Bank of Boston Corp. has bought derivatives trading and risk management software from Summit Systems Inc., New York.
Terms were not disclosed, but observers said the system could cost upward of $1 million, including installation costs. The purchase rounds out a two-year, multimillion-dollar overhaul of Bank of Boston's securities trading room operations.
Most banks use derivatives as hedges for their interest rate-sensitive loan portfolios. The new system should help Bank of Boston expand its use of the complex financial instruments.
The company has "made a very large commitment to derivatives this year," said Andrea Buffum, project manager overseeing the integration of the new derivatives trading systems. "Our goal is to increase the business. We've basically hired a lot of people in this area of the trading floor."
Ms. Buffum was hired away from State Street Boston Corp. last year, and she helped make the decision to buy Summit's software.
Before deciding to buy the system, Bank of Boston ran Summit's software in a 60-day pilot alongside derivatives software from Infinity Financial Technology Inc., Mountain View, Calif.
Summit's software will handle all front- and back-office processing. It will be linked with the bank's general ledger, counterparty, and settlement systems and will be integrated with the bank's proprietary treasury and risk management system.