A number of large banks are considering banning traders from online chat rooms, as regulators seek to clamp down on collusion and market manipulation.
According to the Wall Street Journal, banks such as JP Morgan Chase, Credit Suisse, Royal Bank of Scotland, UBS and Citigroup are all currently conducting internal reviews into the use of online communication tools.
Chat rooms are widely used on trading floors around the world to support the buying and selling of equities and currencies, linking tens of thousands of employees and clients with chat tools such as those available through Bloomberg terminals.
However, the use of electronic chat rooms has come under increased scrutiny from regulators such as UK watchdog the Financial Conduct Authority (FCA), which last month launched an investigation into potential manipulation of foreign exchange markets by bank employees. It is thought that traders had sent instant messages to a group called the Bandit's Club or the Cartel.
It is believed that many big banks have already suspended traders following the launch of the currency trading investigation, which is being supported by regulators in other countries such as Switzerland, Hong Kong and the US.
Banks hope to avoid significant fines from regulators by banning the use of electronic chat rooms, and by reviewing standards for monitoring electronic communications.
For example, JP Morgan has begun a review of its internal rules around electronic communications, expected to be completed by 2014. Meanwhile Citigroup recently moved some currency traders away from its Bloomberg chat tools and onto an internal communication platform for a number of reasons including improved security.
It is not the first time that communications between traders have come under scrutiny from regulators. The Libor scandal saw a number of banks handed billions of pounds of fines after traders used emails and instant messages to collude on the manipulation of bank lending rates.
Sign up for CIO Asia eNewsletters.