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NEW YORK (AP) - Business Wire, a company that publishes and distributes corporate earnings and other news releases, will stop providing its service directly to high frequency trading firms.
The decision comes after an article in the Wall Street Journal earlier this month highlighted the advantage that high-frequency trading firms had gained by getting the information directly from Business Wire, rather than accessing it through financial news wires such as ThomsonReuters, Dow Jones and Bloomberg.
High-frequency traders typically use computer programs to scan corporate earnings and then place buy or sell orders within fractions of a second. By bypassing the newswires and getting the corporate releases directly, the traders were gaining a crucial advantage.
Even though the direct distribution of its electronic feeds to a "handful" of trading firms was not illegal, the company said it was concerned about its reputation. Business Wire made the decision after consulting with Warren Buffett, the chairman of Berkshire Hathaway, which owns the company.
"Our most important assets are our reputation and the trust we have earned from our clients and other market participants for more than a half century," Cathy Baron Tamraz, Business Wire's chief executive, said in a statement Thursday.
Business Wire's move was welcomed by New York Attorney General Eric Schneiderman, who said the decision was a victory in the effort to eliminate advance trading on market-moving information.
"High-frequency traders who drain the value out of market-moving information in the milliseconds before it becomes available to other investors erode confidence in our markets and skim from the rest of the investing public," Schneiderman said in a statement.
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