|From Vitamin Press|
BY PETER EAVIS AND BEN PROTESS
Long thought of as a company that serves the needs of Wall Street firms, Bloomberg L.P. is quietly becoming more like them, expanding recently into businesses that have been the domain of the largest banks.
This relatively unheralded expansion by Bloomberg helps explain Wall Street’s consternation at recent disclosures that some customer data was freely available to reporters and others inside the company. The fear inside banks is that Bloomberg could use that data not only to write negative reports but also to become a better competitor.
In recent years, Bloomberg has offered new ways to trade stocks, bonds and more complicated financial products, potentially taking revenue from subscribers to the ubiquitous Bloomberg desktop terminals, which contain a vast store of market data. The expansion is even leading Bloomberg to offer traditional Wall Street services like wealth management and research.
Here's a trading rule that would have been a moneymaker for most of the last generation: Watch what stocks the Goldman Sachs guys keep looking up on their Bloomberg Terminals and buy those. Watch what stocks the Citi guys keep looking up and sell those. Oh, and keep an eye on what the boys at Berkshire Hathaway are looking up for Warren and Charlie.
... Bloomberg executives apologized after Goldman Sachs and other banks complained that Bloomberg’s journalists were able to gain access to information about when customers logged in and what functions they were using.
Journalists are nobodies.
People close to the company said Tuesday that the same data had been accessible to employees in its trading division, known as Bloomberg Tradebook,
Uh-oh. Traders aren't nobodies.
but that the company had cut off that access recently.
So, nothing to worry about.
In fact, better not offend Bloomberg by worrying in public at all. Don't let anybody connect your name to your worries. After all, it's not like the owner of Bloomberg controls a 43,000-man armed and badged security force known as the NYPD. It's not like the Oscar-winning documentary Inside Job didn't lay out an entire strategy for how a police and prosecutorial force could put top Wall Streeters in jail: arrest call girls for cocaine possession, get them to roll over in return for suspended sentences on clients who are traders at the targeted firm, then get the traders to roll over on the bosses by spilling the dirt on high-level financial shenanigans. (Of course, people whom Wall Street doesn't like, such as Elliot Spitzer, Julian Assange, and Dominque Strauss-Kahn, seem to get arrested in sex scandals themselves a lot.)
The criticism of Bloomberg has been caused in part by Wall Street’s desire to push down the steep $20,000 yearly price tag for a Bloomberg terminal. Many bankers say they have little choice but to pay if they want to communicate with their customers, most of whom are on Bloomberg’s communication networks.
Bloomberg provides mindblowing 22nd Century technologies like, I'm guessing here, email, chat, text messaging, instant messaging, bulletin boards, file sharing, phone calls, telegrams, semaphore, smoke signals, piles of rocks beside the trail, notches carved in trees, and so forth. Where else could Goldman Sachs get all that?
Remember what I said about how in Econ 101 they tell you about the virtues of "perfect competition" using the example of a wheat farmer in South Dakota? Well, you don't want to be a wheat farmer in South Dakota. You want to be Michael Bloomberg, monopolizing the provision of technologically simple digital services to the world's richest customers.
Mr. Tierney has helped Tradebook win a greater market share in stocks and options and has developed new products. Last fall, it introduced Bloomberg Pool, which serves as a competitor to Wall Street’s dark pools, where stock trades are executed away from the public exchanges.
Okay, that should be the title of director J.C. Chandor's follow up to Margin Call. He should call his next Wall Street movie Dark Pool. I don't know what Dark Pool means, but I'd go see it.
The funny thing about Wall Street guys are that they have so much testosterone-driven arrogance that they love using sinister sounding names -- "dark pool" -- for whatever it is they are trying to put over on the rest of us. The unfunny thing is that the rest of us are so scared of the Wall Street guys that we let them rub our noses in it like this.
Like other Wall Street firms, Bloomberg has not been afraid to resort to legal muscle to protect its swaps business. It has hired a top Washington lawyer, Eugene Scalia, to challenge rules for the swaps exchanges that were proposed by the Commodity Futures Trading Commission.
Scalia ... That name rings a bell. I've heard the name "Scalia" before in legal contexts. Oh ... Eugene Scalia is Antonin Scalia's son.