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Twitter in the trading room
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Financial-i columnist, Gerald Ashley, says Twitter is radically transforming the way market and financial news is distributed. But how do you regulate Twitter conversations in the trading room?On the 2 August 1990, Saddam Hussein’s troops invaded Kuwait and kick started a period of turmoil in the region that is arguably still not resolved. Also his actions had an unexpected effect in trading rooms around the world, not just the knee jerk market reactions in the oil price and a rush to dollars and Swiss francs – more importantly he changed, quite by chance, the way news was consumed.
Throughout the 1980’s trading rooms had steadily become more sophisticated – even quite small banks had the makings of integrated trading desks, with better phone systems and Reuters dealing systems. But telex machines were still lurking in corners, and the news mainly arrived via rolling headlines on screens and rumours flying around by telephone.
The flare up in the Gulf changed things because suddenly there was a point to business television and 24 hour news – what up until then had been a very minor actor in the financial markets suddenly took off. Traders no longer wanted to wait for journalists to reel off news headlines via market screens when they could see the action live on their TV’s in the trading room.
Now some 20 years later another similar revolution in financial news might be happening – this time it isn’t a single event that has triggered the change, more an emerging technology that is proving to be the game changer. The catalyst this time is Twitter and the effects could be profound. The protests in Iran last year, and more recently in Egypt, showed how Twitter could both distribute news that the authorities wanted to restrict or ban, and that it might be faster than television news or the usual internet channels.
Given financial markets insatiable appetite for instant news, comment, rumour and even gossip, whichever channel can deliver this the fastest is going to be avidly followed. Could this mean that Twitter is the new channel for the latest news? If so what are the implications? Could news channels be wrong footed or will they just join in, but risk cannibalising their existing delivery channels? How do you regulate Twitter conversations in the trading room, where are the audit trails, conversation histories and compliance rules?
Early days but once again technological progress is leading to disintermediation – the consequences have yet to play out and no doubt there will be huge commercial opportunities – but perhaps the world of 24 hours news is facing its first serious challenge?
Gerald Ashley is a risk & strategy consultant based in London – his blog is on www.geraldashley.wordpress.com
Date Posted:13th February 2011