NEW YORK - Chase Manhattan Corp. is building a trading room in New York that is to be outfitted with a sophisticated new computer system.

The $85 million project, to be completed by the end of next year, is intended to provide state-of-the-art facilities to a trading unit that has been a star performer for Chase in recent years.

"This is investment that's needed in these businesses," said Rupinder S. Puri, Chase's senior vice president for trading technology and operations.

Room for 456 Traders

While a reduction in troubled loans has been at the core of Chase's improving earnings in recent years, growth in trading revenues has helped out.

For the first nine months of this year, Chase's total trading revenues were $549 million, compared with $468 million for all of 1992, and $335 million for all of 1991.

The new trading room will be in Chase's headquarters in lower Manhattan.

The room will accommodate 456 traders, and will replace an older trading room in the head-quarters with 300 traders.

The trading in domestic equities and currencies that now takes place in the older trading room will be moved to the new room.

Additionally, the room will accommodate dealing in foreign securities, private placements, and loan syndications that now occurs in other Chase offices.

Unix Workstations

"We want all the trading related businesses in the same floor to improve communication and get better integration," Mr. Puri said.

Advanced technology will be used to make the traders more proficient.

The core of the new computer system will be Unix workstations from Sun Microsystems Inc. that will run market-specific software traders will use to manage risk, get market information, and record deals.

The computers will be hooked together by fiber cables into what computer specialists call a local area network.

In addition to shutting all of the critical data that Chase uses to manage its trading operation, the network will support what is called video conferencing.

Video Communication

Traders will be able to use computers hooked into the network to see and talk to each other across a noisy, crowded trading room that will be split into two floors connected by a spiral staircase.

"Our goal is to improve communication," Mr. Puri said.

No other American bank or trading company is known to have used video conferencing technology on a trading floor for this purpose, Mr. Puri said.

"It will be a state-of-the-art trading room," he said.

The new computer system will have much more horsepower than the systems now available to Chase's traders.

The extra power will make it possible for Chase to engineer its risk management software to work faster, and to provide more comprehensive analyses, Mr. Puri said.

The computers will also be powerful enough to support other new technologies, including speech recognition, a capability that enables computers to hear and understand spoken words, and convert them into numbers and text on a computer screen.

Speech Recognition Tested

Chase technicians are now testing the feasibility of using speech recognition technology to record trades.

The bank hopes to give this technology to several traders in the international capital markets group in three to six months, Mr. Puri said.

If the test goes well, Chase may eventually give the technology to traders throughout the bank.

The hope is that speech recognition will help Chase record trades faster and more accurately.

Other brokerage companies and banks have been testing speech recognition for years with limited success.

Mr. Puri said he believes the technology has improved markedly in recent months, and may now be ready for commercial use.

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