Opening Cross: In the Interest of Full Disclosure

Disclosure of market-moving information, and the industry that surrounds it, is changing rapidly.


In today’s age of fast-moving market information and highly sensitive data, you would think that companies would take more steps to guard against market-moving data unwittingly becoming public. So it was a shock to the market when Twitter’s financial results hit the internet early last week, after New York-based low-latency events data provider Selerity found the results—which revealed that the microblogging site missed earnings expectations—online and tweeted them early on Tuesday, April 28.

The result was a drop in Twitter’s share price as those armed with the early information were able to trade while others were still waiting for the official results.

What’s particularly shocking is that this isn’t the first time Selerity has scooped a major corporate’s earnings—and without any hacking to obtain the information—in 2011, it put its name firmly on the map when it found Microsoft had posted its financial results early on its website. Selerity merely scrapes web pages. The vendor figures out what the URL for an earnings release is likely to be, then checks that page to see whether anything has appeared. Even if an item has not been ranked to appear on a company’s homepage yet, it may already be published, just hanging out, waiting to be moved to a more prominent position. All Selerity does is look for something trying to hide in plain sight, in the place it would expect it to be.

Aside from the early scoop, releasing earnings and other market-moving corporate news over Twitter or other social media is no longer the taboo it once was when Netflix chief executive Reed Hastings posted potentially market-moving information on Facebook.

In fact, the use of social media to shake up traditional corporate news disclosure wires is the fastest-growing segment of the investor relations news distribution industry, which accounts for around $650 million of the industry’s annual $26 billion spend on market data and related services, according to Burton-Taylor International Consulting, which last week released its latest market sizing for the market intelligence and PR wire industry.

“In terms of disclosure, people are using [social media] as another tool in their belt,” says Chris Porter, director of Porter Walford Consulting, which compiled the report with Burton-Taylor. “Social media has gone from a sliver [of the pie] to a sizeable portion. The traditional PR distribution model seems ripe for disruption… and we are likely to see consolidation and acquisitions in the next year or two,” he says, adding that exchanges may follow Nasdaq and buy or build their own corporate IR businesses to provide a stable revenue stream that would not be affected by fluctuations in trading and listing business.

Of course, less than full disclosure can be one of the reasons that companies go to such lengths to assess counterparty risk, which is why accurate and reliable credit data—including data on credit default swaps, which firms are increasingly using as a proxy for the creditworthiness of bonds or issuers—is in such high demand. So high, in fact, that vendors who can’t generate this data themselves partner with other specialists to obtain a source of it. For example, Thomson Reuters has sourced CDS data from Markit under a deal originating in 2007, and has just renewed and expanded the deal to give itself access to more of Markit’s content, as well as more control over what it can resell.

Similarly, fixed income trading platform MarketAxess has incorporated Interactive Data’s Continuous Evaluated Pricing for fixed income securities into its BondTicker feed, and will shortly add the data directly to its trading platform as a reference price to make quoting and trading more competitive for participants. Though the CEP prices will be an integral dataset in the feed, MarketAxess will fully attribute them to Interactive Data… in the interest of full disclosure, of course.

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