Hedge fund managers betting Twitter will give them an edge in rapid trading

Date: Wednesday, June 24, 2009
Author: Richard Tyler, Enterprise Editor, Telegraph.co.uk

Traders are using software developed by US-based technology StreamBase to monitor "tweets" for price sensitive information.

The software plugs into Algorithm-based automated trading platforms that have been used by traders for years. But rather than searching Reuters or Bloomberg the software now scans Twitter.com.

Streambase – whose client base includes Royal Bank of Canada and London-based hedge fund BlueCrest Capital Management – was commissioned to develop the software by several "unnamed" clients.

The software allows traders to take into account "event-based" information published on Twitter in their automated equity, bond and foreign exchange trading.

The company, whose investors include Inqtel, Central Intelligence Agency's venture capital arm, claims it could give traders an edge when deciding whether to trade on breaking news, like terrorist attacks and natural disasters, rather than waiting for the information to be filtered through providers like Reuters Thomson or Bloomberg.

Nasir Zubairi, a former product manager for algorithmic trading and foreign exchange e-commerce at Royal Bank of Scotland, said the City would be looking at websites like Twitter.com as a useful market information "broadcast tool".

"Markets tend to buy on rumour and sell on facts," he said.