The pros and cons of an instant messaging ban on Wall Street
Pick any Wall Street scandal that has made front-page news over the last five years and there is a decent chance that the key piece of incriminating information was harbored in the searchable history of an online chat room. So finally – frankly mercifully – banks are considering emptying the chamber and banning the use of instant messaging.
The Wall Street Journal is reporting that J.P. Morgan and Credit Suisse have had internal discussions over whether to ban online chat tools. Other banks, including Royal Bank of Scotland, Barclays, UBS and Citigroup, are considering implementing standards for chat room use that would include monitoring.
On the surface, the move seems prudent and overdue. Details surrounding the Libor scandal and, most recently, the foreign exchange rate manipulation investigation were each unearthed in chat room histories. Moreover, instant messaging was the tool used to carry out most of the alleged collusion.
But for those traders who play by the rules, the elimination of IM as a communication tool would be a difficult blow. As much as banks want traders to communicate over the phone, it’s often the busy clients who prefer online chatting. One sell-side trader told us that he inks most all of his deals through IM – and it’s also where he does most of his daily chit-chatting to keep things light and personable.
Text messaging is a replacement option, but not a very efficient one. Instant messaging apps for personal smartphones may eventually fill the gap, but that could open up another can of worms.
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