Social media drew the attention of the financial markets once again last week, though this time not only in terms of the debate over the value of tweets and information outside the established channels of news and market data, but as a communication tool used by the Occupy Wall Street protesters to relay tactics and share information. “Disruptive” technologies, indeed.
On the same day that the protesters attempted to block access to parts of the financial district, I noticed an article by Mathew Ingram on GigaOM.com, titled “Memo to AP: Twitter is the newswire now,” which points out that a generic description of Twitter—“a distributed digital-information network that gives subscribers short news updates in something approaching real time, whether on the web or a mobile device”—applies equally to traditional newswires, and cites a recent instance where reporters were admonished by their employer for tweeting news (of their arrests at the Occupy Wall Street protest) instead of breaking it over their newswire.
In an ever-increasingly digital society, one strength that Twitter has for the mass news market is that it pushes content to users based on who or what they subscribe to—much like professional, customizable newswires—rather than an individual having to know what to search for every time they want the latest news. And as such, mainstream media outlets are using Twitter more and more as a channel to disseminate news—and if not the story itself, then at least a link to the story on their own site, or a teaser of what will appear in print to advertise the fact that they got the news first.
Ingram also credits New York Times reporter Brian Stelter with pointing out that “if Twitter is beating the wire then maybe the wire should speed up.”
And here’s the key: Twitter (and other social media tools) do have a valid role to play, even if a limited role. At our recent Asia-Pacific Financial Information Conference, one panel debated the value of these new tools, with 8 Securities’ chief technology officer Cedric Roll describing “real value in bringing… user-generated content into an ecosystem, meshing it with market data in our platform and creating a consolidated view of the market,” while Ipug and Cossiom representative David Berry emphasized the difference between information and data, pointing out that financial firms “have regulators who are scrutinizing the inputs we use to make decisions. And a tweet is not data. Nobody is going to start issuing products based on tweets.”
This may be true, but there are anecdotes of people who have correlated Twitter buzz and sentiment as a leading indicator of major indexes. And hedge funds are not as strictly regulated as banks or asset managers as to what they base trading decisions on. So it wasn’t surprising to see Twitter-based investing information service StockTwits partnering with Boulder, Colo.-based social media aggregator Gnip to create Gnip MarketStream, a real-time platform for consolidating relevant social media streams for hedge funds and high-frequency traders.
In another example of how new and “established” media are colliding, StockTwits also last week made its first move into international stocks with the addition of support for Canadian stock tickers—mirroring moves by data providers to beef up Canadian content, such as Barchart, which has added Canadian data to support clients of the Stockgroup business it acquired in August (IMD, Sept. 6), and fundamental analysis provider YCharts’ expansion plans.
However, I suspect that the next big adoption of social media tracking in finance may not be to identify potential trades, but rather to comb the Twitter, Facebook and Foursquare activity of next year’s round of job applicants to see whether any of their would-be bankers’ postings correlate with the movements of the current protests.
Jesse Lund talks about real uses for DLT in the capital markets, lessons learned while rolling out IBM's blockchain platform, and what’s ahead for 2018, and into 2019.Subscribe to Weekly Wrap emails