JP Morgan takes debt and derivatives online

Morgan''s recently established e-finance unit ramps up their technology output.

LabMorgan, the e-finance unit JP Morgan established in March, has been busy recently making friends with new technology partners as well as releasing a slew of their own products.

In recent days the group announced new derivatives websites as well as added mobile functionality for their SynDirect online fixed income distribution system. The mobile platform, known as SynDirect Wireless, allows issuers to track investors' interest for pending debt issues and lets investors check current pricing and even express interest for bonds remotely.

Many providers of financial technology have released, or are working on, mobile platforms that allow access to their exisiting software solutions, but current WAP technology (WAP version 1.1) still has some security issues that have to be addressed.

"A number of short-comings associated with WAP will make it a merely transitional technology, serving only to stimulate demand for m-commerce (mobile commerce) products until more advanced protocols arrive," says IT research group Datamonitor in a recent m-commerce white paper.

End-to-end security and application level security needs to be improved before actual transactions can confidently be incorporated into companies' mobile platforms. But timely, remote access to information is just as important. SynDirect Wireless offers just such access and also allows users to monitor new-issue calendars.

Within Asia, SynDirect Wireless can be used on any WAP-enabled mobile phone, but it also works on Palm VII handhelds for those working out of the US.

"Our proprietary wireless technology allows users to access our internet-based SynDirect system in another way," says Joe Cook, Morgan's head of High Grade Financing for Europe. "We're really combining the best of Morgan's capabilities: financial markets leadership, technological innovation and top client service."

Derivative websites

JP Morgan also has several derivative websites as part of its integrated MorganMarkets portal. These offer services such as risk management, trading of credit derivatives and information on the municipal market.

As well as new products of its own, JP Morgan is also driving growth through partnerships and spinning off independent companies. One recent partnership deal saw the company team up with other major players such as Deutsche Bank to invest in, a website aimed at increasing the liquidity and transparency of Asian debt markets.

The two companies will become active dealers and content providers for the website, which is looking to begin trading of US-dollar denominated bonds this summer after beta-testing of the trading engine is completed. Japanese yen corporate debt and other Asian currency instruments will be added later.

"The Asian credit markets suffer from structural impediments such as insufficient information in terms of pricing and research," says Tom Dunn, managing director for JP Morgan Asia Credit Markets. "By satisfying this market need, the portal will attract more institutional investors to Asian credit products, which should result in growing the multi-trillion dollar Asia/Japan fixed income markets."

In the past months JP Morgan has also spun off some independent companies utilising their in-house developed technology and analysis tools for the derivitaves market. These include Arcordia, an independent internet-based derivative management and settlement company.

JP Morgan says it plans to commit up to $1 billion to electronic business ventures in 2000, the majority of which will be invested as capital in promising ventures. 

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