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Reuters Admits To "Inadvertently" Leaking ISM Data 15 Milliseconds Early To HFT Clients

Tyler Durden's picture




 

Back on Monday, following the huge miss in the Manufacturing ISM, in collaboration with Nanex, we exposed yet another instance of blatant headline data frontrunning in "15 Milliseconds Of HFT Fame: Watch Today's Early Leak Of The ISM Print" where we showed aggressive trading amounting to tens of millions in notional contracts ahead of the 10am release of the key economic indicator.

We assumed that just like every other lament about a market that is front-run by those "who have the means", manipulated (by the Fed of course - remember when that was just a conspiracy theory: good times) and simply broken, it would disappear in the ether forever. After all: why bring attention to facts when hopium is sufficient for the E-Trade baby to retire rich and famous before it has hit 2.  We were delighted to learn that CNBC's Eamon Javers picked up the torch and actually did some further investigating, which in turn led to an actual admission out of Reuters that it "inadvertently" sent out the data to "a select group of high frequency traders, many of whom immediately traded on the information before it was available to the wider market, CNBC has learned." Inadvertently? The humor just never stops.

More from Javers:

ISM, which puts out the data, told CNBC on Monday that it believed the data was not released early over its normal distribution method, PR Newswire. In a statement, ISM senior Associate Rose Marie Goupil said, "ISM's data was not released early today, nor is it ever released before 10:00 a.m. eastern time."

 

But ISM also explained that in 2012, ISM entered into an exclusive agreement with Thomson Reuters to offer "a low latency economic data feed of the data." This super-high speed computerized service, ISM said, included just the data contained in the report and not its full text, which makes it easier for computer trading programs to process the data quickly. "This feed," ISM wrote, "offers subscriptions to low-latency programmatic traders worldwide who have the proper equipment and trading algorithms."

 

Thomson Reuters is a news service that calls itself "the world's leading source of intelligent information for businesses and professionals." On Wednesday, Thomson Reuters released a statement to CNBC confirming that it had, in fact, released the data early. "We have identified that there was a minor clock synchronization issue Monday causing this data to be released 15 milliseconds early," the firm said in statement. "We are taking measures to minimize clock synchronization issues in order to ensure that release of the data is as close as possible to the official release time of 10am ET." Thomson Reuters said that the manufacturing data is just one of more than 1,300 economic indicators available on its high speed news feed direct service. The firm said it would not disclose how much it pays ISM for early access to the data or what it charges subscribers for its high-speed service.

 

A source familiar with the situation characterized Monday's incident as a "minor, isolated, clock synchronization issue," and said Thomson Reuters is "taking measures to make sure that synchronization is completely up to speed in the future."

Well, they apologized. Almost. And anyway, it is two days later now. So what difference does it make!

And for those who wish to see the charts, here they are again:

From Nanex:

Note how SPY and the eMini traded within a millisecond for the Consumer Confidence release last week, but the eMini lagged SPY by about 7 milliseconds for the ISM Manufacturing release. The simultaneous trading on Consumer Confidence is probably because that number is released at the same time in both NYC and Chicago, whereas the ISM Manufacturing number is released in NYC, and then takes 5-7 milliseconds, due to the speed of light, to reach Chicago. Either the clock used to release the ISM number was 15 milliseconds fast, or someone (correctly) jumped the gun.

1. SPY trades color coded by exchange and NBBO. Chart shows 150 milliseconds of time.

 

2. ES June 2013 Futures (eMini) trades and quote spread. Chart shows 150 milliseconds of time.

 

3. SPY trades color coded by exchange and NBBO. Zoom-out of Chart 1. Chart shows 1 second of time.

 

4. ES June 2013 Futures (eMini) trades and quote spread. Zoom-out of Chart 2. Chart shows 1 second of time.

 

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Wed, 06/05/2013 - 13:24 | 3626813 knukles
knukles's picture

What's a millisecond amongst friends?
Sorta like a few dozen extra zeros on the QE4evah daily injection

Wed, 06/05/2013 - 13:26 | 3626825 freewolf7
freewolf7's picture

"We apologize."

Wed, 06/05/2013 - 13:29 | 3626839 Precious
Precious's picture

Insiders call this 'front-sprinting".

Wed, 06/05/2013 - 13:36 | 3626866 ghengis86
ghengis86's picture

I call it 'criminal'.

Where's that shitstain, fuck face, child killing, gun running, Obama dick sucking mother fucking bag of dicks Holder when you need him? off-the-record meetings with a captured media, dribbling cum on their foreheads and telling them he'll be nicer next time?

Ok. Corzine will have to do. At least his name starts with "Honorable"...

Wed, 06/05/2013 - 14:03 | 3626972 The Juggernaut
The Juggernaut's picture

OOOooohh I get it... You have to be a powerful corporation with connections to get away with insider trading.  Stupid Raj.

