By Jamie McGeever
LONDON (Reuters) - Big banks are considering banning traders from some online chat rooms in response to investigations into alleged collusion between dealers over key financial market benchmark rates, people familiar with the matter said on Monday.
The banks are targeting so-called multilateral chat rooms, in which many dealers participate at the same time. Bilateral communications between individual traders and their counterparts at other banks, and between traders and their clients, are not under review, the sources said.
Regulators and investors are concerned about the integrity of financial benchmarks after investigations 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.
A global probe into alleged currency manipulation is focusing on chat rooms with names such as "The Cartel," in which traders from many of the big banks are alleged to have colluded to manipulate foreign exchange (FX) rates, the Wall Street Journal reported earlier.
CHAT ROOM ACCESS
Chat communications featured prominently in a five-year probe into Libor. The probe into alleged FX rigging only surfaced in June but has snowballed in recent weeks, with regulators from the United States, Switzerland and Britain confirming they are investigating.
"Every bank is looking at this issue, you'd be crazy not to be," said one source.
He said removing access to chat rooms, where traders from a number of banks communicate with each other online via third- party services including Bloomberg LP and Thomson Reuters
"It goes back to Libor," he said.
The key foreign exchange rates, WM/Reuters, are compiled using data from Thomson Reuters and other providers, and are calculated by WM, a unit of State Street Corp
The WM/Reuters rate set at 4pm London time is considered the benchmark by many companies and investors because more than 40 percent of daily FX trading is done in London. It is the nearest thing to a closing price in a 24-hour, self-regulated market.
JPMorgan, Citi, RBS
(Editing by David Holmes)