1 12713 Revised Bloomberg Whitelpaper Open Symbology

ENTERPRISE PRODUCTS & SOLUTIONS ºººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººº

OPEN SYMBOLOGY & MARKET IDENTIFIERS Third-Party Third-Part y Pro Provide viders rs Beneft From Bloomberg Open Symbology

Third-Party Providers Beneft From Bloomberg Open Symbology ºººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººº

EXECUTIVE SUMMARY

In an age o rapid transormation and increasing specialization, market needs continue to grow or applications that can’t be served eciently by larger organizations. Ser vices provided by companies in this area enhance the value o market data, providing solutions such as enterprise data management, integration, portolio management and risk management — to name just a ew. Companies that serve the market at the highest level requently choose to partner with Bloomberg. Registered Bloomberg partners complete a rigorous application process that ensures a value-added oering and uses data in a manner that is compliant with Bloomberg, exchanges and other data contributors. Even as third parties have improved the ability o rms to do business, the evolution o a global nancial trading network has drawn attention to some o the most prominent obstacles that remain in the trading lie cycle. The Internet’s use o common protocols demonstrates how the ree movement o inormation creates innovative products and services in all sectors o the economy, tearing some down and building entirely new ones in their place. Conversely, the nancial services industry exchanges inormation 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 o inormation has grown into something entirely dierent. Proprietary symbologies create barriers by imposing ees and limiting usage in ways that discourage connectivity between systems. Throughout the trading lie cycle, the need to map a security’s inormation between incompatible symbologies incurs added risks and maintenance costs. While every market participant eels the expense o proprietary protocols, third-party providers bear an exceptional burden. Working with a wide variety o clients, third parties maintain mappings or a wider range o protocols than those needed or any one client and must continually adapt their systems to accommodate the unique data exchange requirements o every new client. Reporting and auditing requirements or the use o proprietary symbologies add to costs. Adoption o an open symbology would reduce or eliminate many o these expenses, permitting these rms to bring clients on board more rapidly; it would also let third parties use any savings to develop new, innovative products. Today, the principles o openness that led to the rapid adoption o Internet-based systems and technologies are beginning to take root in the nancial services industry. Third parties now have an option to build new systems around the Bloomberg Global ID (BBGID), an open symbology system o identiers or securities. Bloomberg Open Symbology enables 02 // OPEN SYMBOLOGY & MARKET IDENTIFIERS

companies to use BBGID or any purpose in internal or externally acing systems, with no licensing ees or use. Bloomberg believes that this policy is in line with precedents in other industries that have reinvented themselves to prepare or new opportunities. °°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°

Adoption o an open symbology would reduce or eliminate many o these expenses, permitting these rms 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 ace when managing multiple symbologies. It also identies opportunities presented to those who recognize the game-changing value o this initiative. SYMBOLOGY’S MOUNTING COSTS

The use o symbologies in modern trading has successully addressed many issues and led to new levels o automation and prots. Originally designed or stand-alone systems, the use o diering symbologies in today’s interconnected computer systems has drawn attention to the signicant costs and operational risks involved in exchanging inormation between systems. Michael Blakley, director o product management at Imagine Sotware, a third-party developer o ront- to back-oce real-time risk and portolio management systems, says the current state o maintaining many dierent symbology sets is becoming unworkable. “There are about a dozen steps in the lie cycle o a trade that depend on an unambiguous description o a security. But someone may know an issue as ‘IBM ABC,’ and the next step in the process reers to it as ‘CUSIP 123.’ That’s an opportunity or ailure,” says Blakley. “And that’s just one potential ailure 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 ocer at Murex. “Today our clients need to use many dierent identiers because there are dierences at the exchange level and among dierent vendors at many points in the lie cycle o a transaction. They have to maintain many translations between these dierent sets o identiers. This has a very high cost because many o our clients must do this mapping or themselves.” While transaction ailure rates have allen dramatically with automated processing, the increase in the volume and velocity o transactions raises both the chances and costs


