Broker Club Personal Account Dealing Survey
Our personal account survey carried out last week showed a variety of approaches to Personal Account Dealing (PAD) within the broker community. This topic has recently come under increased FCA scrutiny, being highlighted in Market Watch 62, and the results should help to give an idea of how firms within the sector are adapting to meet the regulator’s expectations. The regulator requires firms to have appropriate policies, training, oversight, systems and controls so they can manage the risks inherent in PAD.
Firms showed different approval policies for PAD trades. 50% required pre-approval for all trades, with a further 14% requiring pre-approval on certain asset classes. Market Watch 62 raises concerns around lack of pre-approval for trades and firms may wish to review their pre-approval policy to ensure compliance with regulations set out in the FCA’s Conduct of Business Sourcebook 11.7 and 11.7A. Required holding periods also varied by firm, with the most common being 30 days (54%). However, our survey showed a wide range of holding periods, from no required holding period (31%) to 1 year (8%).
Company policy in the other areas surveyed showed more consistency across the sector. 92% of firms held an annual attestation of accounts held by staff, while the majority of firms (85%) did not have a maximum number of trades per month, however manager’s discretion was highlighted as an important factor in this decision, with the ability to impose caps if necessary.
Our survey results show a lack of consistency in approaches to PAD, which Market Watch 62 flagged as a cause for concern across the sector. Firms should assess how they manage conflicts of interest and the risk of market abuse and the policies and processes that they have in place for managing PAD by employees.
For further reading on this subject see Market Watch 62, COBS 11.7 and COBS 11.7A
