Commonwealth Bank of Australia Restricts Chat Rooms

MELBOURNE, Australia--Australia's biggest bank has restricted the use of Internet chat rooms by its staff as regulators globally boost scrutiny of electronic communications that could be used to manipulate markets.

Commonwealth Bank of Australia, the nation's largest by market value, said it had followed lenders in other countries by introducing measures to limit access to chat rooms, which traders at different banks sometimes use to communicate with each other.

Commonwealth Bank's main rivals in Australia are also considering restricting access to so-called multibank chat rooms--or at least discouraging their use. Elsewhere, Goldman Sachs Group Inc., Citigroup Inc., Deutsche Bank AG and several other investment banks have banned staff from accessing some of them.

The crackdown comes as regulators step up surveillance in an effort to detect potential interest-rate rigging and other types of market manipulation through the use of electronic communications and other means. Scrutiny of such activities worldwide has intensified since 2008, when regulators began probing suspected rigging of the London interbank offered rate, or Libor.

Investigations into other financial markets, triggered by the Libor scandal, are less advanced. The U.K.'s Financial Conduct Authority began probing currency trading last April in an investigation that has since expanded to include the practices of traders in the U.S., Switzerland and elsewhere.

In addition, several regulators have asked banks in their jurisdictions to search through thousands of messages between traders for any evidence of collusion. Last month, The Wall Street Journal reported that some banks had discovered chat room transcripts showing traders from different institutions working together to move markets in their favor.

Australia entered the spotlight earlier this week when the country's securities regulator censured BNP Paribas SA after the French lender admitted that some of its staff based elsewhere had sought to influence the country's daily benchmark interbank lending rate.

An internal audit by the bank found no evidence that its Australian employees were influenced, nor of collusion with any another bank, and BNP Paribas has agreed with the Australian Securities and Investments Commission to tighten its controls to prevent future attempts at market manipulation.

ASIC said it regularly monitors chat rooms and social media for evidence of misconduct.

Australia & New Zealand Banking Group Ltd. said it was considering restricting the use of multibank chat rooms too, but had yet to make a final decision. National Australia Bank Ltd. said its traders no longer participated in such chat rooms, despite there being no official policy forbidding them from doing so.

Westpac Banking Corp. and investment bank Macquarie Group Ltd. declined to comment. The Australian Bankers Association, an industry group, said policies on chat rooms were a matter for individual banks.

Write to Robb M. Stewart at [e-mail]

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