Dividends and Leaked audio feeds have given some traders an unfair edge on rivals, BoE says

A number of years ago, there was books and articles about how high frequency traders were getting a little closer to the stock exhanges in order to very quickly analyze and make trades on the information they received in less than a second. For most investors, it was interesting but whether you received an extra cent or not did not matter, for most investors buy something to hold it for longer than a month. If you are buying for the dividends, your holding can be years.

In an article in Reuters, a rogue trader has been misusing audio feeds from the Bank of England news conferences. The Bank of England had been using a third party supplier (not usual) but the third party was compressing the sound and sending the feed to high-speed traders who could have a 5 to 8 second head start.

The Bank of England has identified the problem, identified the supplier and possible court cases are being examined. The Bank of England said this was wrong, the supplier was not identified but the Bank of England has blocked their access.

The intention of the audio feed was as a backup in case the official video feed of its news conferences failed.

Hedge funds have long sought to steal a march on their rivals and have an edge to produce better than than market indexes.

Linking to dividend paying stocks, in every industry there are people trying to get the edge and depending on the trading you do, that is what you have to do. Last year my funds were up 20% which is a good number with low risk. Sometimes the best solution is the solution which has worked over the year. Buy profitable companies which pay a dividend and they will trade at a higher multiple because they make money.

There are more questions than answers, till the next time – to raising questions.

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