and of course that also is only possible, when they know the exact time of when the news would go out. So that, they can time their activity just milliseconds before that, using tech.
For a lot of these economic numbers and earnings report, they are provided to news organizations prior to the announcement with instructions that the information cannot be released prior to a certain time.
So, for this example, that time was 10:30AM. The moment it hits that time, the reports get pushed out into the newswires and reported on-air.
This allows the reporters to digest the numbers and figure out how to report it.
Yes, but they have strong motivation not to abuse it. I've seen one case where an news org broke an embargo due to fat fingering a release, that news org lost early access privileges for a year as did every sister company that belonged to the same news group.
If you specialize in financial news losing numbers is a huge deal, you'll lose thousands of customers over it. And when those customers are often $1000/month subscribers it can easily mean a financial loss of tens of millions of dollars.
Within news organizations the information is typically restricted to 1-2 named individuals who have restrictions on trading. If they leak the information they can generally be criminally prosecuted.
I'm talking about government figure releases (employment, inflation, etc and the like).
In that case it was probably just a contractual issue between Google and their printer, to the wider market it would have been the same as if Google had accidentally released their numbers early.
(Actually even in the governments case it's still a contractual issue, it's just that governments have huge power by withdrawing early access rights)
If RR traded on those numbers they would have violated criminal insider trading law.
Outsider here, but I can't think of a good reason to give this info to news people before traders, and as the parent said, there are obvious bad reasons.
Much of the news ia a facade. Reporters often get things like economic numbers and speeches prior to the event.
Things like the State of the Union Address and candidate speeches are usually provided to the press beforehand so that they can package together a story. Next time you watch a major political speech, listen to the pundits prior to the speech. They will talk about all the things that the candidates are about to say.
With regards to economic numbers, there's very good reasons for them to do it this way (pre-released to media and embargoed). If it is not pre-released, reporters will need to take time to report the numbers which gives certain people an advantage.
For example, if you're monitoring Bloomberg for the CPI and the reporter is a slow typer, a person monitoring Reuters would have an advantage over you. Secondly, this forces a situation where reporters are in a hurry to get the numbers out which could potentially lead to errors. With these types of numbers, an error could have impact of billions of dollars in trades.
Well it seems to be known that the report is due for 10.30am, so it is possible. Just an additional possibility, though nanex are far more experienced in explaining odd activity in the markets than I am :)
yes, I saw that, but think it in this way, that its a very unreasonable way, to give the time in advance. Its better for investers to have some luck with this, if the time is not given in advance, just the day roughly. The news will drop at any time during the 12 hours before or after the given day.
This would cut the advantage those hardwired trading machines have, that do tons of trades in few seconds or even milliseconds.
This should be one of the reforms against such things, in the interest of common folk investors.
If your idea of investing involves reacting to news and trading stocks/bonds/commodities/derivatives on internationally automated markets then just donate all your money to a good cause because at least then you'll get a tax deduction out of it.
