Trading on Data Becoming an Increasingly Blurry Picture

Trading on Data Becoming an Increasingly Blurry Picture

Trading on Data Becoming an Increasingly Blurry Picture

According to Geoffrey Rogow, investors with the superfast computers and algorithmic-trading software needed to read and act upon the low-latency line’s digitalized information will inevitably be the first to trade on the news. The advantage these high-tech traders enjoy is measured in just millionths of a second, but it will be more than enough time to beat competitors who instead must rely on news services that generate headlines from the Business Wire release.

According to observers of ISM’s actions, the national nonprofit organization is motivated by a desire to smooth the impact of its data, which can move everything from stocks to currencies. With an “algo” feed, the market can assume these traders will have it first and plan accordingly, as opposed to other policies where the first point of dissemination is in question.

The bifurcated release also limits technical glitches, which seem to be on the rise. This month alone, both the Labor Department and the National Association of Realtors have accidentally released information on their websites well in advance of the official release time.

Whereas the government is actively trying to curtail the ability of high-frequency firms to trade on its data first–the Labor Department, for example, is poised to change the protocol for market-sensitive economic indicators released during its “lockup” with media organizations–ISM and other private data providers are embracing the algorithmic news feeds. The rationale: There is simply no way to cut out rapid traders altogether.

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About yocijourney

God does not play dice
This entry was posted in Breaking News, Business, Finance, High Frequency Trading, high-frequency journalism, Insider Trading, Market Making, Regulatory Updates, The Wall Street Journal, U.S. Economy, World Economy and tagged , , , , , , , , , , , , , , . Bookmark the permalink.

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