Chinese wall

Definition

Information barriers within financial institutions designed to prevent conflicts of interest, like keeping the investment banking side from sharing insider information with the trading desk. Also increasingly called 'ethical walls' because geography.

Example Usage

There's supposedly a Chinese wall between our M&A advisory team and proprietary trading desk, enforced by compliance officers and the honor system.

Origin

Financial services terminology from 1920s-30s, referring to the Great Wall of China as metaphor for impermeable barrier

Fun Fact

Chinese walls work great in theory but are famously porous in practice—financial scandals regularly feature wall-breaking as a central plot point.

Source: Securities regulation and compliance terminology

Related Terms

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non-recurring charge

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audit trail

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liabilities

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top-down analysis

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