Chat Service Aims to Challenge Bloomberg

The largest banks on Wall Street are teaming up to join a network that could challenge an important part of Bloomberg’s terminal business.

The banks have all signed up for a messaging service that will be introduced on Monday and will allow finance industry employees to find and chat with one another quickly.

Many traders and bankers now rely on the chat application that comes with a Bloomberg terminal, which is valuable in the networked world of Wall Street because of the number of people who have the terminals. Instant Bloomberg, as it is known, is generally available only to people who pay for the terminals, which cost about $20,000 a year each.

Bloomberg’s dominance in the messaging realm â€" and its hold on the information that runs through the chats â€" has grated on some banks that are unhappy about the fees that Bloomberg is able to charge. Banks have complained that they sometimes have to pay for a terminal just so an employee can use the chat service.

The new, more open and less expensive service, which will be operated by the industry-owned firm Markit, could loosen Bloomberg’s dominance on Wall Street.

“The industry was looking for an open network,” said Lance Uggla, the chief executive of Markit. “We all believe that chat is an item that can be unbundled from the rest of the technology to allow broader adoption in the industry.”

There is no shortage of free chat programs. But the new Markit Collaboration Services will be different because it will link chat programs that bank employees already use internally, like those offered by Microsoft and Cisco. It will also include the 190,000 people who have data terminals from Thomson Reuters, Bloomberg’s biggest competitor.

“Prior to this, you were stuck,” said David Craig, the Thomson Reuters executive working on the effort. “You’d have to buy into a terminal or use a separate messaging program.”

Because the system will allow banks to use their pre-existing chat programs, banks will maintain control over the contents of the chats and the security measures protecting their communications. Banks that sign up for the new service will pay one fee to connect to the system and will then be permitted to add as many employees as they want to the directory. The eight largest Wall Street companies have already signed up, including JPMorgan Chase, Goldman Sachs, Deutsche Bank, Bank of America, Citigroup and Barclays.

Jim Toffey, an executive at the inter-broker dealer GFI Group, which has also joined, said in a statement that “today we rely on multiple systems to communicate and the ability to use one platform to reach many customers is extremely valuable.”

The network will have several hurdles to overcome to be adopted widely. One of the biggest will be winning over not just the banks but also the big investment firms that employ the banks. Markit is trying to appeal to those firms by making it free to link their employees into the network.

The new effort will also have to contend with the fact that Bloomberg’s chat offerings link seamlessly with Bloomberg’s trading software, making it easier to execute transactions. Bloomberg also now allows its chat program to link up with AOL and Yahoo chat programs.

Executives from Markit and Thomson Reuters said they began collaborating at the end of last year, at the instigation of banks that wanted an alternative to then-current networks. That was before a number of banks raised concerns about Bloomberg’s internal use of data about bank employees. Since then, Bloomberg has taken steps to soothe the unhappy banks and has strengthened its privacy policies. Still, several banks decided to join the Markit network in recent months.

The banks that have signed on have more than a million employees worldwide. Bloomberg has 315,000 terminal customers.

A Bloomberg representative said the company could not comment on the Markit effort until the details were officially released on Monday.

A version of this article appears in print on October 7, 2013, on page B2 of the New York edition with the headline: Chat Service Aims to Challenge Bloomberg.