Thomson Reuters has released the latest version of its Eikon trading terminal, adding new features including a social media sentiment analysis tool.
The Eikon platform was launched in 2010 following a two-year, billion dollar development, offering news, trading, search and analytics for brokers and other market participants. Following a troubled launch, which preceded the departure of CEO Tom Glocer, the service has quickly grown its subscription base to 120,000, as of December 2013, up from 30,000 12 months ago.
The latest update to the platform features a social media sentiment analysis tool which draws on proprietary language processing technology to determine whether a tweet contains a positive or negative message, similar to the system developed by Thomson Reuters for its News Analytics service.
The analytics tool provides traders with a visualisation of the volume of both positive and negative postings relating to individual companies on an hourly basis, based on posts on Twitter and social media site for brokers, StockTwits.
Traders are able to view a comment from the top poster – designated by their Klout social media ranking score – as well as view a more in-depth list of tweets from individuals and news sites.
Other features of the Eikon version 4 release include user interface upgrades, enhanced search functionality to incorporate natural language queries, and a Google Chrome plug-in which enables analysis of web pages such as news sites, providing links to related trading data via the main Eikon system.
According to Thomson Reuters chief technology officer and global head of platform for Financial and Risk, Philip Brittan, the new social media feature will meet demand from a growing number of traders using sites such as Twitter, but he said it is likely to be used as a research tool rather than as a basis for trading decisions.
“A certain group of users want to understand what is going on social media, but I don’t think that people are going to use this for a trading decision or whether invest to in a company – it is more about timing,” he said.
“Our customers might be ready to buy Apple, Google or whoever, and wonder ‘is now a good time? Is there a negative discussion [about these companies] going on out there?’ There are people that are going to care about that sentiment.
He added: "Of course there are going to be some people who absolutely don’t care and are fundamentally driven on the results of the company, but for certain users it is certainly something they are asking for.”
Social media and news analysis is already widely used by trading businesses, with analysts Aite Group estimating that 50 percent of quantitative trading firms are using machine readable news feeds.
The use of social media sentiment analysis in automated trading has received criticism in the past due to the impact of fake tweets being sent out. Last year the Dow Jones Index plunged after Associated Press’ Twitter account was hacked by the Syrian Electronic Army and erroneous tweets were posted, highlighting the potentially negative impact of social media on markets.
However the Eikon sentiment analysis aims to also make it easier for humans to quickly make sense of masses of social media information currently available, with tens of thousands of tweets about major companies each day.
“The ability to incorporate social media into the analytics toolkit is becoming an increasingly frequent demand from today’s generation of traders,” said Aite Group analyst Danielle Tierney. “Such functionality is no longer just a value-add, but is well on its way to becoming an important part of many quantitative strategies. The real differentiator is usability, or how this data is then harnessed to present financial professionals with an easily-digestible picture of market trends.”