Business Wire Stops Direct Feeds To High Frequency Traders


Last week, press release distributor Business Wire, decided to stop the practice of selling direct feeds to high frequency traders, much to the delight of New York’s Attorney General.  Business Wire is owned by Warren Buffet’s Berkshire Hathaway, Inc.

Background on the Story

Management at Business Wire decided to take action on this issue after The Wall Street Journal published an article on February 6th revealing that the press release distributor was selling direct access to its feed of news releases to high-frequency trading firms and other investor clients at the same time that traditional media companies receive access to this potentially market moving information.

The WSJ article explained why HFT firm’s were paying for the Business Wire feed:

“By paying for direct feeds from the distributors and using high-speed algorithms to crunch data and enter orders, traders can get a fleeting—but lucrative—edge over other investors, according to traders and people familiar with the practice. The reason: tiny lags between the time the distributors release the news and when media outlets send them out to the public, including other investors.”

Consultation with Warren

Despite the fact that there is nothing illegal about selling access to this information, or in trading on the information, Business Wire management was concerned that the WSJ article could harm their reputation.

This concern prompted Business Wire CEO, Cathy Baron Tamraz, to consult with her boss, billionaire Warren Buffet about the practice.  This was a highly unusual move as Buffet typically takes a “hands off” approach to business decisions made by the companies owned by Berkshire Hathaway.

Additionally, Tamraz also had conversations with officials in New York Attorney General Eric Schneiderman ‘s office about the issue.  People familiar with the conversations said the AG’s office expressed concerns about the practice and encouraged Business Wire to end it.

Ultimately, Business Wire decided to stop selling access to its direct feed to HFT firms, forcing them to obtain this information from intermediaries like Thomson Reuters, Bloomberg, LP or Dow Jones.

Another Victory for NYAG

This decision was welcomed by New York Attorney General Eric Schneiderman.  In a statement, Schneiderman said that it’s “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.”

The Business Wire decision is the second time the New York Attorney General has convinced a firm to stop selling perfectly legal information to HFT firms and other professional investors because of what he saw was a new form of “market manipulation”.

Last year, Schneiderman’s office negotiated a deal with Thomson Reuters Corp. to stop providing early access to the results of the University of Michigan’s Consumer Confidence survey.  The attorney general became in the practice after details of the Thomson Reuters arrangement were reported in a WSJ article last June.

In a speech Schneiderman gave last September at the Bloomberg Markets 50 Summit in New York, he said the practice of trading on early access to publicly released information, which he dubbed “Insider Trading 2.0,” was responsible for “distort[ing] our markets far more than Albert Wiggin or Ivan Bosky or even Gordon Gekko could ever have imagined.”  Mr. Schneiderman said this practice required action from regulators and lawmakers in Washington.


The public pressure recently put on Business Wire, and the regulatory pressure Thomson Reuters faced last year, to stop selling legal, albeit market moving information to high frequency traders, is a clear sign that some important players are trying to eliminate the “unfair” information advantage inherent in these computerized trading strategies.

However, in our view this raises a big question, “Where is the line between a legitimate and an unfair information advantage, and who gets to decide when this advantage should be eliminated?”  Clearly, New York Attorney General Eric Schneiderman is hoping to make his name by leveling playing field between high frequency traders and the rest of the market.




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