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NEW YORK (TheStreet) -- Global price fixing in the foreign-exchange market is still making headlines. Regulators are now watching chat rooms, used by major investment banks, to catch crooks -- a practice many say is long overdue.

Reports of a foreign-exchange cartel surfaced in June, stating that a handful of large forex traders were colluding to manipulate benchmark rates.

The traders were employed by competing investment banks. Through the use of instant messaging in online chat rooms, they were allegedly able to coordinate trading strategies, the reports said.

The scandal rocked the investment community that had dealt with news involving the rigging of the London Interbank Offered Rate months earlier.

To shun the appearance of evil, JPMorgan Chase (JPM) - Get Report, Credit Suisse (CS) - Get Report, USB (USB) - Get Report, Citigroup (C) - Get Report and Deutsche Bank (DB) - Get Report, among others, are reportedly paying closer attention to their FX traders; some traders are getting axed and interbank chat rooms may soon be banned.

The new ring of traders was known by the forex community as "The Dream Team" or "The Cartel." The team used a coordinated trading strategy to influence the closing prices of exchange rates.

A currency fix is when global exchange rates are calculated every day at 4 p.m. London time. The forex market is open 24 hours a day, but with London accounting for about 40% of the daily trading volume, its close is used for benchmark rate calculations.

There is a 60-second window at the end of the trading day when the rates are calculated. Money managers across the globe use this price fix to determine the price of portfolio assets, making it very important.

The alleged price manipulation by The Cartel can be compared to what is known in the U.S. as "marking the close." That is when a large trader artificially influences a stock's closing price in a direction that unfairly benefits the trader.

The forex trading pool allegedly colluded via private message boards to discuss positions and orders on their books.

Knowing each other's positions, the traders allegedly devised a strategy leading into the 60-second price-fix window that would be profitable for their price fills. The traders would front-run client orders as well as push through a large volume of orders to manipulate the closing benchmark prices.

The forex market is large and relatively unregulated compared with other asset markets. Some large banks, with the use of online messaging, may have been able to get away with interbank collusion because the forex market's large daily volume tends to filter out who is doing what and why.

The Financial Conduct Authority, a U.K. regulator, conducted a probe in June to gain access to traders' messages to determine whether wrongdoing had taken place. Messages were found that discussed positions and strategies that led to the belief collusion had in fact taken place.

The international aspects of the forex market make it out of the jurisdiction of many government entities. That allows large banks to carry out unethical behavior that would otherwise be persecuted in a different asset market.

The heavy regulation of U.S. equities allows for crimes such as insider trading and market manipulation to be spotted more easily.

In the case of the alleged instant-messaging cartel, members have already received suspensions from their employers and their managers have come under fire for failure to oversee the trading floor. It is suspected that more than a dozen traders were part of the cartel, operating at over five different investment banks.

Last month, the U.K. edition of the IBTimes stated that six Barclays traders and two RBS traders have been suspended because of the FX scandal. The list is growing.

There have yet to be any major indictments or fines, but investment banks in the U.S. and London have begun to hire criminal defense lawyers for traders who may face trial, reports say.

Instant messaging does provide a quick and cost-effective way to communicate within firms and across the world, but it needs more oversight. To this point, regulators have pursued only multilateral online chat rooms. These rooms consist of multiple people participating in the chat room from different firms. One-on-one chat among employees at different firms is still allowed.

Instant messaging is a way for teenagers to connect to their friends online. It may also have been used by high-volume forex traders looking to manipulate exchange rates. It's such a useful, yet dangerous, piece of innovation.

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This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.