Thomson Reuters "Estranged"

July 9, Tuesday. Ask you a question: assuming that there are three participants in the market, a quick B 2 seconds, B and a quick C 5 minutes, from the point of view of fair sharing of information, do you think this "time gap" has the necessary to fill?

Investors who pay attention to high-frequency traders (HFT) and regulatory dynamics may have guessed what old man wanted to say. If the data provider, Thomson Reuters, had "detonated itself", decided to revise the three-tier information dissemination framework related to the University of Michigan consumer Confidence index in Friday to abolish the highest level of service (6000 US dollars reported monthly), and to retain only the remaining two levels, "fast market two seconds to make a lot of money" whether it involves moral and legal issues, It's really not easy to attract public attention.

Thomson Reuters "Estranged"

The thing is, Thomson Reuters pays 1 Million dollars a year to the University of Michigan, with the exclusive right to the consumer confidence index, which is compiled by the university and published two Times a month (published on the Day of Friday).

Thomson Reuters "maximizes" The business value of data by a three-tier architecture based on different reception times. Top-rated subscribers are scheduled to get the data 9:54 A.M. 58 seconds on the day of the index, pay far less than the top users, get the same data on a conference call after two seconds (9:55), and in 5 minutes the consumer confidence index will be released online free of charge. In other words, this important data, which is a sneak peek at Thomson Reuters subscribers and that can affect the share price, became public information 10 o'clock in the morning the day of the announcement.

Small investors are at a disadvantage in the market. Take Wen first A, B, C three market participants for example, C at any time can not get rid of the big "eat" fate. The problem is that data providers are "estranged" from A to b two-tier subscribers, and are willing to pay the top-cost VIP subscribers, with two seconds of information-receiving advantages, as the key to the whole thing. It is this "blink of an eye" window, forcing Thomson Reuters to take the initiative to remove the top level decision, at the expense of some commercial interests, in exchange for regulatory authorities and public opinion, no longer around the information asymmetry and the data provider embarrassed.

The stock market has already entered the high-frequency era, Wall Street transactions every day, more than half through the program trading. These "premium customers" at Thomson Reuters are High-frequency traders who invest a lot of resources in trading speed, or hedge funds that are strategically important to high-frequency trading. The world of these people is measured in milliseconds, not minutes, but two of seconds is not very meaningful to the normal, but in the HFT "country", it is not.

On May 17, Thomson Reuters, for example, issued a consumer confidence index to top users at 9:54 58 seconds, and in less than 10 milliseconds, Spy's S & P 500 index ETF traded more than 100,000 shares (ETF units). In half a second, the ETF unit, worth more than $40 million trillion, has changed hands, and it is only 10 seconds before the deal breaks 100 million dollars. Ordinary unblinkingly, which takes 300 to 400 milliseconds, the top data user at Thomson Reuters, spy the number of units in the first 10 milliseconds, to 100,000. But how many units changed hands in the blink of 400 milliseconds? For high-frequency traders, fast market two seconds, the significance is significant.

What is the "self-correcting"?

In the eyes of Thomson Reuters, according to the contract, the University of Michigan, which prepares a consumer confidence index, pays seven digits, obtains the exclusive right to obtain the data, and then provides services to the users of the information in accordance with the contract and earns income, which is a fair and aboveboard business decision, so long as it makes full disclosure of such arrangements as timing the exclusive agreement between the two parties, As early as 2009 years came into effect, in other words, the separation of data transmission grading and so on, for three or four of years, why did Thomson Reuters not change the late and not change, and now to abolish the most commercial value of the top-level services in exchange for the regulatory authorities "Jews"?

Do you still have an impression of Spitzer (Eliot Spitzer)? The former New York State Attorney-General, who had been devastated by the scandal, was forced to pay a huge fee for reconciliation by forcing the Great Wall Street Act of "junk shares to sing" at the time. Spitzer the reason why he dared to den in the world on Wall Street, not because he was particularly rich in justice, know not to be, the real reason is that New York State launched the Martin Act in 1921 (after a number of revisions, once more than once), giving the state Attorney-General a very wide range of powers, May prosecute for alleged financial fraud.

New York State The power of the attorney general in this regard, the United States does not have any State counterpart officials or institutions comparable, even the SEC can not cite only New York State Attorney-General of the "Martin Act" conferred power, in his opinion "dishonest" financial behavior singling.

"Martin Law" This handle sword, now fell in the hands of the incumbent New York State Attorney Schneiderman (Eric Schneiderman), and the "interest" on the fast market two seconds to make a formal investigation of the money, it is this gentleman! Thomson Reuters may be alert, knowing that the big staff sitting in this position will not be a mess, Rather than actively modify the data distribution structure, so as not to "trouble the upper body." However, similar market inequities are not limited to the acceptance of consumer confidence index, so how can it be only Thomson Reuters?

To change, perhaps not the data distribution system, but the inability to create real value of the "rent-seeking behavior"!