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HSBC Bans Traders From Buying Stocks, Bonds on Their Personal Accounts

Updated on
  • Employees allowed to maintain existing holdings, people say
  • Sales must be pre-approved by compliance personnel, people say

HSBC Holdings Plc has instructed about 6,000 employees of its global markets division to cease buying single-name securities on their personal accounts, according to people with knowledge of the matter.

Purchases of single-name stocks, bonds and concentrated exchange-traded funds will be prohibited, Global Head of Markets Thibaut de Roux told staff in an email on Friday, said the people, who asked not to be identified discussing internal communications. The changes also apply to employees managing the lender’s own balance sheet, the people said.

A London-based spokesman for the bank declined to comment.

Employees will be allowed to maintain existing holdings of securities prohibited by the new rules, while any sales must be pre-approved by compliance personnel, staff were told. Managers have been instructed to be vigilant in such approvals and decline requests if necessary, the people said.

HSBC wouldn’t be the first big bank to toughen a policy addressing conflicts of interest. Goldman Sachs Group Inc. barred investment bankers from trading individual stocks and bonds in 2014. By contrast JPMorgan Chase & Co. allows traders to deal for their personal gain through approved brokers. It bans “speculative and other short-term investment activity” or purchasing the securities of a client, according to a 2016 rule book. A spokesman declined to comment.

Compliance Clampdown

Barclays Plc employees are allowed to trade single-name securities, though the bank’s policy is currently under review, according to a person briefed on the matter.

Deutsche Bank AG, which houses Europe’s biggest investment bank, also allows personal-account trades once managers approve, according to two people familiar with the matter. Charlie Olivier, a spokesman for Deutsche Bank in London, didn’t immediately comment.

The Frankfurt-based lender last year said it was reviewing a 2009 trade that may have involved “unacceptable conflicts of interest.” Six employees participated with personal investments alongside a hedge fund, a person with knowledge of the deal said at the time.

HSBC has hired 1,800 extra compliance staff since the start of the year, raising its total to more than 6,000 worldwide as the firm strives to improve its anti-financial-crime capabilities and comply with the demands of its Department of Justice monitor. The U.S. authority has overseen HSBC since it entered a deferred prosecution agreement and was fined $1.9 billion in 2012 for aiding money laundering.

(Updates with additional banks’ policies from sixth paragraph.)
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