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Banks, Regulator Reach Pact over Symphony Chat Platform

The New York State Department of Financial Services ("NYDFS") and 4 major banks have reached an agreement pertaining to record-keeping at a yet-to-be-launched chat and messaging platform, Symphony Communications LLC. The banks - The Bank of New York Mellon Corporation BK , The Goldman Sachs Group, Inc. GS , Credit Suisse Group AG CS and Deutsche Bank AG DB - have consented to keep records available for regulators once they start using Symphony.

In July, the NYDFS had raised concerns over certain features at Symphony like its promise of "guaranteed data deletion", which would restrict regulators' ability to investigate banks for business misconducts. The recent probes/settlements pertaining to rate rigging and manipulation of foreign exchange were partially based on communication between traders over instant messaging services.

Anthony J. Albanese, Acting Superintendent of Financial Services, said, "This is a critical issue since chats and other electronic records have provided key evidence in investigations of wrongdoing on Wall Street. It is vital that regulators act to ensure that these records do not fall into a digital black hole."

Symphony, created through a consortium of 14 major banks and financial institutions, has agreed to retain chatroom and other electronic communication sent through its platforms to or from the banks for 7 years, nullifying its "guaranteed data deletion" feature. Also, the above-mentioned 4 banks will keep duplicate copies of decryption keys for their messages with independent custodians.

Further, though the pact was reached with these 4 banks, the NYDFS believes this agreement will be applicable to all financial entities that would be using Symphony in future. In Oct 2014, Symphony was formed as an alternative to Bloomberg's chat program, which is used by traders and investors across the globe.

Symphony's chief executive, David Gurle, said, "The agreement is another positive development on the eve of Symphony's launch. Symphony's platform safeguards against cyber threats while strengthening customers' compliance operations and facilitating their ability to meet their regulatory obligations."

We believe the afore-mentioned pact will aid regulators and law enforcement agencies to probe business misconducts. Further, this will help pinpoint executives involved in such practices. Nonetheless, all said and done, only time can tell how much effective this agreement will prove to be for the regulators.

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CREDIT SUISSE (CS): Free Stock Analysis Report

BANK OF NY MELL (BK): Free Stock Analysis Report

DEUTSCHE BK AG (DB): Free Stock Analysis Report

GOLDMAN SACHS (GS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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