Nearly one month after Warren Buffett’s Business Wire discontinued the practice of providing high frequency trading firms access to information, Marketwired, a firm that distributes corporate earnings and other potentially market moving news, has stopped selling to HFT firms.
Marketwired had conversations with NY Attorney General Eric Schneiderman
The move comes after Marketwired had conversations with New York Attorney General Eric Schneiderman, according to a Reuters news report. The firm discontinued the service so as to “eliminate any perceived advantages gained through technology by certain customers,” according to a statement obtained by Reuters. Last year, Thomson Reuters Corp agreed to stop its early release of the Thomson Reuters/University of Michigan consumer sentiment data to a small group of trading clients. BlackRock Inc, the world’s largest asset manager, agreed to end its analyst survey program worldwide as part of an agreement with the Attorney General’s office, the report also noted.
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Damage to firm reputation
Damage to a firm’s reputation was cited by both Marketwired and Business Wire as reasons for discontinuing offering the service. Marketwired is majority-owned by Omers, a Toronto, Canada-based private equity firm. At the time they discontinued offering the service, Business Wire Chief Cathy Baron Tamraz said the company had done “nothing wrong” stating that a news article “may have caused some misperceptions, and that was of deep concern to us.”
As noted in ValueWalk, the issue started with a February 6 Wall Street Journal article Scott Patterson, author of the algorithmic trading book The Quants, wrote, which said that “High-frequency traders have been paying to get direct access to market-moving news releases, a practice that can give firms the ability to trade fractions of a second ahead of less fleet-footed investors. The traders are getting news releases from Business Wire, which distributes corporate-earnings releases and economic reports such as the Philadelphia Federal Reserve’s monthly manufacturing survey…”