Wall Street

JPMorgan bans multidealer online chat rooms: Source

JPMorgan & Chase Co. signage outside of the company's headquarters in New York.
Peter Foley | Bloomberg | Getty Images

JPMorgan Chase, the biggest U.S. bank by assets, is banning the use of multidealer online chat rooms and the use of such chat rooms among staff for social purposes, a person familiar with the matter told Reuters on Tuesday.

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 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.

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The source said JPMorgan's decision was unrelated to the foreign-exchange (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.

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Bilateral online chats between JPMorgan traders and traders at other financial institutions are under review, while external chats between JPMorgan staff and clients will still be permitted, the source said.

JPMorgan declined to comment because the plans have yet to be finalized.

Other banks have taken similar action recently.

Deutsche Bank has prohibited its foreign exchange and fixed income staff from using online chat rooms, and UBS banned the use of multibank 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 and Thomson Reuters.

By Reuters