Assessment plan- personal trading policy

The personal trading policy is probably the single most important thing for new employees to get their head around when they join the firm. While they get briefed on this before they sign their employment paperwork, as well as the day they arrive, the reality is that it may not make sense to them in the first few weeks of their job, so we go through this policy again during the Compliance 101 course, which is the course that covers the general compliance framework for the industry, the specific framework at the firm, and the top policies that apply to all individuals who work at the firm.

The learning objectives for the personal trading policy are:

  • Demonstrate the rationale for the personal trading policies;
  • Identify who is an access person- which is anyone that has access to pre trade or post trade information that ordinary investors don’t have access to;
  • Identify an access account- this is any investment account held by the access person defined previously;
  • Identify if investments are on the permitted investments list or not;
  • Explain the preclearance process for buying and selling personal investments; and
  • Demonstrate an understanding of the employee sanctions that may be enforced under the personal trading policy.


The learners for this course are the employees of my firm. All employees are required to take this course, regardless of where in the company they work. This means that the course will touch a variety of people with different backgrounds, ages, years of experience in the industry as well as various types of previous experience they may bring to their current roles.

The common ground for all of the employees is that they will usually have a general understanding of the industry- basic things such as knowing what a mutual fund is, or what a financial adviser does and what they sell to clients.

Many of the new employees may have had a similar policy that they had to abide by at other investment management firms they will have worked at, but this will depend on what their previous roles were.

The Assessment framework: 

Employees are allowed a week to complete an online quiz, available on the intranet, after they have completed the Compliance 101 course; this gives them time to review all the various policies and other reading material that the compliance team provides to them.

During that week the employees may ask as many questions as they like of the compliance team via email, phone or face to face.

The quiz is multiple-choice, with questions that are either simply worded or a collection of questions that are based around a scenario. There are a total of 25 questions in the quiz.

The scenarios in the quiz are based on real life events or situations that we have come across in in the compliance team, and are usually the types of occurrences that may involve personal decision making, or interaction with clients or other players in the industry like vendors or regulators. There are generally 2-3 questions per scenario, where there is a scenario given.

The specific questions for the personal trading policy are one of the ones that are scenario based, and the scenario would be one of the top 2-3 violations that the firm’s employees seem to commit regularly.

The importance of this policy requires a change to the assessment strategy, in order for it to be better digested. I am proposing that the answers to the questions for personal trading should be made a typed response rather than multiple choice answers. I believe doing this will encourage employees to actively put themselves in the situation (and they will be in the situation, sooner or later, during the course of their employment).

The questions around the scenario will always ask whether the employee in the scenario is an access person- and why; whether the investments they wish to buy or sell come under the permitted investments list; whether their actions were the correct ones as stipulated under the personal trading policy, and if they weren’t what the sanctions would be.

However I think that many of the questions should be paraphrased, and quiz takers asked as to what they would do themselves, rather than be given a stem and alternatives in a multiple choice question. This encourages them to stop to think about their course of action and to actively articulate it, and if they don’t know, they can go back and read the personal trading policy and interpret the rules for the scenario in front of them.

For instance:

“You have been asked by your friend a stockbroker if you would like to buy shares in an up and coming mining company that is going to list on the TSX-Venture.

1. Explain, as an access person, what you must consider before deciding to purchase the shares.

2. Explain, as a non-access person, what you must consider before deciding to purchase the shares.”

Having glossed over multiple choice questions myself and joking with others over time about defaulting to “just pick (c)”, I have had a number of conversations with my managers about the value in getting employees to own the interpretation of the policies in real-life scenarios, rather than expecting them to regurgitate slabs of text of what are really boring documents to read. After all, the ultimate goal of compliance training is to arm employees with the ability to make day to day decisions that are on the right side of the law, regulations and company policies.


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