January 13, 2012

The bankruptcy of MF Global shocked farmers, commodity trading advisors and other types of investors who are clamoring for $1.2 billion in missing customer funds, but it also has impacted Bloomberg L.P., a supplier of computer terminals to the futures and commodities brokerage firm.

According to today’s New York Times, the financial information giant lost 600 subscriptions to its market data and news terminals, which amounts to $1 million in monthly revenue, after MF Global filed for bankruptcy on Oct. 31. While $1 million is a small sum next to the $7 billion in revenues that Bloomberg reportedly generates from selling its terminals around the globe, it underscores the interdependent relationship that exists between the fortunes of Wall Street firms and their technology/financial information providers.

The loss of business from MF Global caused the Bloomberg staff to miss their sales targets by 12 percent in 2011, and could impact their bonuses, reports the New York Times article. According to a bankruptcy filing first in a Manhattan court, Bloomberg Finance, LP is owed $276,064 by MF Global.

But Bloomberg is not the only technology vendor suffering from the bankruptcy. A list of MF Global Holding's unsecured creditors and shareholders includes Caplin Systems Ltd., owed $427,520; Headstrong Services, an IT consultant, owed $3.9 million, according to the story “Bankrupt MF Global Sticks Tech Vendors with Unpaid Bills” in Wall Street & Technology.

However, the New York Times points out that subscription fees from Bloomberg customers contribute 85 percent of the company’s revenues and go toward paying for the company’s huge global news operations. Still, the company has 314,000 terminals worldwide, so 600 terminals lost is no more than a speck on an elephant’s back. Also, Bloomberg has survived turbulence on Wall Street before as when Lehman Brothers, which had 3,500 subscriptions, went bankrupt in September 2008.

And despite the challenging market in 2011, Bloomberg had a good year since subscriptions in total were up by 14,000, a company representative told the Times.

Another interesting aspect of this story is that MF Global, led by Jon Corzine, the former Goldman Sachs executive, apparently spared no expense in awarding Bloomberg terminals – which cost as much as $1,600 a month per terminal— to its employees. Even though MF Global was a moderate size brokerage firm with 2,500 employees, nearly one-third had subscriptions to Bloomberg terminals, a sign that the firm was rolling the dice on its expenses as well as European debt. Not only did the futures and options traders need to have real-time market data, news and analytics, but reportedly, even a human resource employee had an elite Bloomberg terminal on its desktop, the Times article noted.

Click here for The New York Times article.

ABOUT THE AUTHOR
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 ...