What's the Latest Development?
Last Tuesday, as a result of the Federal Trade Commission's decision to allow traders to use social media like Facebook and Twitter on the trading floor, a 140-character message sent the Dow Jones into a 150 point dip. The message was a false one, though it was tweeted on the Associated Press' Twitter account, claiming that the President had been injured in a bomb attack at the White House. Investigators later determined that the message was written by Syrian hackers who broke into the AP's account. "The hoax message also went out on a new feature on Bloomberg’s financial data terminals that delivers select Twitter posts to hedge funds, investment banks and other users."
What's the Big Idea?
The use of algorithms to find patterns in massive amounts of data, executing trading decision based upon the frequency of certain keywords across millions and millions of messages, is becoming more frequent. "The incorporation of social media in these algorithms is relatively new and is therefore particularly susceptible to hacking. 'A Twitter feed is structured in a way that is machine-readable, and there’s a broad following so you get strong signals about topics,' said Paul Rowady, a senior analyst at Tabb Group, a capital markets research and consulting firm."
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