Bloomberg glitch hits India, global markets; volumes dip

MUMBAI: Bloomberg terminals went on the blink for about two-and-a-half hours on Friday throwing global markets, including Dalal Street, into disarray. Trade orders from institutional investors dipped as fund managers, who convey orders to brokers through Bloomberg, remained on the sidelines. Traders and analysts who depend on Bloomberg data and its analytical and technical tools also found themselves cast adrift.

Turnover on the NSE’s equity futures and options segment dropped 18 per cent on Friday from the previous day, while in the cash segment, the decline in activity was moderate.

Institutional investors and broking firms usually communicate using the Bloomberg messaging system to keep a third-party record of orders. When a fund manager wants to buy or sell a stock, this is conveyed to the brokerage firm through a Bloomberg message, the contents of which cannot be erased or deleted. “Fund managers did not give us orders on Friday because confirming the order through the chat is more of an informal compliance for them,” said a senior institutional sales person with a Mumbaibased broking firm. Some institutions, however, resorted to confirming orders by e-mail.

Many brokerages and institutional investors have alternative data suppliers such as Thomson Reuters as backup in the event of a major disruption. But for market participants habituated to the Bloomberg tools, the Reuters terminal was not an option.

Brokers said there were fewer large bulk trades because of the decline in institutional activity. Sales desks of large institutional brokerages were unusually silent with executives stepping out for long lunch breaks. Fund managers said they were unable to take a call on the market on Friday without the help of the various tools on the Bloomberg terminal.

“As a fund manager, you need to track various aspects of the market before deciding to buy or sell. It was very difficult to get the larger picture without the Bloomberg terminal,” said V Balasubramanian, senior fund manager, IDBI Mutual Fund.

Some market participants attributed the sharp selloff in several stocks late in Friday trade to the confusion sparked by the Bloomberg outage. “It was a situation where a lack of information helped a few people short-sell and make good money,” said a top official with an institutional brokerage. The Nifty fell 101 points, or 1.2 per cent, to 8,606.

Analysts also found themselves unable to create trading strategies as they are accustomed to using data from Bloomberg. “We create a personal back-up of some data. It is not possible to create it for everything. Without a data supplier, it is not possible to create effective strategies,” said a derivatives analyst with a retail brokerage.

The terminals went down due to apparent technical problems, prompting the British government to postpone a planned £3 billion ($4.4 billion) debt issue, the Associated Press reported. “Significant but not all parts of our system experienced a disruption on Friday,” said a Bloomberg spokesperson. “There is no indication this is anything other than an internal network issue... We apologize to our customers.”