Commodities Future Trading Commission (CFTC) might regulate the relationship between Bloomberg’s trading business on its terminals and its news operation.
CFTC Commissioner Bart Chilton explained during Thursday at CNBC’s Squawk Box program that if trading arm may have an effect on the news arm, CFTC should be able to look at them.
There was this interesting story last week, whereby Bloomberg journalists used privileged access provided by their company to get information from the Bloomberg accounts of certain clients.
Bloomberg journalists were able to obtain information of some of their clients in order to produce certain articles or check certain facts. Bloomberg did acknowledge that there is a lack of Chinese wall in between the “trading/terminal platform” and “financial news” divisions within the company.
Goldman Sachs Group, Inc. (NYSE:GS) was the first to flag the matter to Bloomberg after a news service reporter in Hong Kong asked the bank about a partner’s employment status, noting the person had not logged on in some time. Goldman found that journalists had access to far more information than the bank had known, and argued the information was sensitive and should not be seen by reporters.
Bloomberg’s clients encompasses almost the entire financial landscape starting from world’s big banks, top hedge funds besides regulators like FED, ECB and other central banks.
Obviously one can understand Bloomberg clients are not happy to learn that Bloomberg’s journalists have a way to monitor a lot of information, including some private.
Bloomberg facilitates trillions of dollars of trading every year through its terminals.
Yesterday CFTC approved new derivatives rules required under the 2010 Dodd-Frank financial reform law. They dictate how buyers and sellers must enter contracts, including credit-default swaps and interest-rate swaps, in the $633 trillion market.
CFTC Regulating Electronic Platforms
During his CNBC interview, Bart Chilton indicated that CFTC is going to regulate these electronic platforms and hoped Bloomberg would register with CFTC.
Elaborating further, CFTC Commissioner indicated that once Bloomberg is registered with CFTC, the commission will be able to ascertain whether there is correlation between news and trading and whether the correlation would impact the prices.
CFTC Commissioner feels everyone including small traders to large banks need protection from news organizations like Bloomberg if the later is involved in mining its client’s data.