UBS has become the latest bank to crack down on the use of chat rooms by its staff, as global probes into alleged benchmark manipulation force banks to rethink how they police employees’ communications.

In an internal memo, the investment banking division’s executive committee told staff that use of social chat rooms was prohibited “with immediate effect”, and that such groups should be closed down straight away.

The use of multi-bank and dealer chat rooms, used by traders to talk to their counterparts at other finance houses, is also prohibited. Requests for exceptions, which can only be for “business-critical use” will have to be signed off by both the executive committee member and the compliance officer for the relevant business.

Staff will still be allowed to use single client chat rooms, but only with “specific written approval” from a managing director or above. However, such chats will have to be permanently moderated by a managing director, according to the memo. Staff who fail to comply with the new rules face “disciplinary action, including dismissal”.

UBS’s move comes one week after the Financial Times revealed that Barclays, Citi and Royal Bank of Scotland have banned the use of most chat rooms on trading floors.

Barclays and RBS introduced reforms last year, while Citi two months ago banned chat rooms with multiple banks, restricting instant messages to conversations with traders from one institution at a time.

The clampdown on traders’ favourite communication tools is a reaction to the running global Libor and foreign exchange rate-rigging investigations. In both cases, banks are being confronted with potentially problematic chatroom conversations.

In the long-running Libor scandal, investigators have seized on trails of incriminating messages that have subsequently proved a public-relations nightmare for those banks that have agreed to pay fines to authorities in the UK and US.

UBS’s memo alluded to this, warning staff that “recent events within our industry serve as a serious reminder to be mindful at all times to use appropriate language and behavioural standards in all of our communication, no matter the channel”.

Chat rooms are also seen as pivotal in the fledgling global probe into potential manipulation of the $5.3tn a day currencies markets.

So far at least a dozen traders at banks that include UBS have been suspended amid suspicions that chat rooms were used to share sensitive client information.

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