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Chicago PMI Data Now Catering To HFT Algos, As Deutsche Borse Buys And Adds Datastream To AlphaFlash HFT Product Offering

Tyler Durden's picture




 

A few months ago we reported on Deutsche Boerse's Alpha Stream: a product suite especially designed to allow subscribers to get a millisecond advantage when market moving economic data is reported, which would then set HFT algos off the races, with the expectation that those paying a pretty penny for such access could scalp a few nickels from those without this critical (in our day and age of collocated needs) data feed. As a reminder, among the key benefits to customers, Deustche Boerse, now the owner of NYSE Euronext were that i) Data is sent directly by our journalists from government lock-ups; ii) Designed for easy direct integration into trading algorithms; iii) Global co-location and other connectivity options iv) AlphaFlash uses the high speed global network of Deutsche Börse and was designed by technology experts from the world of low latency trading. And while Euronext has had about 3 market halts in Europe in the past week, that appears to be irrelevant: with reverse merger listing fees now a thing of the past, the Deustche Borse has to continue raking in high margin HFT clients with the promise of some free latency arbitrage. Therefore, in order to make its product offering that much more appealing to 19 year old Ph.D.'s everywhere, NYSE Boerse has just announced its purchase of Kingsbury International Ltd., which surveys managers for the Chicago Business Barometer, also known as the company that hosts the Chicago PMI data, in order to bring PMI data direct to feed subscribers. Net result: expect even more market volatility at each PMI release, now that the market is not two but three-tiered, and consisting of regular HFTs, HFTs with access to the Deutsche Boerse feed, and everyone else. Does this make capital markets any more efficient? Hell no. Does it benefit the willing participants in a rigged casino who are about to purchase a faster reaction time for one of the blackjack tables? But of course.

From Dow Jones:

Deutsche Boerse AG said Monday it acquired the firm that publishes the Chicago Business Barometer, in a move seen adding a key U.S. economic data point to a suite of products targeted at the professional trading community.

The German group and rivals have in recent years acquired providers of financial indices to generate new contracts, but Deutsche Boerse is a leader in taking control of data that drives the volume of business, particularly from high-frequency traders.

The company launched its AlphaFlash data and news feed in April 2010 and funnels more than 150 economic indicators directly to algorithmic trading firms, which use the data points as  fodder for rapid-fire transactions.

Monday's deal is seen propelling the 30-year-old monthly Business Barometer, formerly known as the Chicago Purchasing Managers'
Index, into the top tier of machine-readable news designed for high- speed traders.

"The Chicago Business Barometer is one of the most widely followed barometers among professional traders and market  participants who use macroeconomic figures to make informed trading decisions," said Holger Wohlenberg, Deutsche Boerse's head of market data and analytics, in a statement. The barometer offers traders a monthly peek into U.S. business activity, querying purchasing managers on employment, inflation and customer demand.

As expected, the man behind the PMI, is delighted to be getting paid a lot of money just so his news can flood DB's well paying customers first:

Jack Bishop, president of Kingsbury and the economist who formulated the barometer in 1981, touted Deutsche Boerse's ability to market the service globally.

"That's the reason I was a party to the transaction, because I know where our strengths and weaknesses are," he said in an interview. Bishop has signed on for three years as a consultant to Deutsche Boerse.

It is unclear if the ultra-speed, HFT friendly feed would be activated before its next release on June 30. That said, we will certainly coordinate with our friends at Nanex for any trading abnormalities, primarily in the critical ES futures, this Thursday at 9:42am, keeping a close eye on the tape, and indicating precisely when the tiered data release hits.

h/t London Dude Trader

 

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Mon, 06/27/2011 - 16:28 | 1406461 Herbert_guthrie
Herbert_guthrie's picture

This will make it all too easy.

Lights out!
Financial System poof!

Mon, 06/27/2011 - 16:34 | 1406467 somethingelse
somethingelse's picture

Maybe we can privatize the BLS and sell that to them too?

Mon, 06/27/2011 - 16:36 | 1406469 buzzsaw99
buzzsaw99's picture

the suckers get a millisecond edge, the squid gets a fortnight.

Mon, 06/27/2011 - 21:35 | 1407332 euclidean
euclidean's picture

(someone junked this?)

+20,000, this is golden

Industrial espionage smashes another gear ....

Mon, 06/27/2011 - 16:40 | 1406471 GeneMarchbanks
GeneMarchbanks's picture

Frontrunning to the max! Bit- nevermind...

Mon, 06/27/2011 - 16:40 | 1406472 topcallingtroll
topcallingtroll's picture

I would like for you to show us the separate waves of buying and selling based on speed of various information flows.

Mon, 06/27/2011 - 16:42 | 1406476 Robslob
Robslob's picture

I am going to privatize myself and sell it on the street

Mon, 06/27/2011 - 16:54 | 1406519 JohnG
JohnG's picture

There's been "hooker deflation" so be careful out there :)

Mon, 06/27/2011 - 16:41 | 1406483 Jambo Mambo Bill
Jambo Mambo Bill's picture

HFT is really a wonder...

