A man with a mission

With Philip Brittan, global FX business manager at Bloomberg L.P.

First Published: e-Forex Magazine 29 / e-Forex Interview / October, 2007

Philip, the last year has been an extraordinarily busy one for you as Bloomberg has rapidly built up a comprehensive suite of forex products and capabilities. Why has the company decided to make this very substantial investment in FX? 


Bloomberg has had extraordinary success, especially in the Fixed Income and Equity worlds, and so it was a natural decision to bring the Bloomberg value proposition to other markets such as FX and Commodities. Users expect a high bar from Bloomberg, so it was imperative that to be a presence in the FX market, we needed to build out a comprehensive news, data, analytical, and electronic-trading platform as quickly as possible. Bloomberg’s investment in FX has allowed us to become a significant force in the market within a short time. Our News team is focused intensely on delivering the most-relevant FX coverage in the timeliest possible way. We now offer extremely high-quality real-time and historical data for spot and forward prices and option implied volatility across a wide range of currency pairs, as well as an innovative set of related data such as realized kurtosis, breakeven volatilities, and exchange rate forecasts. We believe that our analytical tools are second to none, with a full range of graphing and technical-analysis capabilities, options structuring and pricing screens, and unique offerings such as forward rate bias trade analysis. Lastly, our electronic trading platform has been evolving rapidly to encompass executable streaming, conversational dealing, and multi-bank RFQs for Spot, Outrights, Swaps, NDFs, Options, and most recently, Deposits. Our breadth of product is only part of the driver of our success -- we couple innovative software with unparalleled customer service and a unique business model that offers a comprehensive suite of FX data and functionality for one monthly fee, with just one login and one desktop to manage. There are no add-on costs, and our electronic trading is completely commission-free for both the buy-side and sell-side. It's all included in the standard BLOOMBERG PROFESSIONAL® service. 

I won't say it's been entirely easy arriving relatively late to the FX market. Not only have we had a lot to build, but we have faced a market that has been, at times, somewhat skeptical of Bloomberg's commitment to FX. We've had to demonstrate that we're in this for the long haul. I hope most of our colleagues in the market will now agree that we've made that case successfully.

Philip, the last year has been an extraordinarily busy one for you as Bloomberg has rapidly built up a comprehensive suite of forex products and capabilities. Why has the company decided to make this very substantial investment in FX?


Bloomberg has had extraordinary success, especially in the Fixed Income and Equity worlds, and so it was a natural decision to bring the Bloomberg value proposition to other markets such as FX and Commodities. Users expect a high bar from Bloomberg, so it was imperative that to be a presence in the FX market, we needed to build out a comprehensive news, data, analytical, and electronic-trading platform as quickly as possible. Bloomberg’s investment in FX has allowed us to become a significant force in the market within a short time. Our News team is focused intensely on delivering the most-relevant FX coverage in the timeliest possible way. We now offer extremely high-quality real-time and historical data for spot and forward prices and option implied volatility across a wide range of currency pairs, as well as an innovative set of related data such as realized kurtosis, breakeven volatilities, and exchange rate forecasts. We believe that our analytical tools are second to none, with a full range of graphing and technical-analysis capabilities, options structuring and pricing screens, and unique offerings such as forward rate bias trade analysis. Lastly, our electronic trading platform has been evolving rapidly to encompass executable streaming, conversational dealing, and multi-bank RFQs for Spot, Outrights, Swaps, NDFs, Options, and most recently, Deposits. Our breadth of product is only part of the driver of our success -- we couple innovative software with unparalleled customer service and a unique business model that offers a comprehensive suite of FX data and functionality for one monthly fee, with just one login and one desktop to manage. There are no add-on costs, and our electronic trading is completely commission-free for both the buy-side and sell-side. It's all included in the standard BLOOMBERG PROFESSIONAL® service.

I won't say it's been entirely easy arriving relatively late to the FX market. Not only have we had a lot to build, but we have faced a market that has been, at times, somewhat skeptical of Bloomberg's commitment to FX. We've had to demonstrate that we're in this for the long haul. I hope most of our colleagues in the market will now agree that we've made that case successfully.

So one of those areas of investment has been in electronic trading of FX. What approach are you taking for your trading platform?


