Merrill Lynch & Co. and the Massachusetts Institute of Technology have announced a five-year agreement to create and run a "financial engineering" curriculum at the university.

Merrill Lynch will contribute $15 million to fund joint research projects in financial engineering, technology, and management. Merrill also will donate $5 million to establish a new minor in financial technology at the graduate level.

The initiative "anticipates a growing need within the financial services industry for sophisticated graduates ... and for focused research on key financial services issues," said Herbert M. Allison Jr., Merrill Lynch's president and chief operating officer.

Research projects in electronic commerce, risk management, data mining, and computational finance will be funded by the venture.

The graduate minor will offer interdisciplinary education for MIT students in fields such as engineering, math, computer science, and media studies. For example, the number of technology courses available to those in Sloan's MBA program would be boosted, as would the financial courses available to students in the technology-oriented engineering school.

Andrew Lo, founder of Sloan's financial engineering management track, noted the increasing complexity of financial markets and the profound effect the Internet is having on the economy and society.

He said the alliance with Merrill is intended to produce "the next generation of financial technologies and engineers to manage these complexities."

The university-industry alliance would serve as a model for other institutions.

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