August 07, 2006

As the market data business shifts toward providing direct exchange feeds for electronic trading applications, competition is looming among the low-latency market data infrastructure providers distributing Bloomberg B-Pipe - Bloomberg's new consolidated, real-time, high-volume market data feed.

For the first time, Bloomberg is allowing its content to be distributed over independent market data platforms and feed handlers for integration into customers' enterprise applications, according to Tom Secunda, cofounder and head of product development at Bloomberg. "We're agnostic as to platform," he says, noting that in the past Bloomberg didn't offer a digital feed for RMDS platforms, and customers were required to subscribe to the Bloomberg terminal. "You had to pay another vendor to get prices because we couldn't deliver it to you that way," Secunda explains.

Now, B-Pipe will be available to both Bloomberg terminal customers and users of other systems. "If I can take the Bloomberg feed, why do I need the Bloomberg terminal?" questions Tom Price, an analyst in the securities and capital markets group at TowerGroup. More than a vehicle to deliver content, the terminal offers sports scores and restaurant listings, for example, while brokers also can contribute pricing information and engage in instant messaging, Price points out. But the Bloomberg Professional Service costs more than $1,500 a terminal, and there recently was a 5 percent price increase, he notes.

Bloomberg's Secunda says the B-Pipe data is different from the Bloomberg Professional Service data in that the Professional Service data delivered to the terminal is highly processed. The B-Pipe data, on the other hand, is closer to what the exchange or source sends out. "We had to back out all the specialty stuff; we wanted to make sure we had the best latency in the business," Secunda says of the B-Pipe data. He explains that the purpose of B-Pipe is "to help Bloomberg terminal customers increase the value of the product to the enterprise."

According to Tricia San Cristobal, who runs the Bloomberg B-Pipe business, Bloomberg is seeing demand for B-Pipe for a wide variety of enterprise applications, such as proprietary risk analysis, trading and pricing models.

But why is Bloomberg entering the consolidated feed space when the buzz is around low-latency direct data feeds for algorithmic trading applications? Industry sources suggest Bloomberg is responding to the trend toward more-automated trading and the consumption of data by applications, and that it's opening up its data so that it can run on the low-latency market data platforms that large customers are installing. Wombat Financial Software, for example, a key rival to Reuters in supplying direct exchange feeds, recently announced the availability of a feed handler for the Bloomberg B-Pipe to run on its Wombat Platform and other widely used market data systems.

"The same day, Reuters confirmed that it plans to distribute the B-Pipe feed over its own Reuters Market Data System [RMDS] platform," wrote Mary Knox, research director at Gartner Investment Services Industry Advisory Services, in a report. "Bloomberg has separated the Bloomberg feed from the Bloomberg terminal. They're partnering with Wombat and Infodyne, which means that Reuters is in competition with those smaller providers," she tells WS&T in an exclusive interview, suggesting that Reuters needs to carry the B-Pipe feed as well.

While some Bloomberg competitors contend Bloomberg has lost credibility since it first announced B-Pipe (previously known as PhatPipe) about three years ago, according to Knox's report, opening up the Bloomberg feed for distribution on other platforms will "legitimize and strengthen B-Pipe, leading to increased share of the real-time market data marketplace."

Ken Barnes, Wombat's VP of business and planning, has been marketing the feed to customers in the U.S. and Europe. He says B-Pipe is getting a lot of attention on both the buy and sell sides. "This thing is for real," he says. "It does work, it is well-designed, it does have some very strong coverage," adds Barnes, citing contributed data coverage and Bloomberg bond pricing. "It's a very credible entrant into the market."

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Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in ...