Fears about employees misusing Internet chat rooms have hit another industry, as banks including JP Morgan Chase and Credit Suisse may be planning limits or a ban on their employees' use of financial sector chat rooms to avoid incidents of price fixing and other market manipulation.
Banks and financial institutions are concerned financial sector chat rooms, which include the data terminals provided by Bloomberg, create temptation for traders to illegally conspire to fix market prices, the Wall Street Journal reports. The Bloomberg terminals and other chat rooms that link traders around the world can increase business convenience, but banks also including Citigroup, Barclays, UBS and the Royal Bank of Scotland may require employees to limit their collaboration with other traders to phone calls, emails or chat systems maintained and monitored by their companies, the Wall Street Journal reports.
The financial market is facing scrutiny from regulators about reports that the chat rooms are becoming a venue for illegally sharing trade information. Banks that have publicly confirmed they are cooperating with regulators in the U.S. and Europe on investigations about alleged attempts to rig currency exchange rates include Goldman Sachs, JP Morgan Chase, Citigroup, Barclays, UBS, Deutsche Bank and the Royal Bank of Scotland, USA Today reports.
The U.K. Financial Conduct Authority began a formal investigation in October on foreign exchange rate rigging by banks in the U.S. and in the U.K., including the Royal Bank of Scotland, the Guardian reports.
The U.S. Department of Justice and the U.S. Commodity Futures Trading Commission have also been investigating whether banks have manipulated trading rates on the currency market Bloomberg reported in October.