News and data provider Bloomberg has been rocked by a scandal that has caused serious rifts between it and its powerful clients and thrown the vital role the company plays in the global markets into the limelight.

A complaint by investment bank Goldman Sachs brought to light that Bloomberg journalists have habitually been accessing the usage records of the company's financial data clients. The data included log-on times and which services had been used, which could be used to surmise their work patterns and interests. The scandal was compounded when it emerged that an email containing private details on client activities had been mistakenly published online.

While to the casual observer the information accessed by the journalists may seem vague and therefore of little consequence, it is a huge issue in market trading where there is cutthroat competition to gain even the smallest advantage over competitors in information access.

Hence the uproar, with Bloomberg incurring not just the wrath of powerful traders, but also of central banks - the Bank of England branded the practices as "reprehensible."

For any news wire service, accuracy is the number one concern. However, the Bloomberg service is far more than a news wire to its users. Since its launch in 1982 by now mayor of New York Michael Bloomberg, it has grown to a $6 billion business. This is because the 20,000 dollar-a-year terminals it provides act as umbilical cord to the markets, streaming up-to-the-second information that traders use to conduct trades and develop investment strategies. For investment banks and financial institutions, the Bloomberg terminal is a primary tool, and having a log-in to a Bloomberg terminal is seen as a sign that one has earned their spurs by many traders. While accuracy is key, client's trust that confidentiality is maintained is just as important.

There is also some irony in that the scandal is down to a failure in the information barrier that should be in place separating Bloomberg's news personnel from the sensitive trading and client data sides of the business. A flouting of similar information barriers between investment and advisory arms of investment banks was an ingredient of the 2008 financial crisis.

While it has competitors such as Reuters and Dow Jones nipping at its heels, by all accounts the Bloomberg system offers the most comprehensive service and is the only game in town for power players. This makes it very difficult for them to simply up and cancel their subscriptions - especially as those who do will worry that traders remaining with the Bloomberg service will then have an edge over them.

This also means that there is a natural tendency towards monopoly in trading data provision. This is a very dangerous situation in a global market that has demonstrated its fragility all too frequently and to devastating effect.

The author is a freelance writer based in Shanghai. Adam.skuse@yahoo.com