December 17, 2013

With the news that a number of large banks are considering limiting or completely banning the use of instant messaging and chat rooms on the heels of rate rigging scandals, Bloomberg LP has taken steps to make monitoring instant messaging easier for its clients.

The increased scrutiny on electronic messages by regulators is creating a challenge for financial market participants, as they need to stay ahead of regulators and monitor messaging at scale. For instance, Bloomberg subscribers send 15 million instant messages and 200 million emails each day through Bloomberg Professional, also known as the Bloomberg terminal.

With the ease of use and popularity of instant messaging through the Instant Bloomberg (IB) tool on the terminal, clients certainly do not want to give up their IB capabilities. "The Instant Bloomberg tool is very important" to my workflow, says Alexandre Silverio, portfolio hedge fund manager at Quest Investimentos in Brazil. "I use it to receive information from the brokers regarding news and the flows they are seeing in the markets. A good portion of my communication is made through chat."

To assist clients, Bloomberg has centralized its existing compliance tools into the Bloomberg Compliance Center, which provides compliance professionals a centralized view of administration, monitoring, search, and retention capabilities designed to give a comprehensive, real-time view into firm-wide communications, according to Bloomberg. Compliance tools have always been available on Instant Bloomberg (IB), the provider's instance messaging tool, but Bloomberg has now centralized this information onto one dashboard.

"Communication is the heart of everything that Wall Street does," says Ben Macdonald, global head of product, at Bloomberg. "We have a comprehensive suite of tools where people can monitor messages … in real time." The set of tools "allows people to archive, search and apply rules" to the chat messages, Macdonald adds.

Recently, Macdonald relates, clients have been requesting more detailed information on communications for compliance purposes and clients want more granularity when it comes to compliance. "People want more metadata about the senders and recipients," Macdonald says. They are requesting "more detail because there is more scrutiny than ever before. The compliance and the operations folks are more integrated into the transaction process. There is a shift of focus from monitoring to prevention."

The Bloomberg Compliance Center provides authorized users with access to a suite of tools, including real-time monitoring, exception reporting, administration capabilities, chat room participation reports, communications Search and retrieval, and integration with Bloomberg Vault, a hosted compliance archiving and e-discovery application.

Access to these capabilities will help compliance professionals stay ahead of regulatory trends and monitor traders more effectively. "The most extreme example is clearing," Macdonald relates. "Before operations was only involved in active trading after the fact. Now, they are getting involved much earlier with SEFS and central clearing."

However given the volume of messaging, monitoring in real time is still not common across the industry. "The majority of [clients] take the downloads at the end of the day," Macdonald says. "We have the ability for real-time monitoring, but most compliance usage has been taking a download at the end of the day and reviewing it."

Finally, with multi-party char rooms at the center of the rate rigging scandals, Bloomberg is developing stronger reporting capabilities and permissioning tools that allow authorized firm administrators to better manage multi-party chat room participation.

The Bloomberg function to access the compliance center is CMPC "GO".

ABOUT THE AUTHOR
Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology.