ENTERPRISE PRODUCTS & SOLUTIONS

OPEN SYMBOLOGY & MARKET IDENTIFIERS

Third-Party Providers Benefit From Bloomberg Open Symbology

Third-Party Providers Benefit From Bloomberg Open Symbology

EXECUTIVE SUMMARY In an age of rapid transformation and increasing specialization, market needs continue to grow for applications that cant be served efficiently by larger organizations. Services provided by companies in this area enhance the value of market data, providing solutions such as enterprise data management, integration, portfolio management and risk management to name just a few. Companies that serve the market at the highest level frequently choose to partner with Bloomberg. Registered Bloomberg partners complete a rigorous application process that ensures a value-added offering and uses data in a manner that is compliant with Bloomberg, exchanges and other data contributors. Even as third parties have improved the ability of firms to do business, the evolution of a global financial trading network has drawn attention to some of the most prominent obstacles that remain in the trading life cycle. The Internets use of common protocols demonstrates how the free movement of information creates innovative products and services in all sectors of the economy, tearing some down and building entirely new ones in their place. Conversely, the financial services industry exchanges information on securities using more than 55 symbologies maintained by agencies and companies around the world. What began in the mid-1960s as a movement to ease the exchange of information has grown into something entirely different. Proprietary symbologies create barriers by imposing fees and limiting usage in ways that discourage connectivity between systems. Throughout the trading life cycle, the need to map a securitys information between incompatible symbologies incurs added risks and maintenance costs. While every market participant feels the expense of proprietary protocols, third-party providers bear an exceptional burden. Working with a wide variety of clients, third parties maintain mappings for a wider range of protocols than those needed for any one client and must continually adapt their systems to accommodate the unique data exchange requirements of every new client. Reporting and auditing requirements for the use of proprietary symbologies add to costs. Adoption of an open symbology would reduce or eliminate many of these expenses, permitting these firms to bring clients on board more rapidly; it would also let third parties use any savings to develop new, innovative products. Today, the principles of openness that led to the rapid adoption of Internet-based systems and technologies are beginning to take root in the financial services industry. Third parties now have an option to build new systems around the Bloomberg Global ID (BBGID), an open symbology system of identifiers for securities. Bloomberg Open Symbology enables
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companies to use BBGID for any purpose in internal or externally facing systems, with no licensing fees for use. Bloomberg believes that this policy is in line with precedents in other industries that have reinvented themselves to prepare for new opportunities.

Adoption of an open symbology would reduce or eliminate many of these expenses, permitting these firms to bring clients on board more rapidly; it would also let third parties use any savings to develop new, innovative products.

This paper explores how open symbology addresses the issues third parties face when managing multiple symbologies. It also identifies opportunities presented to those who recognize the game-changing value of this initiative. SYMBOLOGYS MOUNTING COSTS The use of symbologies in modern trading has successfully addressed many issues and led to new levels of automation and profits. Originally designed for stand-alone systems, the use of differing symbologies in todays interconnected computer systems has drawn attention to the significant costs and operational risks involved in exchanging information between systems. Michael Blakley, director of product management at Imagine Software, a third-party developer of front- to back-office real-time risk and portfolio management systems, says the current state of maintaining many different symbology sets is becoming unworkable. There are about a dozen steps in the life cycle of a trade that depend on an unambiguous description of a security. But someone may know an issue as IBM ABC, and the next step in the process refers to it as CUSIP 123. Thats an opportunity for failure, says Blakley. And thats just one potential failure point. There are many others. Continuous mapping is a cost that many third-party providers recognize all too well, maintains Arnaud de Chavagnac, business development officer at Murex. Today our clients need to use many different identifiers because there are differences at the exchange level and among different vendors at many points in the life cycle of a transaction. They have to maintain many translations between these different sets of identifiers. This has a very high cost because many of our clients must do this mapping for themselves. While transaction failure rates have fallen dramatically with automated processing, the increase in the volume and velocity of transactions raises both the chances and costs

