High-Speed Traders Prompt Business Wire to Study Delays
This article is for subscribers only.
Business Wire is considering whether to encourage corporations that distribute press releases through its service to delay sending announcements until a few minutes after 4 p.m. New York time, reducing the odds of altering their stock’s closing price.
The risk, first reported by the Wall Street Journal, was highlighted on Dec. 5 when Ulta Salon Cosmetics & Fragrance Inc. distributed its worse-than-estimated earnings report through Business Wire, a division of Warren Buffett’s Berkshire Hathaway Inc. Because Ulta sent it before Nasdaq OMX Group Inc. set the price about 1 second after 4 p.m., the stock’s end-of-day level was about $4 less than it would have been had Ulta waited.