Yes, as I mentioned before, we have built out a platform for trading all FX instruments in both single- and multi-bank settings. When we started, we knew we had a tall mountain to climb. FX market participants had come to expect a high level of functionality. So we focused on getting the basics right and building from there as fast as we could. Our view is that most users are looking for a platform that is straightforward and easy to use. Our philosophy is: don't get in the way of the relationships between the banks and our mutual customers. We facilitate those relationships with technology and connectivity. And we've brought a unique value proposition to the market by not charging any commission to the buy-side or sell-side. We are extremely pleased with the response from both banks and customers. We now have over 100 tier 1 and regional banks offering their liquidity on Bloomberg and our trading volumes have risen dramatically over the past 2 years, with even more significant acceleration in the past 6 months.

Now we are turning our sights to handling more of the trade life-cycle. We have just released our FX Execution Manager, which is a comprehensive work-flow tool for the buy-side to upload pre-allocated orders from spreadsheets or their OMS, route those orders to their relationship banks, and to manage pricing and execution in one 'dashboard' environment. Our flexible STP solution allows users to capture all trades into their downstream systems, and is pre-integrated with the Bloomberg POMS and TOMS position-management applications and with several popular third-party systems. One recent initiative that I am most excited about is conversational dealing. The FX market has already come to rely on the Instant Bloomberg chat application for market color and free-form trading. We now offer the facility to parse chats in real-time so that trades are captured with a full audit trail for STP and compliance purposes.

In March we saw the launch of the electronic FX marketplace, Bloomberg Tradebook® FX. How is this new platform made available to clients and what key transaction functionality does it offer institutional traders?


BLOOMBERG TRADEBOOK® FX is Bloomberg's broker-dealer subsidiary, and it launched an innovative ECN for FX this past year. Unlike the BLOOMBERG PROFESSIONAL service FX trading platform I just described, BLOOMBERG TRADEBOOK FX* does charge a commission, and in exchange it provides active traders with anonymous, direct-market access into a highly liquid and diverse electronic marketplace.
A man with a mission

The platform provides traders with a real-time executable inside market, six levels of market depth and block liquidity views. Traders can seek to gain the spread by placing limit orders, control information leakage with icebergs and employ advanced trading algorithms, commonly used by traders on Bloomberg Tradebook's other platforms (equities, futures, options), to seek better executions.


Last year Bloomberg supplemented its foreign exchange offering with the launch of its Foreign Exchange Information Platform (FXIP) which consolidates all Bloomberg news, commentary, analytics and data onto a single platform. Was this undertaken in response to customer demand and what new features have you added to the platform?


We wanted to give customers one starting point to see a complete landscape of our FX offering and to navigate quickly and easily to relevant content. And we wanted to lay out that landscape in a sensible and useful way for the specific needs of currency professionals. That's what FXIP accomplishes, and it is an extremely popular function. We call it a “platform” because we will continue to hang additional functionally on it. Over the past year, we started a suite of FX investment analysis tools, including with FXCT, our FX Carry Trade analytic, and FXFB our Forward Rate Bias trade analytic. We recently enhanced both of these functions to allow customers to overlay technical signals on the underlying strategy. We also launched FXFC, our function for FX exchange rate forecasts from over 50 major sell-side and research institutions. FXTF, our FX Ticker Finder, helps customers find the exact currency data they are looking for using hierarchical navigation and intelligent key-word search.

With your background in FX options, presumably you've also been focused on building out FX options capabilities at Bloomberg?


Yes, analytical and trading support for FX options has been one of the key pillars in our strategy. The centerpiece of our options initiative is OVML, our options calculator and trading screen, which allows users to structure and price a wide range of single- and multi-leg option structures from Vanilla and exotic components.

OVML also allows customers to request and trade on executable prices for their options structures from top-tier liquidity providers. Complementing OVML is our new options portfolio risk analysis function, OVRA, which allows users to run revaluations and a variety of risk-scenario analyses on their FX and FX options positions.

Recently, several banks have committed to offering liquidity in non-deliverable forwards (NDFs) over the Bloomberg FX Dealing platform. What prompted the company to support trading in NDFs?


We launched support for NDF trading this summer and we have had a positive response from the banks and their customers. Bloomberg has carried NDF pricing and analytics for years, so supporting NDF trading on our platform was a natural extension for us. And we found a surprising gap in the marketplace for trading NDFs that we have been able to address.

