Tuesday, December 12, 2006

News Drives Program Trading via Reuters NewsScope

TechWeb notes the introduction of Reuters NewsScope Real-Time and NewsScope Archive, services which allow securities analysts and traders to match Reuters news stories to securities trading data with a very high degree of precision and organization. The archive version of NewsScope allows the posting time of stories to be matched with trading data at millisecond-level accuracy, so that there can be very exact analysis of how news moved specific trading activity. The service meta tags story content to identify the industry sectors, companies, and other data that might be useful to financial analysis functions. The real-time service uses the same general functionality to match news as it breaks to real-time trading information, enabling automated trading functions to act on breaking news more efficiently.

There's of course a great deal of financial analysis that still requires human intervention, but the real-time aspects of this service provide an intriguing peek at how news can move markets in the era of automated trading. Already securities ratings agencies create press releases on ratings changes that use very stock, standard phrases to indicate the reasons behind ratings changes; many regular news stories in financial markets also have fairly standard language. It's a relatively small leap from basic metadata generation for real-time stories to real-time text analysis that can push automated trading and risk analysis to new levels of sophistication.

But as the U.S. Securities and Exchange Commission ponders allowing corporations to post their financial reports and disclosure-related press releases on RSS feeds, news services are likely to go several steps further in providing analysis that can move automated trading. To some degree we're well on the way already a two-tier news marketplace - one level driven by automated numeric and text analysis and another for executive and consumer consumption. With an ever-increasing thirst for making sense of news coming from an ever-increasing galaxy of news sources premium news services will be moving further into the realm of news analysis services on many levels. Speed remains important, but time to insight is becoming an even more important performance benchmark for fast-moving news consumers.
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