Magazine article Global Finance

Deals Du Jour

Magazine article Global Finance

Deals Du Jour

Article excerpt

FUTURE SAVINGS Last month J.P Morgan announced another Internet venture: Arcordia, a new company specially created oo handle the bank's back-office operations of its over-the-counter derivatives business.Through a joint venture with information technology company Electronic Data Systems, Arcordia will provide Internet-based technology to carry out posttrade transaction management and settlement services for derivatives. The aim is to tackle the rising volume and costs of banks' back office opera dons through outsourcing. As the derivatives trade grows and diversifies, banks' in-house systems are becoming swamped.

Meanwhile, margins are dwindling. Arcordia aims to enable banks to focus their efforts-and money-on their core business instead.

J.P Morgan is the first-and at this stage, only-customer of Arcordia with a 91 % stake in the company However, it is confident that other financial institutions will soon join and confirms that talks with a number of firms are at a fairly advanced stage.

Rafic Dahan, chief executive of Arcordia, emphasizes that the new company is to be entirely separate from J.P Morgan:"It is important that Arcordia is independent because it is intended to support other major institutions around the world:'

Arcordia is the product of J.P Morgan's e-finance unit, LabMorgan, established in March for the purpose of creating and incubating new technology ventures.

BANKS SWAP OPERATIONS

Six of the leading derivative dealers, Chase Manhattan, Citigroup, Deutsche Bank, J.P Morgan, Morgan Stanley Dean Witter, and Warburg Dillon Read, have announced their intention to form a network and protocol for online trading and negotiation of interest rate derivative transactions. In its initial stages, the new system is to be aimed at professional dealers in benchmark swaps but eventually will look to expand its services to cover all participants in the interest rate derivatives market, including user clients. …

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