By Denny Gulino
WASHINGTON (MNI) – News services that have spent years building
packages of information products derived from government data are
scrambling to adjust to changes in procedures the Labor Department is
imposing that soon will determine how reporting on jobs, inflation and
initial jobless claims reach the outside world.
The new regime for data dissemination at Labor takes effect with
the June jobs report issued July 6. Government computers will replace
those owned by the news agencies, and all the tools reporters have used
for years — including their transmission software, templates for data
tables and even pens and pencils — will be kept out of the locked room
where the data is released, at 8:30 a.m..
So far the new rules will only apply to data “lockups” at the Labor
Department, while the Commerce Department, where most of the rest of
market-sensitive U.S. government financial data is generated, is
watching the exercise closely and may eventually do the same thing.
The Labor Department has also reviewed anew which news firms will
be allowed to participate in the data lockups, which allow reporters
advance access to the numbers. It will post on the Department’s Web site
later in the day who gets in and who won’t.
What changes — if any — the customers of the news services will
see when the 8:30 ET July 6 jobs report is released are at this point
difficult to anticipate.
The new rules mean the news services will still have 30 minutes to
look at the release — in a locked room with no communication with the
outside world — but may have fewer people preparing the breaking news.
And whoever is there will be using generic software to do it, not the
custom-built programs that currently organize headlines, data tables and
stories while minimizing input errors.
Meanwhile, between mid June to early July, the Commerce Department
will temporarily host the Labor data lockups. During the hiatus, the 13
news services currently participating in the Labor lockups will be
required to remove their computers to be replaced with Labor Department
gear. And those selected to participate in future lockups will be
permitted to test the new system.
The audience that appears most likely to detect some alterations
are customers of the news services’ so-called algo feeds, the relatively
small group of firms which now pay extra for extremely speedy delivery
of key numbers — measured in thousandths of a second, known as
“low-latency delivery” — that often move the markets worldwide.
“Algo” is shorthand for algorithm, a type of highly specialized
computer code, some intended by trading operations to identify the most
profitable trades than can be executed in milliseconds, before human
traders can react.
More conventional news feeds, to newspapers, broadcasters, Web
sites and non-algo traders, take what has now become the slow route,
meandering their way to their destination in perhaps half a second.
Under the new rules, news firms worry they could see the speed race
to get the numbers delivered starting later and being completed more
slowly for Labor Department data.
In addition, the new arrangements raise the possibility of new
competitors for the traditional newswires, from cable television outlets
to the Labor Department itself.
Outside the world of algo, cable television outlets, like CNBC,
Bloomberg Business News TV and the Fox Business Network, hope the new
Labor Department rules works to their advantage, though technical staff
at the print newswires are working hard to keep their edge.
High-speed algo feeds of government economic data were debuted by
Dow Jones in 2007 and then offered by several other news firms, six of
which provide them from the Labor lockups.
The threatened slowdown from low latency to high latency
information from the Labor Department is viewed by the community of algo
feed users as another disquieting sign that closer government
scrutiny may not be to their advantage.
“Everyone’s waiting for the whistle to blow,” said Matt Simon, an
analyst at the Tabb Group, an independent analysis firm that specializes
in monitoring automated electronic trading. A lot of effort is under way
in the algo industry “to understand how fast and when that whistle is
going to blow and what’s going to happen when that whistle blows.”
“There is this fear about not knowing what’s really going in a lot
of these high frequency trading firms, how their strategies are actually
using the data that’s available,” Simon told MNI.
And the SEC and CFTC repeatedly warn they will soon be increasing
their monitoring of the opaque world of automated electronic trading,
constantly recording millions of trades for examination later.
Labor Department officials say they are imposing the changes to
reinforce the already tight security at the data lockups. Bloomberg News
L.P. was one news service that put its complaint on the record.
“There are few government reports that have the wide-ranging
impact on the market as the Department of Labor statistics, and we are
troubled by the degree of government restrictions on how the press can
fully and accurately report this data to the public,” said Matthew
Winkler, editor-in-chief of Bloomberg News in a story about the changes.
Some Labor Department officials have had an intense dislike for
some time of the algo news operations, as distinct from the conventional
transmission of headlines, tables and stories. MNI reported exclusively
March 9 that they were considering abolishing the high-speed feeds from
the lockups.
As reported then, their concerns were:
–Taxpayers support government gathering and reporting of economic
data and the product of that effort, such as the monthly reports on
jobs, have always been intended for a mass media audience, not for
special treatment for a small niche slice of the audience, like the algo
trading operations.
–The “algo” or “data packet” transmissions are out of sight of
government agencies nominally in charge of them, making the performance
of the news agencies in the algo arena something of a mystery. This is
particularly vexing when one news service complains that another may be
cheating somehow to gain an additional speed advantage.
–The algo feed business is so competitive that the government
overseers worry that some news services are willing to disregard the
agency’s rules to beat their competitors by a few milliseconds.
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** MNI Washington Bureau: 202-371-2121 **
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