Chinese wall

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Chinese wall

Communication barrier between financiers at a firm (investment bankers) and traders. This barrier is erected to prevent the sharing of inside information that bankers are likely to have.

Chinese Wall

Informal; the imposed lack of communication between the investment banking and brokerage services of a financial institution. The Chinese wall exists in order to prevent brokers and investment bankers working for the same company from deliberately or accidentally sharing inside information that could lead to illegal insider trading. The Chinese wall protects both the financial institution at large and the individual investment bankers and brokers.

Chinese wall

An imaginary separation placed between a brokerage firm's investment banking business and its trading and retail business. A Chinese wall prevents investment bankers who frequently are privy to information that could substantially influence the price of a client's securities from leaking that information to the firm's traders and sales personnel. The exchange of such information is legally prohibited.

chinese wall

the segregation of the related activities of a financial institution in order to protect the interests of its clients. For example, a stock market firm could be responsible for ‘making a market’ in a particular share (see MARKET MAKER), 'while at the same time offering investment advice to clients to purchase this share, bringing with it the danger that the advice given will not be impartial.

Chinese wall

the segregation of the stockbroking, jobbing (see MARKET MAKER), fund management, etc., activities of a financial institution in order to protect the interest of its clients. For example, the same institution could be responsible for making a market in a particular financial security while at the same time offering investment advice to clients to purchase this security with the danger that the advice given will not be impartial. See CITY CODE.
References in periodicals archive ?
The importance to the accountancy world - and other professions - of safeguarding the principle of "Chinese walls", cannot be understated.
(14.) For an examinition of the regulatory framework in the US and implications on Disclosure and "Chinese Walls" see Contoudis (2003) and Coffee (2002).
Following the burst of the dot-com bubble in 2003, then-New York Attorney General Eliot Spitzer spear-headed an effort to establish a "Chinese wall"--a firewall or ethical barrier--to reduce conflicts of interest between research analysts and investment bankers.
AMF said that it had been unable to find evidence of insider trading but that Societe Generale's failure to identify a potential conflict of interest and police its Chinese Walls were breaches of financial rules.
There is no rule of law that Chinese walls, or other arrangements of a similar kind, are insufficient to eliminate the risk of disclosure of client confidential information.
Ronald Duska, chairman of ethics at The American College, says companies that combine research with investment management services can avoid problems by disclosing potential conflicts of interest and by using "Chinese walls" to separate research from other departments.
But when it comes to money I have always been able to rationalise my principles and build Chinese walls between the two.
Among the obvious are the porous Chinese walls between investment banks and their brokerage affiliates, stock analysts and the companies they cover, and media that may be less independent than thought.
Others say that IBM has been very diligent about establishing various controls, such as 'Chinese walls' between Linux and AIX developers, to prevent any kind of code contamination from taking place.
He told them: "There must be maximum unity in Labour's campaigning and the campaign that I lead will have no barriers, divisions or Chinese walls.
UK officials have been at pains to stress that they anticipate participating in both European and US stealth programmes, with strict Chinese walls being maintained between them.