The Trade Restrictions tab of Investment Management allows you to customize trade-building behavior to meet specific account holder needs. For example, a client may need to avoid trading in the shares of their employer. Or an account holder may wish to avoid selling a particular security, even if this creates drift from a model portfolio’s weights. Restrictions allow for client customization, at the account level, without having to create a new target for each client.

See Creating Trade Restrictions for information on adding Exclusions, Substitutions, and Equivalent Security rules for an account.

The Trade Restrictions grid provides a list of all restrictions created. By default all restrictions are displayed in the grid, even those that may no longer be in effect.

In addition to Standard Grid Controls, the following controls available:

Filter and Search

Each column that has a drop-down header can be searched and the table filtered by selecting a search result in that column.

Details

Some Restrictions can be expanded by clicking to see the individually affected securities and associate behaviors.

Edit and Delete Controls

At the end of each row are Edit and Delete controls. The only edit that can be made to an active restriction is setting or changing the end date.

Notes on Restriction Behaviors

Multiple Trade Restrictions

In order to avoid inconsistent instructions, the same security cannot be part of more than one Trade Restriction for the same account. If a user attempts to create a new Trade Restriction on a security with an existing Restriction, they will be prompted to delete the other Restriction first.

The exception to this limitation is that a security can be part of an Equivalent Securities Restriction, and also be the substitute (but not the security being replaced) security in a Substitution Restriction. In this situation, the substitution is into the Equivalent Securities group, and the system will use the behavior options for that group to determine which member of the group serves as the actual substitute when building trades. Note that this means that the specific security designated as the substitute may not actually be purchased.

For example:

A Substitution Restriction exists on an account, naming GOOG as a substitute for AAPL. The same account also has an Equivalent Securities group of two securities: GOOG and GOOGL.

The account is invested in a model that holds AAPL.

In this example, the account could hold GOOG, GOOGL, or a combination of the two. Which of them is held would depend on the Behavior options selected for the Equivalent Securities Restriction, and possibly also on any legacy holdings in the account prior to the Restrictions being implemented. The fact that GOOG was named as a substitute for AAPL in the Substitution Restriction does not give it preference within the Equivalent Securities group.

APM Sleeve Trades and Equivalent Securities Trade Restrictions

Trade Restrictions are intended to give an Advisor control over how investment models are implemented in individual accounts. It is assumed that APM trade instructions from an Advisor take precedence over account-level Equivalent Securities. Generally speaking, APM Trades will be sent to market, as built, irrespective of Equivalencies. For example, even if an account had an Equivalent Securities group of SPY and VOO, if an Advisor submitted APM trades to buy SPY and sell VOO, both trades would be sent to the market, rather than netting against each other. The assumption in this case is that the action to sell one security and buy the other, in spite of their “equivalency”, is an intentional action taken by the Advisor.

Long-Short Accounts and Equivalent Securities Trade Restrictions

The behavior of Equivalent Securities Restrictions in accounts with short positions can be unintuitive and it is recommended that Advisors contact AE Support before attempting to use these Restrictions with long-short accounts.

For example, Do not trade behaviors still hold; securities assigned this option will not be traded. But, Do not buy allows buy-covers and sell-shorts, while Do not sell also allows buy-covers, while preventing sell-shorts. Since Equivalent Securities groups calculate trades based on the sum of the group’s weight, long-short accounts with long and short positions both within the same Equivalency group generally won’t produce the desired result; short weights will be netted against long weights, and trades will be built to achieve the overall net weight for the group.