Traders Seek an Edge With High-Tech Snooping

A growing industry uses surveillance and data-crunching technology to supply traders with nonpublic information. The techniques, which are perfectly legal, represent the latest advance in the longtime Wall Street practice of searching for every possible trading advantage. But the high cost of much of the new information means that some forms of trading are becoming even more the province of firms with substantial resources.

Andrew Lo, a finance professor at Massachusetts Institute of Technology, says advances in technology can make markets more efficient but also can raise questions of fairness. "It can drive less-informed investors out of the market," he says. "Is the information so valuable, and so hard to get, that only a few people can get it? That creates a barrier to entry."