SD-10.4 — Restricted & Watch List Management

Business Domain: BD-10 Investment Compliance & Guideline Monitoring (Middle office) · Applies: BOTH

Purpose

Maintains the restricted, watch and grey lists and enforces them across the firm’s desks — the lists that say a security must not be traded, or traded only with clearance, because the firm holds information or a relationship that bars it. SD-10.4 exists because a firm that advises, lends, sits on a board or runs a deal acquires material non-public information (MNPI) and conflicts that must be walled off from its trading. It maintains those lists, places names on and off them, and enforces the information barriers that keep MNPI from reaching the desks. It is not the sanctions screening of issuers against external regulatory lists — that is SD-10.6 — and it is not the personal-conduct controls over employees, which are BD-14’s.

Service Operations

• Maintain the restricted list — the names the firm must not trade at all, and the events that put a name on it: a mandate, a board seat, a deal, MNPI receipt.
• Maintain the watch and grey lists — the names under heightened monitoring, traded only with clearance or under surveillance.
• Operate the control room / insider-list function — record who holds what inside information and when, and manage the insider lists regulation requires.
• Enforce information barriers — control the flow of MNPI across the firm’s information barriers so a listed name is walled off from the desks.
• Clear and release — process clearance requests against the lists and record the decision.

Inputs and outputs

• Inputs: MNPI and relationship events from across the firm — advisory mandates, board representation, deal involvement, research; trading-desk activity.
• Outputs: the restricted / watch / grey lists and clearance decisions — consumed by SD-06.1 Order Management and SD-10.1 (enforced as a pre-trade rule), and the audit trail consumed by BD-14.

Entities

• Consumes: E-02 Instrument / Asset, E-01 Legal Entity (the issuer), E-03 Portfolio / Mandate.
• Owns: the restricted / watch / grey lists — currently a process artefact. Whether a Restriction List entity is warranted — shared in shape with the prohibited-party lists of SD-10.6 — is an open question.

Standards

• The EU Market Abuse Regulation insider-list obligations.
• The SEC information-barriers guidance; SIFMA MNPI and control-room practice.

Open extensions

• A Restriction List entity.
• The control-room and insider-list sub-model.
• The information-barrier model — how MNPI flow is recorded and contained.