LONDON Nov 11 Big banks are considering banning
traders from some online chat rooms in response to
investigations into alleged collusion between dealers over key
financial market benchmark rates, people familiar with the
matter said on Monday.
JPMorgan Chase, Credit Suisse Group and
Citigroup Inc, among others, are reviewing chat room use
over concerns that some of those forums are seen by regulators
as potential venues for collusion and market manipulation.
The banks are targeting so-called multilateral chat rooms,
in which many dealers participate at the same time. Bilateral
communications between individual traders and their counterparts
at other banks, and between traders and their clients, are not
under review, the sources said.
Regulators and investors are concerned about the integrity
of financial benchmarks after investigations 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
A global probe into alleged currency manipulation is
focusing on chat rooms with names such as "The Cartel," in which
traders from many of the big banks are alleged to have colluded
to manipulate foreign exchange (FX) rates, the Wall Street
Journal reported earlier.
CHAT ROOM ACCESS
Chat communications featured prominently in a five-year
probe into Libor. The probe into alleged FX rigging only
surfaced in June but has snowballed in recent weeks, with
regulators from the United States, Switzerland and Britain
confirming they are investigating.
"Every bank is looking at this issue, you'd be crazy not to
be," said one source.
He said removing access to chat rooms, where traders from a
number of banks communicate with each other online via third-
party services including Bloomberg LP and Thomson Reuters
, has been under consideration for months, pre-dating
the currency allegations which centre on the so-called London
fixings and which first surfaced in June but snowballed in
"It goes back to Libor," he said.
The key foreign exchange rates, WM/Reuters, are compiled
using data from Thomson Reuters and other providers, and are
calculated by WM, a unit of State Street Corp. Thomson
Reuters is the parent company of Reuters News, which is not
involved in the fixing process.
The WM/Reuters rate set at 4pm London time is considered the
benchmark by many companies and investors because more than 40
percent of daily FX trading is done in London. It is the nearest
thing to a closing price in a 24-hour, self-regulated market.
JPMorgan, Citi, RBS, Credit Suisse, Barclays
and Thomson Reuters all declined to comment. Bloomberg
and UBS were not immediately for comment.