Several leading banks and asset managers on Wall Street plan to acquire a stake in chat and instant messaging startup Perzo Inc., Reuters reported on Sunday, citing sources.
For years, Bloomberg LP has dominated messaging on Wall Street for years, but its application is part of a data, trading and news terminal that costs about US$20,000 a year, the report said. The Perzo applications are free.
Those considering an investment in Perzo include Goldman Sachs Group, Morgan Stanley, JPMorgan Chase & Co., Bank of America Corp., Deutsche Bank AG, HSBC Holdings Plc, BlackRock Inc. and hedge fund Maverick Capital Ltd., according to the sources. The companies declined to comment.
Perzo is a Palo Alto, California-based startup founded by David Gurle. Perzo’s application is “open-source,” meaning customers can plug it into their systems and alter it as they see fit. The Bloomberg system, on the other hand, is part of the entire terminal and users can’t modify it.
Banks have been looking for an alternative to Bloomberg’s closed messaging system, but have little success because it is used by so many on Wall Street, according to Reuters.
“Bloomberg is a very tough ecosystem to break,” Jefferies analyst Dan Dolev was quoted as saying. “People say it is the most expensive social network system in the world.”
Thomson Reuters, which competes with Bloomberg in news, data and analytics, has a chat system with more than 200,000 users in its directory, compared with Bloomberg’s 320,000.
Thomson Reuters has also collaborated with price data provider Markit and banks including Goldman Sachs to create an open messaging network, the report said.
Messaging applications play a critical role in the daily functioning of Wall Street. An underwriter will use messaging programs to tell investors where a bond has priced. Hedge fund managers use messaging applications to talk about trading ideas, and traders use them to talk to sales staff.
To succeed, a bank messaging system must be secure, because of the sensitive information transmitted through the application. It must allow for central monitoring, so compliance staff and other officials can monitor conversations to make sure the bank is following securities trading regulations.
– Contact us at [email protected]