Under Canadian securities legislation, registered firms are expected to have personal trading policies in place. Among other things, the firm’s chief compliance officer (CCO) must maintain and consistently update a restricted securities list (i.e., a list of securities that employees may not trade at a given time), as well as pre-approve each separate personal trade requested by employees of the firm. Additionally, the firm’s CCO must obtain and review the brokerage statements of each of the firm’s employees every month to verify that employees have only made pre-approved trades or trades that fall outside the scope of the firm’s policy. In the course of a regulatory audit, the Ontario Securities Commission (OSC) and other Canadian securities regulators typically test a firm’s compliance with its personal trading policies and the adequacy of the records it keeps in this regard.
Ensuring that employees are adhering to your firm’s personal trading policy requires staffing, can be time-consuming, and often raises concerns among employees about confidentiality when employee account statements are reviewed internally.