Bloomberg Tradebook Looks at its Options

Traders in the U.S. equities options space can now get quotes without hanging on the telephone. Institutional buyside customers of Bloomberg’s agency brokerage, Tradebook, are able to submit requests for quote-or RFQs-to multiple market makers electronically.

The advantage to this is that the process of getting quotes-often done over the phone-is both electronic and anonymous, according to Bloomberg’s Michael Tobey, in charge of developing Tradebook’s U.S. options business. And because it is electronic, Tradebook can capture the entire negotiation process in its database.

“It’s all captured in the sense that a direct-market-access order would be captured when you enter an order on an exchange,” Tobey said. “It’s captured in our database, blotters, drop copies and end-of-day files.”

Bloomberg said it’s at the forefront of this development. Offering electronic RFQs is a relatively new functionality that Tobey thinks will catch on.

To use the electronic RFQ, Tobey said, a trader enters an electronic request that’s routed to a Bloomberg Tradebook desk. The desk accesses a number of market makers using Instant Bloomberg-the firm’s instant messaging system.

The market makers don’t know who the client is, he added.

When a number of them respond, the user can then decide if he wants to trade against the received quotes. An accepted trade is crossed and printed on the exchange, Tobey said.

“Now, a lot of people have relationships with their phone brokers, and they’re comfortable with them,” Tobey said. “So, we’re competing against that.” Still, those Tradebook customers who like the captured audit trail and the anonymity are giving the new functionality a try, he added.

And electronic RFQs will be helpful to others, as well.

“Under the Tradebook umbrella, some of our smaller or non-U.S. clients can go in and anonymously access this sellside liquidity,” Tobey said, “which they didn’t have the ability to do before.”