Open source makes another move on Wall Street

I say third because Marketcetera's open source trading platform, under the GPL, has been gold for almost a year. A SaaS version of Marketcetera for portfolio management was also released last year. (They must be working hard there -- their latest blog post is dated November.)

Still Marketcetera is a start-up, Bloomberg a major player.

Bloomberg announced its Bloomberg SYMbology (BSYM) would be available free back in November. That news was noted mainly by insiders. Promotion alongside the New York Stock Exchange is a big deal.

So what's going on?

The stock symbols you see in a newspaper don't fully describe what you can buy and sell. Go to Bloomberg's site for its open source symbology and input a known stock symbol -- any symbol.

What you will probably see are page-after-page of puts and calls, at different dates, on different exchanges, from different sources, in different configurations. (There are 78 pages of these for Google alone.) Getting the best price through an automated system requires that your computer know all the unique identifiers for these securities.

This is a big part of Bloomberg's "secret sauce." Until recently you could only get this data through a Bloomberg terminal, using an expensive Bloomberg data stream.

So why is Bloomberg publishing these codes, and in time its algorithms for making them? Are they crazy?

As the A-Team Group noted when the symbols were first released in November, they are crazy like a fox. Here is why:

1. Trading is moving toward higher levels of abstraction, with people replaced by computer programs. Releasing the codes gets Bloomberg inside these new programs, and makes its data feeds important in this new method of trading.
2. This is a real shot across the bow at Standard & Poor's and Thomson-Reuters, its main rivals. Both are being investigated in Europe for the monopoly created by Reuters' Instrument Codes (RIC), the main BSYM rival. Now there is a free alternative. And if you're getting the codes free why not buy the data?

It's a good lesson in what might be termed the offensive use of open source, as opposed to its defensive use. Open source can force open opportunities that companies were locked-out of, just as it can maintain customer loyalty for services and support.

I will be interested in seeing what Marketcetera does with this news. With open source symbology and data feeds, open source trading platforms can get much more powerful.