Hi, I know that there are restrictions for people working in investment banking to trade stocks for themselves. But do you guys know how things are like in PE? Say a quite junior level, an associate working at a PE firm wants to trade a stock, what are the restrictions for the types of the stock, frequency of trading and the minimum period of time to hold that stock? Are permissions required for every trade/stock or just for some? Thanks.
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Firms usually have and maintain their own no-trade/restricted list for compliance purposes. My experience has been that as long as you do not trade anything on these lists, you can trade at your own discretion.
Thank you
Same here (large cap non-MF PE) - we do have a blacklist of restricted companies / securities, but can trade anything else. Although do need to get approval for all of it through an online platform, the software basically cross-checks our proposed trade with the black list and approves if its not on there. After approval you have a window of 3 working days to execute the trade until the approval expires. Its pretty relaxed.
EDIT: Plus we do have to (i) allow the compliance department to access our holdings in real time (in the US) or (ii) send them quarterly snapshots of our portfolios that detail holdings as of quarter end and all transactions during the quarter.
Trading Stocks as a Private Equity Associate (Originally Posted: 02/25/2016)
In investment banking we're heavily restricted in our public market trading activities, having to get every trade pre-cleared by compliance, and having a full restriction from trading in our industry if we're in an industry coverage group.
Does anyone know how this works in private equity? Are there any restrictions on investing in the stock market or in bonds at private equity shops?
That was very helpful thank you. What are your working hours like?
I'm at a larger fund and it's similar to when I was in banking at a BB. The firm has a firmwide restricted list for companies with which we're involved, and trades must be (1) approved by compliance via an online system and (2) placed at an approved brokerage.
Pretty much blanket ban from trading stocks for me. In theory, I can trade stocks but practically speaking the approval process makes it so that it's not really an option. The thinking is that if you have good investment ideas, you should be putting those forward for the firm rather than yourself (even though there's a mandate mismatch a lot of the time).
I work at a large MM firm and they're fairly lax about trading compared to my banking days. I can trade anything with a large market cap without approval and there are no holding periods. However, anything sub-$5bn needs to be approved, just like in banking.
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