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JPMorgan Deploys New Risk Model for Derivative Bet

JPMorgan Chase & Co., whose trading loss of more than $6.2 billion was fueled by the adoption of a flawed mathematical formula that understated the risks, is trying yet another one.

JPMorgan said today it started using a new formula to judge the risk of the derivatives position, at least the third such model it’s used this year, when it moved most of the contracts to the investment-bank unit. The new analysis cut the firm’s calculation of overall value-at-risk, or VaR, by $36 million, or 24 percent, to $115 million in the third quarter, the New York-based bank said today on its website.