Bloomberg blackout hits markets, BoE stands ready after Gilts setback

LONDON (ShareCast) - In the City of London (LSE: CIN.L - news) and financial centres around the globe traders and analysts were left gnashing their teeth as their Bloomberg computer terminals crashed on Friday morning, with fixed income markets suffering an especially large impact. The trading and information units are heavily relied upon by many thousands of financial professionals around the world, with a single Bloomberg Professional subscription, costing about $20,000 a year, providing real-time market prices and a flow of economic news from a specially built computer unit.

After the technical snafu, traders at Spreadex cited "frantic scenes" on the markets and Twitter (Xetra: A1W6XZ - news) saw outpourings of frustration and some amusement, while Michael Hewson, chief markets analysts at CMC Markets, said the issue "could well" affect trading volumes.

The UK Debt Management Office was forced to postpone a £3bn sale of Treasury bills scheduled for 10:00 BST due to the disruption.

The Bank of England confirmed its core operations had not been affected and that it was ready to provide liquidity if needed, a presumably gleeful Reuters reported.

"The Bank retains all the tools it needs to carry out its responsibilities for financial stability, and provision of market liquidity, if and as required," the BoE (Shenzhen: 000725.SZ - news) said in a statement.

A note from Citigroup said: "Within about 30 minutes of Bloomberg ironing out the technical issue, all of our benchmark indices took a co-ordinated nosedive into what can only be described as a bid vacuum. If you ask me, this feels like a tape that was probably set to trade with a sloppy tone today anyway, but there is no doubt that the weakness has been accentuated by the liquidity environment." Bloomberg, which has claimed it has around 320,000 subscribers, confirmed that its terminal system was unavailable worldwide, with the outage first cited at around 08:20 in London.

The company said it was examining the causes of the outage and by 09:10 London time the company said that some customers had reported the terminal was back online.

Allen Mattich, blogging at the Wall Street Journal, said: "Sure, a technical disruption affecting Bloomberg terminals made trade difficult, particularly in bonds. That seems a little far-fetched as a trigger for a market rout, although the fact that a big communications channel for traders was temporarily cut off shouldn't be underestimated." The dominance of the terminal has been widely questioned. Last year, Fortune cited several entrepreneurs and venture capitalists who believed the system was "a bit of an anomaly, perhaps even an anachronism.

"In the era of free information on the internet and open source Big Data tools, here's a business that charges its users to access data that it generally obtains from third parties, as well as the tools to analyse it".

As of 13:09 the yield on 10-year Gilts was down by five basis points to 1.56%.