A host of big banks are considering restricting their traders' use of chat rooms, or in some cases blocking them outright, as regulators zero in on them as potential hotbeds of collusion and insider trading, sources tell the Wall Street Journal and Financial Times. Traders around the world have for years used multidealer chat rooms—which bear such names as "The Cartel," and "The Mafia"—to help clients trade in and out of big positions quickly, and to share industry gossip.
But regulators looking into allegations of interest rate and currency manipulation have found chat transcripts in which traders joked about their ability to fix exchange rates, and appeared to share insider info with competitors. They also discussed sex and drug use, in what the Journal describes as "crude banter." The chats are largely accessed via Bloomberg terminals, and Citigroup has already moved its foreign exchange traders to a proprietary system, while JPMorgan is considering banning chats entirely, pushing traders to use phone and email instead.