Imagine trading your stocks while you are on your favourite social network ‘Facebook.’ Well, that’s possible now since many Indian brokerage firms are now going to host stock trading apps on Facebook. As per a story at the Economic Times, many brokerage firms are in the process of launching Facebook apps that will allow clients to execute stock trades on the Bombay Stock Exchange. Retail brokerage Geojit BNP Paribas will be the first to launch a stock trading app later this week, followed by at least 10 more stock brokers.
With Facebook being the most familiar ground for the young investor, this decision comes across as a well-thought move by stock brokers in India. Facebook apps in the US are already offering real-time stock quotes, charts, discussions and trading. The MD of Geojit BNP Paribas stated that FB integration will give both amateur and expert traders similar ability to ‘like’ a stock and thereby stay tuned on its latest developments, in addition to seeing which stocks their friends ‘like’.
However, this is coming at a time when the use of social media as a mode of communication is under the scanner in all markets. When the CEO of Netflix shared the company’s latest achievement through his Facebook post, there was a sudden rise in its share prices last year. While this post triggered the rise, it also put all those unaware of this information, at a disadvantage. In a bid to tackle this, the American market regulator Securities Exchange Commission, has issued guidelines this April, wherein it states that social media platforms can be used for making announcements if all stakeholders are aware of it.
The other major concern involving the use of social media is the spread of sensitive information that could influence stocks. The Indian market regulator SEBI has found the medium is being increasingly used by unscrupulous parties to manipulate stocks. Last year, SEBI had hired special IT officers to keep an eye on blogs and social networking sites like Facebook and Twitter, to track and identify the manipulators.
This April, following the SEC, SEBI has announced that it will soon establish guidelines to companies on the use of social media and platforms like Facebook and Twitter, for sharing non-public material information.
But, how safe are social networks?
The recent hack of the Associated Press Twitter account and the false tweet about explosions at the White House injuring Barack Obama, resulted in the Dow crashing by nearly 100 points.
As SEBI is yet to issue social media usage guidelines, the scenario gets even trickier. The regulator faces the toughest challenge from sensitive information being shared through Blackberry Messenger (BBM) and messaging apps like Whatsapp. While the regulator is finding ways to tackle this – which is a far tougher challenge compared to keeping a tab on social networks – the use of social media is on the rise when it comes to trading in the social media age.
As stock brokers launch their trading apps on Facebook, we do not know how manipulators look at this. If a Twitter account can be hacked, so can a Facebook app or an account, thus adding to SEBI’s woes and investor concerns.
Image source: The Hindu