A Study On The Regulations Of The Domestic Securities Firm Information Isolation Wall

In recent years, it is seen frequently in the media that many securities firms issue positive research reports and buy recommendations for stocks which have already been held by their self-operated department. This phenomenon draws investors’attention and makes question this practice of securities firms. Meanwhile, the underlying problem arising from the conflicts within securities firms attracts more and more attention from regulatory agents. The direct cause of the series of problems lies in the different beneficial groups that investment banking department, self-operated department, asset management department， and research institute, which compose the business of securities firm for different clients. When the conflicts among groups appear, securities firm would always consider the problem from the perspective of maximizing self-interests, instead of sticking on "Fairness and impartiality" principle. Through which mechanism could restrict the conducts of securities firm? After weighting the market fairness and efficiency. Information Isolation Wall is put forward and widely applied on dealing with interests conflicts within securities firms.At present, construction of the Information Isolation Wall in domestic securities firms just started, especially in the regulatory level, neither specific Information Isolation Wall regulatory law. nor the related Information Isolation Wall regulatory measure is issued. It is apparently not beneficial to the construction of Information Isolation Wall. In the long run. it is also not beneficial to healthy growth of the whole securities industry. Hence. it becomes very important and urgent to promulgate the regulatory law and measure on construction of Information Isolation Wall in the regulatory level. Based on the above-mentioned situation, this paper starts with the regulation perspective to research on the Information Isolation Wall in securities firms. I hope that through this search. I could propose policy suggestions on making laws and measures of Information Isolation Wall.Hence, this paper focuses on designing the mechanism and regulation of Information Isolation Wall. I first analyze the Information Isolation Wall related problems from both theoretical and practical views:on the one hand, from the theoretical view, the paper will give theoretical policy advices based on the public management-related theory, on the other hand, from the practical view, I find out the shortage of domestic Information Isolation Wall system and regulatory measure in contrast to other countries’regulatory practices. Next, based on the above analysis. I devise the domestic Information Isolation Wall system including regulatory object, mode, organization structure, regulatory rules as well as detailed regulatory measures etc. Amongst them, designing the rules and measures of Information Isolation Wall are the key points:rules of designing Information Isolation Wall consists of normal process and detailed process, which contains measures on "controlling information flow between different business departments" and "taking strict and direct precautions against interest conflict between securities firm and clients, as well as among clients":measures of designing Information Isolation Wall includes "focusing on the targeted and key business"."building up the motivating measure on Information Isolation Wall management. mobilizing the enthusiasm of securities firms","building up long-term restriction mechanism, eliminating the short-term behavior of companies’ decision-maker" and"combing the code of conduct of licensed working staff. taking precaution against the improper inside information flow"...