farrukhsadiq

my understanding is that a watch list is used to monitor trading on nonpublic information within the firm -- thus it is not widely distributed because it would become a self fullfilling prof. but what instead is distributed is a restricted list, which prohibits trading on securities for a number of different reasons.

in other words, if management were to distribute a list of securities that they have nonpublic information on, they would encourage traders to bet on the securities. instead you can distribute a restricted list firm wide because you disallow insider trading or front running on the securities that are distributed.