While interoperability has become the North Star for many tech projects across the capital markets, it’s often easier said than done, especially when it comes to legacy systems.

Bloomberg’s Asset and Investment Manager (Aim) buy-side order management system (OMS) was officially launched in 2008, but its roots can be traced back to the early 1990s with the Platform Trading System. Bloomberg’s Portfolio & Risk Analytics (Port) offering—its portfolio management system (PMS)—is more than a decade old, but has been made more robust (and complex) after the acquisition and integration of a competing platform, Barclays’ Risk Analytics and Index Solutions, or Brais.

Matthew York, global head of buy-side OMS and compliance at Bloomberg, says in the past, the vendor community would talk about OMSs, PMSs, and execution management systems (EMSs) separately. But since the credit crisis of 2008—and subsequent regulatory rollouts, market structure changes, and liquidity fragmentation—buy-side firms have sought better front-to-back and platform-to-platform interoperability.

“In the past, we were very much focused on best-of-breed solutions for a given function, hence a PMS allowed you to look at your portfolio and assess the risk characteristics within the portfolio and construct new models that allow you to work out better portfolio constructs,” says York, who previously worked at FlexTrade and ThinkFolio, which was bought by Markit (which later became IHS Markit, and was acquired by S&P Global).

“That was very isolated from an order management system that would take that new portfolio construct and suggest trades. Previously separate between Bloomberg Port and Aim, we now have tools that we have been bringing together into a combined portfolio and order management system. You will see that throughout the industry, there has been similar evolution and combination of these products,” says York.

Interoperability between Aim and Port—and all buy-side products, including post-trade and compliance—means one codebase is used, where analytics between the solutions can be shared. Users can construct, implement and manage their portfolio using the same pricing, data, and analytics that flow through the ubiquitous Terminal, which has over 330,000 users.

Users can also integrate real-time data and analytics from other applications, such as axe data—”wish-lists” of securities that other firms are interested in buying or selling, and which are provided through trading counterparts and aggregators—from Bloomberg’s inventory management system.

“In the past, clients would separately buy a post-trade solution, and an execution management or order management solution, potentially bringing many different solutions together as part of their trading technology stack,” York says. “That best-of-breed approach of utilizing lots of solutions from different providers had a cost to it, and the cost was how you joined these things together.”

Due to new regulations, market structure changes, and liquidity fragmentation—combined with a shift from active to passive and systematic investing—over the last decade, the buy side has faced significant pressure to cut costs. York says this led the asset management community to look for single solutions, rather than a hodgepodge of tools.

Bloomberg stands to benefit from the mindset shift York describes, as Bloomberg is known to be a closed ecosystem. It’s also true, though, that the company has been increasingly embracing application programming interfaces (APIs) to build partnerships with outside parties. For example, there’s the Bloomberg Query Language (BQL), an API that allows users to download large amounts of data and, through it, run selective querying of their data stores and enrich and calculate analytics on Bloomberg’s servers and cloud services.

On top of that, Bloomberg rolled out BQuant, which is used by developers and analysts to create environments that allow them to use things like Jupyter Notebooks to create and model scenarios, as well as build custom apps to deploy and send to other users. Both BQL and BQuant are integrated into Port and Aim.

Cosaic—a desktop integration platform provider and charting vendor—recently connected its Finsemble platform to the Bloomberg Terminal using the Bloomberg Terminal Connect API. As a result, Finsemble users who also use a Bloomberg Terminal can interoperate between various applications in the Finsemble environment and the data workstation. In a trader’s blotter, users can push information to a Bloomberg security worksheet, and data can travel from the Bloomberg panel in Finsemble to other components running in the container.

“If you asked me five years ago if I thought Bloomberg would be an open and willing partner in this [interoperability movement], I’d have thought probably not, but they are opening up,” says Dan Schleifer, CEO of Cosaic. “Vendors are realizing that openness is a market opportunity for them. In the past, they thought that if they let things out of their box, it would be a weakness—now openness is seen as a strength.”

However, Cubillas Ding, research director of consultancy Celent’s capital markets division, notes that companies like Bloomberg are taking it slow when opening up.

“This is a double-edged sword and erodes the lock-in effect for them in the longer term,” he says. “Navigating the tension between end-users and vendor interests could mean that structural change may not happen as quickly as one may expect.”

Skimming the surface

In addition to making integrations with competing venues in the electronic trading space, such as MarketAxess, Tradeweb and FXall, Bloomberg is also using its API development to expand into new asset classes, such as crypto.

Earlier this year, Bloomberg announced it was integrating with Elwood Technologies, which provides a cryptocurrency trading platform. Through it, the platform can connect directly into Aim.

“In the past, solutions providers could get away with working within their own sphere, with their own solutions. Because clients need to lower costs and support full end-to-end workflows, providers like Bloomberg must recognize partnership plays and work with our friends who are also our competitors. This is pushing us to evolve our solutions and our technology offerings to be more open, interoperable, and supportive of full end-to-end workflows for clients,” York says.

“We are also seeing that happening within the OMS world. We recognize that certain clients will use us for a piece of the portfolio process, the [portfolio, order and execution management system] sphere, but they may choose to use a different source of execution management system or portfolio construction and risk. We focus on how we can offer standardized integrations from third parties with our underlying order management and compliance system, and we expect to see more of that in future years,” he says.

Additionally, while Bloomberg offers a hosted solution with a private cloud offering, it also connects with Amazon Web Services (AWS) and Microsoft Azure. Through these partnerships, Bloomberg can create cloud-native tools that allow users to connect their internal data with, for example, Port within their own private cloud or a provider’s private cloud.

York says users can take their risk and performance calculations from Port and expose them into a client’s AWS or Azure cloud offering, for example. They can then put tools like Microsoft Power BI—a data visualization offering—on top of that and create dashboards using that data.

For York, this interop push is only the beginning, even if interop is at the center of tech projects across the industry.

“I think we are only skimming the surface of where interoperability will go,” York says. “The most important part of interoperability is creating more standardized API architecture. The challenge is how you do that with both new and legacy technology.”