o any ailures. “Nobody likes to ail on the trade,” says Blakley. “Bad symbology can lead directly to severe losses. Real losses. This isn’t just a loss o eciency or loss o an economy o scale. This is real money.” A ew 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 o these symbologies prevent them rom serving as an open industry standard. Licensing and reporting costs are keenly elt by third parties — who must oten maintain a large number o symbologies in order to work with a range o clients. De Chavagnac observes that third parties have little choice in the matter. Bringing on a new client “usually means we must adapt our platorm,” he says. “We have to change our platorm to support as many dierent symbologies as possible, which is, o course, an added cost or us.” It’s a model that Blakley eels has become more cumbersome and less useul as symbology owners increase reporting requirements and enorcement mechanisms. “With closed symbologies, you have to license, you have to disclose your use, and you have to reveal your clients rom 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 or more than 36 million securities. Bloomberg placed its system o security identiers, including the recently created BBGID, into the public domain, creating an open symbology system that any company could adopt and use or any purpose. This advance enables securities rms worldwide to tear down one o the last remaining, and signicant, obstacles to the ree fow o inormation and realize the promise o ully automated, straight-through processing. Bloomberg Chairman Peter Grauer sees the move to an open system as a natural progression. “The need or open symbology, o creating identiers that are readily available to capital markets around the world, is another step in creating additional transparency and leveling the playing eld around the world,” he says. Cristiane Coutinho, symbology product manager at Bloomberg, says Bloomberg’s approach is to ensure that this symbology system is comprehensive. “The rst phase consisted o building a robust product, a symbology system that was secure and extensible, able to accommodate a wide range o 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 03 // OPEN SYMBOLOGY & MARKET IDENTIFIERS

players such as market makers, exchanges and regulators.” Third parties, says Coutinho, are especially important. “These companies work with so many di erent clients, their participation is essential. We want to reach out to all third-party vendors, those we’ve worked with in the past and those we haven’t.” BEYOND THE OBVIOUS BENEFITS

Bloomberg Open Symbology oers companies many avenues to savings. Eliminating perpetual licensing ees along with reporting and auditing requirements will be signicant. Third-party partners project that signicant savings also will be ound in the client onboarding process. For example, building and maintaining mapping tables or each new client is a considerable expense that will be reduced or eliminated with the use o a common symbology. As an early adopter, GoldenSource Corp., an enterprise data management company, has attracted notice rom clients and prospects or its aggressive deployment o Bloomberg Open Symbology. Volker Lainer, vice president o product management at GoldenSource, observes that the early move has led to new sales opportunities. “Being a rst mover has generated inquiries rom the market on what we’re doing with regard to Bloomberg’s new Open Symbology,” says Lainer. “We’ve also ound that our early adoption o Open Symbology has made it much easier and a greater incentive or our clients to adopt and use.” Similarly, Sebastian Meyer, head o data management at CMA, sees signicant market eciencies in the ability to more easily communicate with clients using a common identier. “The licensing cost o the various i dentiers in the market has a direct impact on the cost borne by our clients, both in terms o the products and services they buy and the associated data mapping and integration costs. Bloomberg’s Open Symbology identiers would level the playing eld and reduce barriers to entry by eliminating much o this expense. This, in turn, would result in more ecient data integration processes and open new and exciting product development possibilities or companies like CMA.” The opportunity to reduce licensing costs and eliminate mistakes is a powerul motivator to adopt an open symbology. The resulting savings will allow rms to redirect resources that currently maintain maps and tables to the development o new products and services that provide real value or clients. In addition, using Bloomberg’s Open Symbology, third parties can provide more coverage across their systems. Adopting an open symbology changes the value proposition a rm can oer. It also eliminates the common obstacle o “Do you support this symbology?” — allowing companies to promote their core competencies instead o the number o symbology sets they support.


