Warren Buffett firm axes direct news for high-speed traders
Corporate news release publisher Business Wire will stop providing direct feeds to high-frequency traders after reputational concerns.
The firm, which is owned by Warren Buffett’s Berkshire Hathaway, made the move amid concerns that high-speed traders can shave thousandths of a second off the time it takes to process a deal by receiving corporate press releases directly.
Buffett, who has previously criticized high-speed traders by telling CNBC they are “not contributing anything to capitalism”, took another look at Business Wire’s service after recent publicity around the practice threatened to damage the firm’s reputation.
The Wall Street Journal highlighted high-frequency traders’ use of Business Wire and Marketwired in an article earlier this month. While noting that the activity is completely legal, it pointed out that such services could give the traders an advantage over other investors when combined with high-speed algorithms to process data and enter orders.
Business Wire chairwoman and chief executive Cathy Baron Tamraz says: “As the recent Wall Street Journal article and others have pointed out, there was nothing wrong in Business Wire serving these handful of HFTs directly.
“These traders 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, and in accordance with Regulation Fair Disclosure.
“However, in discussions that have taken place with a few of our clients, we learned that the article may have caused some misperceptions, and that was of deep concern to us.
“Our most important assets are our reputation and the trust we have earned from our clients and other market participants for more than a half century. Therefore, we have pro-actively made the decision to terminate these feeds.”