High-speed trades had a head start
Multinational company Thomson Reuters agreed recently to stop disseminating certain market metrics to high-speed traders a full two seconds prior to their release to other subscribers ”“ enough time to deliver an advantage.
The information and media giant maintains offices in Valhalla, Stamford, Conn., and globally. Its world headquarters in Manhattan oversees 38 U.S. offices. Eleven regional headquarters circle the globe.
New York Attorney General Eric T. Schneiderman said the company has agreed immediately to discontinue the practice of providing high-frequency traders with certain market-moving consumer survey results prior to the release of that information to its other subscribers. The move was prompted by a current investigation into the practice.
Prior to this agreement, the attorney general”™s office alleged Thomson Reuters was selling early access to the University of Michigan consumer survey results to high-frequency traders.
The survey results are distributed exclusively by Thomson Reuters every other Friday.
The University of Michigan”™s consumer survey results are among the most closely watched indicators of consumer sentiment in the U.S., Schneiderman said.
“High-frequency traders were able to access and act on this information two seconds earlier than other Thomson Reuters subscribers,” Schneiderman said in a prepared statement. “That two second advantage is more than enough time for these traders to take unfair advantage of their early access to this information as they execute enormous volumes of trades in the blink of an eye.”
The state”™s investigation into the scope and impact of this practice is ongoing.
“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.”
This change, according to Schneiderman, “immediately removes a prior distortion in the markets and it sends a message that unfair timing advantages for high-frequency traders and others will not be tolerated by the attorney general.”