NEW YORK: As part of a deal with New York State Attorney General Eric Schneiderman, news-release-distribution service PR Newswire is requiring recipients to certify they will not use the information contained within statements for high-frequency trading.
But unlike competitors Marketwired and Berkshire Hathaway’s Business Wire, which also agreed earlier this year to stop providing direct feeds to high-frequency traders, PR Newswire had not sold information in this way, said its CEO, Ninan Chacko. He added this certification is a formalization of its existing internal policy.
"[Schneiderman] had approached us to discuss what additional policies the industry at large could take to prevent this from happening," said Chacko. "We felt it would be in the best interest of our clients in the marketplace for us to formalize and strengthen our existing policy."
As a part of the code, PR Newswire clients releasing information upon the close of the markets must do so at 4:01 pm.
"Clients are still free to pick whatever time, but our counseling and policy is around helping to educate them about how [releasing information at 4:01 pm.] prevents the possibility of same-day trading," said Chacko.
To communicate the company’s changes, PR Newswire disseminated a press release on Wednesday and is counseling partners on an individual basis.
"When clients call us about communicating news, they are engaging with our editorial staff, and our staff will counsel our clients about the benefits of holding distribution of market-moving news to avoid same-day trading of the information," Chacko said.
Going forward, the company will audit the policy on a periodic basis to ensure certifications are up-to-date and valid; clients will confirm this with PR Newswire annually in writing.
PR Newswire works with Joele Frank on an ongoing basis, Chacko confirmed.
Last month, Schneiderman said he would probe high-frequency traders’ access to market-moving information, or "Insider Trading 2.0," as he called it. He has since reportedly sent at least six high-frequency trading firms subpoenas, seeking information on their relationships with exchanges.
Seeking to crack down on investors’ early access to analyst and consumer sentiment, Schneiderman has also pressured companies such as asset manager BlackRock to end its analyst-survey program worldwide in January. He also encouraged Thomson Reuters to suspend investors’ two-second-early peeks at an economic survey last July.