The doomsday device in the war of the trading terminals


The doomsday device in the war of the trading terminals by Sverre Rørvik Nilsen aka finansakrobat

Two simple words could radically change the whole power dynamics in the huge financial software industry. They are “Federated Chat”.

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In the past few months, the financial software sector has suffered something of a disruption. Namely the very powerful, very expensive Bloomberg platforms came under criticism in relation to journalists reportedly snooping on customers to get stories.

And not just any stories. One of the scoops by the people at Bloomberg was the outing of Bruno Iksil as the infamous London Whale. All done by monitoring terminal logins.

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Considering how high banks value security, it’s no surprise that the security breach has caused banks and Bloomberg competitors to scramble to make a product that can take on Bloomberg’s possibly most important feature: the chat.

Just days after the first scandal broke earlier this year, it was already clear that Markit and a few partners was working on a open source chatting program called Federated Chat.

Well. It’s become a big thing.

The partner list has become long: Bank of America Merrill Lynch, Credit Suisse, Citigroup, JPMorgan Chase, CFI Group having just joined the alliance with the original partners Deutsche Bank, Goldman Sachs, Morgan Stanley and Thomson Reuters.

The 12 registered partners might be joined by about 12 more soon and there is reportedly several hundred more in the pipeline, according to Markit.

This is probably something along the lines of 3/4th of Bloomberg’s client list that could be free to use any chatting service they would like, considering that Federated Chat is an open solution any provider can feed into.

The new service has three main features: A phone book (Markit Directory), a chat platform that allows any XMPP and SIP instant messanging platform (like Thomson Reuters Eikon Messenger, Microsoft Lync, Cisco Jabber) to talk amongst eachother and finally a way to feed these chats into most workflows and platforms.

The global chat in the Bloomberg and Reuters platforms are a big selling point for the high priced services. Considering how strong the partners are, it is very likely that the market leader Bloomberg will seeing some cancellations in the comings months, especially from sell side firms, that rely on the chatting service but often little more.

Bloomberg currently has 315,000 subscribers each paying in excess of $20,000/year for the platform, while Thomson Reuters Eikon has 190,000 subscribers.

The war of the terminals is not over yet.

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This was previously published on Inside Investing at the CFA Institute.

Copyright © 2008–2014 Sverre Rørvik Nilsen aka finansakrobat
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Sverre is a financial entrepreneur working out of Oslo, Norway. He is running two financial startups. One is a trading platform, the other a newswire. He also consults for a number of different clients. He has a weekly webshow alongside Howard Lindzon at Stocktwits.

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

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The CFA Institute Enterprising Investor blog is a forum for delivering practical analysis of current issues in finance and investing. The blog is written for investment professionals and aims to elevate the most interesting and compelling commentary and perspectives from the sea of opinions and research; to contextualize the many educational offerings of CFA Institute; and to provoke debate and an exchange of ideas among serious investment practitioners about topics of the day. The CFA Institute Market Integrity Insights blog is a forum for providing analysis and commentary on the integrity of global capital markets. From regulatory reform and corporate governance to insider trading and financial reporting, our content experts explore timely issues in financial regulation and other issues affecting the global capital markets. In addition, CFA Institute publishes a variety of blogs covering our live events programming around the world, including the CFA Institute Annual Conference, now in its 65th year; the European Investment Conference; the Middle East Investment Conference; and the Asia Pacific Investment Conference. Please note that the content of these blogs should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.
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