Babble < > Babel

The words Babble and Babel apparently are not related etymologically. Goldman’s new effort to create a type of federated chat to challenge Bloomberg messaging is code-named Babble. In the story of Babel, the builders of a great tower were scattered into confusion by God for their hubris. They were given different languages, and communication then became a bit trickier. So maybe Babble and Babel are in fact related.

Goldman and, one assumes, the other big banks, no longer trust Bloomberg after the privacy scandal last year. It was revealed at the time that Bloomberg reporters had access to message traffic. Apart from this trust issue, Bloomberg is also viewed as being too expensive and having too much power. Last, Bloomberg’s continued expansion into trading services constitutes an apparent threat to core dealer businesses, with little way for them to fight back. So the tension between Bloomberg and the dealer community appears to be structural and ongoing.

The Federated Chat platform initiated by Markit and supported by the dealers was an earlier attempt to break the messaging strangle-hold. Several big investment banks all own pieces of Markit. So why would Goldman initiate a separate effort? Now that Markit is public and those investment stakes can be sold down maybe the incentives between Markit and the banks are no longer aligned. It also may be that the Markit Federated Chat platform is not gaining traction. How would the Goldman effort be different?

What happens from here? Goldman may not trust Bloomberg. Will users, including other dealers, trust Goldman? The Senate hearings involving Goldman’s Fabulous Fab are not so far removed in time. And even now other banks are under the gun for practices related to dark pools they control. Who will trust the market players themselves with this kind of messaging information? Bloomberg, some will say, may not be perfect but it is better than a big bank alternative.

So, as of now greater powers have not yet found a way to bring down that particular tower.