Who does early access to sensitive data really hurt?

Masters of the Universe, or dummies?

The Wall Street Journal reports on the perils of providing early access to sensitive economic data:

The early look at the consumer-sentiment findings comes from Thomson Reuters Corp. The company will pay the University of Michigan $1.1 million this year for rights to distribute the findings, according to the university. Next year, it will pay $1.2 million.

In turn, Thomson Reuters's marketing materials say the firm offers paying clients an "exclusive 2-second advanced feed of results…designed specifically for algorithmic trading."

Clients who pay a subscription fee to Thomson Reuters, which for some is $5,000 a month plus a $1,025 monthly connection charge, get the high-speed feed at 9:54:58 a.m. Eastern time.

Those who pay for Thomson Reuters's regular news services get the report two seconds later. At that point, it swiftly becomes widely available through other news providers as well.

Take a look at what happens to the trading volume in those two seconds:

That obviously makes sense. If you pay thousands of dollars for an advance connection, you're presumably doing to want to act on it. That two-second preview gives anyone who can afford it and some algorithms smart enough to parse the information a huge advantage in the market.

Except that every trade needs a counterparty. That is, if bad data comes out and you decide to sell some shares, someone else needs to buy them. If you know that some people in the market have access to secret data which you will get in less than two seconds, the reasonable thing to do is not trade for the next two seconds. Who are these idiots who make willing counterparties to traders with inside information?

One possibility is that people are leaving buy or sell orders open over the period of the release. So, for instance, if you decide on Monday that you want to buy a share of Acme Corp. for $100 when it's trading at $105, you may end up being stuck with it if the value plunges to $90 in two seconds on Tuesday. Of course, that's still a certain amount of stupidity, but it makes it easier to understand criticism that early access to such data hurts so-called "mom and pop" traders.

But there's another possible explanation, which is that all these trades are between people with early access to the data. We might both think the information is bad, but if you think its worse than I do, I may well be prepared to buy from you – albeit at a price lower than I would have before I found out the news. And if the release is borderline, it's even more likely that the counterparties also have information. Everyone thinks they're smarter than the crowd, otherwise they wouldn't bother trading.

If that's the case, then there are still dummies in the mix; but they're the ones paying thousands of dollars a month for the chance to take a stab in the dark two seconds before the general public.

A robo-trader, maybe. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Wikipedia.
Show Hide image

No, Jeremy Corbyn did not refuse to condemn the IRA. Please stop saying he did

Guys, seriously.

Okay, I’ll bite. Someone’s gotta say it, so really might as well be me:

No, Jeremy Corbyn did not, this weekend, refuse to condemn the IRA. And no, his choice of words was not just “and all other forms of racism” all over again.

Can’t wait to read my mentions after this one.

Let’s take the two contentions there in order. The claim that Corbyn refused to condem the IRA relates to his appearance on Sky’s Sophy Ridge on Sunday programme yesterday. (For those who haven’t had the pleasure, it’s a weekly political programme, hosted by Sophy Ridge and broadcast on a Sunday. Don’t say I never teach you anything.)

Here’s how Sky’s website reported that interview:

 

The first paragraph of that story reads:

Labour leader Jeremy Corbyn has been criticised after he refused five times to directly condemn the IRA in an interview with Sky News.

The funny thing is, though, that the third paragraph of that story is this:

He said: “I condemn all the bombing by both the loyalists and the IRA.”

Apparently Jeremy Corbyn has been so widely criticised for refusing to condemn the IRA that people didn’t notice the bit where he specifically said that he condemned the IRA.

Hasn’t he done this before, though? Corbyn’s inability to say he that opposed anti-semitism without appending “and all other forms of racism” was widely – and, to my mind, rightly – criticised. These were weasel words, people argued: an attempt to deflect from a narrow subject where the hard left has often been in the wrong, to a broader one where it wasn’t.

Well, that pissed me off too: an inability to say simply “I oppose anti-semitism” made it look like he did not really think anti-semitism was that big a problem, an impression not relieved by, well, take your pick.

But no, to my mind, this....

“I condemn all the bombing by both the loyalists and the IRA.”

...is, despite its obvious structural similarities, not the same thing.

That’s because the “all other forms of racism thing” is an attempt to distract by bringing in something un-related. It implies that you can’t possibly be soft on anti-semitism if you were tough on Islamophobia or apartheid, and experience shows that simply isn’t true.

But loyalist bombing were not unrelated to IRA ones: they’re very related indeed. There really were atrocities committed on both sides of the Troubles, and while the fatalities were not numerically balanced, neither were they orders of magnitude apart.

As a result, specifically condemning both sides as Corbyn did seems like an entirely reasonable position to take. Far creepier, indeed, is to minimise one set of atrocities to score political points about something else entirely.

The point I’m making here isn’t really about Corbyn at all. Historically, his position on Northern Ireland has been pro-Republican, rather than pro-peace, and I’d be lying if I said I was entirely comfortable with that.

No, the point I’m making is about the media, and its bias against Labour. Whatever he may have said in the past, whatever may be written on his heart, yesterday morning Jeremy Corbyn condemned IRA bombings. This was the correct thing to do. His words were nonetheless reported as “Jeremy Corbyn refuses to condemn IRA”.

I mean, I don’t generally hold with blaming the mainstream media for politicians’ failures, but it’s a bit rum isn’t it?

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Daniel Hannan. You can find him on Twitter or Facebook.

0800 7318496