* Chat rooms with workers at other banks prohibited
* Social chat rooms banned and must be closed immediately
Dec 19 (Reuters) - Royal Bank of Scotland's marketsdivision has banned the use of multi-dealer online chat rooms,the bank said, joining rival banks that have taken similaraction in response to regulatory scrutiny.
Chat rooms have been a focus for regulators investigatingmanipulation of the Libor and Euribor benchmark interest ratesand possible rigging in the $5.3 trillion-a-day foreign exchangemarket.
Confirming a Bloomberg report, RBS said it had told frontoffice staff in its markets division that all permanent chatrooms with workers at other banks, bank entities or competitorshad been prohibited, as well as those with clients, brokers andsecurities firms, unless certain criteria were met.
RBS has also told staff that all social chat rooms areprohibited and must be closed immediately. It said the primarypurpose of chats should be business related and adhere to thegroup's competition law guidance.
Sources told Reuters this week that JPMorgan Chase,the biggest U.S. bank by assets, was planning to ban the use ofmulti-dealer online chat rooms and the use of such rooms amongstaff for social purposes.
Deutsche Bank had prohibited its foreign exchangeand fixed income staff from using online chat rooms, and UBS banned the use of multi-bank and social chat rooms atits investment banking division. Citigroup and Barclays had also clamped down, according to people familiarwith the matter.
Traders at banks and financial institutions oftencommunicate with each other online via third-party servicesincluding Bloomberg LP and Thomson Reuters.