Reuters Buys J-Risk Derivatives Trading Platform Provider Application Networks

Reuters has acquired Application Networks, a risk management software provider based in London and Palo Alto, for $41 million in cash. The purpose of the acquisition, says Reuters, is to accelerate the growth of its Trade and Risk Management practice.

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Reuters has acquired Application Networks, a risk management software provider based in London and Palo Alto, for $41 million in cash.

The purpose of the acquisition, says Reuters, is to accelerate the growth of its Trade and Risk Management practice. The acquisition, says the company, is consistent with the Reuters strategy of extending its capabilities in pre and post trade services.

Reuters Trade and Risk Management practice generated revenues of 82 million in 2005 and is part of Reuters Enterprise division. It provides traders, heads of desk and risk and operations managers with trade and risk management software.

Reuters reckons the increase in trading of complex financial instruments, and the growing dependence of banks on trading for profits, means banks and hedge funds are increasingly reliant on risk management systems and technology to keep ahead of the market.

Application Networks developed cross-asset derivatives trading platform, JRisk, which is already in use at JPMorgan Chase, Societe Generale, UBS and Wachovia. It recently signed a distribution agreement with hedge fund administrator GlobeOp.

Reuters is betting that the combination of Reuters Kondor+ and JRisk will enable it to meet the needs of customers looking for fast, flexible, integrated risk management systems that cover all asset classes. Reuters estimates the value of the global trade and risk management systems market at 1.5 billion.

“We are committed to growing Reuters Trade and Risk Management as a key product offering and this acquisition shows our determination to do this,” says Peter Moss, Global Head of Reuters Enterprise Solutions. “Managing the trade process and associated risk is increasingly crucial to our clients and we aim to offer them an outstanding product backed by Reuters global support network.”

Andrew White, Reuters Global Head of Trade and Risk Management, adds that he believes the Kondor+-JRisk combination will become first choice for investment banks and hedge funds.

Reuters and Application Networks clients will be given the opportunity to migrate to a new platform within the next 24 months. This will be called Kondor+ 4.0 and will combine JRisk’s upgradeable “services orientated architecture” with Kondor+. Before then, Reuters will release staged upgrades to existing JRisk and Kondor+ users as the platforms converge.

Senior managers from Application Networks will be joining Reuters from today. These include Application Networks CEO, Evrard van Hertsen, who becomes Head of Product and Strategy for Reuters Trade and Risk Management; Lionel Simon who will lead Product Management, and Alex Hernandez, based in Palo Alto, who will become Chief Technology Officer for Reuters Trade and Risk Management.

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