Too big to fail: Lack of competition on the trading floor?


Disaster recovery and disaster avoidance systems rank among some of the most important considerations for large companies, especially those which operate real-time, and for whom outages, even for a few seconds, create a vast effect on business and reputation.

So accustomed has the entire global electronic trading industry, especially on the instutitional side, become to flawless provision of data which appears within a fraction of a second and with milimetric precision, as well as an execution process which opens and closes hundreds of thousands of trades across multiple venues without even so much as a murmur.

For this reason, it was an unusual circumstance indeed when, on Friday last week, Bloomberg’s worldwide terminal network experienced a two and a half hour outage, with the cause reported to be the spillage of an innocuous can containing a soft drink.

Bloomberg’s terminals have been a mainstay for several decades in the trading rooms of leading brokers, banks, and money managers worldwide.

Bloomberg completes an approximate annual revenue of $8 billion, the majority of which come from terminal subscription fees, which come in at a rate of about $1,800 per user per month, with the price being justifiable due to the firm’s extremely advanced network, and whilst no official reason was given, widespread media coverage at the time cited the somewhat low-tech can of soft drink having been spilled as the cause.

In contrast to the media reaction, the industry has remained relatively opinion-free thus far, however Money.Net explained to LeapRate that it considers the introduction of healthy competition into this sector to be a matter which could assist in refining internal processes within other large firms.

Morgan Downey, CEO of Money.Net, a company whose platform facilitates the monitoring of the market and analysis of investments in real-time for a flat $50 per month, explained “One of the world’s largest economies had to cancel a debt issuance this morning because of dependency on a single software system. Limited software choices on traders’ desktops has introduced systemic market risk.”

“For too long market have been spending close to $30 billion each year on market information software with little innovation in the space. There is a solution, and that is to introduce more competition into the trading floor ecosystem” concluded Mr. Downey.

Technological advancement has eradicated the majority of potential incidents, and whilst systems are far more integrated these days, and reliance on physical hardware has given way to cloud-based storage and online hosting, liquid and electronics still do not mix, thus if it is the case that a can containing soft drink caused the outage, it may legitimize an initiative by British Telecom in the mid 1990s when the firm migrated its entire outsourced call center systems from a mainframe system to Microsoft Windows NT4.

At the time of the migration, British Telecom, which is now known as BT Group plc (LON:BT.A) invoked a policy which operated under the somewhat ambiguous name of “World Class”, which dictated that all employees in all British Telecom call centers would not be allowed to store any item at all on their desks, and soft drinks had to be decanted into British Telcom sealed beakers which did not spill if knocked over.

The implementation of the “World Class” initiative was not met with universal acceptance by employees, however it appears that British Telecom had considered the low-tech dangers to high-tech equipment two decades ago.

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Too big to fail: Lack of competition on the trading floor?

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