Personal financial transactions

Overview

Why do we need this policy?

The principles of integrity and impartiality are crucial in maintaining public confidence in the Bank. Our personal financial transactions should never influence, or be influenced by, our work at the Bank.

We regulate a number of listed companies and because of the unique role of the central bank, many of us are involved in making or advising on policy decisions that could influence the value of certain assets – for example, securities issued by financial institutions, or foreign exchange.

It is essential that proper arrangements are in place to allow both the Bank and you to show that individual investment and borrowing decisions have not been influenced by market sensitive information made available to you confidentially in the course of your work, and to show that work decisions could not be, or were not, influenced by personal factors. Civil and criminal sanctions apply to market abuse and insider dealing,^{footnote [1]} and we all sign a Declaration of Secrecy^{footnote [2]} when joining the Bank.

This policy and the rules it contain, sets out how these risks are managed for the Bank and for us all.

Who does this policy apply to?

This policy applies to all of us working at the Bank. This includes consultants, contractors and agency staff.

What you must know or do

This policy covers the requirements for financial transactions you would like to carry out. There are some transactions – set out in Section 2 – that are not permitted. There are other transactions that require advance approval – these are set out in Section 3.

Please see the Financial relationships policy for declarations you may need to make about your continuing relationships with financial firms.

1: General principles

1.1. You must not under any circumstances seek to make a profit or avoid a loss by making use of information acquired in the course of your duties at the Bank. You should exercise caution in the management of your finances.

1.2. Dealing in securities on the basis of inside – ie unpublished, price sensitive – information is a criminal offence. All employees are expected to be familiar with the contents of the guidance on market abuse^{footnote [3]} and the related prohibitions on insider dealing.

1.3. You are reminded that even though you may wish to carry out a transaction very quickly, you must not do so before you have received the necessary approval.

1.4. You can use the interactive personal financial transactions checker to help you work out whether you need to seek advance approval for the saving, investment, divestment or borrowing that you want to carry out.

2: Transactions that are not permitted

2.1. You must not carry out transactions that might embarrass the Bank or harm its reputation.

2.2. You must not carry out transactions whose main purpose is speculative (eg to make a profit or avoid a loss in the short term) including transactions in cryptocurrencies.

2.3. You must not bet on financial variables or indices. You are not permitted to take out a contract for differences,^{footnote [4]} which includes ‘spread betting’, in relation to securities, UK indices/sectors or economic variables of direct interest to the Bank and its forecasting processes (eg commodity, currency markets) or the UK equity market as a whole.

2.4. You are not permitted to acquire financial instruments (such as debt, equity, or derivatives) in any entity regulated by the Bank, including PRA-regulated firms,^{footnote [5]} or their financial holding companies.

2.5. If you joined the Bank with holdings in an entity regulated by the Bank you may retain them, but you must declare your holdings under the financial relationships section of the Our Code Compliance system (see the Financial relationships policy). You must not acquire more or actively manage them. If you exercise your rights in relation to your prior holding or sell these securities, you must obtain approval in advance via the transaction request form in the Our Code Compliance system.

2.6. You are not permitted to invest in collective investment schemes that are unduly weighted towards investments in the financial services industry (ordinarily this means portfolios should not be more than 35% invested in financial services securities).

2.7. In exceptional circumstances, additional restrictions on transactions may be imposed on relevant staff during periods of significant stress in financial markets. This would be agreed by the Governor and the Secretary and communicated to the individuals concerned.

3: Transactions that require advance approval

3.1. The transactions for which advance approval must be sought include:

I. Arranging a mortgage on a property, whether for your own use or for investment purposes.

‘Arranging’ in this context means entering into a new or revised agreement to borrow, or an agreement in principle, on stated terms and conditions. Approval must be sought once a mortgage offer is received and before it is accepted.

II. Dealings in exchange-listed securities and related investments (including gilts), dealings in collective investment schemes (eg unit and investment trusts) and commodities such as precious metals (eg gold).

Transactions through crowdfunding and peer-to-peer lending platforms are covered where they are substantially the same as an investment, rather than a donation. You do not need to seek approval for dealings in investments in the core funds permitted within the Bank’s Supplementary Pension Plan.

III. Setting up or transferring a personal pension plan and taking or approving decisions relating to the investments within such a plan.

Switching between funds within the Bank’s Supplementary Pension Plan does not require approval.

IV. Transferring more than £5,000 from a bank or building society where you have a balance greater than the Financial Services Compensation Scheme limit (currently £85,000 per person per firm) to an account at another institution (including National Savings and Investments).

You should not split up financial transactions in order to circumvent this requirement. You do not need to seek approval for transfers made within the same institution, or for payments made to others for goods and services.

