Battle of the messaging systems, and more

The introduction of the Symphony messaging service, backed by 15 large banks, should make things interesting in a space that has long been dominated by Bloomberg and to some extent Thomson Reuter's Eikon. It is another example of cooperation between large banks after the recent introduction of an OTC derivatives collateral management utility, which was discussed in an earlier blog by this author. Banks are increasingly moving onto the turf of players such as Bloomberg and large IT firms involved in the capital markets through such ventures. It is an interesting business models where the buyers of services are coming together to create or back service providers, which would reduce prices of these services, put more competitive pressure on the other service providers in the space and create greater synergies and efficiencies for the industry overall. It does make things a little tougher for regulators, as the traditional boundaries of which firms are the service providers and which ones are the consumers are changing. But overall, it seems to be a positive move for the markets. The rising costs of complying with financial regulations and the tough market environment have possibly been important drivers for banks to cooperate in this manner. Having the backing of large banks in itself does not guarantee success to Symphony. However, its open source platform offers it a strong chance of being a contender in this space, as it allows its users to add their own features to the messaging platform. What would also be interesting for the neutral observer is the reaction of players such as Bloomberg and Thomson Reuters. These have long dominated not just the messaging, but also the terminal space, and now there are efforts to break their stranglehold on this market. These are large technology-oriented firms that offer a wide gamut of services to the banking and capital markets industry. Their response (if any) to the launch of Symphony could give us valuable insights into how they would react if their control of the terminal space is challenged. Interesting times ahead for sure!