NEW YORK CITY (AFP) – Thomson Reuters said Monday it will halt the early release of valuable market-moving data to high-speed traders while a regulator probes whether the privileged releases give the traders an unfair advantage.
Starting July 12, Thomson Reuters plans to release the twice-monthly University of Michigan survey of consumer confidence to all its customers at the same time, and no longer give a two-second head start to customers who pay more.
The move follows pressure from New York State Attorney General Eric Schneiderman, who has complained that the early release of the data to high-speed traders can give them an unfair edge in the market.
“Promoting fairness and avoiding distortions in the securities markets is an important focus of this office,” Schneiderman said. “The securities markets should be a level playing field for all investors and the early release of market-moving survey data undermines fair play in the markets.”
Schneiderman is investigating the scope and market impact of the early release of the data.
Thomson Reuters said it “strongly believes” releasing the data early to clients who pay extra for it is legal.
“It is widely understood that news and information companies compete for exclusive news and differentiated content to help their customers make better informed trading and investment decisions,” the New York-based company said.
But the financial news company said the suspension of the early release service will be in effect during the probe.
It will distribute the news to all of its clients equally at 9:55am starting July 12, five minutes before the information is released to the general public.
“Thomson Reuters is fully cooperating with the NY attorney general’s review and made this change voluntarily at the request of the attorney general,” said the company.
Thomson Reuters currently purchases the data on consumer sentiment from the University of Michigan for more than $1 million a year, according to press reports, and then resells it to its clients.
Typically a strong or unexpected movement upward or downward in the confidence index can push the markets significantly higher or lower.
To traders using complex algorithmic programs and high-speed computers, knowledge of the survey results just two seconds early can turn into huge gains on the markets.