A man with a mission

Another significant Bloomberg development has been the publishing of your own fixing rates with the launch of BFIX for FX. How often do you fix the ranges and how close to real-time is the data made available?


Our customers told us there was a need for a single fixing standard across all currencies, one that gave customers the flexibility of numerous fixing times and a quick fixing algorithm. And so we launched our BFIX FX Fixing Rate source. We publish official BFIX fixings every 30 minutes, and each fixing is available on the
screen and via the Bloomberg API within 15 seconds of the fixing time, which makes our fixings extremely actionable. The fixings themselves use a transparent algorithm that makes them impervious to manipulation by market players, and the underlying prices used are from our Bloomberg Generic pricing source, which is itself a proprietary composite of the highest-quality data available. We offer BFIX to
our customers for use in commercial agreements, for mark-to-market, trade settlement, order execution, and benchmarking.

What are your views on the impact of Algorithmic trading in FX? Do you think it will create an entire new industry based around automated and strategy-based FX trading as some commentators believe or will it end up being seen as just another extremely useful tool in the trader’s armoury?


Algorithmic trading, across all asset classes, is becoming an increasingly larger share of total volumes. It is to be expected that it become similarly common in FX. The high-frequency nature of FX in fact lends itself to certain approaches for algorithmic trading better than many other asset classes. But algorithmic trading should not be seen as an industry unto itself -- it is one aspect of the FX trading world. Already, algorithmic traders commonly use Bloomberg data to drive their models. We believe that our ability to deliver a deep set of data and analytics across a wide range of asset classes and economic statistics is one of our core strengths. We have some exciting developments underway in the area of algorithmic trading that will leverage our data and analytics for our users' benefits in innovative ways, but we're not quite ready to talk about those initiatives yet.

Bloomberg has standardised on FIX across all asset classes including FX, which is a very big endorsement of the protocol. Do you think we are now reaching a critical mass with regard to FIX in FX with most providers adopting it and what are your expectations for the new FIX Algorithmic Trading Definition Language that has just been announced?


Bloomberg started using FIX many years ago for its Equities and Fixed Income trading platforms. It was natural for us to standardize on FIX for FX, and we feel that we were well-timed in doing so. Just a couple of years ago, FX trading APIs used a variety of different, incompatible, technologies. Now, everyone is working hard to standardize on FIX, which is a good thing because it brings efficiency to the market. It allows firms to focus more on how to make money and less on figuring out how to wire up. The FIX Algorithmic Trading language seems like a natural extension of FIX and is in step with these algorithmic times. I’m certain it will take a little while though, before we see clearly how the market adopts it.

The FX market currently seems fairly crowded with a variety of marketplaces and ECNs. Do you see this situation continuing and the market proving able to support all these trading venues or will we see some consolidation?


There is no doubt the market is crowded. The tremendous growth we've seen in the FX market has made for a fairly lenient environment for all comers to have a go in FX. But it is inevitable that consolidation must come, and only a few platforms will be left standing. Already we see platform brokerage fees compressing across the market. In order to be one of those platforms left standing, our strategy is to focus on providing an unparalleled package: great product, continual innovation, access to a huge high-quality customer base for banks, access to every significant liquidity provider for the buy-side, and a unique charging model that sticks no extra fees or commissions to either the buy-side or sell-side. We are also betting on the value of offering a comprehensive and integrated product -- including news, data, and analytics, as well as trading -- on one desktop and one login.
A man with a mission

In this article we've discussed just a few of the important initiatives Bloomberg has recently undertaken to cater to your wide range of customers. With so many different types of client segment now active in the FX trading environment, how are providers like yourselves going to be able to meet the future challenges of servicing all of these segments and at the same time continually delivering new, innovative bespoke trading tools and applications?


One of the trademarks of Bloomberg's success has always been the close relationship we have with our customers and our responsiveness to their evolving needs. Bloomberg keeps an ear close to the ground of the market and is able to bring considerable resources to bear on a challenge quickly. We will never stop learning from our customers, never stop innovating, never stop finding new ways to bring unique value to the marketplace. We make it easy for our customers and potential customers to speak with their Bloomberg sales reps, get thorough demonstrations and training sessions for our functionality, and to provide feedback that is immediately looped back into our product strategy process.