February 1, 2012

The Financial Times

Bloomberg aims to bypass Thomson Reuters

Bloomberg, the US financial data and information provider, is set to launch a new front in its war with Thomson Reuters by offering a free and open software interface that aims to bypass its rival’s lucrative code for identifying securities on terminals. 

The group has developed a tool that allows financial institutions, rival data vendors and software developers to connect and adapt their increasingly complex trading and data connections through a single source at no cost.

It also represents part of Bloomberg’s push to build on Thomson Reuters’s long-running dispute with European antitrust officials into so-called market access codes, a lucrative business for the Canadian group.

At the same time the increasing automation of trading is putting pressure on providers of market data terminals to open up their data feeds.  The fragmentation of markets into new trading platforms has forced many investors to connect to multiple data feeds, ratcheting up their IT costs.  By offering a free interface, Bloomberg is hoping to to provide a tool that allows investors to both cut costs and circumvent its rivals’ market access codes and win market share.

Bloomberg is a fierce competitor to Thomson Reuters, which two months ago announced that Tom Glocer would stand down as chief executive to be succeeded by Jim Smith, a long-time Thomson executive with a mandate to improve its core financial data product, Eikon, and technology and customer service.  Burton-Taylor International Consulting LLC has estimated that Bloomberg has gained market share on Thomson Reuters in the last four years.
 

Thomson Reuters’ codes, called RICs, are short alphanumeric codes that identify financial instruments and their trading locations, and are used by banks, brokers and other financial institutions to convert information from Thomson Reuters market data feeds.

But the codes could not be used to translate data from rival market vendors like Bloomberg or Fidessa, a process known as “mapping”.  The European Commission is examining whether customers could be “locked into” working with Thomson Reuters because rewriting software to replace RICs could be lengthy and costly.

Bloomberg’s move could force Thomson Reuters to further weaken its policy on RICs and push the US data group into hitherto closed markets.  “We sell market-data services.  We want these systems to be easy to use,” Shawn Edwards, chief technology officer at Bloomberg, told the Financial Times.

Last month Thomson Reuters proposed to the Commission that it allow customers to licence additional usage rights for RICs and provide them with information to map RICs to rivals’ codes.  The move could make it easier for financial institutions to switch between different data providers and help Thomson Reuters avoid a potential fine.