Data Management

10:56 AM
Marcus Holland, FinancialTrading.com
Marcus Holland, FinancialTrading.com
Commentary
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Culture Clash: Transparency Versus Proprietary Data at Bloomberg

The news media requires transparency and openness, while trading on Wall Street thrives on minimizing information leakage and protecting proprietary data.

The acknowledgement by Bloomberg LP that it had allowed journalists to view specific types of subscriber data has led to a debate about whether their transparent news culture can coexist within a proprietary Wall Street climate. On the heels of a complaint by investment bank Goldman Sachs that confidential information provided by the Bloomberg Terminal was viewed by reporters, a number of large banks and governments are now re-evaluating their relationship with Bloomberg. In fact, the U.S. Senate may even begin an investigation of Bloomberg.

Many of Bloomberg's top clients are now concerned about whether a sophisticated financial services data content provider who collects and saves complex information can work alongside a news and media culture that requires transparency.

Bloomberg, which is a privately held company, was started by current New York City Mayor Michael Bloomberg and is in the firing line after disclosing that it has just started to restrict its journalists from accessing data previously available. Throughout its history, continuing until April of 2013, Bloomberg made these functions available to reporters in an effort to allow their employees to interact with their clients in a productive manner.

Bloomberg Terminals
Access to Bloomberg's proprietary system is expensive and requires a number of secure steps for users to gain access to their accounts. Through Bloomberg Anywhere, the platform’s data is available to users at any location, as long as users have access to a code that is accessed through a device that uses a fingerprint to allocate the secret code. The company goes to extraordinary measures to insure access is only granted to those who pay for the service.

[The revelation that Bloomberg reports had access to usage data from the Bloomberg Professional platform has surprised traders. Read more: Is Your Bloomberg Terminal Spying On You?].

Bloomberg clients can chat or email with one another, share ideas and send and store proprietary trading ideas created using Bloomberg data. The company, which was started in 1982, was initially conceived as a mechanism to price and store opaque pricing data that was not readily available to all market participants.

Reliance
As news spread throughout the trading community that journalist’s had access to information which was considered proprietary to Wall Street traders, the episode shed light on how much users rely on Bloomberg. The conflicting issues for traders is they rely on the openness of the product and its ability to allow them to share trading data with specific individuals, but want that information to be held close to the vest and gated from prying eyes.

While a culture of sharing information can facilitate collaboration in a newsroom environment, the idea clashes with proprietary Wall Street traders who pay approximately $20,000 per year for access to Bloomberg. Prior to the revelation that journalists had access to data, the Bloomberg community felt that their ideas and conversations lived within a gated community. The news that journalists had access to data that was previously thought of as being private, creates a true clash between the openness of a news environment and the insulated world of trading data.

Investigation
Bloomberg is a one of a kind product and any evidence that the company used the data for malfeasance would undermine its role as the top source of financial analytics and data. Although many government agencies and banks are concerned about potential misuse, it remains unclear whether the recent scrutiny will endanger the company’s sales.

Marcus Holland is Editor of FinancialTrading.com, an educational resource on derivative instruments. Marcus graduated from the University of Plymouth in 2005 with an Honors degree in Business and Finance and has since been trading the financial markets, with a particular focus on forex.

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Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
5/23/2013 | 11:56:01 AM
re: Culture Clash: Transparency Versus Proprietary Data at Bloomberg
I agree. The Bloomberg Terminal is so entrenched in the industry that removing it from any company would be a monumental task. Traders would revolt. That said, Bloomberg needs to make sure this never happens again, which it looks like they are doing.

Once Sam Palmisano's investigation is completed, Bloomberg should take the step of releasing the full report so everyone can see how this happened, why, and what is being done to make sure it never happens again. I don't know if that will happen, though, as Bloomberg has always been a very private and closed company. But increasing transparency around the Snooping Scandal will do a lot to reassure customers. We'll see.
Nathan Golia
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Nathan Golia,
User Rank: Author
5/16/2013 | 8:17:27 PM
re: Culture Clash: Transparency Versus Proprietary Data at Bloomberg
It sounds similar to the harsh truth about Facebook or Google GÇö yes you get the access, but it's at the "price" of exposing your data and habits to a third party. That balance must be struck both in personal and professional life.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
5/16/2013 | 1:50:15 PM
re: Culture Clash: Transparency Versus Proprietary Data at Bloomberg
Bloomberg is such an important part of the financial trading system that I doubt they will lose any customers over this. If they make some changes to protect their clients' privacy I think this will go away pretty quickly.
Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
5/16/2013 | 10:41:45 AM
re: Culture Clash: Transparency Versus Proprietary Data at Bloomberg
It's quite shocking that the data 'sharing' between journalists and the Bloomberg Professional side of the business was allowed at all, much less allowed to go on for years. Traders should know that Bloomberg knows about everything that happens on the Terminal (most frequently used functions, most/least popular features). The ability to track the usage is one reason why the product continues to meet expectations -- it is constantly being tweaked. But, traders expected that the usage data is collected in aggregate.
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