Third-party providers such as Imagine Sotware also believe that once an open symbology is widely adopted, it will ree third parties to think about entirely new service clas ses and oerings that had been either unworkable or inecient in a mixed-symbology environment. Providing niche services such as a secondary source o risk data is one example o what will almost certainly be protable when companies do not need to spend six months building symbology bridges between third-party providers and their clients. °°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°

Adopting an open symbology changes the value proposition a rm can oer. It also eliminates the common obstacle o “Do you support this symbology?” — allowing companies to promote their core competencies instead o the number o symbology sets they support. °°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°

As another rst adopter, Volante Technologies is using Bloomberg Open Symbology to simpliy internal data eed and reerence data implementations. Mark Chapman, sales director or 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 transormation process. In some implementations, clients tell us we have saved them up to 80 percent in development eort. Bloomberg Open Symbology is growing in i mportance in our ability to achieve these kinds o savings or our clients.” IMPLEMENTATION MADE EASY

While the adoption process is already relatively painless, Bloomberg is taking steps to urther s mooth it and provide the support all stakeholders will require to s uccessully use the symbology. Coutinho sees an ongoing commitment rom Bloomberg as critical or market uptake — “I we don’t provide the support that companies and third parties need to rapidly adopt this, it becomes just another identier in the marketplace. We have heard those concerns rom 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 unqualied ‘Yes.’” Third-party providers have been implementing the new Bloomberg Open Symbology standard on a step-by-step basis. Lainer o GoldenSource says that his rm has already completed several phases, which include mapping BBGID on the exchange level or all Bloomberg back-oce and extended

04 // OPEN SYMBOLOGY & MARKET IDENTIFIERS

modules through its standard connection products. “This step, and uture extensions, will make it easier or our mutual clients to preload or augment their environments with the ull set o Bloomberg identiers.” Adopting Bloomberg identiers is no dierent or third parties than or any other rm. Steps such as adding elds and mapping exercises are the same as or adopting any new symbology; Coutinho maintains that Bloomberg is ready to help. “We’re happy to work with all third parties who are willing to add the new identier BBGID as a valid eld in their systems. BBGID represents an impor tant opportunity or the market.” Companies with ewer than 5,000 securities can download identiers directly rom Bloomberg’s 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 les sent over data license eeds, a set that uniquely identies about 36 million securities, divided by asset classes. All data sets are retrievable rom an FTP account. NOW, AN OPEN SYMBOLOGY

As more acets o trading move to automated processes, the limitations imposed by a multitude o security identiers have become close to insurmountable, making a compelling case or an open symbology. Third parties, in particular, are coming to recognize the strategic, nancial and operational impact that maintaining so many dierent systems imposes. Bloomberg is answering this need with the BBGID Open Symbology, one that oers all market participants a reely available, comprehensive, secure and fexible system o global identiers. This initiative enables third parties to abandon closed systems, eliminate costly mapping processes, streamline the process o working with clients and reduce operational risk. “The benets o 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 o our MXpress™ implementation solution are to reduce implementation and maintenance cost, to accelerate the time to market and to improve the saety o 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 ree themselves to spend more time developing and promoting the competencies that make them unique; they will also ree up the resources to und more or ward-looking, alpha-generating initiatives.


Moving the industry to an open symbology is an evolutionary process, one requiring an understanding that investments made today oer signicant long-term gains. CMA’s Meyer indicates that this is an investment they are willing to make, as it will benet the market as a whole. °°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°

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

The move to open symbology promises to eliminate a signicant barrier to the fow o inormation, streamlining the ability o third parties to onboard and serve customers more eectively. It also creates an environment where rms 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 o third parties.

°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°

“As clients take it up, this will ree up our time to ocus on solving other important problems aced by our clients in the OTC space.” Those benets 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 o the market standardizes on Bloomberg identiers, it’s an investment we are convinced will grow in value.”

The ollowing table in this paper provides inormation about third-parties using Open Symbology.


