction for something like forex?
pls no forex pls
Can you hit me on IG in my messages to tell me about this thing called Forex trading, you must have some masterclass in it.
Same for everyone...
What's more valuable, your job or the $100 of TWTR
Nope no Forex.
I'm at a small asset manager. No preclearance for personal trading, all trades must be reported quarterly except mutual funds held in retirement vehicles (IRAs, 401(k)s). No trading securities on the restricted list. Restricted list is mostly companies one of our family office clients holds a stake in.
Is the restriction on no shorting that common?
Yes. It's seen as taking a position against potential clients plus MNPI if you've learned of something private.
Can we trade actively-managed ETFs (e.g. ARK ETFs)? Or must they be passive ETFs?
Your firm should have an exempt list for ETF’s that they’ll give you a list of. You’ll still have to clear it but at least you can trade those names
I see, thank you!
Why on earth would you be restricted from certain ETFs or mutual funds? That seems completely unjustifiable.
I understand the 24 hour pre-clearance policies, those are manageable. I have that also, and it’s done using AI now, which is also convenient.
The logic is that if you know a company is doing a big acquisition and you buy an ETF containing the acquisition target, you have MNPI. And depending on your company's trading policy, that would definitely expose you to an SEC investigation per the recent shadow trading case. It's stupid though because the list of pre-cleared ETFs is entirely arbitrary and decided by someone in compliance who probably thinks Chipotle is exotic. The bank I worked at had a HY muni ETF among the list of pre-cleared ETFs (which were stuff like the S&P and treasuries), but it was like 90% Puerto Rican munis.
Alright time for a muni lesson, Puerto Rico is a triple tax exempt entity, meaning their interest cant be taxed at the federal, state, or local level. It actually plays really well into a lot of wealth preservation strategies.
A quick glance at the S&P Municipal Bond Puerto Rico Index, shows a 7.12% tax equivalent yield as of May. In addition to this the S&P Municipal Bond Puerto Rico Index is 123 bps higher in the 10 year annualized return then the S&P 500 bond index.
Risk adjusted the PR bonds still remain 19bps higher than the SP 500 across the 10 year time horizon.
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