Commonwealth Bank of Australia Curtails Multibank Chat RoomsNarayanan Somasundaram and Ambereen Choudhury
Commonwealth Bank of Australia followed global rivals including Goldman Sachs Group Inc. in restricting traders and dealers from using chat rooms as regulators probe alleged currency rigging.
Employees in its markets teams will be prohibited from using instant-messaging groups with counterparts at more than one bank from this month, Peter Habib, a Sydney-based spokesman, said in response to questions. The bank is “implementing best practices,” he said, and wouldn’t comment further on why the changes were made.
Banks including JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc are curtailing use of chat rooms after regulators used them in investigations into the manipulation of benchmark interest rates and currencies. Firms have also fired or suspended staff since Bloomberg News reported in June that some employees said they shared data about positions to try and rig a key gauge in the $5.3 trillion-a-day currency market.
“The banks are protecting themselves and their traders from the temptation of either accidentally or on purpose divulging information” through the chat rooms, Derek Mumford, a director at Rochford Capital, a foreign-exchange risk-management company in Sydney, said by phone. “This will only make markets more efficient and transparent.”
Commonwealth Bank, Australia’s largest by market value, was the first of the country’s four so-called pillar lenders to say it has restricted instant messaging.
While National Australia Bank Ltd. hasn’t officially banned chat rooms, its traders no longer participate in them with other banks, Fiona Macrae, a Melbourne-based spokeswoman for the country’s biggest lender by assets, said in an e-mailed statement today.
Australia & New Zealand Banking Group Ltd. is “looking at it but no decisions have been made yet,” Ayesha de Kretser, a Melbourne-based spokeswoman, said in an e-mail. Emma Cunningham, a spokeswoman for Westpac Banking Corp. in Sydney, declined to comment on whether it has restricted chat-room use.
Goldman Sachs, JPMorgan and Deutsche Bank AG are among almost a dozen firms that are reviewing millions of e-mails, instant messages and phone records of their foreign-exchange employees for evidence of potential manipulation, people with knowledge of those probes have said.
Currency dealers said they had been front-running client orders and attempting to rig foreign-exchange rates by colluding with counterparts and pushing through trades before and during the 60-second windows when key benchmarks, such as the WM/Reuters rates, are set, Bloomberg News reported in June. They would share details of orders with brokers and counterparts at banks through instant messages to align their strategies, two of the people said at the time.