March 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 cut back on those grand a month terminals. More and more I hear folk say “why pay a grand a month for an email account ?”
Bloomberg’s difficulties should be opportunities for those involved in proprietary single dealer channels. The advantages of single dealer channels for dealers are obvious. And they can be attractive to clients too – they’re free to clients, and can carry innovative offerings that the multi dealer ECNs aren’t nimble enough for. But what they lack, by their very nature, is the direct real time price competition of the multi dealer RFQ.
Could there be some form of mitigation for this handicap ? Two avenues seem possible. Firstly the moribund LiquidityHub consortium. The tech infrastructure is in place for composite prices for a whole range of rate products. The consortium could agree to allow members to republish LQH composite price on their single dealer channels. Secondly, vendor driven aggregation. Single dealer channels are now common enough that vendors have sprung up to service the sector: Caplin & Lightstreamer for instance. The vendors themselves could perform the price aggregation in portals. Dealers could reuse vendor supplied aggregate or composite prices to make single dealer channel tickets MiFID compliant for the buy side by enriching them with the portal prices.