I have been asked multiple times about Bloomberg based trading, so I have posted something in the professional forum with links for those interested.
Bloomberg in its professional application offers matching and managing services in its Tradebook and FIET service. The system started out for equities only and so US only and now covers, US and Non-US equity, energy, foreign exchange and futures as well as fixed income securities for EXCHANGE traded securities.
Its clearing and settlement is done by third parties such as subsidiaries of Bank of New York and UBS.
The matching is done straight through and the platform provided is widely used for client interaction by US brokerage houses.
The system is regulated by the SEC and specific rules and regulations apply.
For anything which is not covered by the Bloomberg registration services the communications exchanged have no legal value, for communications exchanged between parties outside the US or between parties which are partly outside the US all depends in legal variations of the applicable local law and the influence of the subscription agreement between participants of the Bloomberg Professional platform.
Different from other systems Bloomberg has not been legally tested on the limitations in regards of abuse and misuse.
Since that is the case the system is used for matching but not for clearing and settlement and serious players in high volume are mainly using other market participants for their trades, especially when it comes to non-exchange listed securities.
Bloomberg if growing and netting with providers like SWIFT and Clearstream/Euroclear will be an alternative but since it currently allows open subscriptions it is not considered safe for very high volume and non-exchange traded instruments; and its open subscription and the considerable problems in linking a non-bank institution into a bank based electronic system will have to be overcome.
Given this Bloomberg is no medium we use extensively and it is also no medium to be used for an actual transaction, since its matching is just a preliminary of the transaction and no execution.
It can be used for the preliminaries but since only the communication itself is secure and not the meaning it only narrows down originating problems in the matching business.
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