THOMSON Reuters, the data provider, yesterday agreed to suspend its practice of selling early access to price sensitive data after a probe by New York’s attorney general.
The UK-Canadian company, which traces its roots back to 1851, used to allow some clients access to the closely watched University of Michigan’s consumer data two seconds earlier than others, in return for them paying extra.
The access often allowed high frequency traders, who use algorithms to make rapid computerised trades, to capitalise on the two second window and profit from trades.
The attorney general launched an industry-wide investigation into the practice in April and is probing other data firms.
“Promoting fairness and avoiding distortions in the securities markets is an important focus of this office,” said attorney general Eric Schneiderman. “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.”
The Michigan data, which is published twice a month, is released to Thomson Reuters clients on Fridays at 1:55pm before a public release at 2pm. Clients paying extra used to get the data two seconds before the clock struck 1:55pm.
“It was an elite group of subscribers who had access,” an insider said last night. “But we’re talking tens of millions or hundreds of millions of dollars which could have been made in those two seconds.”
A Thomson Reuters spokesman said: “Thomson Reuters strongly believes that news and information companies can legally distribute non-governmental data and exclusive news through services provided to fee-paying subscribers.
“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.”