V. Transactions in foreign exchange that seek to hedge or take a position.

You do not need approval for transactions in foreign exchange relating to the purchase of goods or services, or to an investment that has been separately approved under this policy. Where you have not previously sought approval, but you wish to reverse a transaction in foreign exchange made within six months because of market movements, you do need to seek approval.

VI. Any financial transaction not specified above but which, in the nature and spirit of these rules, could reasonably be seen as sensitive.

This would include, for example, withdrawing deposits from a firm where you know of contingency planning being carried out for that firm, or are aware of adverse stress testing results or a breach of regulatory requirements by the firm, or where you are involved in any intervention by the Bank with respect to that firm. During ‘quiet periods’^{footnote [6]} certain transactions by those on insider lists for MPC and FPC meetings will not ordinarily be permitted.

4: Exemptions where investments are under full discretionary management

4.1. Exemptions from the full requirements of the Policy are available where your investment assets are managed by a personal portfolio manager who has full discretion over investment decisions on terms that have been specifically approved in advance by the Secretary.^{footnote [7]}

4.2. We require you to sign up to a set of undertakings to provide assurance that day-to-day control over all investment decisions – which include security selection and asset allocation – would rest solely with the portfolio manager once the mandate has been agreed, and that you will not provide any instruction relating to, or otherwise directly or indirectly influence, such decisions.

4.3. Where you are selecting specific investments or collective investment funds yourself, even where these are index-tracking funds, this would not be considered full discretionary management and you must refer to Section 3 of the Policy to assess whether advance approval is required.

4.4. Where a discretionary management arrangement has been approved by the Secretary, the restrictions (Section 2) and requirement for pre-approvals (Section 3) in the Policy no longer apply. However, portfolio managers:

4.4.1. Must not purchase synthetic assets or derivatives, such as contracts for difference, other than those purchased for standard risk management purposes; and

4.4.2. Are not permitted to invest in collective investment schemes that are unduly weighted towards investments in the financial services industry (ordinarily this means portfolios should not be more than 35% invested in financial services securities).

5: Carrying out transactions for, or by, others

5.1. These rules cover transactions you carry out on your own account, and where you are directing and advising on the investment decisions of another individual (eg a spouse, partner or child) or organisation, including where you are acting as executor of a will, trustee, director, or shareholder. Transactions undertaken independently by others on their own initiative generally do not need approval (Section 10 for the additional requirements that apply in relation to members of Court and the statutory policy committees).

5.2: You must not give advice to another person on transactions in regulated institutions and must not divulge, take advantage, or encourage others to take advantage of information that may be considered as inside information. You should refer to your Local Reporting Officer (LRO) in any case of doubt about giving advice to another person.

6: Trustees of charitable organisations

6.1. If you are invited to become a trustee of a charitable organisation, you must advise your LRO, explain what the role as trustee involves and agree on the degree of involvement in and reporting of investment decisions in specified circumstances (which will depend upon the particular information which may become available to you as a result of your Bank work). You need to obtain advance approval for an appointment as a Trustee via the Our Code Compliance system.

6.2. In the case of a charity, if you were to sit on a trust’s investment committee you would be assumed to be acting in an advisory capacity or have an oversight role. If you also had responsibility for approving investments or financial transactions than this would require reporting of the trust’s relevant Financial relationships and seeking advance approval for relevant Personal financial transactions under those policies. Merely being a member of the general body of trustees (absent indications to the contrary) would not require transaction reporting. Trustees must be particularly careful not to offer investment advice at Trust meetings and to make it clear (and have it minuted by the Trust) that they cannot.

7: How will my request for approval be treated?

7.1. Personal financial transaction requests are screened centrally for errors or omissions and for Bank-wide sensitivity by the Conflicts Team in Secretary’s Department before being forwarded to your LRO. Reporting Officers will usually be in your management line, as they are most likely to know what specific information you may have access to in your work.

7.2. LROs will not approve transactions where you have – or might be perceived to have – relevant information that is not in the public domain, for example, about decisions, publications or announcements made by any of the Bank’s senior policy committees (including the FPC, MPC and PRC). LROs will also consider whether the proposed transaction gives rise to any sensitivity about work you are currently involved in.

7.3. Generally, your LRO will not approve dealings that appear to be short term and speculative and will question and may not approve the reversal of a transaction within six months – depending on the circumstances this may be treated as a breach of Our Code. This is for the protection of both you and the Bank, as such transactions could result in a perception of an abuse of information much more easily than for other transactions.

7.4. If a transaction is carried out before approval is received, this will be treated as a breach of the policy.

8: Can I appeal a decision?