Third-Party Providers Using Open Symbology ºººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººº

Company Name

Primary Services Provided

Open Symbology Analysis

Next Steps

Contact Inormation

Imagine Sotware

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

Imagine expects the Bloomberg Open Symbology to dramatically simpliy its automated trade links by reducing the complexity o inormation its clients must provide to correctly identiy securities. Imagine also anticipates improvement in its client support services, since it will no longer have to translate rom one set o identiers to another beore being able to respond to clients.

Once Imagine has ully mapped its data to Bloomberg identiers and has automated that process to account or security additions and modications, it will ocus on providing its clients with methods to use whatever identier they preer in their daily workfow. None o this would be possible without the common denominator that the BBGID provides.

Main sales contact:

Provider o data services solution accelerators, Volante speeds up the data integration and transormation process; clients have indicated that the company has saved them up to 80% in development eort.

Volante supports open symbology and can map this to any internal client standard — simpliying data fow to client applications. Volante provides data tools that help isolate downstream applications rom change and simpliy data eed mapping, integration and transormation to internal systems.

Volante will continue to help clients use Bloomberg Open Symbology to simpliy their internal data eed or reerence data implementations.

Mark Chapman Sales Director, EMEA Volante Technologies Inc.

Bloomberg’s Open Symbology initiative should result in a more ecient marketplace by removing a key challenge many market participants ace.

CMA will add Bloomberg’s identiers to its products to help clients streamline their data integration processes.

Volante Technologies

CMA

CMA is a leading source o independent data on t he OTC markets. Thousands o individuals in nancial institutions worldwide rely daily on the company’s data and technology to provide the clear, reliable pricing and related OTC inormation they require. Clients range rom some o the largest investment banks and asset managers in the world to boutique hedge unds and risk-management rms.


212-317-7600 Fax: 212-317-7601 Corporate website: www.imaginesotware.com

9 Devonshire Square London, EC2M 4YF +44(0) 779 503 1851 +44(0) 203 178 2970 Corporate website: www.volantetech.com

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: in[email protected]

Third-Party Providers Using Open Symbology ºººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººººº

Company Name

Primary Services Provided

Open Symbology Analysis

Next Steps

Contact Inormation

GoldenSource

GoldenSource provides an integrated enterprise data management (EDM) platorm or the securities and investment management industry. Customers benet rom better management, storage and distribution o their data companywide. Trading, risk management and compliance, settlement, portolio accounting and other ront-, middleand back-oce unctions all benet rom improved data management.

By partnering with Bloomberg, GoldenSource enables its customers to eciently adopt and utilize the open symbology within their own enterprises.

To date, GoldenSource has: • Mapped ID_BB_GLOBAL on exchange level or all BB BackOce & EXTended modules that it supports through standard connection products.

Main sales contact:

On the sales ront, being a rst-mover on this has allowed GoldenSource to respond switly and positively to specic inquiries rom the market.

212-798-7100 in[email protected]

Global Headquarters: 22 Cortland Street New York, NY 10007 Corporate website: www.thegoldensource.com

• Enabled support or BB Per Security access or ID_BB_GLOBAL.

Next steps include: • Introducing the COMPOSITE_ ID_BB_GLOBAL. – Handling UNDL_ ID_BB_GLOBAL when it becomes generally available. • Supporting BYSM les.

Murex

Murex is a recognized leader in the development o an enterprise sotware solution that covers the areas o trading, risk management and global processing or 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 benet rom lower implementation costs, reduced implementation risk, and aster implementations.

Open symbology initiatives bring greater transparency to communications with clients. Today, the lack o a common identier or some instrument types makes communicating and understanding client needs more dicult. These initiatives lower costs resulting rom the need to develop a data storage application or each identier, while simpliying or even removing the need or mapping.

Murex will be conducting a easibility study about the integration o open symbology in its oer to new or existing customers.

Arnaud de Chavagnac, Business Development: [email protected]

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

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1 12713 Revised Bloomberg Whitelpaper Open Symbology

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