Bloomberg has launched Options IOI, a price-monitoring tool for equity derivatives investors, available on the Bloomberg Terminal.
The tool uses natural language processing to detect indications of interest and price quotes in users' Instant Bloomberg chat rooms, then organises that information in a central desktop display.
It targets a market in which traders often monitor fragmented pricing information across multiple chat channels and applications while assessing liquidity in equity options. Bloomberg said growing institutional activity and off-exchange block trading have added to that complexity, leaving traders and banks to navigate limited transparency and dispersed communications.
Options IOI is designed to bring together pricing information from multiple chats and let users filter messages by criteria including instrument characteristics, price levels and counterparties. It also places broker-distributed pricing alongside exchange data on the Bloomberg Terminal and lets users jump from the display to the relevant chat to continue a negotiation.
Market workflow
The launch reflects the growing importance of electronic messaging systems in equity derivatives trading, where liquidity may be discussed in chat rooms rather than displayed in a single transparent order book. As a result, traders can spend significant time scanning messages manually to find relevant quotes and gauge available interest.
That process can create friction for both buy-side and sell-side participants, particularly when pricing information is spread across several desktop applications and communication channels. Interdealer brokers also face the challenge of making their liquidity visible and capturing traders' attention quickly enough in fast-moving markets.
Bloomberg noted that API-based alternatives are available, but said those data feeds can lag in rapidly changing markets. Options IOI instead focuses on extracting information directly from the chat-based communications market participants already use.
Use in options
The product focuses on equity options and is intended to help users screen liquidity more quickly by turning unstructured chat messages into a structured view. Bloomberg said users can analyse thousands of Instant Bloomberg messages in seconds and identify quotes relevant to their trading needs.
For interdealer brokers, the tool is intended to preserve existing communication habits while making prices easier to surface in a format traders can review and compare. Brokers can continue using Instant Bloomberg chat rooms while distributing pricing information in a more structured form through those same conversations.
Bloomberg positioned the product as a way to improve visibility across trading desks and make it easier for traders to respond to broker liquidity. The company is applying a version of natural language processing tuned to the terminology used in derivatives markets, where shorthand and market-specific phrasing can make automated interpretation more difficult than in general business messaging.
Simon C. Watts, Head of Product Development for Listed Derivatives and Delta One at Bloomberg, described the problem the company is trying to address in the equity derivatives market.
"Equity derivatives traders often need to sift through massive quantities of fragmented pricing data across multiple applications just to source the right liquidity to meet their objectives. By harnessing Bloomberg's NLP to structure chat-based quotes within the Options IOI solution, we are transforming how clients quickly discover prices and accelerate execution quality for off-exchange liquidity," Watts said.
Instant Bloomberg is Bloomberg's messaging system for Terminal users and is widely used across financial markets for real-time communication between traders, sales teams and counterparties. The new tool builds on that workflow by using information already exchanged in chats rather than requiring users to shift to a separate communication process.
The launch adds to Bloomberg's efforts to tie market data, communications and trading workflows more closely together on the Terminal, particularly in areas where liquidity remains fragmented and price discovery relies heavily on bilateral conversations rather than on-screen markets.
Options IOI lets users move directly from a centralised pricing display to the relevant Instant Bloomberg conversation to continue trading negotiations.