Restricted Trading List

What is a Restricted List?

A Restricted List is a list of securities that a bank’s employees are prohibited from buying or selling, either themselves or via any other person or third party.

When are stocks placed on a restricted list?

StocksStockWhat is a stock? An individual who owns stock in a company is called a shareholder and is eligible to claim part of the company’s residual assets and earnings (should the company ever be dissolved). The terms "stock", "shares", and "equity" are used interchangeably. of an issuer are placed on the Restricted Trading List when either:

• A material transaction in which the bankBanking (Sell-Side) CareersThe banks, also known as Dealers or collectively as the Sell-Side, offer a wide range of roles like investment banking, equity research, sales & trading is involved in has been generally disclosed and the bank is in possession of, or may obtain, material, non-public informationMaterial Nonpublic InformationMaterial Nonpublic Information is information that would affect the market value or trading of a security and that has not been disseminated to the general public.  It is considered insider information. Information is considered to be "material" if its dissemination to the public would likely affect the market price concerning the securities issuer (thus putting it in the position of someone capable of insider trading)Insider TradingInsider trading refers to the practice of purchasing or selling a publicly-traded company’s securities while in possession of material information that is; or
• The bank is engaged with the company on non-public activity, such as mergers and acquisitions work, affiliate ownership, or underwriting activities or other distribution of the issuer’s (the company’s) securities.

What does it mean for securities that are placed on a restricted list?

When a securities issuerCorporateThe "Corporates" section of our interactive Career Map will tell you about salaries, skills, personalities, courses you need to work at a corporate issuer is subject to trading restrictions by being placed on a bank’s Restricted Trading List, unless the Chairman of the bank otherwise approves trading (in consultation with the bank’s Legal and Compliance Departments), subject to certain exceptions, the bank will not tradeSales and Trading Career ProfileThe sales & trading division (S&T) of an investment bank helps mutual funds, hedge funds, pension funds, etc. facilitate equities transactions (buy/sell). A career in sales & trading can be extremely strenuous with a very fast paced environment. The competition for positions is intense, compensation can be very high, as a principal in securities of the issuer or publish any equity researchEquity Research AnalystAn equity research analyst provides research coverage of public companies and distributes that research to clients. We cover analyst salary, job description, industry entry points, and possible career paths. reports concerning the issuer.

In addition, bank employees cannot personally trade in securities of any issuer subject to trading restrictions by virtue of being on the Restricted List.

Generally, securities will stay on the Restricted List until the securities issuer announces that the material transactionInvestment BankingInvestment banking is the division of a bank or financial institution that serves governments, corporations, and institutions by providing underwriting and mergers and acquisitions (M&A) advisory services. has been completed or has been aborted, or until the bank’s Compliance is otherwise satisfied that the bank does not possess, and will not come into possession of, material non-public information about the securities issuer.

Trading securities on a restricted list can result in serious legal and financial repercussions.

Additional information

Thank you for reading CFI’s guide on Restricted Trading List. To take your skills to the next level, these additional resources will be a big help:

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