How do Investment Banks Monitor their Employee’s Personal Trading Accounts?


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How do investment banks monitor their employees’ trading accounts? This is a question that a lot of people nowadays ask. As a result, we’ve written this article to assist you. Today, all financial services organizations have a great desire to show their customers that they have ethical behavior, honesty, and no conflicts of interest. Let’s find out how do investment banks monitor their employee’s personal trading accounts.

As fiduciaries, the industry gets required by law (such as REG BI) to put customers’ interests before its own. Having a strong and enforced Code of Ethics that includes supervision of personal employee trading reduces risk and, consequently, discourages workers from engaging in reputation-damaging behavior.

When we spoke with Heads of Compliance at hedge funds, investment advisers, and asset managers, we discovered that many lacked a systematic mechanism to track their employees’ trading activities and holdings in other financial institutions.

Many were also worried about their failure to identify front running or shadowing of investors’ accounts and their inability to prohibit personnel from trading during rebalancing times. Several issues arose from these discussions:

  • Obtaining employee trade and position data in machine-readable forms is difficult (as opposed to paper confirms and statements)
  • Inability to examine or test data against limited lists, internal investment regulations, or black-out periods
  • There is no simple mechanism for workers to obtain pre-trade approvals (as mandated by regulations)
  • Due to this, investment banks get required to monitor their workers’ trading accounts.

What is a Trading Account?

How do Investment Banks Monitor their Employee’s Personal Trading Accounts

A trading account gets used to purchase or sell shares in the stock market. The stock market used to operate on an open outcry method. Traders communicated their purchasing and selling choices via hand signals and vocal conversation.

Trading accounts quickly replaced the available outcry method as the stock exchanges adopted the computerized system. Buyers and sellers must not be present physically at the stock market to make orders using the online approach.

Instead, they create a trading account with a licensed stock market broker, who handles all of their trading’s for them. Each trading account has its trade ID used to make online purchases.

How does a Trading Account Function?

How do Investment Banks Monitor their Employee’s Personal Trading Accounts

A trading account functions as a link between an investor’s Demat account and bank account. When an investor wishes to acquire stock, he uses his trading account to place an order.

The transaction mentioned above will get processed at the stock market. Upon execution, the requisite number of shares gets credited to his Demat account, and an equal payment gets taken from his bank account.

When selling equity shares, a similar procedure gets followed. For example, with this trading account, the investor sets a sell order for 200 shares.

It gets sent to the appropriate stock market for processing. The needed number of stakes gets deducted from his Demat account, and the corresponding payment is deposited to his bank account after the order gets completed.

How do Investment Banks Monitor their Employee’s Trading Accounts?

How do Investment Banks Monitor their Employee’s Personal Trading Accounts

The need for continuous surveillance of workers’ financial activities is becoming louder. The financial sector is getting forced to develop more stringent control measures due to spectacular incidents in securities trading.

Employees in the financial industry often walk a fine line regarding personal securities transactions. Personal securities trading has resulted in several severe financial scandals, some of which have had far-reaching implications.

Consequently, several banks and financial institutions have concluded that it is time to examine their monitoring systems thoroughly. They want to make sure they can spot problems early on and closely check their workers’ financial activities. A trade watch list may help you do this.

Investment banks use a trade watch list to monitor their employees’ trading accounts in investment banking. The compliance group keeps track of this to ensure that legal and regulatory obligations get met. This also helps stop conflicts of interest, insider trading, and information barriers.

To protect against inappropriate usage, a watch list supports compliance securities trading surveillance and research monitoring operations. This also makes it easier for a bank or its staff to disclose crucial nonpublic information.

Monitoring Workers’ Trading Accounts Advantages

Monitoring Workers' Trading Accounts Advantages

Increased savings

Using employee monitoring software or workplace surveillance technologies may help you save money. This is true because you are more likely to obtain your money’s value as an employer if your workers are productive during the period you pay them for.

According to research, employees spend 4.5 hours every week, sucking away 20% of every dollar made. 


Employee surveillance software does not have to be prohibitively costly. It usually costs between $20 and $150 per user per year. Like any software, the cost gets determined by the functionality you choose and the number of licenses your team requires.

Although most systems do not charge extra, installation and IP renewal charges may be. Upgrades such as geo-location tracking and mobile licensing may incur additional charges.

