Morgan Stanley has been fined over £5.4 million after traders at the bank used WhatsApp on privately-owned phones to discuss energy market transactions.

UK energy watchdog Ofgem found that while Morgan Stanley has rules in place which prohibit the use of WhatsApp for trading communications, the bank did not take "reasonable steps" to make sure its traders were complying with its internal policies or legal requirements.

The regulator said that wholesale energy traders at Morgan Stanley had breached its rules by not recording and retaining electronic communications between January 2018 and March 2020.

The penalty is the first of its kind to be issued in Great Britain under legal requirements to record and retain electronic communications relating to trading wholesale energy products.

The breach was revealed after the bank responded to information requests made using powers Ofgem has under the REMIT Enforcement Regulations.

The bank admitted to the breaches and has taken steps to ensure they do not happen again.

As Morgan Stanley fully co-operated with Ofgem's investigation and agreed to settle the case, the fine includes a 30 per cent discount.

“This fine sends a strong message to market participants that they must comply with all REMIT rules or face enforcement action," said Cathryn Scott, regulatory director of enforcement and emerging issues at Ofgem. “It is unacceptable that MSIP failed to prevent electronic communications which could not be recorded or retained.

"It risks a significant compromise of the integrity and transparency of wholesale energy markets"

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