NY official says Marketwired to limit trader sales
- Article by: MICHAEL VIRTANEN
- Associated Press
- March 19, 2014 - 3:01 PM
ALBANY, N.Y. — Business information company Marketwired will stop selling high-frequency traders direct feeds of the information it distributes for clients, the company said Wednesday.
Toronto-based Marketwired said it will continue to provide "full and fair, simultaneous disclosure of information. We will now eliminate any perceived advantages gained through technology by certain customers."
New York Attorney General Eric Schneiderman, who first announced the company's decision, said it will end unfair split-second timing advantages for those traders and follows a similar decision last month by Business Wire, a Berkshire Hathaway subsidiary. His staff has been in discussions with Marketwired since.
"High-frequency traders who drain the value out of market-moving information in the milliseconds before it becomes widely available to other investors erode confidence in our markets and skim from the rest of the investing public, which hurts the entire market," Schneiderman said.
Marketwired, which says it has 20 offices on four continents and more than 15,000 clients, said it will no longer provide its distribution service to high-frequency trading firms. "Our decision enables us to continue serving our customers under the highest ethical standards that Marketwired holds."
Schneiderman, speaking a day earlier at a New York Law School symposium, called on stock exchanges and regulators to help curb practices that give some high-frequency traders unfair timing advantages in split-second stock trading.
According to the attorney general's office, those advantages include extra computer network bandwidth, ultra-fast connection cables and special high-speed switches to computer servers. Some traders are allowed to place their computer servers within trading venues.
New York's attorney general has authority to investigate and prosecute securities fraud under the Martin Act, which the office has used to crack down on widespread institutional issues like research analyst bias.
In response to Schneiderman's comments, the Modern Markets Initiative, organized last year by some trading firms, said co-location and data feeds are available to all market participants, not just a select few. The group said they promote efficiency and transparency, allowing for many more participants than there was room for previously on the trading floor.
"Direct market data feeds are not limited in availability. ... Many of those brokers who trade on behalf of individual investors make use of them," MMI said. The group said there's "a mistaken assumption on the part of many that professional traders using (computerized high-frequency trading) compete with investors. This is certainly not the case."
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