PR Newswire makes users promise not to use info for trading
The press release distribution service is ‘going the extra mile’ to make sure information that shows up in its direct feed doesn’t get used to game the stock market.
PR Newswire has enacted new restrictions on recipients of primary feed of press releases to head off what officials have identified as a potential problem: using information contained in those releases to make stock trades just before news breaks about major developments in the world of business.
The service is “going the extra mile to ensure its service is not abused by high-frequency traders—at any time during the trading day and in the moments after the closing bell,” New York Attorney General Eric Schneiderman told the Associated Press.
Only 20 or so organizations receive PR Newswire’s direct feed, and they’re almost all news organizations, but that feed is then distributed to thousands of recipients. Traders who get that information seconds before other people could take advantage of it, so PR Newswire is essentially making organizations promise that none of their employees will use such information in high-frequency trading.
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