Wed, 06/05/2013 - 15:24 | 3627291 Disenchanted
Disenchanted's picture

Obviously the Reuters clocks are set to HFT Standard time. EST'ers are muppets.

Wed, 06/05/2013 - 15:35 | 3627315 James_Cole
James_Cole's picture

I wonder if Reuters client list went up after this story came out? Pretty damn good advertising!

Wed, 06/05/2013 - 13:43 | 3626901 ebworthen
ebworthen's picture

"We apologize".

LOL!

"Do not worry".

Wed, 06/05/2013 - 14:39 | 3627121 DeadFred
DeadFred's picture

Raise your hand if you think they would have apologized if Nanex hadn't outed them.

Wed, 06/05/2013 - 20:22 | 3628132 MachineMan
MachineMan's picture

Oooo, Oooo Mr Kotter.......

Wed, 06/05/2013 - 13:29 | 3626840 blindfaith
blindfaith's picture

wonder what kind of 'kick-back' they got...just say'in

Wed, 06/05/2013 - 14:27 | 3627067 stocktivity
stocktivity's picture

They have to keep their white, fat, blue-eyed banker friends happy.

Wed, 06/05/2013 - 13:53 | 3626937 Panafrican Funk...
Panafrican Funktron Robot's picture

Interesting that copper is holding up in spite of the recent slight pullback in stocks.  It's worth noting that the copper market and the stock market diverged considerably in January.  Even since QE started, copper and stocks have maintained their very strong correlation.  Currently, copper is implying an S&P price of about 1400-1425.  

Wed, 06/05/2013 - 13:24 | 3626818 ZippyBananaPants
ZippyBananaPants's picture

I 'accidently' sharted my pants one time too!

Wed, 06/05/2013 - 13:28 | 3626836 Yen Cross
Yen Cross's picture

    I wonder what the fee per milisecond is, to be on the Reuters {ISM early release list}?

Wed, 06/05/2013 - 13:29 | 3626838 Dr. Engali
Dr. Engali's picture

I'll bet that they inadverently recieved a credit in their checking account 2 milliseconds later too.

Wed, 06/05/2013 - 13:36 | 3626865 LawsofPhysics
LawsofPhysics's picture

Yes, yes.  If you can't identify the sucker at the table, it's probably you.

Wed, 06/05/2013 - 13:32 | 3626851 reTARD
reTARD's picture

AP gets spied on while Reuters is still helping friends in high places. Now I know which one is more well connected to the elites.

Wed, 06/05/2013 - 13:36 | 3626867 Stoploss
Stoploss's picture

And they wonder why no one wants anything to do with the "stock market".

 

LOL!!

Wed, 06/05/2013 - 13:37 | 3626872 max2205
max2205's picture

If that happened in iran they'd be shot....only in amerika

Wed, 06/05/2013 - 13:39 | 3626883 Racer
Racer's picture

Oh they should get their excuses right and have said it was due to the relativity of simultaneity

Wed, 06/05/2013 - 13:57 | 3626887 Kiss My Iceland...
Kiss My Icelandic Ass's picture

 

 

REUTERS "inadvertently" sent out the data to "a select group of high frequency traders, many of whom immediately traded on the information before it was available to the wider market,

 

How would Reuters have this info to begin with?

 

That having been said, algos can't read and act on english text in 15 milliseconds. Neither can a human. Something very wrong here ...

Wed, 06/05/2013 - 13:58 | 3626948 Technical Difficulty
Technical Difficulty's picture

Did you even read the article?

Wed, 06/05/2013 - 14:58 | 3627199 NotApplicable
NotApplicable's picture

Nah, he's a freakin' algo, focused wholly upon the data.

Wed, 06/05/2013 - 20:34 | 3627579 Kiss My Iceland...
Kiss My Icelandic Ass's picture

"My bad". Didn't read the article carefully.

 

So, it's just plain old garden variety criminal activity.

Wed, 06/05/2013 - 13:58 | 3626950 Overflow-admin
Overflow-admin's picture

Maybe ISM sold it "inadvertently" early to Reuters.

Wed, 06/05/2013 - 19:26 | 3628010 cdntrader
cdntrader's picture

You're wrong! In the HFT world, any processing over 1 ms is not even put on production anymore. FPGA cards are now processing sub-10-microseconds!

Wed, 06/05/2013 - 13:40 | 3626891 ebworthen
ebworthen's picture

The kickback for that "mistake" had to have been at least $50,000 in unmarked non-sequential FED notes.

Wed, 06/05/2013 - 13:41 | 3626896 ziggy59
ziggy59's picture

Inadvertently got caught...

Wed, 06/05/2013 - 13:48 | 3626918 orangegeek
orangegeek's picture

But of course, no one at Reuters knows who did it.

 

And the kickback to the SEC is more than enough to stifle any investigation.

 

Ah, the world is a wonderful place.

Wed, 06/05/2013 - 13:49 | 3626921 Overflow-admin
Overflow-admin's picture

Reuters admits being part of a Délit d'initié. In another dimension, prosecutions start. But nothing to see here.

