8
$\begingroup$

In my project, we have two version of systems. One version is for derivative trades and other version is for bond trades.For derivatives we get the market data from Reuters and for Bonds we are getting the data from Bloomberg. Currently we are planning to upgrade both version systems and migrate to a single version. I am analyzing the difference between Bloomberg and Reuters market data. To start with,i am just trying to find out whether there is any difference between these 2 sources in terms of market feed.Can we have just one real time feed, or should we have both the feeds. If only one real time feed, which one we should go with. Does both provide ISIN download information?

In terms of cost reduction, is it possible to have the market data from one source (either Bloomberg or Reuter) for all types of trades.Please share your thoughts on this.

$\endgroup$
9
$\begingroup$

There are a few things to consider:

Price

On average Thomson Reuters is known to be less costly than Bloomberg. One thing to consider when looking to save money is that most vendors will use some kind of ladder pricing. So if you cannot get rid of either Bloomberg or Thomson Reuters completely then you may not save as much as you expected.

Technology

Thomson Reuters is really big on feeds while Bloomberg is not. Bloomberg's main business is selling terminals with very little footprint in the feeds business, afaik. If you are happy that your-terminal-app-is-your-feed then this will not matter to you. To be fair Bloomberg does sell something called BPipe which is the competitor to the Thomson Reuters consolidated feed, known as Elektron Real Time, previously known as RDF. Most banks I know will have a Thomson Reuters feed, very few banks will have a BPipe.

If you are building something for yourself or you are not too concerned with latency and not worried about not receiving every tick then all of this may be irrelevant to you. If- on the other hand - you are building something that will be used by several users in your organization and you do not want a solution that requires each user to be a subscriber to the vendor's terminal application, then you'll need a true feed solution.

From my experience most small shops will be happy with the infra that the vendor's terminal application gives them. There are lots of in-house solutions out there that's been build around the vendor's terminal application as opposed to around a true feed. As long as you realize what that means I don't think this is a problem per se.

Quality and accuracy of prices

As far as stuff that's traded on a market place (i.e. an ECN or an exchange) then there's no difference between what you get from Bloomberg and Reuters except that they may have conflated the stream for you so that your are essentially not guaranteed to receive every tick. Again a true feed solution is better than a solution where you take the price off a terminal infrastructure.

For stuff that's essentially OTC you should act with more caution. Bloomberg is really big on fixed income instruments which means that sometimes they sit on pricing data that's just not available from anyone else simply because the data is 'born' in the Bloomberg network. I think this is getting less so over time as fixed income liquidity these days does tend to get more concentrated on ECNs rather than on one-to-one closed environments (i.e. old style OTC). It all depends on which types of bonds we are talking about.

ISIN download information

By this I suppose you mean information that will allow you to map from an ISIN code to the vendor's instrument naming scheme (known as BSyms/BBGIDs for Bloomberg and RICs for Reuters) ? Firstly I hope you realize that this is a one-to-many mapping, not a one-to-one mapping. ISINs represent a unique identification of a financial (securitized) instrument while BSyms and RICs represent a financial instrument on a given 'market'.

Both Bloomberg and Thomson Reuters provide services that will allow you get hold of such mapping information. Of course such a feature is available in their respective terminal applications (i.e. BB Terminal and TR Eikon) but I'm assuming you are asking for such a service outside of the terminal realm ? Both vendors provide such service independent of their terminal apps but they will make you pay for it, afaik.

Other alternatives

There are a few other vendors out there of what is known as consolidated feeds. Probably fair to say that of those vendors with a global reach Interactive is #3 in this space. There are regional vendors as well, e.g. vendors specializing in the North American market only, etc. These alternative vendors very much so compete on price with the "the big two", i.e. Bloomberg and TR, so you can get a good deal with them. From my experience the cost reductions are however minimal because many organizations will not be able to get totally rid of "the big two" and then you suddenly end up with 3 solutions in your org, rather than one or two. YMMV.

$\endgroup$
1
$\begingroup$

Well for bond prcing, since there isn't a real market you'll need multiple data feeds anyway to create your bid/ask price. The question then becomes can either bloomberg or reuters.

Both will allow you to pull in data from multiple sources. On bloomberg its PCS to setup what pricing sources to use. The pricing sources available depend on what you pay for.

By default bloomberg has its own pricing source, which isn't very accurate. They do allow you to scrap BB IM chats to pull in pricing data, which is very common, I"m assuming if you are bond traders then you probably already do this as I haven't yet seen a bond trading firm the at doesn't:)

Reuters has similar functionality but I don't have my Eikon terminal open right now, yes I'm one of hte 50 people that has a Reuters Eikon terminal:)

To answer this:

In terms of cost reduction, is it possible to have the market data from one source (either Bloomberg or Reuter) for all types of trades.

Yes you can use either one, but the accuracy of both differs based on the products you are pricing and the sources available to you. In other words if you choose one over the other you are likely to have some upset traders and some happy traders:)

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.