The newswire service, Business Wire, has decided to stop providing a direct newsfeed to high-frequency traders (HFT), citing concerns about its image.
Business Wire chairwoman and CEO, Cathy Baron Tamraz, announced the decision to stop licensing direct feeds to HFTs, citing recent consultations with legendary investor and chairman of Berkshire Hathaway (which owns Business Wire), Warren Buffett, in the wake of public attention the practice received.
Tamraz stressed that the HFTs it served directly had “absolutely no time advantage in receiving material news from Business Wire, which operates a patented internet delivery network that disseminates news simultaneously and in real-time to all market participants.”
However, she said that it was concerned about its image and client perception of the practice of serving HFTs directly. “Our most important assets are our reputation and the trust we have earned from our clients and other market participants,” she said, adding, “Therefore, we have pro-actively made the decision to terminate these feeds.”
New York state attorney general, Eric Schneiderman, applauded the company’s decision. “Business Wire’s decision to voluntarily step forward and stop selling its clients’ information directly to high-speed traders is a tremendous victory for our effort to eliminate advance trading on market-moving information and a demonstration of Business Wire’s commitment to being a responsible industry leader,” he said.
Schneiderman said that HFTs “were taking advantage of the split-second difference between the time when Business Wire released information directly to high-frequency traders and other subscribers and the time when various news aggregators (such as Bloomberg, Dow Jones, and others) were able to receive and then deliver that information to the market more broadly. During that time lag, which lasted just a fraction of a second, high-frequency trading firms were able to trade on the information ahead of, and at the expense of, other investors.”
“High-frequency traders who drain the value out of market-moving information in the milliseconds before it becomes available to other investors erode confidence in our markets and skim from the rest of the investing public, which hurts the entire market. I strongly encourage other participants in this industry to follow the leadership of companies like Business Wire and join us in the effort to level the playing field between high-frequency traders and the rest of the investing public,” he added.