MIT and Merrill Lynch Create Strategic Partnership for Five-Year Research and Educational Initiative

CAMBRIDGE, Mass., Mar. 8, 1999 - Merrill Lynch and The Massachusetts Institute of Technology (MIT) today announced a five-year institutional partnership to pursue joint research across a broad range of disciplines and build a path-breaking Financial Engineering curriculum at MIT.

The strategic institutional partnership has two central components: a $15 million joint research initiative that will fund collaborative projects in financial engineering and technology innovation and management; and a $5 million charitable gift that will help MIT establish a new graduate minor in financial technology.

The MIT Sloan School of Management, the School of Engineering, the School of Architecture and Planning and six laboratories across the Institute will be involved in the initiative. The unique university and industry partnership will strengthen MIT's tradition of applied interdisciplinary programs and serve as a model for other higher educational institutions.

"This collaboration supports Merrill Lynch's commitment to investigating and implementing new technologies and business methods which will help us continue to provide our clients with the most intelligent, effective advice and service globally," said President and Chief Operating Officer Herbert M. Allison, Jr. "The initiative anticipates and addresses a growing need within the financial services industry for sophisticated graduates schooled in a broad, multi-disciplinary curriculum and for focused research on key financial-services issues. MIT is the perfect partner, bringing a broad range of disciplines and a multi-dimensional faculty and student body to the initiative."

Said MIT President Charles M. Vest, "The forces now shaping the global marketplace are as powerful and as far-reaching as those that drove the Industrial Revolution, and their impact on the way we live, work and interact will be equally profound. The demand for multidimensional leaders to solve the complex problems of this modern world requires stronger, innovative partnerships between industry and academia."

A new graduate minor in financial technology will be part of the Financial Technology Education Initiative, a joint undertaking that will be anchored at the Sloan School and the Department of Electrical Engineering and Computer Sciences (EECS) at the School of Engineering. The program will provide finance education for MIT graduate students from technology fields such as engineering, math, computer science and media studies. The minor will increase financial applications within the Engineering School's technology courses and boost the number of technology courses available to those in the Financial Engineering Management track of Sloan's MBA program.

MIT Chancellor Lawrence S. Bacow said, "This joint initiative between MIT's management and engineering schools will offer students a unique comparative advantage in the marketplace by providing them with a necessary blend of management and finance, technology and engineering competencies."

Research projects at the three participating schools will also be funded by the partnership. The Laboratory for Financial Engineering, housed at the Sloan School of Management, will launch a series of new research initiatives in electronic commerce, risk management, data mining and computational finance.

Andrew Lo, director of the lab and founder of Sloan's Financial Engineering management track, is one of the foremost thinkers and researchers in the field of financial engineering. He said, "Financial markets are becoming increasingly complex, and the exponential growth of the Internet and electronic commerce are having profound social, political, technical and economic effects on the economy and society. Partnering with Merrill Lynch has given us the intellectual and financial resources to produce the next generation of financial technologies and financial engineers to manage these complexities."

EECS faculty have long conducted research in technologies that have shaped the financial industry. Department Chair John Guttag said, "This partnership will provide a fertile field in which to apply many of the ideas coming out of basic research activities in fields such as machine learning, computer and communications security, the design of complex systems, and the acquisition and analyses of data. We very much look forward to a deep engagement with colleagues in the Sloan School and with the people at Merrill Lynch."

MIT's Media Lab, housed at the School of Architecture and Planning, will continue its research in novel techniques for electronic commerce and information filtering. Media Lab Professor Pattie Maes said, "The strides being made in the research of software agents that buy and sell goods and services promise to revolutionize the way we conduct transactions, whether business to business, consumer to business, or consumer to consumer. The additional research made possible by this venture will allow the Media Lab to further develop such technologies, as well as research some of the socioeconomic issues involved such as trust, reputation, security and value-based marketing."

Merrill Lynch is one of the world's leading financial management and advisory companies with offices in 43 countries and total Private Client assets exceeding $1.5 trillion. As an investment bank, it is the top global underwriter and market maker of debt and equity securities and a leading strategic advisor to corporations, governments, institutions, and individuals worldwide. Through Merrill Lynch Asset Management, a wholly owned subsidiary, Merrill Lynch operates one of the world's largest mutual fund groups.

The Massachusetts Institute of Technology is an independent, coeducational university located in Cambridge, Massachusetts. It is the world's foremost center for educating scientists, engineers and managers. MIT is one of the leading research universities in the world; its faculty, alumni and researchers have been awarded 35 Nobel Prizes. In 1997-98, approximately 2,700 researchers worked with 900 faculty and about 800 students on projects funded by government, foundations and industry. A recent study found that the 4,000 companies founded by MIT graduates and faculty worldwide employ 1.1 million people and have annual world sales of $232 billion. MIT routinely leads U.S. universities in patents granted and each year enters into approximately 70 licensing agreements with private companies as one means of translating knowledge into products, services, and jobs.

MIT News

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For Immediate Release
March 8, 1999
Contact:
  Paul Denning
  (617) 253-0576
  denning@mit.edu
  Ken Campbell
  (617) 253-2703
  kdc@mit.edu