Elite Traders Pay to Receive Early Look at Consumer Confidence Data

By on June 13, 2013

CNBC is reporting that an elite group of traders pay a fee to Thomson Reuters to access an important economic indicator prior to its public release. The University of Michigan, which generates the consumer confidence statistic, and Thomson Reuters have an exclusive agreement to publicize the figure to the general public on 10 a.m. on days the number is released. However, according to CNBC, Thomson Reuters provides the consumer confidence indicator to paying clients at 9:55 a.m. Even more elite clients receive the information at 9:54:58.000 a.m.

In order to receive exclusive access to the data, Thomson Reuters pays the University of Michigan $1 million every year, according to the contract, in addition to a “contingent fee” based on the revenue earned by Thomson Reuters. Traders who receive the key economic indicator prior to the public release can use the information to gain an advantage in the market using high-frequency trading, CNBC reported.

The consumer confidence figure is an assessment of household opinion about the state of the economy. The measurement is used by financial professionals as a determinant to how the economy is affecting people’s judgment on spending and ability to deal with tough economic conditions. The stock market often reacts to the consumer confidence statistic, therefore a sneak peek can provide an edge over traders who do not pay Thomson Reuters for the elite service.

Several economists contacted by CNBC said they were not aware that an elite group of traders received the data before the public. One economist said the release was “disingenuous,” another called it “unfair.”

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