With news hitting social media before it reaches the traditional and online media, it is fast becoming the new newswire. Informing us of events, usually along with pictures, within minutes of an event taking place.
The recent hacking of AP (see: Can We Ever Trust Our News Agencies Again?) with the announcement that there had been an explosion at The White House highlights the damage that can be done by false reporting. This report was taken at face value for long enough for the Dow Jones to take a nose-dive.
Despite these risks Bloomberg announced that it would add Twitter feeds to the firms terminals, which inform traders of current industry news and effect trading decisions. Many smaller trading firms have been using Twitter for some time and this new way of working will only expand across the industry.
So will social media affect the way our financial institutions trade stocks and shares? Bet your silk socks it will.
New companies are popping up every day. Companies such as StockTwits, which has almost 300,000 Twitter followers and has built a trader network based purely on Twitter feeds.
Now the challenge is breaking through the sheer volume of posts and tweets coming from the social media world, or which most recent estimate is 400 million each day, and separating fact from fiction.
Organisations must take corporate responsibility to protect their organisations from hacking, malicious use and accidental posting (see our white paper: Social Media Risk, Compliance and the Law). They should also be investing in monitoring platforms, which cut through the social media dross and focus on key companies.
Social media is here to stay and financial institutions should be taking steps towards embracing this powerful medium in a secure and focussed way by implementing social media risk management policies and training their staff to use social media in a responsible way.