chapter
Chinese walls
Pages 2

Generally speaking, authorised persons are expected either to avoid any conflict of interest263 but, where conflicts do arise, to ensure fair treatment for all their customers. Depending on the circumstances, they may achieve this by disclosure,264 through ‘internal rules of confidentiality’, by declining to act for the customer or otherwise. ‘Otherwise’ might for instance encompass an automatic trading programme that takes any decision to deal, etc, away from the person with the conflict of interest. Such arrangements, however, can have their own problems.264a The expression ‘internal rules of confidentiality’ is perhaps the best way of summarising what is meant by a ‘Chinese wall’. Essentially, a ‘Chinese wall’ is an established and effective arrangement which requires information obtained by a firm in the course of carrying on one part of its business to be withheld in certain circumstances from persons with whom it deals in the course of carrying on another part of that business. The expression can also be used to describe an established arrangement between different legal entities within the same group which requires information obtained by one group company to be withheld from persons with whom another group company carries on business.