There is a pretty interesting article at WSJ (link here) on how traders get early access to market-moving data releases to make millions of dollars.
Within 1 second of receiving the early data (machine-readable), HFT firms trade millions of shares / contracts across thousands of securities to push the market down / up to reap their profits.
- Machine-readable news generates $75 million in revenue for the data providers.
- Players include SAC Capital, Tudor Investment Corp, Wellington Capital Management, Infinium Capital Management, Jump Trading LLC, Chopper Trading LLC.
- For the March 15, 2013 University of Michigan consumer sentiment survey came in at 71.8 vs expectations of 78, early access traders
- Shorted 7 million shares in 1 second across 1,624 securities.
- Shorted ~60K shares in 1 second in Consumer Discretionary SPDR ETF.
- Shorted 300K shares in 1 second in SPDR S&P 500 ETF
- Shorted 4,196 contracts in 1 second in S&P 500 futures.
- Contributed 10%, or $18 million, of Infinium’s revenue
University of Michigan Consumer Sentiment Survey
- Thomson Reuters paid $1.1 million for the rights to distribute the findings.
- Clients can pay ~$6K / month to get the data at 9.54.58 am EST, 2 seconds faster than others.
- Other news agencies get the data at 9.55am EST.
- The figures are posted on the University’s website at 10am EST.
Chicago Business Barometer
- Deutsche Börse AG bought the rights to distribute the data.
- Clients can pay $2,600 per year to get the data at 9.42am EST, 3 minutes faster than others.
ISM Manufacturing Index
- Thomson Reuters distribute the data.
- Clients can pay ~$3K / month to get the data at 10am EST, 5 to 10 seconds faster than others.
- ISM news release goes out 5 to 10 seconds after 10am EST.