Third-Party Providers Benefit From Bloomberg Open Symbology

of any failures. Nobody likes to fail on the trade, says Blakley. Bad symbology can lead directly to severe losses. Real losses. This isnt just a loss of efficiency or loss of an economy of scale. This is real money. A few prominent symbology systems have achieved enough market penetration and cover enough asset classes to be considered an industry standard. However, the closed nature and strict licensing requirements of these symbologies prevent them from serving as an open industry standard. Licensing and reporting costs are keenly felt by third parties who must often maintain a large number of symbologies in order to work with a range of clients. De Chavagnac observes that third parties have little choice in the matter. Bringing on a new client usually means we must adapt our platform, he says. We have to change our platform to support as many different symbologies as possible, which is, of course, an added cost for us. Its a model that Blakley feels has become more cumbersome and less useful as symbology owners increase reporting requirements and enforcement mechanisms. With closed symbologies, you have to license, you have to disclose your use, and you have to reveal your clients from a third-party perspective. The symbology owners demand auditing access, and that reporting and auditing is expensive. A BETTER SYMBOLOGY In mid-2010, Bloomberg created BBGID symbols for more than 36 million securities. Bloomberg placed its system of security identifiers, including the recently created BBGID, into the public domain, creating an open symbology system that any company could adopt and use for any purpose. This advance enables securities firms worldwide to tear down one of the last remaining, and significant, obstacles to the free flow of information and realize the promise of fully automated, straight-through processing. Bloomberg Chairman Peter Grauer sees the move to an open system as a natural progression. The need for open symbology, of creating identifiers that are readily available to capital markets around the world, is another step in creating additional transparency and leveling the playing field around the world, he says. Cristiane Coutinho, symbology product manager at Bloomberg, says Bloombergs approach is to ensure that this symbology system is comprehensive. The first phase consisted of building a robust product, a symbology system that was secure and extensible, able to accommodate a wide range of existing asset classes but also able to embrace growth. The second phase, Coutinho says, is to achieve the widest possible participation in this symbology. That includes critical
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players such as market makers, exchanges and regulators. Third parties, says Coutinho, are especially important. These companies work with so many different clients, their participation is essential. We want to reach out to all third-party vendors, those weve worked with in the past and those we havent. BEYOND THE OBVIOUS BENEFITS Bloomberg Open Symbology offers companies many avenues to savings. Eliminating perpetual licensing fees along with reporting and auditing requirements will be significant. Third-party partners project that significant savings also will be found in the client onboarding process. For example, building and maintaining mapping tables for each new client is a considerable expense that will be reduced or eliminated with the use of a common symbology. As an early adopter, GoldenSource Corp., an enterprise data management company, has attracted notice from clients and prospects for its aggressive deployment of Bloomberg Open Symbology. Volker Lainer, vice president of product management at GoldenSource, observes that the early move has led to new sales opportunities. Being a first mover has generated inquiries from the market on what were doing with regard to Bloombergs new Open Symbology, says Lainer. Weve also found that our early adoption of Open Symbology has made it much easier and a greater incentive for our clients to adopt and use. Similarly, Sebastian Meyer, head of data management at CMA, sees significant market efficiencies in the ability to more easily communicate with clients using a common identifier. The licensing cost of the various identifiers in the market has a direct impact on the cost borne by our clients, both in terms of the products and services they buy and the associated data mapping and integration costs. Bloombergs Open Symbology identifiers would level the playing field and reduce barriers to entry by eliminating much of this expense. This, in turn, would result in more efficient data integration processes and open new and exciting product development possibilities for companies like CMA. The opportunity to reduce licensing costs and eliminate mistakes is a powerful motivator to adopt an open symbology. The resulting savings will allow firms to redirect resources that currently maintain maps and tables to the development of new products and services that provide real value for clients. In addition, using Bloombergs Open Symbology, third parties can provide more coverage across their systems. Adopting an open symbology changes the value proposition a firm can offer. It also eliminates the common obstacle of Do you support this symbology? allowing companies to promote their core competencies instead of the number of symbology sets they support.

Third-Party Providers Benefit From Bloomberg Open Symbology

Third-party providers such as Imagine Software also believe that once an open symbology is widely adopted, it will free third parties to think about entirely new service classes and offerings that had been either unworkable or inefficient in a mixed-symbology environment. Providing niche services such as a secondary source of risk data is one example of what will almost certainly be profitable when companies do not need to spend six months building symbology bridges between third-party providers and their clients.

