25 million lines of Fortran

June 1, 2006

One of my colleagues is ex Bloomberg. He tells me there's only one thing I need to know about them: "25 million lines of Fortran !"  Apparently they have 1500 coders firefighting, just keeping that legacy monster alive.

And there's a good reason Bloomberg has those 1500 coders keeping those 25M lines of Fortran alive. Walk round any trading floor, and you'll see every trader has their Bloomberg terminal running. They're watching news tickers, checking Bloomberg email, and trading. In fixed income, Bloomberg is the leading liquidity pool for the buy side. If you're a money manager, and you need swaps, govies, credit, structured notes, whatever, you go to Bloomberg. Consequently, every trader on the sell side wants to get their quotes on to Bloomberg.

Apparently, Bloomberg has been trying to make the jump from Fortran to C++ for some time, but the Fortran codebase and the guys that maintain it are too entrenched. Cripes – in the oil industry we made that transition 15 years ago !  Anyway, the problems with rewriting existing products are well known.

Two factors make Bloomberg hard to deal with, from a front office techie point of view. One is the legacy code issue mentioned above. The other is their revenue model. All their income comes from charging users a grand a month for a Bloomberg terminal. As our colleagues in NY say: "you do the math!". How much does your trading floor pay Bloomberg every month ?  So because Bloomberg don't derive their revenue from dealers quoting on their system, and because they have a massive legacy codebase issue, and also because they seem to have tremedous staff churn, working with them can be massively frustrating.

Other ECNs are quite different [an ECN is an electronic communications network – shorthand for "online market" really]. Liffe is a paragon of virtue, for instance. Their CTSG group are quite simply excellent. They pick up the phone quickly, their staff aren't constantly churning, and they really know their stuff, both technically and in business terms. Andy Weaver deserves a special mention as being incredibly helpful and knowledgeable. Damn – now all you exchange connectivity guys are going to be bugging Andy !  But he deserves the credit. No wonder Euronext have adoped LiffeConnect as the platform for all their exchanges.

All these considerations lead me to ask, what could displace Bloomberg ? It will be incredibly hard to displace that liquidity pool, because traders follow the liquidity. But they've got a legacy and cultural millstone round their necks. And we've got to remember that they were once young and hungry, and they stole the crown from Reuters.

So let's get speculative. Really speculative. Could Bloomberg be displaced by a Web 2.0 player ?  The obvious candidate is Google. They have a lot of the elements for an ECN in place…

  • Google payments could be built out to handle clearing and settlement
  • The Google web toolkit could be used to build a trading terminal
  • Being a Google user already gives identity and authentication
  • Google finance already has the makings of a ticker plant and news service
  • A technical platform that scales, based on Linux, C++ and Python

What are the missing parts of the puzzle ?

  • Trustworthiness and creditworthiness. A trading counterparty must be trust and credit worthy. Ebay has gone some way to addressing trustworthiness. But something new would be necessary for a Web 2.0 solution to the question of establishing credit worthiness.
  • A trading model: indicative quotes & RFQs, or limit order book ?
  • Credible solutions for the many technical issues surrounding real time quoting and trading. You know – stale quotes, RFQ wire times – all that stuff

The trading model and real time issues are just technical problems. Google is smart enough to solve them.

But what would be the Web 2.0 solution to creditworthiness ?  In the world as we know it now, this problem is solved by brokers. They decentralise and federate the problem of creditworthiness. Not everyone can be a member of the exchange, so brokers take on the job of knowing their clients, holding their paper, judging when margin calls are necessary etc.

I don't know what the answer to this question will be. But I suspect the answer may tell us where online trading will be in 5 or 10 years.

19 Responses to “25 million lines of Fortran”

  1. Interesting!
    When transactions are instant, and tightly interwoven, where is the need for credit?

    If I have to send a package to you for your cash, and if the packaging is handled by “amazon fulfillment service” then my credit worthiness is not very relevant.

