Nine Wall Street firms have been actively involved in creating an alternative to one of Bloomberg LP's most widely used programs, its chat messaging network, people briefed on the effort said.
The development predates the controversy over Bloomberg journalists being given access to sensitive customer information, but it could spell trouble for Bloomberg because the company's chat program is one of the main selling points for its $20,000-a-year terminals. Banks have been looking for ways to lessen their reliance on the terminals and lower their payments to Bloomberg.
Two competitors to Bloomberg - Thomson Reuters and Markit - have already signed an agreement to develop the technology, according to people involved in the deal who requested anonymity because the negotiations were not complete.
Reuters and Markit are said to be working in cooperation with banks including Barclays, Citigroup and JPMorgan Chase, the people said. Deutsche Bank and Goldman Sachs have been even more involved, agreeing to use the service when it is introduced. The program would allow bank employees to talk to business partners at other firms in the way that they do now on the closed Bloomberg network. Such chat systems are vital to everyday work on Wall Street, like communicating with competitors and clients to work out prices for trades.
One banker involved in the conversation said: "The chat application within the Bloomberg terminal has become a very powerful tool. If that didn't exist, we'd have a substantially lower need for terminals than we do."
FRUSTRATION WITH BLOOMBERG'S DOMINANCE
The effort to create a new messaging network was in motion months before Bloomberg's customers began to complain about the confidential information available to Bloomberg journalists. Both developments underscore the frustration on Wall Street with the powerful place that Bloomberg occupies in the financial infrastructure, and the lack of alternatives to it expensive terminals.
"If they are unhappy about the pricing, if they are unhappy about the fact that they are locked in, any alternative would be better," said Sang Lee, co-founder of the financial consulting firm Aite Group. "The bigger challenge everyone faces is, 'I wish I could get beyond my Bloomberg community and talk to others."'
There are already countless messaging services, but Bloomberg's has been around for years and is considered essential because the Wall Street banks and their customers are all on it. The service is so valuable to Bloomberg because access is available only to people who have a terminal.
The new chat program will be available to anyone in the financial services industry, people involved in the deal said. It would build on Reuters' chat program but add users from Deutsche Bank, Goldman and Markit, a data firm owned by many Wall Street banks.
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