DEFINITION of 'Firewall'

Legal barriers that prevent both the transference of inside information and the performance of financial transactions between commercial and investment banks.


Restrictions placed on collaborations between banks and brokerage firms under the Glass-Steagall Act of 1933, acted as a form of firewall.

This works similarly to fire wall software and hardware used in preventing or limiting outside access to a company's internal servers and networks.

  1. Investment Bank - IB

    A financial intermediary that performs a variety of services. ...
  2. Dealer

    A person or firm in the business of buying and selling securities ...
  3. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which ...
  4. Broker-Dealer

    A person or firm in the business of buying and selling securities, ...
  5. Commercial Bank

    A financial institution that provides services, such as accepting ...
  6. Insider Information

    A non-public fact regarding the plans or condition of a publicly ...
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  1. How does investment banking differ from commercial banking?

    Investment banking and commercial banking are two primary segments of the banking industry. Investment banks facilitate the ... Read Full Answer >>
  2. What is the difference between the Volcker Rule and the Glass-Steagall Act?

    The Banking Act of 1933, commonly referred to as Glass-Steagall after one of its most important components, created federal ... Read Full Answer >>
  3. What types of companies hire a chartered financial analyst (CFA)?

    The Chartered Financial Analyst, or CFA, program is a professional certification awarded by the CFA Institute. CFA candidates ... Read Full Answer >>
  4. What are the major categories of financial institutions and what are their primary ...

    In today's financial services marketplace, a financial institution exists to provide a wide variety of deposit, lending and ... Read Full Answer >>
  5. What's the difference between investment banks and commercial banks?

    Investment banking and commercial banking are two divisions of the banking industry that provide substantially different ... Read Full Answer >>
  6. Who facilitates buying and selling on the primary market?

    There are several important actors that facilitate buying and selling on the primary market, the home of initial public offerings ... Read Full Answer >>

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