A SIMPLE analysis of 100 company news releases shows that the average delay between when PR wire services release the information to Wall Street and when most non-professional investors actually have access to it on Yahoo! Finance is just over 83 seconds.
A difference in access of that magnitude is unacceptable in today’s market where company news is routinely the subject of heavy trading in the pre- and after-hours markets. It’s especially galling because companies and regulators have free or low-cost ways to easily close the access gap between Wall Street and mainstream investors.
Growing public awareness of the uneven nature of company news dissemination is likely to undermine investor confidence in the fairness of the markets and diminish their willingness to invest. No one wants to participate in a market where some get earlier access to information than others.
Real-time web increases public awareness
That there are latencies in the PR wire dissemination system is nothing new. It is inherent in the Internet protocols and computer systems that most PR wires rely on to distribute and publish company news on a myriad different websites. Many factors can affect the time it takes for information to travel over the web, including network congestion, the size of the releases, and the speed at which the receiving systems process and publish the information.
While PR wire services like Business Wire boast about their patented simultaneous distribution technologies, the fact is they cannot guarantee that an investor waiting for a company earnings release on a public investment website will be able to access it at the same time as a professional trader looking at a Bloomberg terminal. It depends on the factors listed above, and in Business Wire’s case, on the recipient system having special software installed to decipher pre-delivered encrypted releases.
However, these inherent latencies have become much more noticeable and relevant to the investing public in the two years since websites like Google Finance and others started publishing real-time stock prices. Prior to that, prices were typically delayed by 15 minutes, so investors on public websites were less aware of Wall Street traders reacting to news that they themselves had not yet seen.
Awareness of uneven news dissemination has also grown with the advent of real-time information sharing services like StockTwits, where traders with access to professional terminals routinely post company news before the PR wire releases make it to popular investment websites.
Quantifying the latency of PR wire distribution
Trying to quantify the delay between when PR wires release company news and when it actually is published on public finance websites has been difficult and imprecise. This is because investment websites show the PR wire service time stamp on the releases they publish, even though the time shown is earlier than when the news actually appears on the public website.
However, I recently discovered that Yahoo! Finance offers an earnings news feed that shows both the PR wire services’ time stamps and when the news is actually published in the feed. Yahoo! Finance is by far the biggest investor site on the web with an audience of 26.25 million unique visitors, by one recent estimate. Its users include most retail investors and also many financial professionals who use it alongside their professional services or from home.
By comparing the PR wire services’ time stamps to Yahoo! Finance’s own time stamps one is able to easily calculate the latency (see screenshot below). I did this for 100 news releases over a period of several days and at random times to get a fairer picture of the delays.
I chose random times and days to avoid potentially skewing the results, assuming that it takes longer for Yahoo! to process releases during busy periods, such as between 4:00pm and 5:00pm ET when many companies are issuing releases.
I also checked both full earnings releases, which are typically more than 1,000 words, and shorter advisories about upcoming earnings announcements. I did this because large files probably take longer to be processed than shorter ones.
Finally, I didn’t focus on any particular PR wire service, but took whatever was moving over the PR wires at the time. In the end, the results included releases from PR Newswire, Business Wire, Globe Newswire, Marketwire and CNW.
As I’ve already said, the average delay was 83 seconds. The fastest was 24 seconds and the slowest was 237 seconds or almost 4 minutes. The median was 80 seconds.
I didn’t calculate which PR wire was fastest or which was slowest because that wouldn’t be fair given that some PR wires were underrepresented in the list.
However, latencies were all over the map for all of the PR wires. For example, the speeds for Business Wire releases ranged from 24 seconds (the best) to 130 seconds, which was the 10th slowest. If anyone wants the results, I’ve posted a summary in a published Google Spreadsheet.
You can do your own research using the source code of the same feed I used. You have to look at the feed source, which you access in different ways depending on your browser, but right clicking on the screen should give you an option to see the source code.
These findings have important implications for companies and regulators. I’ll explore some of the issues in an upcoming post. In the meantime, let me know what your experiences are.