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Instant messaging: Always online

When instant messaging began to explode in popularity a few years ago, brokers, portfolio managers and other financial professionals couldn't use the technology at their workplaces.

Their firms blocked access to America Online's AOL Instant Messenger and competing services. They were worried about viruses and other security threats, and that the content couldn't be monitored and archived for compliance purposes.

But the demand for IM couldn't be ignored, and there was no holding back the tide once Wall Street's systems administrators got their hands on new security and database tools that assuaged their concerns. Those advances have turned many financial companies into outright promoters of IM as a way to keep their employees in efficient and often constant contact with each other and with clients.

It's a common sight on many trading floors: multiple discussion threads flickering on computer screens as traders track the news, participate in chat forums, seek out products and negotiate prices. "If you don't have instant messaging, you're out of the market," says Graham Lawlor of Deutsche Bank.

Lawlor, in fact, personifies how pervasive IM has become: He is his bank's New York­based IM program manager and is chairman of the Financial Services Instant Messaging Association, which Deutsche, Merrill Lynch & Co., UBS and several other institutions formed three years ago. FIMA's purpose: to adopt common technical standards to smooth IM system implementations while ensuring that they are compatible with ever-more-stringent rules governing communications within firms and the retention of client-contact records.

The bottom line for IM? Boston-based research firm Celent Communications estimates that 2.7 million people in the financial services industry use it at work, up from less than 2 million in 2003. Celent projects that the number will reach 3.8 million next year.

The technology is evolving, and executives like Deutsche's Lawlor are working constantly to keep it under rein. FIMA's "single biggest priority," he notes, is to encourage standard practices and interoperability among such providers of IM compliance and security systems as San Diego­based Akonix; FaceTime Communications in Foster City, California; and Waltham, Massachusetts' IMlogic. These and other IM technology suppliers are continually enhancing and expanding their products and functionality. "As these applications are developed and proliferate," says Lawlor, "we need to understand their features, what they're compatible with, their APIs [application programming interfaces] and scalability and what they're licensed to do."

The good news is that the financial industry is big enough to make vendors cater to its demands. White Plains, New York­based Communicator, founded in 1999 by former Salomon Smith Barney bond department chief Leo Schlinkert, created an IM system with security built for Wall Street's needs. Schlinkert calls it a "gated community" that smooths collaboration and document sharing among some 100,000 buy- and sell-side users.

Financial firms are intent on making more-open IM utilities fully secure and compliant with regulations. Reuters Group was able to build in security from scratch when it introduced its instant messaging service in 2002. The older, heavily trafficked Bloomberg Messenger system needed some retrofitting. Indeed, Citigroup recently reiterated its ban on the use of Bloomberg's IM service. New York­based Orchestria, which developed a compliance tool called active policy management for all forms of messaging, including IM, began to integrate its technology with Bloomberg's last year.

In March, Pivot Solutions, a spin-off of Boston-based trade-order management systems vendor Eze Castle Software, said it was the first vendor to fully integrate the AOL service with a FIX (financial information exchange) trading desk application.

Thomson Financial announced in February that, in alliance with IMlogic, it had added AOL Instant Messenger to the Thomson One desktop system -- the Thomson Corp. unit's answer to the Bloomberg and Reuters trading services. Research in Motion of Waterloo, Ontario, said recently that it will offer IM from AOL and Yahoo! on its popular Blackberry wireless messaging devices.

With a FaceTime archiving system in place, Thomas Weisel Partners, the San Francisco merchant bank, lets employees use any IM system, including public networks like AOL. "I have 225 buddy names in AOL right now -- 295, counting all the networks," says Weisel chief technology officer Beth Cannon. "That's half the company."