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Bloomberg terminal row signals banking’s cultural shift

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For Bloomberg LLC's Canadian business, the scandal around journalists using terminals to snoop on bankers is the least of their worries – the thing they really fear is cost cutting. The move to reduce the tens of thousands of dollars paid every year for each Bloomberg terminal also highlights an interesting cultural shift in the Canadian investment industry that minimizes the importance of individual star traders and brings us closer to bank-led corporate hegemony.

Access to a Bloomberg terminal or, better yet, having a B-unit (ownership of which signals that you and you alone have 24/7 access to a Bloomberg account with your own ID), is a rite of passage on trading floors. Though it's famously user-unfriendly, Bloomberg provides a virtually bottomless pit of data for analysts and is the second-by-second bible for traders who are judged by their portfolio manager clients on execution (usually by VWAP – volume weighted average price).

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The orange fonts and bizarre function keys of Bloomberg are woven into the very fabric of capital markets, but this may be changing. The New York Times reports that nine global banks are developing software to compete with Bloomberg's chat network, "one of the main selling points for its $20,000-a-year terminals." Why? "Banks have been looking for ways to lessen their reliance on the terminals and lower their payments to Bloomberg."

The mere thought of slashing Bloomberg costs is catnip for Canadian bank management who will be giddily punctual for the meeting when the new software gets pitched.

Existing Bloomberg users on trading floors across the country will, of course, attempt to hold on to their access like grim death. They will scream and threaten to quit (historically a reflex reaction) but in the current market environment, their leverage is far lower than in times past – threatening to quit only works if you have somewhere to go.

The non-bank brokerages are suffering mightily in recent months, as the revenue from resource-related underwriting evaporates. They are cutting staff, not hiring. The individual stock-trading rock stars – some of whom have graced the cover of the venerable ROB magazine – have faded, at least for now.

I'm completely unconcerned that a company run by the billionaire mayor of New York City might have to endure a revenue slowdown because of global market conditions. But as a sign that bank culture – low cost, low wage, everybody's replaceable – has finally erased the more flamboyant and entertaining (if occasionally ethically challenged) working environment of the brokerage world, the trend is less welcome.

Scott Barlow is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here to read more of his Insights, and follow Scott on Twitter at @SBarlow_ROB.

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