High speed traders are on to someone else. Berkshire Hathaway will no longer provide high frequency traders their direct feeds that they use to trade.
Business Wire, which is owned by Warren Buffett’s Berkshire Hathaway, is being accused of giving certain clients an unfair advantage. According to CNN Money, for some investors, it’s those milliseconds that critically count. The issue is whether exchanges sometimes allow for high-speed trading firms to trade ahead of less-sophisticated investors, potentially disadvantaging them and violating the regulatory rules.
USA Today has reported that Cathy Baron Tamraz, chairwoman and CEO of Business Wire, explained the company’s decision to end the practice and also stressed that the high-speed trading firms had no trading advantage. “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,” said Cathy Tamraz.
An article in the Wall Street Journal suggested $800,000 in trades were conducted 50 milliseconds after Business Wire moved an earnings statement. Rival services published the news fractions of a second later. Market rules require material information to be distributed to Wall Street and the public at the same time.
Warren Edward Buffett, 83, is widely considered the most successful investor of the 20th century. Ranked as the world’s wealthiest person in 2008 and as the third wealthiest person in 2011, Warren Buffett is the chairman, CEO and largest shareholder of Berkshire Hathaway. In 2012, American magazine Time named investor and philanthropist, Warren Buffett, one of the most influential people in the world.
Warren Buffett is chairman of Berkshire Hathaway Inc. a multinational conglomerate holding company headquartered in Omaha, Nebraska, that oversees and manages a number of subsidiary companies. According to the Forbes Global 2000 list and formula Berkshire Hathaway is the ninth largest public company in the world. The company wholly owns GEICO, BNSF, Lubrizol, Dairy Queen, Fruit of the Loom, Helzberg Diamonds and NetJets, owns half of Heinz and an undisclosed percentage of Mars, Incorporated and has significant minority holdings in American Express, The Coca-Cola Company, Wells Fargo, as well as IBM.
Business Wire, which has published corporate news releases in the US for the last half century, will now stop selling direct feeds to high-speed traders. Tamraz said that the decision to stop the direct feeds to these rapid-fire trading firms was finalized after Business Wire “learned that the article may have caused some misperceptions, and that was of deep concern to us.”
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