1 12713 revised bloomberg whitelpaper open symbology

8/6/2019 1 12713 Revised Bloomberg Whitelpaper Open Symbology

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EXECUTIVE SUMMARY

In an age o rapid transormation and increasing specialization,market needs continue to grow or applications that cant beserved eciently by larger organizations. Services providedby companies in this area enhance the value o market data,providing solutions such as enterprise data management,integration, portolio management and risk management toname just a ew.

Companies that serve the market at the highest level requentlychoose to partner with Bloomberg. Registered Bloombergpartners complete a rigorous application process thatensures a value-added oering and uses data in a mannerthat is compliant with Bloomberg, exchanges and otherdata contributors.

Even as third parties have improved the ability o rms to dobusiness, the evolution o a global nancial trading network hasdrawn attention to some o the most prominent obstacles thatremain in the trading lie cycle. The Internets use o commonprotocols demonstrates how the ree movement o inormationcreates innovative products and services in all sectors o theeconomy, tearing some down and building entirely new onesin their place.

Conversely, the nancial services industry exchangesinormation on securities using more than 55 symbologiesmaintained by agencies and companies around the world.What began in the mid-1960s as a movement to ease theexchange o inormation has grown into something entirelydierent. Proprietary symbologies create barriers by imposingees and limiting usage in ways that discourage connectivitybetween systems. Throughout the trading lie cycle, the needto map a securitys inormation between incompatiblesymbologies incurs added risks and maintenance costs.

While every market participant eels the expense o proprietaryprotocols, third-party providers bear an exceptional burden.Working with a wide variety o clients, third parties maintainmappings or a wider range o protocols than those neededor any one client and must continually adapt their systems toaccommodate the unique data exchange requirements o everynew client. Reporting and auditing requirements or the use

o proprietary symbologies add to costs. Adoption o an opensymbology would reduce or eliminate many o these expenses,permitting these rms to bring clients on board more rapidly;it would also let third parties use any savings to develop new,innovative products.

Today, the principles o openness that led to the rapid adoptiono Internet-based systems and technologies are beginning totake root in the nancial services industry. Third parties nowhave an option to build new systems around the BloombergGlobal ID (BBGID), an open symbology system o identiersor securities. Bloomberg Open Symbology enables

companies to use BBGID or any purpose in internal orexternally acing systems, with no licensing ees or use.Bloomberg believes that this policy is in line with precedentsin other industries that have reinvented themselves toprepare or new opportunities.

02//OPEN SYMBOLOGY & MARKET IDENTIFIERS

Third-Party Providers BeneftFrom Bloomberg Open Symbology

Adoption o an open symbology would reduceor eliminate many o these expenses, permittingthese rms to bring clients on board morerapidly; it would also let third parties use anysavings to develop new, innovative products.

This paper explores how open symbology addresses theissues third parties ace when managing multiple symbologiesIt also identies opportunities presented to those whorecognize the game-changing value o this initiative.

SYMBOLOGYS MOUNTING COSTS

The use o symbologies in modern trading has successullyaddressed many issues and led to new levels o automationand prots. Originally designed or stand-alone systems,the use o diering symbologies in todays interconnectedcomputer systems has drawn attention to the signicant costsand operational risks involved in exchanging inormationbetween systems.

Michael Blakley, director o product management at ImagineSotware, a third-party developer o ront- to back-ocereal-time risk and portolio management systems, says thecurrent state o maintaining many dierent symbology sets isbecoming unworkable. There are about a dozen steps inthe lie cycle o a trade that depend on an unambiguousdescription o a security. But someone may know an issue asIBM ABC, and the next step in the process reers to it asCUSIP 123. Thats an opportunity or ailure, says Blakley.And thats just one potential ailure point. There aremany others.

Continuous mapping is a cost that many third-party providersrecognize all too well, maintains Arnaud de Chavagnac,business development ocer at Murex. Today our clients needto use many dierent identiers because there are dierencesat the exchange level and among dierent vendors at manypoints in the lie cycle o a transaction. They have to maintainmany translations between these dierent sets o identiers.This has a very high cost because many o our clients must dothis mapping or themselves.

While transaction ailure rates have allen dramatically withautomated processing, the increase in the volume andvelocity o transactions raises both the chances and costs


3/703//OPEN SYMBOLOGY & MARKET IDENTIFIERS

o any ailures. Nobody likes to ail on the trade, saysBlakley. Bad symbology can lead directly to severe losses.Real losses. This isnt just a loss o eciency or loss o aneconomy o scale. This is real money.

A ew prominent symbology systems have achieved enoughmarket penetration and cover enough asset classes to beconsidered an industry standard. However, the closed natureand strict licensing requirements o these symbologies preventthem rom serving as an open industry standard.

