Boy that seems like it could be a hackers dream. ...Spoof some news on a reliable website. How could it be stopped? They wouldn't even have to pre-position themselves in the stock... they could just buy the bounce and look perfectly legit.
Who Gets News Alerts First? And How
- Thread starter vanzandt
- Start date
Been done a bunch of times already.
Remember 2-3 years ago when someone hacked the AP newswires and said a bomb went off in the White House and Obama was injured? S&P's tanked briefly and snapped right back when people realized it was fake.
For the older guys- Remember Emulex in August 1999? Someone hacked a newsfeed and said the company had been releasing fraudulent earnings for years and was raided by the FBI.
EMLX (old ticker) went from like $70 to sub $20 in a matter of minutes then got halted and opened up at $70 again after the company denied the story. Guys in my office bought houses off Emulex and QLogic (QLGC) that day.
Sadly, I was sitting on a beach and missed the festivities
There are several major news services (Bloomberg, Thomson Reuters, Dow Jones) that provide low-latency feeds of their own news with prices in the realm of $10,000 - $30,000 per month (or potentially more if they think you can pay more). There are also services that forward news feeds in a low-latency format. Finally, there are rumor-specific services out there that charge $000's per month for a lower-latency version of what's otherwise a Web-based product. My guess is that it would cost you $1,000,000-per-year-plus to get the full suite of low-latency products that MIGHT give you news at any given time.
There are many other possibilities, of course, such as insider information, as well as hedge fund employees hanging out in court rooms and/or regulatory agencies waiting to text big decisions to their bosses.
Unfortunately, this asymmetric information ends up being a cost borne by the market as a whole -- slippage/spreads would be a whole lot less if symbols were halted before large news events, or if such news were only reported during non-trading hours, giving the market a chance to digest the information and lessening the impact of latency.
There are many other possibilities, of course, such as insider information, as well as hedge fund employees hanging out in court rooms and/or regulatory agencies waiting to text big decisions to their bosses.
Unfortunately, this asymmetric information ends up being a cost borne by the market as a whole -- slippage/spreads would be a whole lot less if symbols were halted before large news events, or if such news were only reported during non-trading hours, giving the market a chance to digest the information and lessening the impact of latency.
Someone suggested news bots and that was a good idea, but have you considered insider trading?
Maybe it was a clerk at DHS that shorted CXW because they knew what was going to be released or maybe they called a 'friend'. I have wondered how many people in the accounting department of an organization or a marketing department that are aware of sales records, make trades for their own benefit before the information is released.
I bet it happens everyday.
^
I did not see the post above before I made mine....same general ideas....he's a smart guy...........
Good thread. I'm sure anyone that has this type of info probably doesn't want to share it though
lol... You know after I posted it, ...I was thinking the same thing.Good thread. I'm sure anyone that has this type of info probably doesn't want to share it though
Where did you pull those numbers of? I think a Bloomberg Terminal is about 3k per month...
BB and other news services are almost worthless for humans now.
Before you can read the first word of the press release, the bots have scanned the entire story and are firing off orders to buy/sell.
News trading used to be a windfall if you were fast to react, that game is all but over now.