New York's top financial regulator is asking questions about whether a new messaging platform being developed by Wall Street banks could make it easier for traders to manipulate prices and commit misdeeds.
Anthony Albanese, who recently took the reins of the New York State Department of Financial Services from Benjamin Lawsky, raised his concerns in a letter sent Wednesday to a California-based startup, Symphony Communications. The company is jointly owned by the biggest banks and aims to provide a way for employees at different banks to communicate instantly.
The letter from Albanese cited recent instances in which traders from different banks were caught conspiring in chat rooms to manipulate benchmark prices.
Albanese suggests in the letter that some of the functions in Symphony's instant-messaging platform could make it possible for traders to delete or encrypt incriminating evidence.
The letter notes that the marketing material for Symphony claims the software will allow for "guaranteed data deletion."
The letter asks Symphony for information on the specific capabilities of its software and also notes that Albanese's office will follow up with banks to ask them, among other things, "how they will ensure that messages created using Symphony products will be retained."
The request for information comes shortly before Symphony is expected to introduce its new software to big clients, including the country's largest banks.
Symphony is a result of a multiyear effort to change the way that banks communicate with one another. The project was inspired, in part, by the desire of banks to rely less on Bloomberg terminals, which provide one of the most widespread but expensive ways in which traders communicate with clients.
The new messaging software was initially developed by Goldman Sachs, but Goldman spun off its work into Symphony so that the platform could be jointly owned and operated by the largest banks. The joint operation of Symphony is intended to ensure that it gets a critical mass of bankers and traders on board.
Business on 07/23/2015