Licensing and reporting costs are keenly elt by thirdparties who must oten maintain a large number osymbologies in order to work with a range o clients.De Chavagnac observes that third parties have little choicein the matter. Bringing on a new client usually means we

must adapt our platorm, he says. We have to change ourplatorm to support as many dierent symbologies aspossible, which is, o course, an added cost or us.

Its a model that Blakley eels has become more cumbersomeand less useul as symbology owners increase reportingrequirements and enorcement mechanisms. With closedsymbologies, you have to license, you have to disclose youruse, and you have to reveal your clients rom a third-partyperspective. The symbology owners demand auditing access,and that reporting and auditing is expensive.

A BETTER SYMBOLOGY

In mid-2010, Bloomberg created BBGID symbols or more

than 36 million securities. Bloomberg placed its system osecurity identiers, including the recently created BBGID, intothe public domain, creating an open symbology system thatany company could adopt and use or any purpose.

This advance enables securities rms worldwide to tear downone o the last remaining, and signicant, obstacles to the reefow o inormation and realize the promise o ully automated,straight-through processing.

Bloomberg Chairman Peter Grauer sees the move to anopen system as a natural progression. The need or opensymbology, o creating identiers that are readily available tocapital markets around the world, is another step in creatingadditional transparency and leveling the playing eld aroundthe world, he says.

Cristiane Coutinho,symbology product manager atBloomberg, says Bloombergs approach is to ensure thatthis symbology system is comprehensive. The rst phaseconsisted o building a robust product, a symbology systemthat was secure and extensible, able to accommodate awide range o existing asset classes but also able toembrace growth.

The second phase, Coutinho says, is to achieve the widestpossible participation in this symbology. That includes critical

players such as market makers, exchanges and regulators.Third parties, says Coutinho, are especially important.

These companies work with so many dierent clients, theirparticipation is essential. We want to reach out to all third-partyvendors, those weve worked with in the past and thosewe havent.

BEYOND THE OBVIOUS BENEFITS

Bloomberg Open Symbology oers companies many avenuesto savings. Eliminating perpetual licensing ees along withreporting and auditing requirements will be signicant.Third-party partners project that signicant savings also will beound in the client onboarding process. For example, buildingand maintaining mapping tables or each new client is aconsiderable expense that will be reduced or eliminated withthe use o a common symbology.

As an early adopter, GoldenSource Corp., an enterprise datamanagement company, has attracted notice rom clients andprospects or its aggressive deployment o Bloomberg OpenSymbology. Volker Lainer, vice president o productmanagement at GoldenSource, observes that the early movehas led to new sales opportunities. Being a rst mover hasgenerated inquiries rom the market on what were doing withregard to Bloombergs new Open Symbology, says Lainer.Weve also ound that our early adoption o Open Symbologyhas made it much easier and a greater incentive or our clientsto adopt and use.

Similarly, Sebastian Meyer, head o data management atCMA, sees signicant market eciencies in the ability to moreeasily communicate with clients using a common identier.The licensing cost o the various identiers in the market hasa direct impact on the cost borne by our clients, both in termso the products and services they buy and the associated datamapping and integration costs. Bloombergs Open Symbologyidentiers would level the playing eld and reduce barriers toentry by eliminating much o this expense. This, in turn, wouldresult in more ecient data integration processes and opennew and exciting product development possibilities orcompanies like CMA.

The opportunity to reduce licensing costs and eliminatemistakes is a powerul motivator to adopt an open symbology.The resulting savings will allow rms to redirect resources thatcurrently maintain maps and tables to the development o newproducts and services that provide real value or clients. Inaddition, using Bloombergs Open Symbology, third partiescan provide more coverage across their systems. Adopting anopen symbology changes the value proposition a rm canoer. It also eliminates the common obstacle o Do yousupport this symbology? allowing companies to promotetheir core competencies instead o the number o symbologysets they support.




Third-party providers such as Imagine Sotware also believethat once an open symbology is widely adopted, it will reethird parties to think about entirely new service classes andoerings that had been either unworkable or inecient in amixed-symbology environment. Providing niche services suchas a secondary source o risk data is one example o what willalmost certainly be protable when companies do not needto spend six months building symbology bridges betweenthird-party providers and their clients.

modules through its standard connection products. This step,and uture extensions, will make it easier or our mutual clientsto preload or augment their environments with the ull set oBloomberg identiers.

Adopting Bloomberg identiers is no dierent or third partiesthan or any other rm. Steps such as adding elds andmapping exercises are the same as or adopting any newsymbology; Coutinho maintains that Bloomberg is ready tohelp. Were happy to work with all third parties who arewilling to add the new identier BBGID as a valid eld in theirsystems. BBGID represents an important opportunity orthe market.

