It does not take much to send financial markets up or down. A report from the Federal Reserve, a release of consumer data, a jobs report, political news, or even weather reports (such as a hurricane in the Gulf of Mexico) can result in a jump or fall in the stock, bond, or commodities markets, depending on the perceived impact of the news. But it takes lot to actually shut them down.
For a few hours in the early morning of Friday, April 17, something happened that, while not completely shutting the markets down, had nearly the same effect: Bloomberg went down. Specifically, the servers that operate a global array of some 320,000 financial data, analytics, real-time news, and instant-messaging terminals shut down and were offline for several hours. The outage happened near the end of the Asian markets’ trading day on Thursday, April 16. The outage hit the U.S. markets before dawn the next day. But it impacted the European markets as they were opening or during their heaviest business hours. On Twitter, Bloomberg blamed the “disruption” on an “internal network issue.” It denied that the outage was the result of hacking or another external attack.
Bloomberg and its terminals have long been part of the financial industry. Founded by Michael Bloomberg in 1981 (reportedly by using a $10 million severance package), the service, through its terminals, provides a wealth of critical, real-time data; analysis; news; and other information to the financial industry. The terminals—known for their nonstandard, dedicated keyboards and ubiquitous, almost DOS-like text on multiple screens—provide several categories of information. Real-time financial data—particularly about all forms of global securities, including stocks, bonds, mutual and exchange traded funds, currencies, and derivatives—is the widest known and most regarded feature. The data is available through updated ticker services as well as through search structures. The derivative markets are heavily featured, allowing users to gather pricing and value for options, futures, and other complex securities. In addition to real-time information, the terminals provide access to historic and comparative information, including pricing and financial history.
Real-time financial and nonfinancial news is also a feature of the terminals. As noted, with the split-second reaction of markets and individual instruments (such as stocks, bonds, or currencies) to seemingly innocuous news, a Bloomberg terminal provides access from its own reporting services, as well as from global news websites, wire services, newsfeeds, and other sources. Both current and archived news is provided and searchable.
Increasingly important in recent years is the chat or instant messaging feature. Chat allows users to communicate with clients, customers, and colleagues in real time. It has emerged as a key element in the markets for “corporate and government bonds, especially in Europe.” During the recent outage, The New York Times reported that alternatives, such as email and phone calls, were used during the outage, but were described as ‘old-fashioned.’
The outage unquestionably had an impact on the financial markets. Fortune magazine reported “operations had ground to [a] halt” at one workplace. The New York Times reported the outage caused delays in several transactions, including a nearly $4.5 billion bond sale by the British Treasury, and it may have contributed to a day in which overall stock prices fell. Bloomberg users took to Twitter to express their frustration, with tweets such as, “Bloomberg being down has finally made me understand how teenagers feel when Facebook crashes” and “Too Bloomberg To Fail.”
A ‘Mission Critical Product’
Bloomberg’s influence on the financial marketplace cannot be underestimated. While there are some alternatives—more on that in a moment—Bloomberg terminals have been described as the “lifeblood” of banks, investment management companies, trading and brokerage houses, and financial consultants. An image published by Inside Investing in December 2013 showed a trading floor the size of a football field with several hundred—perhaps as many as a thousand—traders and employees, virtually all of whom had a Bloomberg terminal at their workstation, at a cost that is reported to be more than $20,000 per station per year. Financial blogger Matt Turck, managing director of FirstMark Capital, describes Bloomberg as a “mission critical product. … In the financial world, data is used to make gigantic bets, so total accuracy and reliability is an absolute must. …”
While the accuracy of the Bloomberg terminals was not an issue in the recent outage, certainly reliability concerns were raised. The terminal is actually a client-server software solution offered by Bloomberg. It connects through existing online networks to dedicated servers at Bloomberg. Mobile apps are also available. The outage affected the dedicated servers, rendering them unusable for all of the various applications Bloomberg offers. In the wake of the outage, a number of users, bloggers, and commentators questioned whether the financial, banking, and securities industries rely too heavily on Bloomberg and whether alternatives might need to be developed or considered.
To be certain, there are competitors to Bloomberg and its terminals. The market for financial data services is estimated at $26 billion worldwide. Bloomberg—which, as a privately held company, is not required to publicize its finances—is projected to generate an estimated $8.5 to $9 billion (just about one-third) of that market. While it holds a significant majority, it is by no means the only player in the marketplace.
Generally recognized as the leading comprehensive competitor to Bloomberg is the Thomson Reuters Eikon financial analysis desktop and mobile solution. Similar to Bloomberg, Eikon offers real-time access to a global array of stock and other exchanges, OTC markets, and other financial services, plus instant messaging, chat, and “unbiased Reuters news, commentary and financial analysis.” On the heels of the Bloomberg outage, the Financial Post quoted Thomson Reuters as saying there’s a “notable increase in free-trial requests and sales.” However, Eikon is priced only slightly less than the Bloomberg terminal for the complete package, although unlike Bloomberg’s single-level subscription, Eikon offers alternative packages with fewer features, but at lower cost.
