Business Wire, which is owned by Warren Buffet’s Berkshire Hathaway, will stop selling early access to information to high-speed traders, the official release said on February 20.
The company that used to provide such firms with corporate earnings and other news releases highlighted that its activity was legal. Bloomberg and Dow Jones were among its clients. Business Wire assures that high-frequency traders did not have any privileges. The decision was taken after consulting with the Berkshire Hathaway chairman.
The halt was prompted after the Wall Street Journal published an article (February 6) claiming that such activity allows traders to jump ahead of other market participants.
Business Wire even cooperated with New York Attornet General Eric Schneiderman to shed light on the situation.
High-frequency trading is criticized due to high risk. In addition, it can distort the situation developing on the market. It is considered that high volume of trades might create an illusion of high liquidity. Besides, the computer programs that place orders for high-speed traders make mistakes, which, in their turn, might cause huge losses. Under the same circumstances in 2012, Knight Capital was left more than $400 million out of pocket.
