The media, specifically CNBC and WSJ, seem to be jumping on a story about Thompson Reuters offering data to traders who pay additional fees earlier than they are available to the general public.
This is not the same as HFT firms simply setting up shop across the street from the exchange. Thompson Reuters is paying roughly $1M, plus a "contingent fee" to the University of Michigan to get the Consumer Confidence data early, then selling it to their customers for a fee. Paying customers can get headline data at 9:55am, while the public release is not until 10:00am. Even higher paying customers can get the data at 9:54:58am, saving an additional two seconds. This is all perfectly legal right now, but I would not be surprised if the SEC jumps on this in the near future.
I have a couple of questions for those of you who would know much more about this than I do...
Are there many/any other situations where this information can be purchased earlier? I know I would love to get my hands on the EIA stats a few seconds early.
Should this be legal? It certainly boxes the retail investors out.
It should be just as legal as placing the machines closer to the exchange.
This is absurd. Might as well let companies make a little extra $ by selling their earnings reports early too. Only way this is okay, is if it's some little non-material report (which we're obviously NOT talking about, because no one would buy it then).
And how is that different than the low latency lines hft uses? They also receive news ahead of the rest of the market.
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