modules through its standard connection products. This step, and future extensions, will make it easier for our mutual clients to preload or augment their environments with the full set of Bloomberg identifiers. Adopting Bloomberg identifiers is no different for third parties than for any other firm. Steps such as adding fields and mapping exercises are the same as for adopting any new symbology; Coutinho maintains that Bloomberg is ready to help. Were happy to work with all third parties who are willing to add the new identifier BBGID as a valid field in their systems. BBGID represents an important opportunity for the market. Companies with fewer than 5,000 securities can download identifiers directly from Bloombergs Open Symbology site (bsym.bloomberg.com). Many companies, however, have larger universes and ongoing requirements a commitment that Bloomberg is well able to handle. Bloomberg is prepared to provide data in the same symbology files sent over data license feeds, a set that uniquely identifies about 36 million securities, divided by asset classes. All data sets are retrievable from an FTP account. NOW, AN OPEN SYMBOLOGY As more facets of trading move to automated processes, the limitations imposed by a multitude of security identifiers have become close to insurmountable, making a compelling case for an open symbology. Third parties, in particular, are coming to recognize the strategic, financial and operational impact that maintaining so many different systems imposes. Bloomberg is answering this need with the BBGID Open Symbology, one that offers all market participants a freely available, comprehensive, secure and flexible system of global identifiers. This initiative enables third parties to abandon closed systems, eliminate costly mapping processes, streamline the process of working with clients and reduce operational risk. The benefits of Bloomberg Open Symbology are very similar to the ones we hope to deliver to our own clients when they implement Murex, says de Chavagnac. The objectives of our MXpress implementation solution are to reduce implementation and maintenance cost, to accelerate the time to market and to improve the safety of the project. As this initiative grows, we will be encouraging our customers to use it in any exchanges where they use the MX.3 system. Third parties that embrace this development will free themselves to spend more time developing and promoting the competencies that make them unique; they will also free up the resources to fund more forward-looking, alpha-generating initiatives.

Adopting an open symbology changes the value proposition a firm can offer. It also eliminates the common obstacle of Do you support this symbology? allowing companies to promote their core competencies instead of the number of symbology sets they support.

As another first adopter, Volante Technologies is using Bloomberg Open Symbology to simplify internal data feed and reference data implementations. Mark Chapman, sales director for Volante, believes Open Symbology is a component that has proven its worth today and will continue to grow in value. We accelerate the data integration and transformation process. In some implementations, clients tell us we have saved them up to 80 percent in development effort. Bloomberg Open Symbology is growing in importance in our ability to achieve these kinds of savings for our clients. IMPLEMENTATION MADE EASY While the adoption process is already relatively painless, Bloomberg is taking steps to further smooth it and provide the support all stakeholders will require to successfully use the symbology. Coutinho sees an ongoing commitment from Bloomberg as critical for market uptake If we dont provide the support that companies and third parties need to rapidly adopt this, it becomes just another identifier in the marketplace. We have heard those concerns from our customers, who ask whether we will be able to provide the support needed, especially to the third-party providers they work with. Our answer is an unqualified Yes. Third-party providers have been implementing the new Bloomberg Open Symbology standard on a step-by-step basis. Lainer of GoldenSource says that his firm has already completed several phases, which include mapping BBGID on the exchange level for all Bloomberg back-office and extended

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Third-Party Providers Benefit From Bloomberg Open Symbology

Moving the industry to an open symbology is an evolutionary process, one requiring an understanding that investments made today offer significant long-term gains. CMAs Meyer indicates that this is an investment they are willing to make, as it will benefit the market as a whole.

Third parties that embrace this development will free themselves to spend more time developing and promoting the competencies that make them unique; they will also free up the resources to fund more forward-looking, alpha-generating initiatives.

The move to open symbology promises to eliminate a significant barrier to the flow of information, streamlining the ability of third parties to onboard and serve customers more effectively. It also creates an environment where firms can invest their energy and resources to create new, innovative products and services, a development that is sure to play to the strengths and interests of third parties.

As clients take it up, this will free up our time to focus on solving other important problems faced by our clients in the OTC space. Those benefits come later in the process, Meyer acknowledges, but this should be considered as a long-term strategic play by the market. Adopting the new Bloomberg symbology appears to be a no-brainer. As a greater percentage of the market standardizes on Bloomberg identifiers, its an investment we are convinced will grow in value.

The following table in this paper provides information about third-parties using Open Symbology.

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Third-Party Providers Using Open Symbology

Company Name
Imagine Software

Primary Services Provided

Provider of real-time investment management solutions worldwide. The flagship product, the Imagine Trading System, is a cross-asset, multi-strategy portfolio and risk-management solution available as a cloud-based, vendor-managed ASP solution or as an enterprise application.