8.1. Appeals may be made to the Secretary or Deputy Secretary in relation to local rulings on specific transactions. The Bank will review all cases carefully but must, necessarily, retain the final decision to approve or decline a transaction based on its assessment of all of the factors.

8.2. The Bank will not be liable for any claims for losses sustained, or profit not achieved, as a consequence of constraints it places on an individual’s ability to undertake personal financial transactions.

9: Annual confirmation and monitoring

9.1. All notifications will be treated as strictly confidential and retained in accordance with the Bank’s record-keeping policies.

9.2. Internal Audit Division, Compliance Division and Secretary’s Department have a remit to consider the adequacy of the Bank’s safeguards in respect of personal financial transactions. Under certain circumstances, for example, in connection with a disciplinary investigation, it may also be necessary for information to be made available to People Directorate, Legal Directorate and relevant senior management.

9.3. From time to time, further information may be requested from individuals^{footnote [8]} in relation to their reportable financial decisions, for example relevant bank statements or appropriate tax returns.

9.4. LROs who have any suspicions or doubts about transactions being carried out by a member of staff should raise this with the Secretary or the Deputy Secretary or with the Compliance Division.

9.5. You will be asked to attest annually as part of Our Code that you have read, understood, and complied with the rules.

10: Additional requirements for all members of Court and the statutory policy committees

10.1. In addition to the requirements set out above, Court members, and members of the statutory policy committees,^{footnote [9]} along with Executive Directors who are members of a statutory policy committee, must report their stock of financial assets and liabilities annually. This group reports via a Declaration of Interests form to the Secretary, and sign that their Declaration is accurate.

10.2. It is highly undesirable for members of this group to be actively involved in managing an investment portfolio, even within the transaction approval arrangements. Accordingly, those who hold a material investment portfolio are strongly advised to place it under full discretionary management on terms approved in advance by the Secretary.

10.3. Members of this group are expected to make themselves aware of any transaction of the nature covered by these rules by close family members (ie spouse, partner, minor children or other close family who live within the same household) that could embarrass the Bank or harm its reputation.

10.4. Members of this group are expected to keep records of their personal financial transactions and of the aforementioned close family members, for at least five years, and on request make them available to the Bank.

10.5. The reporting lines for this group in relation to any disclosures and proposed transactions are as follows:

10.5.1. The Governor refers, via the Secretary, to the Chair of Court.

10.5.2. Other members of Court and the statutory policy committees refer to the Secretary. The Secretary may consult the Governor or Chair of Court in the event the application of this Policy to a proposed transaction is unclear.

11: Protecting your information

11.1. The application of this policy will be in accordance with the relevant data protection legislation. For information on how the Bank processes your data, please see our staff data privacy notice.

Definitions

For the purposes of the financial reporting sections of this policy, the words and expressions set out below have the following meanings:

Contract for differences: A contract between an investor and an investment bank or other counterparty. At the end of the contract, the parties exchange the difference between the opening and closing price of a specified financial instrument, including shares or commodities.

Dealings: Include purchases, sales, subscriptions, transfers or other dealings in, securities and related investments. This includes taking up rights issues (including any decision to elect for scrip dividends)^{footnote [10]} or acquiring any rights or interests in securities and related investments.

Investment portfolio: Investments in securities and related investments or collective investment schemes.

Securities and related investments: Include shares (as well as individual company shares held in ISAs or other wrappers), bonds, debentures, other forms of securitised debt, commodities (such as precious metals) and any other financial investments, including debt instruments, futures, forwards, options, swaps, and other financial derivatives.^{footnote [11]}

Collective investment schemes: Sometimes known as a ‘pooled investment’. A fund that a number of people contribute to. A fund manager invests the pooled money in one or more types of asset. This Includes unit and investment trusts, OEICs (Open Ended Investment Companies) and exchange traded funds, including any held in a SIPP, ISA or other wrapper.

Local Reporting Officers (LFOs): Usually an individual’s Head of Division (Director or above if the individual is a Head of Division), or another Head of Division in the same Directorate, who is responsible for screening and approving or rejecting transaction requests from a local area perspective once a transaction request has been centrally screened by the Secretary’s Department.

What support is available to help you comply with this policy?

The following documents support this policy:

• Our Code; and
• Staff Handbook (see Section C2).

Please see the financial relationships policy for declarations you may need to make about your continuing relationships with financial firms.

What is the impact of non-compliance?

If you realise you have breached – or suspect that you might have breached – a requirement in this policy please tell AskCompliance as quickly as possible, so that the issue can be reported and redressed under the Bank’s Breach management policy. The Bank gives credit for you taking prompt responsibility for your mistakes. You should be aware that failing to discharge your responsibilities could lead to disciplinary or other action.

January 2024