Bank's new messaging startup questioned by regulator
The Department of Financial Services (DFS) has written asking instant-messaging software company, Symphony Communications, for details regarding its data retention and deletion, encryption services and open-source features. The letter highlights the concern that it will become harder to subpoena instant messages, emails, and other communications between bank employees, since they will have to go directly to those banks who will use Symphony on their own systems and not to a third party, such as Bloomberg, to obtain them. As we noted this week, Symphony is being launched by some of the world's largest banks as a bid to challenge Bloomberg's dominance of the communications market. &nbsp;
A trader checks in on his Bloomberg chat Margin Call

A new messaging service backed by some of the biggest names on Wall Street is attracting scrutiny from New York's regulators.



The New York State Department of Financial Services is interested in the privacy features that lie at the heart of Symphony Communications Services' pitch as an alternative to Bloomberg's ubiquitous messaging system -- which is used by traders across Wall Street.

Anthony J. Albanese, Acting Superintendent of Financial Services for the State of New York, has sent a letter to the chief executive of Symphony, asking for information about their instant messaging service. Symphony did not return calls or emails seeking comment in time for publication.

The letter, which was released publicly, reads: "Specific areas of interest for our Department include but are not limited to the data deletion, end-to-end-encryption, and open source features of your products."

Symphony has received backing from the likes of Goldman Sachs, Deutsche Bank and Citigroup, and takes aim at Bloomberg's chat function. Rate-rigging investigations found that in many cases traders had used the chat function to collude in the setting of interest rates.

Part of the appeal is Symphony's offer of privacy. Chats are encrypted and only the client can unlock it.

Kevin McPartland, a principal with Greenwich Associates, told Business Insider earlier this year: “If it’s acting like a ‘virtual shredder’ then it’s a problem.”

"If it’s intended to mask something; that’s concerning."

A spokeswoman for Symphony said: "Symphony is built on a foundation of security, compliance and privacy features that were built to enable our financial services and enterprise customers to meet their regulatory requirements.

"We look forward to explaining the various aspects of our communications platform to The New York Department of Financial Services.”