This suggests the most significant competitive theme in evaluating alternatives to Bloomberg. Specifically, are there solutions that exist that can provide some of the Bloomberg functionality for those that don’t require the complete level of Bloomberg’s features? The answer seems to be a guarded yes.
The key to addressing this question is to break down to a very specific level the types of data provided by the Bloomberg terminal and identify alternatives that can effectively provide them. The alternatives may include various subscription services or content that is freely available on the web. Depending on the nature of the need, a person may be able to selectively obtain and subscribe to only those individual services that are critical to the user’s need at an overall lower cost.
A good starting point is the Harvard Business School’s Baker Library and its Bloomberg Center. While Harvard appears to offer some level of access to one or more Bloomberg terminals, it has a spreadsheet of the data types provided through Bloomberg and the alternative means of accessing that data. Included among the data types are commodities, futures and options, corporate debt, credit ratings, stock prices and ownership, exchange and interest rates, and futures and other data. For each entry, a link is provided to databases offering access to that particular type of data. While most of the databases mentioned require some level of subscription to access the information, others did not. (Disclosure: Working in an academic environment gave me access to several of these databases through campuswide subscriptions or through reduced or no-cost academic access.)
Among the databases that Harvard highlighted as potentially providing substantial amounts of content is FactSet for futures prices, current and historical stock prices, stock fundamental data, and other resources. Another source is BvD, which has information on more than 150 million public and private companies worldwide. Also highlighted is S&P Capital IQ for data on “public and private companies, investment firms, capital transactions and people.” However, it was noted that Capital IQ did not have news or some of the market data available from Bloomberg. A free service mentioned by several commentators (although not Harvard) is FINVIZ, which purports to offer “the fastest and the most advanced stock screener available online, interactive market maps, innovative market analysis and institutional services.” Users need to be aware that, as with most free services, quotes are delayed.
Another low-cost alternative is Money.Net, a startup company founded by a former Bloomberg executive that offers a “Professional market platform” for subscriptions as low as $50 per month. The service provides breaking market news, complete global quotes, technical analysis, charting capabilities, and other services, via a cloud environment. One reviewer described it as a potential “industry disruptor starting to gain traction.”
There are a number of free news services available, including feeds from Yahoo Finance, CNBC, the ubiquitous Google News search service, and even Bloomberg’s own news services. (Bloomberg News is a separate division of Bloomberg, as is Bloomberg BNA, a legal research service that competes with RELX Group’s Lexis Advance and Thomson Reuters’ WestlawNext.) One low-cost, fee-based service mentioned by several commentators is The Fly, a feed for live news “that matters.” Another commentator suggested that the free news services, plus subscriptions to The Wall Street Journal and the Financial Times (with related online newsfeeds, including the Financial Times’ FT Alphaville) would be sufficient for most needs.
Secure messaging through Bloomberg’s chat feature is a critical component to Bloomberg’s success. While there are a number of secured email and message services that exist in the market, a significant up-and-comer targeting the business and financial industries is Symphony. It offers a collaborative and secure platform for the “exchange of sensitive business content.” Symphony was recently the recipient of some $66 million in startup funding from a coalition of financial services companies, and former Thomson Reuters executives serve as its CEO and director in several other key positions.
Comprehensive charts of finance data and analysis are particularly valuable and are often available for free from Yahoo Finance and Google Finance. A commercial service targeted to individual and professional investors is YCharts. Describing itself as the “Financial Terminal of the Web,” YCharts offers the ability to compile research in chart form and download and export data for personal use. A Lite version is available for individual investors at $40 a month, with a Standard edition at $100 a month and a Professional edition (offering a much broader array of financial data and statistics along with the ability to export 500MB of data a month) at $300. For the professional investor, it provides a similar level of charting service as Bloomberg at a fraction of the cost. Still, it does not provide everything Bloomberg does, which is what has made Bloomberg so successful.
Crowdsourcing and Big Data
This is also a space that seems to be crying out for Web 2.0 or 3.0 solutions. Turck suggests that while he does not believe that a startup may be in a position to fully compete with Bloomberg, there are “fertile grounds ‘around’ and ‘below’ the terminal” that Bloomberg does not presently occupy. He suggests that “quintessential internet concepts” such as crowdsourcing, Big Data evaluation, app development, and networking can effectively occupy those spaces.
A few hours of an outage are not going to send Bloomberg to the technology scrap heap. By all accounts, the Bloomberg terminal achieved its dominance by offering and continuing to offer a critical and valuable combination of information and services to a very specialized and sophisticated audience of users. That audience is not likely to have the time or inclination to put together an alternative by cherry-picking bits and pieces of multiple resources to craft an ersatz solution. However, for the user who does not need the full array of Bloomberg’s features, the growing data industry is increasingly well-positioned to respond to those needs.