Twitter for trading a 'bad idea'

According to Peter Hiom, the deputy chief of the ASX, using Twitter as a primary disclosure mechanism is a bad idea. He says it would place a huge onus on listed companies to ensure tweets containing price-sensitive information are correct, which could create a lot of difficulty for markets and investors.

The article notes that traders are building incredibly sophisticated algorithms that can scan huge amounts of data, including Twitter feeds, and then execute trades based on what they find. That means social posts can be picked up and acted on automatically by high-speed systems.

If companies use Twitter for price-sensitive announcements, everyday investors could face faster, algorithm-driven market moves and the risk of acting on incorrect or incomplete tweets. The ASX deputy chief warned this would put significant responsibility on companies to get information right and could complicate trading.

Peter Hiom said he 'frankly thinks [it] is a terrible idea' to treat Twitter as an appropriate disclosure mechanism in US equities markets. He warned that relying on Twitter would create a huge onus on companies to ensure accuracy and would lead into 'a whole world of difficulty.'

Yes. Paul Hilgers, head of Optiver Asia Pacific, said some trading firms are using 'microwave' set-ups to transmit information directly from wire news services into their trading strategies, giving them very fast access to news.

In the article's context, a 'microwave' set-up refers to technology used by some trading firms to transmit information directly from wire news services into their trading systems, enabling faster delivery of news into automated strategies.

The article implies that faster access by algos and firms using microwave links can lead to rapid market moves that ordinary investors may struggle to match. That speed differential is a concern highlighted by industry figures quoted in the piece.

The article stresses that listed companies would need to ensure any Twitter-disclosed information is correct and accurate. The ASX deputy chief warned this would impose a heavy responsibility on firms to avoid misleading or incomplete tweets that could trigger automated trading responses.