Prevent market abuse with proactive personal account dealing compliance

Frequently Asked Questions 

• Are personal account dealing monitoring systems mandatory?

  Personal account dealing (PAD) monitoring systems are not explicitly mandatory under MiFID II, but firms are required to have controls in place to monitor employees’ personal transactions and prevent conflicts of interest or market abuse. While firms can choose how to implement these controls, they must ensure compliance with regulatory requirements through effective monitoring and record-keeping.

• What are the compliance risks of employee personal trading?

  There is the potential for the company to become subject to substantial financial penalties for failing to prevent personal account dealings where an employee benefits from insider knowledge or comprises a conflict of interest. This can, in turn, lead to reputational damage for the company and a loss of trust with clients.

• How does personal trade pre-clearance software help compliance teams?

  By running employee personal trades through a pre-clearance system, you can minimise compliance risks such as insider trading. Enter into TradeLog parameters that relate to the regulatory requirements and your own company trading policies so that it will flag potential problems before a purchase or sale is made. TradeLog helps you optimise your process to allow personal trades to take place in good time and without tying your compliance function up with manual investigation work. This automated pre-trade clearance system helps you reduce the administrative burden while securing your compliance with all relevant legislation.

• Who should submit personal account dealing requests?

  Managers, employees and tied agents of investment firms, as well as their family members, close friends and anyone else connected to them (if there is a chance that the personal trade would benefit the employee), should also use the system.

• How does MiFID II impact personal account dealing monitoring?

  MiFID II (Markets in Financial Instruments Directive II) is a legislative framework instituted by the EU to regulate financial markets. It’s focused on transparency and investor protection. MiFID II requires firms to have robust systems in place to detect and report potential market abuse. A personal trading compliance system like TradeLog can streamline this process, maintain accurate records and provide the necessary audit trail for compliance.

• How can automation improve transparency in the process of monitoring personal account dealings?

  Systems that automate personal account dealing compliance like TradeLog keep a comprehensive record of all employee personal trades, both approved and declined. This allows compliance teams to generate standard and custom reports with ease, ensuring that all trade activities are transparent and traceable.