About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Trading Firms See Merit in Social Media Strategies, But Also Risks

Subscribe to our newsletter

Trading firms see the advantages of implementing execution strategies driven by social media alerts, including Twitter and Facebook updates, and some are already doing so. But many also are wary of the risks associated with leveraging information sources that are not subject to the same quality controls as traditional news media. Those are the findings of a market survey from tick data management and analytics technology vendor OneMarketData.

The survey – conducted by OneMarketData as a research exercise into market attitudes that could feed into product developments – garnered some 50 responses from market participants and academics located in North America, Europe and Asia/Pacific. OneMarketData director of solutions Louis Lovas says the vendor continues to monitor the impact of social media on trading but has yet to kick off any speculative product developments to address it.

That said, Lovas does point to some key results from the survey, which covered not just overall interest, but also asset classes likely to benefit, approaches to analysing social media and regulatory impacts. A fundamental result, he suggests, is the belief held by 85% of respondents that social media can offer a faster alternative to traditional news media for detecting market moving events. 

The survey also provided useful data points regarding the current and likely adoption of social media to actually drive trading strategies. While a sizeable minority don’t think it’s a way to go, a significant element – 35% – do believe the approach is worth exploring. Some firms – 18% – are actively leveraging social media in their trading and investment operations.

Most interestingly, trading firms see various challenges in adopting social media sources. Obtaining meaning from unstructured text data is one challenge identified, and quite likely related to that is the potential for erroneous trading signals to be generated by not correctly analysing the social media streams, or by incorrect data at source as was the case in the recent ‘hash crash’, caused by the hacking of a Twitter account belonging to the Associated Press. Some 61% of respondents saw the potential for false signals, and most firms expect further market disruptions as the result of incorrect information, perhaps deliberately issued.

Also explored in the survey is whether social media analytics would be most effectively employed in near-real-time, or on historical data sets. The majority expected near-real-time processing to be important, though Lovas notes that mainstream big data technologies, such as Hadoop, are not engineered for such rapid processing. Specialist technologies will be required, he suggests.

The complete survey results are available from OneMarketData here.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Unlock the Future of European Equities & Trading Technology: 2024 and Beyond!

In a world where the financial landscape is perpetually evolving, 2023 has brought widespread discussions around liquidity, regulatory shifts in the EU and UK, and advancements like the consolidated tape in Europe. For the year ahead in 2024, the European market is poised for transformative changes that will influence the future of trading technology and...

BLOG

OpenYield Launches Automated Bond Trading Platform

OpenYield Trading LLC, a relatively new player in the financial markets, has commenced its operations as a broker-dealer and alternative trading system (ATS) registered with both FINRA and the SEC, by executing its first trade. The OpenYield platform is designed to democratise access to the bond market, catering to broker-dealers, financial advisors, and asset managers...

EVENT

ESG Data & Tech Summit London

The ESG Data & Tech Summit will explore challenges around assembling and evaluating ESG data for reporting and the impact of regulatory measures and industry collaboration on transparency and standardisation efforts. Expert speakers will address how the evolving market infrastructure is developing and the role of new technologies and alternative data in improving insight and filling data gaps.

GUIDE

BCBS 239 Data Management Handbook

Our 2015/2016 edition of the BCBS 239 Data Management Handbook has arrived! Printed copies went like hotcakes at our Data Management Summit in New York but you can download your own copy here and get access to detailed information on the  principles and implications of BCBS 239 on Data Management. This Handbook provides an at-a-glance...