The use of IM in financial trading is widespread, thanks to its real-time communications capabilities in a time-sensitive industry. When theres news that can move markets, traders often zap instant messages to their clients rather than trying to track them down on the phone or send e-mails. A trader also can push an IM out to a group simultaneously rather than trying to juggle multiple phone calls.
With IM adoption expected to grow within hedge fund and other financial services firms, compliance officers and IT managers in these organizations will need to manage IM within a comprehensive compliance and archiving framework. Instant messaging communications are specifically included in SEC regulations as a form of electronic communication, and as such must be managed in a way that is consistent with existing e-mail policies.
Having been relatively free from regulatory oversight until now, many hedge fund firms may find themselves unprepared to meet the new SEC regulations pertaining to IM. The rules require registered financial advisers to archive their IM communications.
Some companies have barred the use of public IM services such as AOL Instant Messenger or Yahoo Instant Messenger, mainly for security purposes and also so their traders appear more professional. Would you take a trading tip seriously from someone who shows up on your screen as TheBigDog, or would you prefer to chat with Geoffrey Jones?
Solutions available today, such as the Bloomberg messaging system, can be used to convey market information and to trade ideas back and forth. Bloomberg requires proprietary hardware, though, and is more suitable for an in-house system.