Thomson Reuters, one of the world’s largest financial information providers, is harnessing the power of social media sites and blogs to enhance the trading strategies of investors.
Aimed primarily at high-frequency traders but also of interest to long-term investors, Thomson Reuters is extending its machine-readable news service to scour and interpret information from around 50,000 news sites and four million social media sites and blogs to create a sentiment score on the quality of information.
Up until now, machine-readable news feeds have focused on economic data and stories and headlines from news feeds but Thomson Reuters is looking to make sense of all this extra information available on the internet.
Rich Brown, head of quantitative and event-driven trading solutions at Thomson Reuters, said: "Investment firms are embracing new data, tools and techniques to help make sense of the massive amounts of unstructured data available on the internet.
“When properly analyzed and understood, this data can complement a firm's trading and investment strategies and give it a competitive edge.
“This launch will give investors additional capabilities to gauge stock, sector, and market sentiment, and to translate these emerging sources of market insight into data that can be incorporated into both quantitative strategies and as a way to provide a broader context to human analysts."
The new service provides users with the ability to filter the available content to spot trends and Thomson Reuters says its customers will be able to quickly sift through the noise and better interpret the waves of online data.
A spokesman for Thomson Reuters said that at this stage the monitoring of sites such as Twitter, Facebook and YouTube would not be included in the service. For example, the spokesman said that because of the specific nuances of Twitter, and the fact that a Tweet has only 140 characters, it would be hard to glean any useful information compared to industry blogs, social-networking and commentary websites.
According to Aite Group, a Boston-based consultancy, 35% of quantitative firms now use some form of machine-readable news feed, up from just 2% three years ago. And last year, Derwent Capital Markets revealed that it had begun trading off sentiment data mined from Twitter messages.
Last week, rival provider Bloomberg announced a $100m overhaul of its market data service. The redesign of its terminal interface aims to simplify how its clients access financial data and news.