JPMorgan Chase is closing down the external commercial operations of Arcordia, a provider of ASP-based post-trade processing services for OTC derivatives trading which was spun out of the JPMorgan back office in March 2000.
A JPMorgan Chase spokesperson confirmed the plans to wind down Arcordia's commercial operations. "Recent events and the continued economic slow-down have caused the firm to re-evaluate its external Arcordia business plan," says the spokesperson. "However, strong internal demand, coupled with an efficient and dynamic platform, will continue to make Arcordia a very important component in our OTC derivatives processing."
The spokesperon would not comment on the implications of this "change of focus" for Arcordia's sole third party client, Bank One, which signed up earlier this year to process its global OTC interest rate derivatives portfolios over the ASP.
Arcordia's only other client was parent company JPMorgan Chase, which processes around 30% of the OTC derivatives market.
The failure of Arcordia casts doubt on the viability of the ASP model in the derivatives markets. It follows the recent Chapter 11 filing by Cygnifi, another Morgan spin-off which was created to rent out derivatives risk management tools over the Web.