Bloomberg Plans to Exit SSEOMS, KYC Business Lines

Bloomberg is intending to exit two key lines of business in the coming months: its Sell-Side Execution and Order Management Solutions (SSEOMS) unit and its Know-Your-Customer (KYC) business, which includes Entity Exchange and Entity Intelligence, WatersTechnology has learned.

A spokesperson for Bloomberg confirmed that it intends to exit both lines but could not go into details about its exact plans.

The information giant does not have plans to exit any other business lines, such as its multi-asset, sell-side focused Trade Order Management Solutions (TOMS) unit or its Asset and Investment Management (AIM) buy-side OMS.

Bruce Fador, managing partner at Fador Consulting Group, says that by winding down these business lines, Bloomberg could potentially free up resources and capital to further invest in more profitable areas, such as alternative data and data analytics. "It makes complete sense," he says. "The profitability factor is one piece, but it's also just where the industry is going. Bloomberg has all the data in the world, but how do you find the nuggets in all the data that's out there? So, putting a front-end and tools on that in order to draw from this vast data that they have is important."

The OMS space has undergone a significant amount of consolidation of late, particularly with buy-side-focused platforms. Much of 2018 was dominated by mega-deals involving storied companies, including State Street's acquisition of Charles River, SS&C Technologies snapping up Eze Software, and Fidessa being bought by Ion. However, the sell-side OMS segment was largely untouched by most of this market movement.

Bloomberg's decision to exit its SSEOMS business, therefore, is significant for being one of the first dominos to fall in this category.

Sign of the Times

Douglas Taylor, co-founder and managing partner of Burton-Taylor International Consulting, says that while it is interesting whenever Bloomberg decides to leave a business—as it's usually entering and growing its business lines—these moves aren’t that surprising.

“I don’t think these are big or significant businesses in any way for Bloomberg; I don’t think it makes a blip in their revenue,” he says. “If they were growing like crazy then they wouldn’t be shutting them down.”

In December, the firm put out its annual report examining the anti-money laundering (AML) and KYC space—Bloomberg did not make enough of a dent to be included in the report, which was led by the likes of Refinitiv (formerly Thomson Reuters), Dow Jones, LexisNexis Risk Solutions and Bureau van Dijk. [See chart below]

Furthermore, for the SSEOMS piece, it’s emblematic of current trends facing the equity order management space. “Everything equities related has become so homogenized and so driven by consolidated tapes and, in many cases, the trading venues themselves, that I think it’s just a sign of the times, frankly,” Taylor says.