- Bloomberg LP is rolling out a new product that will offer its customers access to alternative datasets from more than 20 companies.
- The alternative datasets will be hosted not on Bloomberg’s main product, the terminal, but instead through its growing enterprise data business.
- The alternative data industry has exploded over the past couple of years with new firms offering obscure information to hedge funds seeking a trading edge.
Alternative data is about to be normalized.
Bloomberg LP is the latest mainstream financial company to wade in to the once obscure alternative-data field with a new product that will give clients access to data from more than 20 niche firms.
The datasets will be immediately available, according to a release from Bloomberg, and will include data such as stats on drug approvals, retail foot traffic tracked through cellphones, and construction permits.
“It’s not just about Bloomberg data, but really any data from a provider that wants to be hosted by Bloomberg,” said Gerard Francis, the global head of Bloomberg’s Enterprise Data business, in an interview with Business Insider.
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As hedge-fund managers seek out ways to beat the market, they’re increasingly turning to alternative-data providers to identify trends before their competitors.
And as the data industry has grown, so have fears that regulators might crack down should they suspect hedge funds and other asset managers are obtaining information in an illegal way. Bloomberg’s portal, data companies say, allows them to get their information in front of some of the largest financial institutions in the world without the extended due-diligence program typically required to onboard them.
“The market is in need of something like this,” said Hazem Dawani, the CEO of Predata, a data company that analyzes geopolitical risk and is one of the companies partnering with Bloomberg. “There are so many alternative-data providers available and datasets that are available for trading firms and hedge-fund managers and all institutional traders to consume, but it is hard for these customers to be subscribing to each one of these data sets individually.”
The access through Bloomberg fast-tracks the compliance and legal process for datasets like Dawani’s, letting massive banks be more “nimble” in working with new data vendors, he said.
See more:A growing alternative-data company uses CIA interrogation techniques to help hedge funds determine whether CEOs are lying
The Enterprise Data business, which launched its Access Point website last year, is a quickly growing unit within Bloomberg as the company looks to shift away from its heavy reliance on selling $24,000 terminals and toward data feeds.
The data companies working with Bloomberg will also be able to grow alongside it with their access to Bloomberg’s “salesforce and infrastructure,” Francis said. Dawani said his sales team grew from the two people he employed to 202 thanks to Bloomberg’s new product.
While Predata will share its roughly 2,000 out-of-the-box signals with Bloomberg clients, custom signals will be available only through a premium service available directly from Predata, Dawani said.
Bloomberg is OK with “providers determining what their strategy is,” Francis said, but there is an expectation that the data made available on the portal deliver what the providers say they will deliver.
See also: A leaked memo shows Bloomberg reached $10 billion in annual revenue last year, and some insiders will receive a special bonus
“We would expect key datasets to be shared on the platform,” Francis said.
And as those key datasets become more mainstream, longtime alternative-data players foresee a future in which they are simply known as data companies.
“Just because the technology didn’t exist to measure something before, does that make it an alternative measurement?” said Greg Skibiski, the CEO of Thasos, a Bloomberg partner that tracks foot traffic in malls.
“This concept of ‘alternative’ isn’t going to be around too much longer.”
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