Enhanced safety

Employees’ trading accounts get monitored, which improves security. Using employee monitoring software, you may also access stored documents, install apps, visit websites, and communicate on business property, such as computers and mobile devices.

It keeps track of company documents, account information, and customer information. Insider threats, security breaches, and suspicious conduct may all get avoided with this.

Employee monitoring software may notify companies when they access data they are not to, whether it gets done deliberately or accidentally.

Increased team productivity

Employees’ trading accounts get monitored, which improves team performance. Examining employee behavior may also assist you spot employees who aren’t living up to business standards.

You’ll know if an employee is spending too much time on Facebook or searching up sports scores digitally in addition to their usual job responsibilities, for example.

Time-tracking software also keeps track of how many hours your staff works and how frequently they arrive late to work. You can assess your workers’ productivity more effectively if you access this data.

Additionally, you learn about your company’s strengths and weaknesses. Some team members, for example, may have more free time or be more valuable in some areas than others.

Your executive decision-making is better informed due to gaining deeper insights into each team member. You’re also aware of problems like harassment and lousy customer service, for example. When personnel get watched frequently, you won’t have to go back to their previous projects to evaluate their performance.

Cons of Monitoring Employees Personal Trading Accounts

Cons of Monitoring Employees Personal Trading Accounts

Keeping track of your workers’ trading accounts might be a unique tool. When employed incorrectly, though, it might hurt your company’s culture. The following are some of the outcomes:

Negative emotions

Surveillance, rather than increasing productivity, might lower employee morale. Employees believe you don’t believe in them. When workers get questioned, they are more likely to leave.

You may avoid this problem by alerting your employees that monitoring software and ordinary workplace policy are in use. That way, they’ll be aware of its policy and won’t be singled out.

It takes time to comprehend the material.

It takes time and effort to dissect employee trading behavior, and it requires scrutiny. Decision-making is aided by analyzing this data. Condensing it, on the other hand, is a time-consuming procedure. It’s a trade-off that necessitates some effort.

Excessive access might be hazardous.

When you have so much access to your workers’ data and digital activities, you’re sure to come across personal information. This includes bank account details, medical data, and very private communications. Employee privacy may be exploited or revealed if your system is compromised.

Frequently Asked Questions

How do investment banks monitor their employee’s trading accounts?

Investment banks use a trade watch list to monitor their employees’ trading accounts in investment banking.

Can your employer view your financial holdings?

No. Unless you give them specific permission, your employer will not be able to view your financial holdings. For what it’s worth, if you work in a regulated industry, your employer may need you to provide them access to your assets to ensure compliance.

Is it possible for investment bankers to own personal stocks?

One difficulty is that investment bankers get bound by rigorous rules on what they may invest in. If you have any specialized expertise, you are almost probably not permitted to invest in it unless you must do so by law.

Why is it necessary to provide information about your employment when opening a brokerage account?

Brokers must collect employer information. The goal is to figure out who is requesting this sort of account. This is true since there are a lot of individuals out there that perpetrate crimes and scams like money laundering.

What is personal trading?

Personal trading gets defined as an individual’s purchase or sale of securities for their account or any other account in that they have a “substantial ownership” stake. This is in addition to whatever accounts they “control.”

What are the benefits of having your trading account?

The following are some of the merits of having a personal trading account:

Accurate information

It’s all about making the correct choice at the appropriate moment for equity investment. Online trading platforms provide vital services such as research papers written by skilled and experienced individuals. Investors may use the reports to make well-informed investing choices. In the end, there’s a greater chance of making extra money.

Customization and notifications

Online trading platforms use trained executives to give customers personalized service around the clock. It may be a technical problem or another issue with the trading area. Alerts may also get set up through SMS or email to get notifications about the purchase and sell goals.


It is now possible to harness a laptop, smartphone, or another hand-held device to access trading areas that have become app-based. Online trading has given many people the ability to monitor their money from anywhere and at any time.

Transactions those are quick and easy

The process of transferring funds and performing equities trading has become more accessible thanks to online trading. Thanks to sophisticated technologies, clients are in a great spot to save and invest comfortably and efficiently.


In conclusion, personal trading accounts provide diverse trading opportunities for investors. And if you need more help on how investment banks monitor their employee’s trading accounts, the tips above will aid you immensely.

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