Why markets freaked when Bloomberg crashed
Service from the financial data giant Bloomberg cut out Friday morning, just as trading got underway in London, staying out of commission for more than two hours. Bloomberg terminals — which cost $20,000 a year — are a lifeline for workers in the financial industry. Trading in some markets nearly stopped, and the U.K. government actually postponed the sale of a series of bonds.
In addition to an array of market data and news, many traders use Bloomberg’s built-in chat system as a kind of virtual trading pit.
“That messaging system has become a critical lifeline for many people in the industry,” says Douglas B. Taylor, a consultant to financial-data companies, including Bloomberg and competitors like Thompson Reuters.
The “network effect” — the fact that so many traders already use Bloomberg this way — is one reason the company has outgrown those competitors, and why it is likely to remain dominant, according to Matt Turck, a partner at First Mark, a venture capital firm.
For traders who use Bloomberg’s chat system this way, an outage would be like trying to organize 20 people to go out to dinner, and finding that your phone has stopped working.
So during the outage today, a lot of traders just sat around. Some sought solace on Twitter:
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