Sell-side firms say that analysis of the accidental distribution of dealer runs, which happened on 4 December via Bloomberg’s Message service, is proving challenging. Firms report that the distribution appeared to be only in the US markets. Bloomberg has confirmed to The DESK that a limited section of market activity was affected without more detail on which part.
Chris White, CEO of data and analytics provider BondCliQ, says, “Dealer runs data is very valuable and sensitive information. In recent years, market makers have increased their diligence when it comes to curating which institutions are on their distribution lists. The impact of dealers seeing one another’s runs is material because it calls into question the handling of their private communication data.”
Reports and feedback from dealers has been that they only noticed the information was being sent to rivals when their own salespeople were receiving other bank’s runs. Internally discussion of the event has also been limited to US desks. “They were scrambling trying to understand who got what,” noted one pre-trade data firm. White says, “Difficult to say how large the event was, but anecdotally, multiple large dealers were impacted. One bank noted that other data and axe distribution providers who supply information on dealers’ positions direct to clients would potentially benefit.
“I would imagine this would help [axe distributor] Neptune as it is using application programming interface (API) and done in a more modern way than [messaging on] Bloomberg [which is used by banks] to send axes,” said the firm’s head of e-trading, speaking on condition of anonymity. Control over distribution was a wider issue which dealers would also need to consider, said White, including in the development of data services. “The discussion on the security of corporate bond pricing information is likely to heat up due to this event,” he says. “However, outside of this incident, the unauthorised use of dealer pricing to create corporate bond data products is a wide-spread issue that will eventually have to be addressed.”
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