Plans were announced last month by J.P. Morgan, its online derivatives spin-off Cygnifi, and the London law firm Allen & Overy, which will serve as the primary counsel of the new venture in some jurisdictions, and the reviewing counsel of the service in general. Cygnifi is a spin-off of J.P. Morgan and outside investors Sybase, Numerix Corp. and Bridge Information Services.
Subscribers will pay a fee that varies by country, said Sally Shackleton, spokeswoman for Cygnifi in London office.
“The fee will entitle the payor to a full pyramid of legal analysis,” Ms. Shackleton said.
At the base of the pyramid are full analyses of the legal structures of a country as applied to derivative interpretation and enforcement. Or a subscriber can obtain a 10-page summary of the key points of that analysis. Further up, a fund’s risk manager (as distinct from its legal department) might prefer to make use of a still shorter executive summary. At the top of the pyramid, the system will include a one-page summary designed by traders. The summary identifies specific documents and types of collateral.
Eventually, Trinity will rate countries’ legal systems by the certainty they provide. For example, the analysis of Turkey or Russia will state the law in theory but point out that in practice, it might not prove reliable, because there is little precedent for derivatives contract disputes in emerging markets.
Allen & Overy said it was unconcerned that the online system might undercut demand for its services.
“One might ask the same question of J.P. Morgan, whether they are giving away information they could sell” for more money than a subscription fee, said Dean Naumowicz, an associate with Allen & Overy, on Monday. All parties involved in the planning of Trinity are trying to get the best available information out into the marketplace, he said.
Today’s derivatives market demands global legal risk management tools, said Simon Haddock, a partner at Allen & Overy. From 1992 to 1997, he practiced derivatives-related law in the firm’s Hong Kong office.
“By combining the world’s leading legal expertise with robust technology, our alliance with Cygnifi should provide subscribers to Trinity with the information they need to execute transactions.”
Other law firms around the world will work with Trinity to provide online access to an array of legal research and analysis. Law firms in 21 countries have come on board, and plans call for covering 50 countries.
Jay Helvey, chief executive officer of Cygnifi, said he was committed to unlocking the proprietary knowledge of financial markets and providing easy access to collateral management tools at a cost-effective price.
Cygnifi also has acquired legal-advice software known as 3CS from Cordova Law and Finance, a Brussels-based firm specializing in financial law. The firm’s founder, Pamela Cordova, is a former vice president of J.P. Morgan. Cygnifi said it plans to integrate 3CS into Trinity.
“Combining Trinity and 3CS provides the market with unparalleled access to legal expertise on the complexities of cross-border collateralization,” said Ms. Cordova.
The address of the Trinity site is www.cygnifi.com/trinity.html .
By Christopher Faille, Reporter CFaille@HedgeWorld.com