Regulations has been eased regarding the Chinese Wall policy for financial investors. Amendments on easing of Financial Investment Services and Capital Markets Act (hereinafter “FSCMA”) has come into effect as of May 20th, 2021.

Before the amendments took place, FSCMA required prescriptive rule-based regulation. In other words, FSCMA required physical separation of office space (such as setting up separate entrances), prohibition on accepting more than one board level positions (concurrent positions) within the same company, and maintaining of specific methods of restrictions on details regarding the mechanisms of information barrier and selection of target group, where information was to be restricted was required.

These type of restrictions were criticized for not taking into account the different characteristics of individual companies and the type of financial services they provide which in effect resulted in rigid and uniform application standards of the Chinese Wall policy in applying these restrictions to the financial businesses. There were constant criticisms that the restrictions resulted in hindering the elasticity of the organization and that it resulted in creating regulatory blind spots.

In countries such the US and Japan, regulations regarding policies on Chinese Wall information barrier for financial investment businesses only provide the basic principles for the financial companies to follow so that it may prevent future conflict of interest and leave it to individual companies to implement and oversee their own internal management control system to comply with the Chinese Wall regulations. This trend gave weight to the voices wanting to revise and amend the regulation concerning Chinese Wall policies under FSCMA.

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