Companies with ewer than 5,000 securities can downloadidentiers directly rom Bloombergs Open Symbology site

(bsym.bloomberg.com). Many companies, however, have largeruniverses and ongoing requirements a commitment thatBloomberg is well able to handle. Bloomberg is prepared toprovide data in the same symbology les sent over data licenseeeds, a set that uniquely identies about 36 million securities,divided by asset classes. All data sets are retrievable rom anFTP account.

NOW, AN OPEN SYMBOLOGY

As more acets o trading move to automated processes, thelimitations imposed by a multitude o security identiers havebecome close to insurmountable, making a compelling caseor an open symbology. Third parties, in particular, are coming

to recognize the strategic, nancial and operational impact thatmaintaining so many dierent systems imposes.

Bloomberg is answering this need with the BBGID OpenSymbology, one that oers all market participants a reelyavailable, comprehensive, secure and fexible system o globalidentiers. This initiative enables third parties to abandonclosed systems, eliminate costly mapping processes,streamline the process o working with clients and reduceoperational risk.

The benets o Bloomberg Open Symbology are very similarto the ones we hope to deliver to our own clients when theyimplement Murex, says de Chavagnac. The objectives oour MXpress implementation solution are to reduceimplementation and maintenance cost, to accelerate the time tomarket and to improve the saety o the project. As this initiativegrows, we will be encouraging our customers to use it in anyexchanges where they use the MX.3 system.

Third parties that embrace this development will reethemselves to spend more time developing and promotingthe competencies that make them unique; they will alsoree up the resources to und more orward-looking,alpha-generating initiatives.


Adopting an open symbology changes the valueproposition a rm can oer. It also eliminatesthe common obstacle o Do you support this

symbology? allowing companies to promotetheir core competencies instead o the numbero symbology sets they support.

As another rst adopter, Volante Technologies is usingBloomberg Open Symbology to simpliy internal data eedand reerence data implementations. Mark Chapman,sales director or Volante, believes Open Symbology is acomponent that has proven its worth today and will continueto grow in value. We accelerate the data integration andtransormation process. In some implementations, clients tellus we have saved them up to 80 percent in development eort.

Bloomberg Open Symbology is growing in importance in ourability to achieve these kinds o savings or our clients.

IMPLEMENTATION MADE EASY

While the adoption process is already relatively painless,Bloomberg is taking steps to urther smooth it and providethe support all stakeholders will require to successully usethe symbology.

Coutinho sees an ongoing commitment rom Bloomberg ascritical or market uptake I we dont provide the supportthat companies and third parties need to rapidly adopt this, itbecomes just another identier in the marketplace. We have

heard those concerns rom our customers, who ask whetherwe will be able to provide the support needed, especially tothe third-party providers they work with. Our answer is anunqualied Yes.

Third-party providers have been implementing the newBloomberg Open Symbology standard on a step-by-stepbasis. Lainer o GoldenSource says that his rm has alreadycompleted several phases, which include mapping BBGID onthe exchange level or all Bloomberg back-oce and extended




Third parties that embrace this developmentwill ree themselves to spend more timedeveloping and promoting the competenciesthat make them unique; they will also ree upthe resources to und more orward-looking,alpha-generating initiatives.

Moving the industry to an open symbology is an evolutionaryprocess, one requiring an understanding that investmentsmade today oer signicant long-term gains. CMAs Meyerindicates that this is an investment they are willing to make,as it will benet the market as a whole.

The move to open symbology promises to eliminate asignicant barrier to the fow o inormation, streamlining the

ability o third parties to onboard and serve customers moreeectively. It also creates an environment where rms caninvest their energy and resources to create new, innovativeproducts and services, a development that is sure to play tothe strengths and interests o third parties.

As clients take it up, this will ree up our time to ocus onsolving other important problems aced by our clients in theOTC space. Those benets come later in the process, Meyeracknowledges, but this should be considered as a long-termstrategic play by the market. Adopting the new Bloombergsymbology appears to be a no-brainer. As a greaterpercentage o the market standardizes on Bloombergidentiers, its an investment we are convinced will growin value.

The ollowing table in this paper provides inormation about third-parties using Open Symbology.



Company Name Primary Services Provided Open Symbology Analysis Next Steps Contact Inormation

Provider o real-time investmentmanagement solutions worldwide.The fagship product, the ImagineTrading System, is a cross-asset,multi-strategy portolio andrisk-management solution availableas a cloud-based, vendor-managedASP solution or as an enterpriseapplication.

Provider o data services solutionaccelerators, Volante speeds up thedata integration and transormationprocess; clients have indicated thatthe company has saved them up to80% in development eort.

Imagine expects the BloombergOpen Symbology to dramaticallysimpliy its automated trade links byreducing the complexity o inor-mation its clients must provide tocorrectly identiy securities. Imaginealso anticipates improvement in itsclient support services, since it willno longer have to translate rom oneset o identiers to another beorebeing able to respond to clients.

