Opening Cross: Gr8 News 4 Social Media re Mkt Data

max-bowie

@IMDreader: Have noticed lot of cap mkts players (incl. CFTC) using Twitter, FBook, etc to reach wide audience. RU on board?

Once upon a time, the closest the capital markets came to social media was instant messaging, which became a more convenient way to conduct short conversations and requests than by phone and without the formalities of email, and became a must-have tool for trade negotiation among traders in certain OTC asset classes.

Now, though, social media is everywhere, and the financial industry is using it to full effect—mostly as a free marketing tool—though participants need to mind their Ps and Qs when dealing with any mass communication tool: UK regulator the Financial Services Authority recently fined a former MF Global senior research analyst £50,000 for sending misleading information that impacted Enterprise Inns’ stock price to clients over Bloomberg’s messaging application.

But regulators aren’t just trying to figure out how to police this new potential source of information leakage or misdirection; they are also figuring out how to use it to their advantage. Last week, the Commodity Futures Trading Commission launched a Twitter feed to make it easier for the public to access news about its activities, upcoming meetings and regulatory events. (It seems only fair since “No to CFTC” was already tweeting). This isn’t the CFTC’s first venture into social media: In fact, the regulator already has presences on YouTube, Flickr and Facebook (as does the FBI—can’t wait to see its version of Mafia Wars!), while the Securities Exchange Commission, the Department of the Treasury and the Environmental Protection Agency are among other US government bodies that use Twitter to provide greater transparency.

Others—such as Fitch Solutions, the data arm of ratings agency Fitch—use Twitter as an additional distribution tool to disseminate information that they already make publicly available via newsletters or websites (for example, Fitch tweets short messages about CDS spreads and credit market information). But how useful is this new barrage of non-revenue-generating information to market professionals?

Richard Tibbetts, chief technology officer of complex event processing software vendor StreamBase Systems, whose feed handler suite includes adapters to capture and process information from Twitter feeds as an input to trading decisions, says that while much of this new data stream will be of more use to retail investors for whom technologies to consolidate this data are readily available—and who are unencumbered by corporate rules about what information sources they can consider when making investment decisions—the vendor is seeing more awareness among institutions of new social media as a new information source, and more interest in understanding how to capture this, assess its sentiment, and quantify its potential as an input to trading.

The increase in interactive content goes hand-in-hand with the increasing mobility of financial markets, and the advances in mobile phones and devices that allow market participants to consume data and generate their own content direct from the source. For example, the Chicago Board Options Exchange, which recently launched an iPhone app (IMD, Jan. 17), has also unveiled a Facebook page to attract a wider audience for its news and training and education programs.

Not to be outdone, IMD and our sibling WatersTechnology publications are both leveraging social media to reach our audiences. IMD (@marketdata) and WatersTech have Twitter pages, and WatersTechnology is now on Facebook. So if you want to see the latest headlines interspersed with volume indicators from CBOE, or upcoming conferences alongside photos of your schoolmates’ babies dressed as reindeer and begging notes from your friends about FarmVille, then you can do that (weirdo).

You can even Poke us! LOL.

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