Trading Technology

11:28 AM
Ivy Schmerken
Ivy Schmerken
Commentary
Connect Directly
Facebook
Google+
Twitter
RSS
E-Mail
50%
50%

MF Global's Bankruptcy Impacts Bloomberg

The loss of subscription revenue from MF Global's collapse, is causing suffering at Bloomberg, reports The New York Times.

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.

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 the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio
Comment  | 
Print  | 
More Insights
More Commentary
Data Integrity: A Necessity, Not an Option
Financial institutions that have taken on the data integrity task in the past now have to spend more money on hardware, software, and people just to keep up with the demand.
What Colombia’s New IT Campaign Means for Latin American Tech Investment
Colombia’s campaign is the latest example of how Latin America is trying to edge into the global technology space.
Initial Margin: When Does More Turn Out to Be Less?
Changing margin regulations are set to affect the OTC derivative market, including initial margin risk models for non-cleared OTCs.
The Mainframe Innovation Drag
It may be time for a consortium of firms motivated around the objective of eliminating the mainframe. What if every self-clearing firm decided to participate in building a modern, back-office system as an open-source, cloud-based project?
Big Data DIY
Now that we have passed the initial hype phase of big data, companies are searching for real business value from their investments. Consultants can play a part, but only if financial firms insist on a new partnership model.
Register for Wall Street & Technology Newsletters
White Papers
Current Issue
Wall Street & Technology - July 2014
In addition to regular audits, the SEC will start to scrutinize the cyber-security preparedness of market participants.
Video
Exclusive: Inside the GETCO Execution Services Trading Floor
Exclusive: Inside the GETCO Execution Services Trading Floor
Advanced Trading takes you on an exclusive tour of the New York trading floor of GETCO Execution Services, the solutions arm of GETCO.