By Denny Gulino
(Part Two)
A generally forgotten sequence of events in August 2010 related to
algo news feeds is presumed by some in the news media to have triggered
the pending rule changes and restrictions.
It was in that month that Senior Labor Department Adviser for
Communications Carl Fillichio discovered that two major news services
had installed fiber optic circuits into the room used for the data
lockups despite a well-advertised department prohibition of the
super-fast data lines, which are milliseconds faster than copper-based
circuits.
“Unfortunately, it has come to my attention that, contrary to this
ban, certain organizations have installed unauthorized fiber
technologies,” Fillichio then wrote to all the news media participating
in the lockups. “Such lines must be removed no later than Friday, August
27 (2010).” They were removed, but subsequently he found a third firm
appeared to him to be attempting to do the same thing.
The offending fiber optic circuits were disabled and removed from
Labor Department premises, yet the episode may have left lasting scars
and apparently was interpreted by Fillichio and others at the Department
as a breach of trust.
Some reporters working in the lockup room for the news services
involved said they were not aware of any fiber optic installations, that
if there were any, they were apparently done by their technical
departments in an effort to gain a speed advantage without the
reporters’ knowledge. Others attributed the errant installations to
misunderstandings between the Department and news service technicians.
Even after the fiber optic circuits were removed, the Department
apparently began considering whether a new security upgrade was needed
that could control algo feeds and their special high-speed technologies
that were outside the expertise of anyone on the department’s technical
staff.
The Labor Department had no comment on this scenario, nor on any
aspect of the coming changes.
But last month CNBC reporter Eamon Javers reported the Labor
Department had hired Sandia Laboratories to analyze data lockup
security, including data circuit installations. Sandia is one of the
contractors which provide high-priority security services to government,
including to some nuclear production and storage facilities.
The Labor Department later confirmed the CNBC story to MNI, but
said no particular incident triggered the in-depth security analysis.
The vendors of such “algo” services include Bloomberg,
Thomson-Reuters, Thomson-IFR, Dow Jones, The Bond Buyer and Need to Know
News, owned by MNI, which in turn is owned by Deutsche Boerse, the
Frankfurt equivalent to the New York Stock Exchange.
Typically only the top set of headline numbers from any report,
such as the change in payrolls in the jobs report, the unemployment rate
and important revisions, are included in an algo feed. There is no
accompanying text or commentary or words of any kind. At the customers’
end, the raw numbers are used by trading computers within thousandths of
a second, having been programmed ahead of time how to react to various
possible outcomes.
The difficulties the new Labor Department dissemination process
might pose for algo feeds were not brought up April 16 by Department
officials or the news media representatives when Fillichio hosted a
teleconference to discuss the rule changes. (A recording and transcript
of which is available on the department’s Web site:
http://www.dol.gov/dol/media/.)
Fillichio fielded questions about the July procedures.
When an MNI representative raised the question of whether the new
Labor Department hardware would be capable of precisely simultaneous
transmission of the key headlines at 8:30 a.m. ET on release days, he
said, “We’ll certainly test it and keep testing it, and you’ll be part
of that testing program if you’re credentialed.”
Asked if he could guarantee every news firm will be able to connect
at the same instant, he replied, “I’m not going to guarantee anything.”
Later in the call, Labor Department technician Tom Bell and a
question-and-answer document posted on the department’s Web site
answered the question by saying the news media will be connected to the
Internet at the same time, governed by switched connections common to
all. For the first time, however, the news media will not be allowed
Internet access before the data lockups begin.
When asked by several participants why the more restrictive
procedures were being instituted, Fillichio said simply it was a
“prudent business decision” to “start from scratch” since security
procedures have not been updated in a major way for a decade.
Fillichio also announced that Labor Department would post its
reports more rapidly on the DOL Web site at release time.
“We will have a staffer in the DOL — in the lockup, so that
immediately after (the report) is posted on the Bureau of Labor
Statistics site, it’ll be posted on the front page of dol.gov,” he said.
“There’s been some concerns about some speed times on the BLS
(site), so we just wanted to make sure that there was a second place
where there’d be credible data for that number,” he said.
For the news firms, the key will be in the details. If the Labor
Department posts the reports instantly on its Web site, some customers
of the algo news services may find reason to instead employ software
known as “screen scrapers” to automatically translate DOL Web site
presentations into trading instructions.
If cable TV outlets turn out to be fast enough, automatic voice
readers could be used by trading operations to translate voice reports
into trading triggers.
The Bureau of Labor Statistics’ current posting of the numbers to
its own Web site, bls.gov, is with a slight delay that obviates its
value to trading institutions.
-more- (2 of 3)
** MNI Washington Bureau: 202-371-2121 **
[TOPICS: M$U$$$,MGU$$$,MAUDS$]
