May 1, 2014
As part of an effort to stop high-frequency traders from trading on market-moving information ahead of the closing bell, PR Newswire will recommend that its clients wait to issue late-trading news releases until at least one minute after markets close, The Wall Street Journal reports.
The move is part of an agreement with New York Attorney General Eric Schneiderman, who is increasing pressure on high-speed trading firms and their ability to trade ahead of other investors by moving in and out of stocks within fractions of a second.
In February, after consultations with Schneiderman’s office, Berkshire Hathaway’s Business Wire decided to stop giving high-speed traders direct access to corporate earnings and other market-moving news releases. Marketwired, a Toronto news-release distributor, has also agreed to stop providing releases to high-frequency traders.
PR Newswire says it doesn’t give high-speed traders access to its services, but the company agreed to require that recipients of its direct-data feed certify that they won’t use information provided by the newswire to engage in high-frequency trading.
The Journal reported in February that high-frequency traders had been paying to gain direct access to market-moving news releases from Business Wire and Marketwired. The newspaper showed how trading during a fraction of a second after 4 p.m., based on information in an earnings release from the cosmetics retailer Ulta, affected the stock’s closing price on the Nasdaq Stock Market. — Greg Beaubien