Quantitative finance collector
C++ Matlab VBA/Excel Java Mathematica R/Splus Net Code Site Other
Mar 17

Twitter Speaks, Markets Listen and Fears Rise!

Posted by abiao at 06:40 | Default | Comments(0) | Reads(945)


Misinformation can spread fast on Twitter, with each retweet exposing it to much wider audience, and sometimes even resulting in a real world impact. In April, 2013, hackers took control of the Associated Press Twitter account and falsely Tweeted that there have been many explosions at White House and that President Obama was hurt. That tweet was up just for few minutes, but was retweeted more than 3,400 times before Twitter took that account offline.

The Associated Press immediately confirmed that this news was not true, but the damage was done as the tweet remained up for long enough to send shudder through stock market, which plunged 149, erasing more than $138 billion in market value. The markets recovered within minutes but this episode has heightened concerns among regulators about the combination of high-frequency trading and social media.

In fact, the vulnerability stems from the recent decision of the Security and Exchange Commission to allow executives and companies to use social media sites such as Facebook and Twitter to broadcast stock market moving news.

A unique trading system has been designed to make trades based on certain keywords in milliseconds. The hoax message on Twitter stock market went up on the latest financial data terminal on Bloomberg that delivers select Tweets to hedge investment banks, funds and investment banks.

Twitter stock market tweets even have a power to end promising careers, fuel a revolution, and cause diplomatic rows. Fake tweets can also have ripple effect and damage control is really difficult. There is no way to append or edit a correction to the tweet, and once retweeted, those 140 characters take the life of their own. In fact, any follow up tweet with correct information might not be seen by the same audience.

The AP incident was not the only one that has influenced the stock markets. In July, 2012, an Italian journalist had set up fake Facebook and Twitter account for an important member of Russian govermnet and has Tweeted that Syria president had been killed, causing brief ripples in the oil markets.


Add a comment
Emots
Enable HTML
Enable UBB
Enable Emots
Hidden
Remember
Nickname   Password   Optional
Site URI   Email   [Register]