3 Min Read
By Jamie McGeever
LONDON, Dec 17 (Reuters) - JP Morgan Chase and Deutsche Bank are banning the use of multi-dealer online chat rooms, sources familiar with the plans told Reuters, as banks crack down on inappropriate communications by staff following a string of scandals.
Chat rooms have been a focus for regulators investigating manipulation of benchmark interest rates and possible rigging in the $5.3 trillion-a-day foreign exchange market.
Chat communications also featured prominently in a five-year probe into the rigging of a key interest rate known as the London interbank offered rate, or Libor, which has already cost banks billions of dollars in settlements.
A source familiar with developments at JP Morgan, the biggest U.S. bank by assets, said the decision was unrelated to the FX probes which first surfaced in June, noting that this had been under review at the bank since even earlier this year.
"This has always been about more than FX," the source said, adding that the casual nature of online chat rooms increased the potential for "inappropriate" remarks to be made.
The ban will come into force later this week, and the use of such chat rooms among staff for social purposes will also be prohibited.
Deutsche Bank, Germany's biggest bank, will extend the ban on multilateral chat rooms already in place for its foreign exchange and fixed income staff to all its corporate banking and securities businesses, including equities.
"It's basically across the whole investment bank," said a source familiar with the matter, adding that the ban will come into force on Jan. 1, 2014.
Bilateral online chats between traders will not be affected, although they are under review at JP Morgan, while external chats between JP Morgan staff and clients will still be permitted.
JP Morgan declined to comment because the plans have yet to be finalised. Deutsche Bank also declined to comment.
These are the latest such measures to be taken by banks recently. Swiss bank UBS has also banned the use of multi-bank and social chat rooms at its investment banking division.
Traders at banks and financial institutions often communicate with each other online via third-party services including Bloomberg LP and Thomson Reuters.