Module III· Capital Markets FundamentalsAdvanced
Question
What is insider trading, and how does a bank protect itself from this risk?
Answer
Insider trading is trading securities while in possession of material non-public information, or improperly disclosing it. Banks manage the risk through information barriers, restricted lists, watch lists, wall-crossing procedures, compliance approvals, personal-account dealing rules, clean teams, training, and careful documentation of investor soundings.