Eight banks join Markit and Thomson Reuters chat network

By Jennifer Saba

(Reuters) - Goldman Sachs Group Inc, JPMorgan Chase & Co and six other banks have agreed to join a new instant messaging network from Markit and Thomson Reuters Corp to connect disparate messaging systems.

The network, called Markit Collaboration Services, was launched on Monday and allows members to chat with one another regardless of the proprietary messaging technology that each firm uses.

This open platform contrasts with Bloomberg LP's messaging system, which is a closed network only for users of Bloomberg terminals. Bloomberg messaging is the most popular form of chat on Wall Street, and often cited as one of the reasons banks are willing to pay around $20,000 a year for a subscription to a Bloomberg terminal.

Markit and Thomson Reuters said they hoped their open messaging network will attract banks that want to chat with their clients or other financial institutions but cannot currently do so because they are on different messaging systems.

David Craig, president of Thomson Reuters' Financial & Risk division, said that the company and Markit started drafting plans for the open network last year at the request of clients.

"This is something that came together with our partners at Markit because the industry, our customers, asked us to do this," Craig said. "It's open to the industry to connect to."

The eight partner banks are minority shareholders in the privately held Markit, and include Bank of America Merrill Lynch, Barclays, Citigroup, Credit Suisse, Deutsche Bank and Morgan Stanley, in addition to Goldman and JPMorgan.

The banks collectively employ more than 1 million people worldwide, though it was not immediately clear how many individuals will use the new Markit service.

Analysts and customers expressed mixed views about the prospects of the new messaging network.

"Bloomberg has done a phenomenal job integrating every aspect of that function so that it's hard to replicate and hard to wean people off of it," said Larry Tabb, founder and CEO of the Tabb Group, a financial markets research firm.

Zar Amrolia, cohead of fixed income & currencies at Deutsche Bank, said in a statement that the new network "allows us to connect disparate systems and improve the quality of communication and therefore service we provide to clients."

Markit and Thomson Reuters said the messages on the new network are encrypted, and the system does not store them.

The launch came five months after Goldman and JPMorgan complained that Bloomberg journalists had access to sensitive information about how the banks' employees were using the terminals, including how often they used messaging. Bloomberg apologized, conducted an internal review, and restricted journalists' access.

Peter Appert, an analyst with Piper Jaffray, said banks are generally looking for ways to reduce their dependence on Bloomberg terminals, but it remains to be seen if the new messaging network will take off.

"The big banks are looking for ways to stir the competitive pot and give themselves more clout to negotiate with Bloomberg," Appert said. "We'll see if this thing catches on and if it really is a viable alternative."

Representatives from Bloomberg were not immediately available to comment.

Representatives from Bank of America, Goldman Sachs and Morgan Stanley were not immediately available to comment on the new messaging system. Representatives from Barclays, Citi, Credit Suisse and JPMorgan also declined to comment.

Shares of Thomson Reuters edged 0.4 percent lower to $35.41 in morning trading on the New York Stock Exchange, in line with the broader U.S. market.

(Reporting by Jennifer Saba; Editing by Tim Dobbyn and Grant McCool)