The Optics Of Selling Financial Information

The Optics Of Selling Financial Information

Thomson Reuters (TRI) (my employer, but I’m not speaking on their behalf here) pays the University of Michigan a seven-figure sum every year. In return, it gets the distribution rights for the university’s closely-followed bi-monthly consumer confidence survey. It’s an arm’s-length commercial transaction: free enterprise in action. But it’s also controversial.

Up until now, Thomson Reuters has orchestrated the distribution of the data using a three-tiered system. The top level of high-frequency traders pay a reported $6,000 per month to get the information at 9:54:58am. The next level of Thomson Reuters subscribers, paying substantially less, get the data two seconds later, from a conference call which takes place at 9:55am. Finally, at 10:00am, the report is made freely available on the web.

As of this Friday, however, the first tier will be eradicated. You can still pay to get the data five minutes early, but you won’t be able to get the data five minutes and two seconds early. Thomson Reuters didn’t want to make this move — it has said repeatedly, and accurately, that it’s entirely kosher for news and information companies to distribute non-governmental data to fee-paying subscribers. And as Henry Blodget says, Thomson Reuters is hardly alone in this: there’s a massive marketplace out there of information providers charging hedge funds enormous sums for timely access to various datasets.

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