Legal Research On The Financial Firewall Regulations

With the globalization of economy and increasingly heated financial competition, financial institutions which break through traditional business scope, supply various financial services has become an international trend. No doubt, financial trend of forming groups is the certain choice of financial institutions to break through traditional respective operation and supervision system and to supply various and convenient services for their clients, and also the choice of market. Meanwhile, it also brings many bad effects, especially risk diffusion and risk contagion. Too many intra-Group transactions and conflicts of interest may be a potential harm to the sound social economy system and financial market, and may put new challenges on the regulators.Regulators have a need to establish a complete and effective financial risk prevention mechanism, to safeguard financial security without sacrificing the economic benefits made by integrated operation of the financial group, and in this mechanism the most important mean is establishing appropriate financial firewalls. Considering the integrated financial operation has gradually become the mainstream of the modern financial services industry, the financial group also has a decisive force in the modern financial system, and our legislative building on the firewall system still in the backward status quo, the author believes that it is necessary to proceeding detail research on the financial firewall system.Such dissertation adopts research measures of Multi-angle analysis and comparative analysis. The dissertation conducts studies on the existence basis of the financial firewall system from different perspectives, and through comparative research of America and Japan, combined with China's national conditions, the dissertation makes a more systematic analysis about the principles, set priorities, basic contents and the exception principles of the financial firewall in CHINA.Such dissertation was divided into three parts:The first part discusses the definition of financial firewall, introduces the changes of the concept's meaning and then summarizes three characters of financial firewall. Then the dissertation analyzes the necessity of the financial firewall from three different angles-the financial risk perspective, the Legal perspective and the economic perspective. The financial risks are the most fundamental reason of the establishing of the financial firewall, we will not need the financial firewall if there is no financial risk. There are four risks which are more important: conflict of interest, intra-group transactions, high financial leverage risk and the risk transfer and spills. The establishment of financial firewall system has its legal basis, at first it is a wisdom compromise of the conflict between the safety value and the efficiency value, this compromise is no longer a simple average and integrated, but a changing balance in a development process; second, according to the fair value, the value of justice, the value of integrity and the value of freedom, the conflict of interest and intra-group transactions also should be regulated by the financial firewall; third, fiduciary obligation also requests the legal controls to the conflict of interest. And on the other side, the financial firewall reduces the cost of the financial organizational forms, it reduces people's trustworthiness costs and at meanwhile reduce the country's regulatory costs.The second part compares and analyzes the United States and Japan's financial firewall system, the financial supervision concept makes a change from safety priority to efficiency priority, and in order to safeguard financial security without sacrificing the efficiency of the economy firewall system of the United States Shows a liberal trend. In Japan, they implement the market principles to the internal transactions of the financial group.The third part analyzes the current status of financial firewall system today and discusses something about the establishment of a flawless financial firewall system in China. In our firewalls system, there are several suggestions raised by the way of logic analysis, such as market income, fund, business activities, information, ratio of capital sufficiency, market management and market exit, and to guard against abusing the firewalls, the exceptions principle should be built.The new idea in this paper is the legal basis analysis. In discussing the construction of financial firewall system, people usually study risk, abroad experience or the specific building of firewalls, there are not many people explored the legal basis of financial firewall. But the author believes that the discussion of the legal basis of financial firewall is very meaningful because it actually reflects the most fundamental interests and values need to be protected by the firewall system, the more we know about what we should to protect, the more we can do to construct a appropriate effectively firewall.