Wed, 06/05/2013 - 13:49 | 3626924 Dan Conway
Dan Conway's picture

The IRS gets to say they did nothing wrong.  Rueters claims they inadvertently released data.  The big banks are laundering money for the mexican drug cartels and pay a small fine.  But if we did something wrong like misdate our tax return - next stop sing sing for some butt slamming re-education.  This is such b.s.!

Wed, 06/05/2013 - 13:50 | 3626926 kahunabear
kahunabear's picture

I luvs the purdy charts.

Wed, 06/05/2013 - 13:51 | 3626931 Dan Conway
Dan Conway's picture

Tyler, can you estimate of how much "inadvertent" windfall they made? 

Wed, 06/05/2013 - 14:04 | 3626975 replaceme
replaceme's picture

But in a related story, EMACS11, an HFT living in NYC said "It really didn't matter that I got this information early - I would still have pounded you human traders if I'd gotten this 30 seconds later.  A minute.  Can I add that I couldn't possibly trade as slowly as you did if I tried?"

 

 

Wed, 06/05/2013 - 14:04 | 3626978 debtor of last ...
debtor of last resort's picture

Grab what you can before this bitch goes down. Unbelievable fraud and theft. Gov., big banks, big news stations, libor, metals, MFG, Enron and so on, what a fucked up mess. Give the masses foodstamps & healthcare, bread & circusses to buy some time for looting some more.

How the west was lost.

Wed, 06/05/2013 - 18:33 | 3627661 Kiss My Iceland...
Kiss My Icelandic Ass's picture

And just as a reminder, former Enron CEO Skilling has "made a deal with prosecutors" for early release :

http://www.cnbc.com/id/100705535

Must be some deal ! I wonder if Attorney General Eric Holder had anything to do with it? Nah ....

Meanwhile, people stealing tube socks continue to rot in jail :

http://disinfo.com/2013/04/how-a-man-was-sentenced-to-life-in-prison-for...

Yep, the best justice system in the world. (At least, if you've got money and you don't like being jailed for committing crimes.)

Just how does a criminal serving time "strike a deal" for early release? Obama? Holder? Anyone?

Wed, 06/05/2013 - 14:16 | 3627017 B2u
B2u's picture

I apologize in advance for any inadvertent mistakes like on my taxes.  I will not do it again.

Wed, 06/05/2013 - 14:23 | 3627054 Toolshed
Toolshed's picture

Gosh, I am so sorry my gun went off while pointed at the bankster's head. It was an inadvertent early release.

Oops.

Wed, 06/05/2013 - 14:40 | 3627126 MrBoompi
MrBoompi's picture

We are very sorry for the clock synchronization thing.  But please remember the money you owed then is still owed today.

Wed, 06/05/2013 - 15:04 | 3627219 Aurora Ex Machina
Aurora Ex Machina's picture

Be First (HFT translation: Faster), Be Smarter, Cheat.

 

Yeah. People seem to have given up on the first two. Total decay.

Wed, 06/05/2013 - 15:16 | 3627260 trader1
trader1's picture

just don't get caught stealing

Wed, 06/05/2013 - 15:34 | 3627312 razorthin
razorthin's picture

Their heads will be inadvertently lopped off someday soon.

Wed, 06/05/2013 - 15:55 | 3627391 goldenbuddha454
goldenbuddha454's picture

I would be shocked if HFT's weren't Privy to the information ahead of the rest of us. 
Besides, its what we expect from the liberal media.  Since when does average joe stand at the front of the line?  One set of rules for the elites and another for the muppets, Duh! 

Wed, 06/05/2013 - 17:06 | 3627603 greatbeard
greatbeard's picture

>> its what we expect from the liberal media. 

Who is this we  you speak of?  What about fully corporate owned and controlled media, with an emphasis on Reuters, makes it liberal?  Can you give a basic definition of liberal?

To be brutally honest, you red team blue team folks are what makes these shenanigans possible.

Wed, 06/05/2013 - 19:57 | 3628081 Kiss My Iceland...
Kiss My Icelandic Ass's picture

 

 

too shay

Wed, 06/05/2013 - 15:57 | 3627396 Ban KKiller
Ban KKiller's picture

Gee, why are individual investors fleeing the market? Rigged much?

Wed, 06/05/2013 - 17:18 | 3627629 medium giraffe
medium giraffe's picture

Holy Kickback, Batman!

Wed, 06/05/2013 - 17:25 | 3627654 max2205
max2205's picture

1% ers are happy so stfu!

Wed, 06/05/2013 - 17:33 | 3627679 drivenZ
drivenZ's picture

does it really matter whether it was 15 milliseconds or on time? If you're not using an HFT program you aren't going to beat the market anyways.  

Wed, 06/05/2013 - 19:04 | 3627954 ThisIsBob
ThisIsBob's picture

So if you trade on advance / inside information that you accidentally got, thats OK then?

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