Last year, Bloomberg became the first data vendor to provide its unique, proprietary identification codes for stocks, bonds, options contracts and other financial instruments for free on a new website called

The interactive site allows users to look up descriptive information on a security by the name of the issuer or industry sector involved without paying for the cost of subscribing to a Bloomberg data feed.

The move was hailed as a first in an data industry where data vendors guard their intellectual property closely.

But that doesn’t mean that Bloomberg wants to give everything away for free. Now the data vendor looks like it wants fund administrators to pay fees, if they use the data to service customers.

Here’s the deal: Fund administrators which distribute pricing data from its Bloomberg Asset Valuation (BVAL) service to their investment management customers as part of the processing of valuing holdings in their portfolios are being asked to sign addendums to their service provider agreements with Bloomberg.

Those addendums would classify the fund administrators – custodian banks such as Bank of New York Mellon, State Street, Northern Trust and Citigroup to name a few – as data redistributors. That means they would have to cough up extra fees when they distribute information such as a Bloomberg quote from its BVAL service to their fund manager customers as part of their net asset value reports if the fund manager client is not a customer of Bloomberg. Fund administrators typically establish net asset values for their clients on a monthly basis.

One data management executive at a large fund administrator who notified Securities Industry News about the new addendums doesn’t think he should pay Bloomberg a red cent. That is because his bank is only redistributing the data as part of the portfolio valuation service it provides.

But Bloomberg says fund administrators shouldn’t complain. The new policy isn’t about a new fee for an old free service. It’s really a new fee for a new service.

“Users of our Data License feeds have always been able to redistribute the Bloomberg data across their enterprises, but we restricted them from redistributing the data outside their enterprises,” wrote Judith Czelusniak,chief communications officer for Bloomberg in a statement issued to Securities Industry News last week. “When we launched this [BVAL] feed last year, fund administrators asked to have the ability to act as agents to redistribute our BVAL data to their clients.  BVAL helps clients produce credible, transparent and defendable valuations across a broad spectrum of financial instruments.”

Czelusniak said that BVAL feed is being used with “great success” from direct customers in the U.S. and was recently expanded to the European market.

Bloomberg is simply following industry practice, according to Czelusniak. Thomson Reuters, Interactive Data and Standard & Poor’s declined to comment on their policies but the gist is that their customers cannot redistribute their data to third parties without the third parties also being treated as customers of the data vendor.

Czelusniak would not disclose its fee schedule for redistributing BVAL data but if what fund administrator executives intimate is accurate, the fee could come to about $1 for each use in pricing a portfolio. Doing some basic math, for a fund administrator servicing one thousand portfolios that comes to a minimum of $1,000 a month. And that’s only if the administrator lists the price one time per portfolio. It could easily come to $10,000 a month for a lot more uses. It’s $1 per valuation of a security. Presumably, discount rates do apply depending on the number of customers the fund administrator wants to redistribute to.

It’s likely that fund administrators would pass along the fees to their customers. But fees aside, fund administrators would have some extra work to do. They would have to identify individual data sources used for valuations, calculate how much each customer owes, bill the customer, collect the payment from the customer and pass along the payment to Bloomberg. That sounds like a job in itself.

Czelusniak says Bloomberg is not in any negotiations with fund administrators about changing the addendum to its service provider agreement for redistributing the BVAL data. But the data management executive at the fund administrator who spoke with Securities Industry News says he wants Bloomberg allows his bank to redistribute the BVAL data for free it will promise to do so only for it portfolio valuations and no other purpose. It will also ensure that its customers wouldn’t use the market data for any purpose other than validating their net asset values. Also, the investment managers can’t redistribute the data somewhere else.

Now all Bloomberg has to decide is just how far it is willing to go to protect its intellectual property. Will it set itself up for another industry first, by allowing redistribution without a fee? Or not.

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