Bloomberg Trading System, boasting only modest success in the Canadian marketplace, is getting ready to descend on our Northern neighbors in a matter of months. While buy-side firms like TD Asset Management are currently implementing Bloomberg as their fixed-income trading system, Bloomberg has actually laid low for the past year, awaiting a new pricing engine and "point-and-click" GUI, before it begins its full-scale onslaught in the first quarter of next year.
"When we go back to Canada to sell, we will be armed with the pricing engine and a whole new front-end," beams Bob Boylan, manager of Bloomberg's fixed-income trading system. He explains that the major impediment to the success of the Bloomberg Trading System lay in the lack of pricing mechanism, a necessary component for sell-side dealers.
But, if the installation at TD Asset Management is any indication, Bloomberg has quite a bit of work to do for the buy side as well, especially concerning the pricing and indexing of Canadian securities. TDAM, one of the five largest money managers in Canada with about $35 billion in assets, first signed with Bloomberg earlier this year for fixed-income trading, and is slowly bringing the system online for its various divisions, but has encountered difficulties in creating a true straight-through processing environment.
"Not all the STP components are in place," Michael Thorfinnson, TDAM's COO, explains. "Some securities need to be identified a little differently, some of the rating systems are different, and some of the pricing is a little different. It disrupts STP because it is difficult to cross reference security profiles between the accounting systems and Bloomberg."
Thorfinnson says that his staff is working with Bloomberg on creating a Canada-specific security profile, but adds that the installation "has been rocky."
TDAM needs to integrate the Bloomberg Trading System with two different portfolio accounting systems on the back-end-Financial Models Co.'s Pacer and Mpower-as well as a modeling system by Wilshire & Associates. The firm is phasing it in slowly to its money managers and traders, with components of its Portfolio Management and Research department receiving it first. For now, trade tickets are automatically faxed to both the back office as well as its custodians, but Thorfinnson admits that this process will be replaced as soon as possible.
"This process is part of our testing phase, but eventually it will be done away with," Thorfinnson explains, adding that a lot of development has been frozen until after the New Year.
Boylan says that there have been some problems with the TDAM installation, but largely a result of the firm's specific needs, rather than that of the Canadian buy-side community. "Some of the money market equivalent yields they were trading were short-term Canada issues, and they had issues with rounding," Boylan explains. "The prices we were sending to the back office were not prices they wanted to see. We were sending the market convention, which is to round the number, but that's not what they wanted. We called the dealers on the Street, and they agreed that we had been doing it according to the market convention, but the way TD wanted it was actually the correct way."
Boylan couldn't comment further on the TDAM installation, explaining that he is not the person who has dealt with the firm directly.