In a move that surprises noone UBS , Switzerland’s biggest bank, is banning the use of multibank and social chat rooms at its investment-banking division as global regulators probe the alleged manipulation of foreign exchange rates.The bank outlined the move to staff in an internal memo yesterday as more scrutiny falls upon peer to peer chat rooms set up on various media outlets.The bank went on to say all social related chat rooms are prohibited and must be closed immediately,” Multibank and dealer chat rooms are also banned, and any request for an exception, which can be made “for business critical use only,” will have to be approved by the executive committee member and compliance officer responsible for the specific business, it said. A spokesman for Zurich-based UBS confirmed the memo’s contents.Regulators have targeted traders’ electronic messages, using them as evidence of wrongdoing in their investigations into the manipulation of benchmark interest rates and foreign-exchange markets. JPMorgan Chase & Co. (JPM), the biggest U.S. bank, is weighing whether to ban traders from using electronic chat rooms to communicate with peers at other firms as the forums are now open to investigation from various regulatory authorities across the globe.Several staff across the world it should be remembered have been placed on special leave pending a full investigation.
This will no doubt continue to cast gloom over the FX market as falling revenues and lower volatility exert ever greater pressure on banks and market participants.Whether this leads to even more regulation in this final bastion of unregulated wild west remains to be seen as investigations such as the LIBOR scandal took years to come to an end.
Talking of LIBOR an employee of Barclays New York who was fired after an investigation into his conduct over the Libor scandal has been awarded a $2.1 million settlement from the financial industry regulator,Dong Kun Lee had originally asked for over $5 million but settled for the lesser sum in arbitration.