Source : THE AGE NEWS
The high-frequency traders who signed up to pay $US100,000 ($140,000) a month for early access to Donald Trump’s social media posts may already have had a demonstration of how easily they can more than recover their investments.
On Saturday, Trump Media & Technology Group’s “Truth API” went live, giving subscribers to the service access to his posts on Truth Social milliseconds before his non-paying followers saw them.
Hours after the API (application programming interface) creating a connection between the subscribers’ and Truth Social’s software was activated, Trump – who had been threatening Iran with massive air and missile strikes again, “the biggest attack since World War II” – posted that he had called off the attacks because America’s allies in the Middle East had reached the basic parameters of a deal to end the war, including a reopening of the Strait of Hormuz.
The oil price, not surprisingly, fell heavily. It had traded above $US90 a barrel leading into the weekend. It fell below $US84 a barrel when futures trading closed on Friday, and dropped further on Monday.
There’s no doubt, Trump’s posts do move markets.
Trump Media began sounding out Wall Street institutions about selling priority access to his posts last month, offering it at $US100,000 a month for a 12-month subscription and $US60,000 a month if they signed up for three years.
At least five Wall Street firms and several financial media businesses have already subscribed, the president’s company says. That, and a competitive advantage in trading – for high-frequency algorithmic traders, milliseconds are their business models and competitive advantage – will pressure other high-frequency traders to join.
For a business that lost more than $US400 million in the first quarter on paltry revenue of just $US871,000, those subscriptions alone may already have more than double the $US3.7 million of revenue Trump Media generated last year.
Investors certainly think the new service will be material for the struggling company, with Trump Media’s shares jumping more than 16 per cent since markets became aware of the existence of the API plan.
The service monetises for commercial gains – and personal gain for Trump, who owns 41 per cent of Trump Media – presidential announcements that are routinely made first in his Truth Social posts before any official White House announcement.
‘This appears to be an outrageous abuse of the president’s office for his personal benefit that undermines everyday investors and the integrity of our markets, while enriching Wall Street and other wealthy insiders.’
Democrat senators Elizabeth Warren and Adam Schiff
Its unveiling has generated controversy and criticism, with Democrat senators Elizabeth Warren and Adam Schiff writing to the Securities and Exchange Commission demanding an investigation and suggesting that the service could violate insider trading laws.
“This appears to be an outrageous abuse of the president’s office for his personal benefit that undermines everyday investors and the integrity of our markets, while enriching Wall Street and other wealthy insiders,” they wrote.
Trump Media responded by saying that its critics were lashing out against the Truth API “either out of ideological opposition to free markets or a failure to grasp the distinction between public and non-public information.”
Effectively, Trump Media is arguing that Trump’s posts, and those of the other nine top posters on its platform made available via the API, are made available to all Truth Social subscribers at the same time – it’s just that those with access to the API can take advantage of a latency gap to get them fractions of a second earlier than those who don’t.
There are other social media platforms that also have APIs, although they don’t have the President of the United States making official announcements on them.
Truth API is just another way in which Trump is monetising a presidency that has already generated billions of dollars for him and his family.
In this instance, however, he is making money from something that doesn’t belong to him.
Under the Presidential Records Act the US, not the president, has “complete ownership, possession and control” of any documents created or received by the president.
Trump, of course, does have the immunity granted by the US Supreme Court for almost anything he does while in the White House and, in any case, it is up to the Republican-dominated Congress to police the legislation, and the party has shown no appetite or inclination to do anything that might upset Trump.
Those who have subscribed to the API and trade based on its feed might be more vulnerable to charges of insider trading, assuming the SEC, led by Trump appointees, were willing to act.
That is, however, where Trump media’s argument comes into play that the Trump posts, along with those from vice-president JD Vance and Trump’s sons, aren’t made available to subscribers ahead of other users of the platform.
It might look like institutionalised insider trading, but there are plenty of other situations, including at most major stock exchanges, where there are APIs or co-locations for high-frequency traders that enable them to gain an advantage over other market participants.
Those institutions that have signed up to the service know that $US1.2 million a year is only a fraction of what they might make from their early access to Trump’s market-sensitive posts, which tend to be voluminous and erratic and therefore have the potential to move financial markets regularly and materially.
Trump’s posts on the state of play in the war in the Middle East in particular have routinely caused major movements, in either direction, in the pricing of oil futures. There are millions to be made from the latency gap.
There’s also an incentive for Trump to make even more pronouncements on Truth Social that are price-sensitive, given that it would enhance Trump Media’s revenues while validating the cost of the service for its subscribers.
The pertinent question about the ethics of commercialising the president’s posts is whether, if he weren’t president, anyone would pay $US1.2 million a year for early access.
The answer might have been provided by Trump Media itself. The discounted $US60,000-a-month pricing of three-year packages presumably reflects the fact that the Trump presidency now has only just over 16 months to run, in the normal course of events. The posts of Trump the ordinary citizen would have little, if any, value.
Senate Democrats have introduced some legislation – the “Stop Corrupt Trading Act” and the “NO PROFIT ACT” in attempts to prevent a president, vice president and their families from selling real-time or non-public access, including prioritised real-time data feeds, to government statements.
At this point, those bills are unlikely to gain any traction in Congress. After the midterm elections, of course, that could change.
For now, however, Trump has found a way to generate yet another income stream from this highly lucrative second stint in the White House.
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