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US, German banks ban online chat rooms amid Libor probe
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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 US$5.3 trillion-a-day foreign exchange market.
Chat communications also featured prominently in a five-year investigation into the manipulation of a benchmark interest rate known as the London interbank offered rate, or Libor, which has already cost financial institutions billions of dollars in settlements.
A source familiar with developments at JP Morgan, the biggest US bank by assets, said the decision was unrelated to the foreign exchange process 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 raised 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 January 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.
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