Bloomberg's Chat-Based FX Trading Tool Attracts Citi, As Banks Reportedly Seek Chat Alternatives

Bloomberg said it unveiled Instant Bloomberg (IB) Dealing, a cost-effective chat-based platform for foreign exchange traders today garnering Citigroup as one of its major clients for the new functionality. But other reports say that Wall Street firms are building their own alternatives to Bloomberg’s chat service.

According to today’s release, Citigroup collaborated with Bloomberg to enhance IB Dealing and its adoption of the platform generated department wide cost savings by reducing the number of other trade communication systems used by their FX and emerging markets trading desks.

IB Dealing is already in use by more than 100 global banks across 46 countries for trade negotiation, execution and straight through processing (STP), according to the company. According to Bloomberg’s release, IB Dealing meets Citi's monitoring and compliance guidelines and is now used by their FX and emerging markets traders worldwide to securely send and receive trade and pricing information, internally and externally. The chat platform is part of the Bloomberg Professional service, which is also used across Citigroup's organization for data, news and analytics.

[For more on IB Dealing, read: Bloomberg Releases FX Chat Tool to Meet Compliance Demands, Gain Efficiencies .]

The news is certainly positive for Bloomberg in light of the recent snooping controversy over its news reporters gaining access to private data about client logins on the Bloomberg Professional service, and it shows how deeply engrained the Bloomberg messaging service is in the trading business.

However, several other news reports are circulating that say Wall Street firms are building an alternative chat service to Bloomberg, and that Citi is moving FX traders off of two of the internal-only Bloomberg chat rooms.

On Monday The New York Times reported that Wall Street firms are collaborating on developing their own chat platform to reduce their dependence on the Bloomberg terminal. Thomson Reuters and Markit are said to be working with several banks on developing an instant messaging service as a rival to their competitor Bloomberg. But the effort was said to be in the works months before clients began to complain that Bloomberg news reporters had access to private data.

According to a Dow Jones News story from May 16, Citi is moving FX traders off of the Bloomberg chat service. From Dow Jones:

Foreign exchange traders at Citigroup soon will move from Bloomberg LP's chat tool to the bank’s own system for some internal conversations among employees. The article cited unnamed sources familiar with Citi’s plans. The shift reportedly affects hundreds of traders globally, many of which are located in New York and London, said the Dow Jones report. But the move was in progress for sometime and wasn’t triggered by recent complaints by customers about data breaches at Bloomberg, according to Dow Jones.

Last Friday, United Press International’s UPI.com (citing a New York Post story) reported that Citigroup, Barclays, Goldman Sachs and a fourth major bank that requested anonymity are considering replacing Bloomberg's messaging and chat functions with in-house systems that would be regarded as more secure.

From UPI.com:

A Citigroup spokesman said the bank had been working on an in-house news and messaging system for two years and it was not connected to the recent revelations about Bloomberg reporters.

Citigroup, which appears to be considering a more drastic shift than the others, is also working on an in-house news service called CitiFX Wire.

While Citigroup is stating that it’s using the IB Dealing functionality and that that IB Dealing is meeting the bank’s monitoring and compliance guidelines and has reduced costs within its FX trading operations, conflicting reports in the media suggest the bank is also developing its own chat system.

It’s also possible that banks have other projects underway to develop their own internal chat systems to meet their own compliance needs.

In some cases, they are no doubt looking to reduce costs of paying Bloomberg’s $20,000 yearly subscription fee, which is the way to get the chat service. In most of the articles, banks are quoted with unnamed sources and they are careful to say they are not turning off their Bloomberg terminals. Given that Bloomberg has 315,000 subscribers around the globe, who exchange 200 million messages a day and have more than 15 million chats, the banks have a lot of work ahead of them.