Trader Chat: What Institutions Should Include (Not Exclude) Post-Pandemic


By Oliver Rooney, CTO, VoxSmart

As Goldman Sachs, J.P. Morgan and other large global banks call staff back to the office, are financial institutions in danger of reverting back to antiquated ways of working following the pandemic? And if so, will this have a negative impact on trader performance? 

With no concrete evidence to date of increased compliance issues or that traders have been unproductive when working from home, should financial institutions look to encourage their traders to be working and communicating from any location across any channel? Does it not make more sense to liberate traders so they can use whatever channels they want? One thing is for sure, it is unlikely that two traders are going to be using exactly the same channels. For example, a trader may be discussing a crypto trade with a UK client on Telegram, a European client on Signal and a US client using WhatsApp. 

Currently, regulation varies so much that it is so hard for banks to know the best approach to take. Hence why some firms place an outright ban on comms channels, and others decide to allow and monitor. . Pre-COVID, HSBC relaxed its restriction on mobile phone use on its trading floors to allow employees to respond quickly to emergency situations. In a similar vein, BNP Paribas has an arrangement where traders go into a booth to have a “private” conversation. 

It is not hard to see why these two banks decided to relax their measures. The reality is that the more restrictive measures a bank enforces on communications, the more creative certain traders become at trying to communicate with customers the way they want.  

As a case in point, if a channel like WhatsApp is monitored, traders can easily move the conversation to WeChat or some other form of communication. Sure, a more laissez-faire approach is bound to lead to concerns about market abuse. Bad actors will always exist, but this is why monitoring tools are there to protect the good people from falling out of compliance. The fact is that multiple forms of communication channels are not going to just go away. On a contrary, all the evidence points to the fact that there will be even more channels to choose from. 

Therefore, instead of adopting a hardline approach, banks need look at a way to identify any gaps in conversations relating to a trade across all these different channels. For example, the compliance officer may be able to identify 90% of the conversation, except that all important line where the price has been agreed. Why is this? Well, it could be that the traders have switched from an internal chatroom to another channel that is not monitored by the bank to “discuss the price.” Banks need to find a way to reconstruct all of the negotiations of this nature to find gaps in pieces of content that are missing, and spot references to and surveil other channels at once. An intent to “pick up the conversation over dinner” away from the floor is, in this day and age, something that has to be looked into.

As the real-world economy starts to rumble back into life over the coming months, financial institutions should not have to pick and choose which applications their traders should be communicating on. There is no point worrying about whether Telegram is going to overtake WhatsApp as the communication channel of choice. Instead, they should be focusing on opening up communication channels and trusting traders to make decisions for themselves rather than enforcing draconian top-down measures from the boardroom.