Pay a Fee To Get Early Trade Info

July 8, 2013

According to CNBC in the article, “Thomson Reuters Gives Elite Traders Early Advantage,” Thomson Reuters and the University of Michigan are cashing in on early trade information. Here is how it works: Thomson Reuters collects data via its news agency and the University of Michigan applies its well-known economic statistic to the data. Together they sell the information to an elite group of traders two seconds before it is officially released. There is more than enough time in the digital age for traders to respond and take appropriate action. Reuters does have to pay Michigan a bit to a cool million a year.

The information package is also tiered, so another client still has the advantage over another.

“’I worry that there’s both a fairness and a disclosure issue,’ said former Securities and Exchange Commission Chairman Harvey Pitt. “’f I’m paying a lot of money, I should know whether I have the best deal possible. If there was no disclosure of the tiered structure, that would be a serious problem.’”

Reuters has not responded on how much its clients are paying for the package. Even if the deal is legal, it sounds like a bunch of insider trading. How long before these bought seconds do become illegal?

Whitney Grace, July 08, 2013

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