Volante supports open symbologyand can map this to any internalclient standard simpliying datafow to client applications. Volanteprovides data tools that help isolatedownstream applications rom

change and simpliy data eed map-ping, integration and transormationto internal systems.

Once Imagine hasully mapped itsdata to Bloombergidentiers andhas automatedthat process toaccount or secu-rity additions andmodications, it willocus on provid-ing its clients withmethods to usewhatever identierthey preer in theirdaily workfow.

None o thiswould be possiblewithout the com-mon denominatorthat the BBGIDprovides.

Volante will con-tinue to help clientsuse BloombergOpen Symbologyto simpliy theirinternal data eed

or reerence dataimplementations.

Main sales contact:

212-317-7600Fax: 212-317-7601

Corporate website:www.imaginesotware.com

Mark ChapmanSales Director, EMEAVolante Technologies Inc.

9 Devonshire SquareLondon, EC2M 4YF

+44(0) 779 503 1851+44(0) 203 178 2970

Corporate website:www.volantetech.com

Imagine Sotware

Volante

Technologies

CMA is a leading source o inde-pendent data on the OTC markets.Thousands o individuals in nancialinstitutions worldwide rely daily onthe companys data and technologyto provide the clear, reliable pricingand related OTC inormation theyrequire. Clients range rom some o

the largest investment banks andasset managers in the worldto boutique hedge unds andrisk-management rms.

Bloombergs Open Symbologyinitiative should result in a moreecient marketplace by removinga key challenge many marketparticipants ace.

CMA will addBloombergsidentiers to itsproducts to helpclients streamlinetheir data integra-tion processes.

5th FloorWatling House33 Cannon Street

LondonEC4M 5SBUnited Kingdom

+ 44 (0) 207 796 5100

Fax: + 44 (0) 207 236 19

Corporate website:[email protected]

CMA

Third-Party Providers Using Open Symbology


7/72011 Bloomberg Finance L.P. All rights reserved. 43163753 041

bloomberg.com/enterprise New York+1 212 318 2000

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+44 20 7330 7500

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+ 49 69 9204 1210

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Hong Kong

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Sao Paulo

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Singapore

+65 6212 1000

Tokyo

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06//OPEN SYMBOLOGY & MARKET IDENTIFIERS

To learn more about Bloomberg Enterprise Products & Solutions (EPS), e-mail the EPS team at [email protected] visitbloomberg.com/enterprise

Company Name Primary Services Provided Open Symbology Analysis Next Steps Contact Inormation

GoldenSource provides an inte-grated enterprise data management(EDM) platorm or the securi-ties and investment managementindustry. Customers benet rombetter management, storage anddistribution o their data company-wide. Trading, risk management andcompliance, settlement, portolioaccounting and other ront-, middle-and back-oce unctions all benetrom improved data management.

By partnering with Bloomberg,GoldenSource enables itscustomers to eciently adopt andutilize the open symbology withintheir own enterprises.

On the sales ront, being arst-mover on this has allowedGoldenSource to respond switlyand positively to specic inquiriesrom the market.

To date,GoldenSource has:

MappedID_BB_GLOBALon exchange levelor all BBBackOce &EXTendedmodules that itsupports throughstandard connec-tion products.

Enabled supportor BB Per Se-

curity access orID_BB_GLOBAL.

Next steps include:

Introducing theCOMPOSITE_ID_BB_GLOBAL.

Handling UNDL_ID_BB_GLOBALwhen it becomesgenerally available.

SupportingBYSM les.

Main sales contact:

212-798-7100

[email protected]

Global Headquarters:22 Cortland StreetNew York, NY 10007

Corporate website:www.thegoldensource.com

GoldenSource

Murex is a recognized leader in thedevelopment o an enterprisesotware solution that covers theareas o trading, risk managementand global processing or capitalmarkets. The company introducedthe MXpress implementationsolution in late 2008. The solutioncombines pre-packaged businesscontent with an adapted implemen-tation methodology that leveragesthe pre-packaged content throughiterative and collaborative imple-mentation processes betweenMurex, its clients and the integra-tors. Customers benet rom lower

implementation costs, reducedimplementation risk, and asterimplementations.

Open symbology initiatives bringgreater transparency to communica-tions with clients. Today, the lacko a common identier or someinstrument types makes commu-nicating and understanding clientneeds more dicult. These initiativeslower costs resulting rom theneed to develop a data storageapplication or each identier, whilesimpliying or even removing theneed or mapping.

Murex will beconducting a ea-sibility study aboutthe integration oopen symbology inits oer to new orexisting customers.

Arnaud de Chavagnac,Business Development:arnaud.dechavagnac@mure

+ 33 1 4405 3200

Corporate website:www.murex.com

Murex

Third-Party Providers Using Open Symbology
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1 12713 revised bloomberg whitelpaper open symbology

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