Open Symbology Analysis

Imagine expects the Bloomberg Open Symbology to dramatically simplify its automated trade links by reducing the complexity of information its clients must provide to correctly identify securities. Imagine also anticipates improvement in its client support services, since it will no longer have to translate from one set of identifiers to another before being able to respond to clients.

Next Steps
Once Imagine has fully mapped its data to Bloomberg identifiers and has automated that process to account for security additions and modifications, it will focus on providing its clients with methods to use whatever identifier they prefer in their daily workflow. None of this would be possible without the common denominator that the BBGID provides.

Contact Information
Main sales contact: 212-317-7600 Fax: 212-317-7601 Corporate website:
www.imaginesoftware.com

Volante Technologies

Provider of data services solution accelerators, Volante speeds up the data integration and transformation process; clients have indicated that the company has saved them up to 80% in development effort.

Volante supports open symbology and can map this to any internal client standard simplifying data flow to client applications. Volante provides data tools that help isolate downstream applications from change and simplify data feed mapping, integration and transformation to internal systems.

Volante will continue to help clients use Bloomberg Open Symbology to simplify their internal data feed or reference data implementations.

Mark Chapman Sales Director, EMEA Volante Technologies Inc. 9 Devonshire Square London, EC2M 4YF +44(0) 779 503 1851 +44(0) 203 178 2970 Corporate website: www.volantetech.com

CMA

CMA is a leading source of independent data on the OTC markets. Thousands of individuals in financial institutions worldwide rely daily on the companys data and technology to provide the clear, reliable pricing and related OTC information they require. Clients range from some of the largest investment banks and asset managers in the world to boutique hedge funds and risk-management firms.

Bloombergs Open Symbology initiative should result in a more efficient marketplace by removing a key challenge many market participants face.

CMA will add Bloombergs identifiers to its products to help clients streamline their data integration processes.

5th Floor Watling House 33 Cannon Street London EC4M 5SB United Kingdom
+ 44 (0) 207 796 5100 Fax: + 44 (0) 207 236 1963

Corporate website: info@cmavision.com

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Third-Party Providers Using Open Symbology

Company Name
GoldenSource

Primary Services Provided

GoldenSource provides an integrated enterprise data management (EDM) platform for the securities and investment management industry. Customers benefit from better management, storage and distribution of their data companywide. Trading, risk management and compliance, settlement, portfolio accounting and other front-, middleand back-office functions all benefit from improved data management.

Open Symbology Analysis

By partnering with Bloomberg, GoldenSource enables its customers to efficiently adopt and utilize the open symbology within their own enterprises. On the sales front, being a first-mover on this has allowed GoldenSource to respond swiftly and positively to specific inquiries from the market.

Next Steps
To date, GoldenSource has: Mapped ID_BB_GLOBAL on exchange level for all BB BackOffice & EXTended modules that it supports through standard connection products. Enabled support for BB Per Security access for ID_BB_GLOBAL. Next steps include: Introducing the COMPOSITE_ ID_BB_GLOBAL. Handling UNDL_ ID_BB_GLOBAL when it becomes generally available. Supporting BYSM files.

Contact Information
Main sales contact: 212-798-7100
info@thegoldensource.com

Global Headquarters: 22 Cortland Street New York, NY 10007 Corporate website:

www.thegoldensource.com

Murex

Murex is a recognized leader in the development of an enterprise software solution that covers the areas of trading, risk management and global processing for capital markets. The company introduced the MXpress implementation solution in late 2008. The solution combines pre-packaged business content with an adapted implementation methodology that leverages the pre-packaged content through iterative and collaborative implementation processes between Murex, its clients and the integrators. Customers benefit from lower implementation costs, reduced implementation risk, and faster implementations.

Open symbology initiatives bring greater transparency to communications with clients. Today, the lack of a common identifier for some instrument types makes communicating and understanding client needs more difficult. These initiatives lower costs resulting from the need to develop a data storage application for each identifier, while simplifying or even removing the need for mapping.

Murex will be conducting a feasibility study about the integration of open symbology in its offer to new or existing customers.

Arnaud de Chavagnac, Business Development:

arnaud.dechavagnac@murex.com

+ 33 1 4405 3200 Corporate website: www.murex.com

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