Mon, 06/27/2011 - 16:43 | 1406487 swissinv
swissinv's picture

if ZH can bring down the latency it may be indeed a source for the 3rd generation

Mon, 06/27/2011 - 16:54 | 1406507 baby_BLYTHE
baby_BLYTHE's picture

ZH is market mover.

Accurately predicting QE2 amongst other things.

Surprised Tyler isn't calling for QE3 when Faber, Rogers, Schiff and Ron Paul, who also got it right before, saying it is a certainty.

Mon, 06/27/2011 - 17:28 | 1406580 Tyler Durden
Tyler Durden's picture

We have been pretty much on the record before Faber, Rogers, Schiff and Paul saying QE3 will come, although it will need a gating factor of a major market drop before it is initiated in the absence of fiscal stimulus.

Mon, 06/27/2011 - 19:16 | 1406895 baby_BLYTHE
baby_BLYTHE's picture

Sorry for mis quoting, Tyler. I was confused due to a chart you posted earlier today in the comment section about the FED being able to rollover maturing securities in sufficient fashion to not need a QE3. Took it out of content, you weren't making a forecast.

Mon, 06/27/2011 - 20:23 | 1407113 Rynak
Rynak's picture

Got a link to that post, or just the thread (i can find tylers post if necessary - just need the right page)? I'm interested just how much can be done via rollover.

Mon, 06/27/2011 - 21:23 | 1407291 Rynak
Rynak's picture

Thank you. From those numbers, it appears tyler was actually argueing the opposite: That just doing rollovers, are not enough to finance the deficit spending. TBH, i would have been surprised if rollovers were enough.... i mean, the amount of bonds they put out is unimaginable, but it doesn't seem enough to survive alone from rollovers... at least with current spending rates.

Mon, 06/27/2011 - 21:29 | 1407305 baby_BLYTHE
baby_BLYTHE's picture

exactly, that is why even people like Bill Gross wonder, "Who in the hell will buy all the new treasury issuance once the FED stops buying?"

Mon, 06/27/2011 - 16:54 | 1406510 illyia
illyia's picture

It is amazing that these gamers-in-charge continue to rig the system. If they explored their game theory further they would realize that they are the end game.

The very fact that ZH reports so quickly and pretty much accurately indicates the end is near.

My amazement at stupid gamers, still thinking they "can get one over," is only exceeded by a genuine awe at their profound lack of respect for anything resembling America - or what America once was.

Almost getting used to the new normal...for now...

Mon, 06/27/2011 - 17:00 | 1406524 Saxxon
Saxxon's picture

This article + the 2 x 4 upside my silver position (recovering until B.O. released SPR oil to crush specs) reminds me; I am done trading. Mean it.

Mon, 06/27/2011 - 17:04 | 1406527 Mae Kadoodie
Mae Kadoodie's picture

I am Iron Man.

Mon, 06/27/2011 - 17:05 | 1406540 Pez
Pez's picture

Need "Time Cop" sequel to go back and take-out the early derivative funds managers

Mon, 06/27/2011 - 17:10 | 1406543 MarcusAurelius
MarcusAurelius's picture

Good article and the future of trading. Nice! Jack up share price and then pull out the rug, do it again and again and again......what's next super high frequency trading, then ultra high frequency trading.....then ...........who the hell knows. Back in the 70's, 80's and even early 90's there were mystical traders who made their fortunes trading. Guys with names like Dennis, Lipchutz, Marcus and a few others who actually traded their way to fortunes. Now.....well it seems stealing is the way to go. Who can f... who the quickest. Don't need a system for that just a millisecond advantage and servers right at the exchange. Just plain stupid and hopefully they will beat up on each other for years before they all go broke.

Mon, 06/27/2011 - 20:28 | 1407139 Rynak
Rynak's picture

What confuses me, is that they even do give the public access to this. As it is now, HFT is still "a bit" in control, by being restricted to the big players...... what happens if this abomination is used by the public? Isn't this just guaranteeing that crap will happen, and regulation of HFT will be introduced (even if perhaps with the biggies being excluded of course)?

Mon, 06/27/2011 - 17:38 | 1406605 Caviar Emptor
Caviar Emptor's picture

Taking the Three Card Monty Game that is the stock exchange to new heights! With Deutsche Borse dealing the cards and other insiders as shill 'players' from the audience (how they hook you is by making it look like the schmuks beat the dealer, that is, until you lay your bet down)

Mon, 06/27/2011 - 17:44 | 1406620 slewie the pi-rat
slewie the pi-rat's picture

later, we shall be treated to the expose' that this bloomberg-competitive enterprise was licensed by...,... bloomberg!!

Mon, 06/27/2011 - 17:55 | 1406657 Caviar Emptor
Caviar Emptor's picture

I'm looking for a full decoupling of the stock market from US economic conditions. That's because the stock market (or what's left of it after dark pools) is really just a proxy for the the TBTF banks. If they ever get their subsidies cut, look for S&P 66. 

Mon, 06/27/2011 - 20:26 | 1407150 Rynak
Rynak's picture

What? The stockmarket is still coupled to "the economy"? This is news to me.

Mon, 06/27/2011 - 19:16 | 1406880 Jasper M
Jasper M's picture

"At Duetche Borse, we for one welcome our new HFT overlords…"

Do NOT follow this link or you will be banned from the site!