Creating an effective policy requires a structured approach focusing on clarity, practicality, and comprehensive coverage of key risk areas.

Step 1: Identify Insiders and Define Material Non-Public Information

Start by explicitly identifying who falls under insider classifications within your organization. This typically includes board members and executive officers, finance team members with early access to earnings data, personnel involved in merger discussions or strategic planning, project teams working on significant product developments, and administrative staff supporting executives with access to sensitive information.

Then provide specific, concrete definitions of what constitutes Material Non-Public Information in your business context. Rather than vague generalities, include examples like:

• Quarterly financial results before public release
• Negotiations for significant contracts or partnerships
• Major management changes under consideration
• Potential litigation settlements or regulatory actions
• Planned product launches or withdrawals

Concrete examples help employees recognize situations where trading restrictions apply to their specific role.

Step 2: Establish Clear Trading Restrictions and Rules

Explicitly outline prohibited activities. Trading company securities while possessing MNPI, sharing MNPI with others who might trade (“tipping”), making trading recommendations based on inside knowledge, and engaging in short-term or speculative transactions should all be clearly prohibited.

Many policies also restrict specific trading strategies like short sales, margin transactions, or options trading involving company securities, as these activities often increase risk or create conflicts of interest.

Step 3: Implement Blackout Periods and Trading Windows

Structured timing restrictions provide clarity and reduce risk. Your policy should specify regular blackout periods beginning prior to quarter-end and extending until after earnings releases.

It should also cover event-specific blackout periods during major corporate developments, open trading windows when insiders may transact (typically after material information has been publicly disseminated), and emergency blackout procedures when unexpected material events occur. These timing controls create predictable patterns that help prevent inadvertent violations while allowing legitimate trading opportunities.

Step 4: Create Pre-Clearance and Reporting Procedures

Establish oversight mechanisms for accountability and documentation. Pre-approval requirements for trades by designated insiders, internal reporting systems for tracking compliance, procedures for meeting SEC filing obligations, and documentation standards for approval decisions all help create a system with appropriate checks and balances. These procedural safeguards add accountability and create records demonstrating compliance efforts.

Step 5: Address Confidentiality and Information Handling

Preventing information leakage requires specific protocols for security and discretion. Physical and electronic security measures for sensitive documents, access limitations based on legitimate business needs, and guidelines for discussions in public settings all contribute to maintaining confidentiality.

Procedures for bringing advisors into confidential matters and protocols for investor relations and analyst communications also play a crucial role in protecting sensitive information. Information containment reduces the risk of both intentional and accidental disclosure of MNPI.