Article Reviews, Trading

The Trading Edge From Early Access to Key Data

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.

The Players

  • 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.

The Edge

  • 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.

-END-

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Discussion

One thought on “The Trading Edge From Early Access to Key Data

  1. That’s so messed up, as retail traders we just have to wait for the action to slow down…..

    Posted by GS | June 14, 2013, 11:23 pm

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