Bloomberg suffered its second-ever drop in the number of ubiquitous terminals dotting global trading desks as it fell victim to cost cutting by the finance industry.
The number of Bloomberg’s distinctive black terminals, used daily by bankers, traders and money managers, fell by 3,145 last year to just under 324,500, down nearly 1 per cent from 2015, according to a report on Tuesday from Burton-Taylor International, one of the leading sources of information on the industry.
Although the drop is a modest one, it is only the second contraction in terminal numbers since the company was founded by former New York Mayor Michael Bloomberg in 1981. The other decline followed the financial crisis in 2009, when the company lost 20,000 terminals. Bloomberg declined to comment on the findings.
The $22,000-a-year terminal has come to be a key tool for traders, investors and bankers, but its cost has in recent years become a source of tension as banks try to keep a tighter control on budgets.
A combination of more stringent capital rules for lenders, low interest rates and a shift towards electronic trading have all weighed on the profitability of Bloomberg’s core customer base — large investment banks.
“A lot of the vendors [of financial information] are facing headwinds,” said Douglas B Taylor, founder and managing director of Burton-Taylor. “The combination of machines replacing traders where they can and cutbacks overall in financial institutions in terms of budgets has made it difficult for all vendors frankly to maintain [terminal numbers].”
Revenues at the 12 biggest global investment banks, including JPMorgan and Goldman Sachs, dropped 3 per cent in 2016, making it four straight years of declines according to Coalition research group. Job cuts of front-line staff accelerated sharply in 2016 to 2,200 from 800 the year before, the data showed. Investment banks are expecting an improved quarter as the market enthusiasm that accompanied the election of Donald Trump lifted trading profits.
Despite the drop in terminal numbers, Bloomberg’s market share edged higher in 2016 to 33.4 per cent, driven by other businesses, in particular its pricing and evaluation feeds. The company’s revenue from financial markets rose 3.4 per cent to $9.2bn, the consultancy estimated.
Market share at Thomson Reuters, Bloomberg’s biggest rival, contracted to 23.1 per cent in 2016 from 24.2 per cent the previous year, while revenues remained flat.
The report showed that smaller challengers that focus on compliance and hard to value pricing data, such as S&P Global Market Intelligence, Platts, Morningstar, IHS Markit and ICE Interactive Data, enjoyed the strongest growth in more than five years.
Overall spending on data — the lifeblood of the industry — reached a record $27.5bn in 2016, up more than 3 per cent on the previous year, according to Burton-Taylor.
The headline increase reflected higher demand for information to meet tougher standards on compliance issues such as money laundering and customer background checks, and more accurate prices of trades that affected banks.
Europe’s forthcoming package of financial reforms, Mifid II, will probably continue to keep demand high among users of compliance information, Mr Taylor said, as would a UK exit from the EU in which financial regulations were overhauled.
However, if US president Donald Trump pursues deregulation of the finance sector that could damp demand within risk compliance, he added.