    My question is will there be transactions that will need creditworthyness in the future?

  2. etrading Says:

    Transactions aren’t instant – cash bond trades are typically settled T+2.

    And not all transactions are cash. Switches are paper for paper, with a cash adjustment. Swaps are a contract to exchange payment streams at (typically) six monthly intervals for (typically) N years. And futures have margin calls.

  3. […] One of the functions of brokers in financial markets is to resolve trust and credit issues. The ebay reputation system addresses trustworthiness, but not creditworthiness, which is a big outstanding issue for any new market model. Posted in books, trading, reading harris | […]

  4. The model for the future is to have transactions flowing through the existing counterparty network with trading protocals that facilitate the existing broker-dealer intermediated business model. That is, each party connects to his network of authorized counterparties and can bid, offer, and broker line-items like in real-life. Certain types of transactions will be automated (e.g., brokerage activity like on BondDesk, or connectivity to liquidity pools in general) while other will require manual input. I think an interesting question is whether such a system will simply evolve overtime as connectivity increases and order management systems extend functionality, and/or will major market participants (perhaps spurred on by a visionary technology giant such as Google) provide a unified platform. An advanced system using this business model was built during the tech bubble, but didn’t get traction and was moth-balled. See http://www.xbond.com.


    if they have 1,500 fortran programmers, then why can’t someone with over a decade of fortran get to first base with these guys?

    is there a trick? please post to whom to send a resume

  6. […] 14, 2009 I’ve written several times before about Bloomberg, and why they’re such a blot on the etrading landscape. Now we’re in a recession and Bloomberg’s clients all want to […]

  7. […] Some time ago I blogged about how Google might provide some of what Bloomberg currently provides for traders. Another part of the picture that I didn’t mention then is analytics. In Bloomberg’s book he describes how they started out with market data in direct competition with Reuters, then added news and email. Another big value add was price histories, analytics and charting. Wolfram Alpha’s scope seems boundless, so a fortiori it could offer something similar. Certainly, it’s reported as offering charts in its results. To me, the crucial  questions are… […]

  8. Neuromancer Says:

    Just how old are you son 🙂 FORTRAN is used because it works and its flipping fast.

  9. Aubrey Kohn Says:

    Actually, there is almost no Fortran left. C++, JavaScript, and increasingly Python.

    • etrading Says:

      Interesting. C++, Python and JS is a mix I like 😉 Does BBG still have the no rehire rule?

      • alfredo Says:

        The problem with the BBG C++ is the mighty Lakos doctrine of weird standard-looking but not actually standards compliant libs. They have close approximations to std::string and others but break it for reasons, like they can.
        Interested to hear more about the no rehire rule – not interested in going back, but is it legal?

      • etrading Says:

        I hired a couple of BBGers when I worked at a large UK rates dealer bank 2004-10. One told me about the 25M lines. The other told me about the no rehire rule. IIRC Bloomberg himself explains and justifies the rule in his book. From Ch 8: Management 101: “I’ve long been criticised for refusing to attend going away parties or to wish departing employees good luck… Why should I?…I long ago declared we would never rehire anyone who quite for other than family reasons.” No doubt legal in the US. But you make a good point. Is it legal in the UK or wider EU?

  10. […] 25 million lines of Fortran – One of my colleagues is ex Bloomberg . He tells me there's only one thing I need to know about them: "25 million lines of Fortran !" Apparently they have 1500… […]

  11. […] recent post (which is actually a re-blog from a 2006 article by John Sullivan) unearths the fact that Bloomberg, a multi-billion dollar financial software, data […]

  12. […] * Bloomberg Terminals run on 25mm lines of Fortran. (Courtesy: Coding the Markets) […]

  13. […] fintech community has circled around a recent post (which is actually a re-blog from a 2006 article by John Sullivan) which unearths the fact that Bloomberg, a multi-billion dollar financial software, […]

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