J.P. Morgan Chase close to switching phone line trading to cloud

Rick Steves

There is a course of discussion within the industry that J.P. Morgan Chase & Co. is seriously considering ceasing to transmit trades via telephone lines in a move to cut costs and adopt more modern and efficient methods, in line with its cost tightening policy since two years ago. The solution that is being offered to JP […]

J.P. Morgan Chase close to switching phone line trading to cloud

There is a course of discussion within the industry that J.P. Morgan Chase & Co. is seriously considering ceasing to transmit trades via telephone lines in a move to cut costs and adopt more modern and efficient methods, in line with its cost tightening policy since two years ago.

The solution that is being offered to JP Morgan comes from startup Cloud9 Technologies LLC, an internet-based “cloud” computing service that borrowed money from the bank last year to further develop its product.

Cloud9, that uses Amazon.com Inc.’s cloud-computing service, is pitching to all financial services companies that employ a total of 200,000 traders using phone lines, estimating that switching to a cloud-based solution would have them save around $1 billion overall.

Cloud9’s system is used by 2,000 traders across 350 firms in 21 countries, but aims to get much higher.

After JP Morgan and ICAP’s loan (converting to equity) in 2015, Cloud9 obtained tens of millions of dollars from both those firms plus Barclays PLC in a new funding round.

In the case of that J.P. Morgan Chase & C, their 8,000 traders would soon be able to work from anywhere as even laptops and tablets could be used to gain access to the trading platform through the cloud. Gerald Starr, CEO at Cloud 9, exemplified with people trading in the Hamptons, from airplanes and speedboats.

Security issues have been the main concern of the biggest U.S. banks, leaving a decision to switch from workstation-connected telephone lines, in order to transfer trading data and record phone conversations, to cloud services by renting computer power from companies that maintain large clusters of servers rather than running their own data centers.

While the contract hasn’t been signed yet, the Cloud9’s technology not only proves to come cheaper and more flexible, but it also seems to be more reliable in terms of data security and quality of voice communications than the current internal system of JP Morgan’s. Still, if the deal goes through, implementation time might be in the order of years.

 

 

 

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