What Is a Bloomberg Terminal?
A Bloomberg terminal is a computer system that allows investors to access the Bloomberg data service, which provides real-time global financial data, news feeds, and messages. Investors can also use the Bloomberg terminal’s trading system to facilitate the placement of financial transactions, such as stock and options trades. Bloomberg charges an annual subscription fee, with the price for the proprietary electronic trading system ranging from $20,000 to $24,000 per user per year.
- Developed by businessman Michael Bloomberg, a Bloomberg terminal is a popular hardware and software system that allows investors access to real-time market data, investing analytics, and proprietary trading platforms.
- Because of their relatively high cost, Bloomberg terminals are typically used by large institutional investors, portfolio managers, and financial analysts.
- Bloomberg offers investors independent stock research from more than 1,500 resources, charting tools, and trade analytics for both the buy-side and sell-side.
- Bloomberg’s biggest competitor is Thomson Reuters—which offers Eikon, a set of software products designed to help investors analyze and trade the financial markets.
- Both Bloomberg and Reuters are seeing competition from other companies that offer similar products at a lower price, most notably Capital IQ and FactSet.
How a Bloomberg Terminal Works
Bloomberg terminals are one of the main product offerings from Bloomberg L.P. They are one of the most heavily used and highly regarded professional investment systems to be created for the financial marketplace. Institutional investors are the typical customers of this product since the relatively high ongoing cost makes it unfeasible for individual investors with relatively small amounts of capital to purchase.
The system provides news, price quotes, and messaging across its proprietary secure network. It is well-known among the financial community for its black interface, which is not optimized for user experience but has become a recognizable trait of the service. It’s not uncommon to see Bloomberg’s rather bland visuals carried into their television station, although they round their media empire out with visually rich content in their flagship magazine Bloomberg Businessweek.
Benefits of a Bloomberg Terminal
The Bloomberg terminal was developed by New York businessman Michael Bloomberg. The terminal includes both a hardware and software system and is a Windows-based application, making it compatible with the popular Excel program, a very important aspect of the system for those in the finance industry.
Bloomberg also offers users access to the application online and through mobile devices, via its Bloomberg Anywhere service. For portfolio managers and brokers, having the ability to access real-time market information from almost anywhere in the world is an incredibly convenient and important advantage of a Bloomberg subscription.
Bloomberg’s instant messaging service has become popular among traders, who use it to post quotes, updates on trades, and news about market activity. The tools included in the Bloomberg terminal are widely used by portfolio managers, sell-side finance professionals, and buy-side analysts. Bloomberg’s data sets are comprehensive and quickly updated to reflect current market activity. Bloomberg’s treasure trove of fixed income data appeals to bond traders.
Bloomberg Terminal Competitors
The largest competitor to the Bloomberg terminal is Thomson Reuters, which started offering its Reuters 3000 Xtra electronic trading platform in 1999, which was replaced by the Eikon platform in 2010. In 2018, Thomson Reuters completed a deal with the private equity firm Blackstone, selling a 55% stake in the company for approximately $17 billion in gross cash proceeds. The company rebranded the Financial and Risk business under the new company name Refinitiv and announced a renewed focus on enhancing the firm’s flagship products, the Eikon desktop platform and the Elektron data platform.
Bloomberg and Thomson Reuters split the market share in 2011, each coming in at 30%. This was a significant improvement for Bloomberg as the share in 2007 was Bloomberg’s 26% to Reuters’ 36%. In 2018, Bloomberg’s market share grew to 32.5% compared to Thomson Reuters’ 22% market share.
While the rivalry between Bloomberg and Reuters continues, both companies are experiencing competitive pressure from smaller firms that offer financial data and analysis at a much lower price point. Two such firms are Capital IQ and FactSet. The proliferation of big data, analytics, and machine learning look to cut into Bloomberg’s stranglehold on the financial data space.