Conference Board Fears Front Running Ahead of Its Economic Data; 250 Millisecond Edge

The Conference Board will no longer provide its economic reports in advance to news organizations because it suspects the data is being diverted early to computer-driven trading systems, reports AP.

The private research group has provided its monthly data to reporters 30 minutes before the information is publicly released. The early access to the data has allowed journalists to prepare news reports ahead of the information's public release at 10 a.m. Eastern time.

Starting Tuesday, the Conference Board's data will be released to everyone simultaneously.

Here's the old embargo policy that is being tossed, since some traders are obviously getting to he reporters that receive the information early:

Access to The Conference Board’s embargoed economic releases, including the Consumer Confidence Index® and The Conference Board Leading Economic Index® for the U.S. and the Euro Area, and The Conference Board Employment Trends Index™, is limited to accredited media who give their chief attention to the gathering and reporting of news. Applicants must be employed by major news organizations that regularly publish or broadcast a substantial volume of news material for public consumption and are required to enter into an Embargo Agreement with The Conference Board.

Embargoed news releases may not be released to the public or data subscribers by any means (including print, broadcast, Internet, podcasts, blogs, wire, or in any other form) before the specified date and time of release.

Failure to adhere to terms of The Conference Board’s Embargo Agreement may result in removal of embargo privileges. If a media organization breaches the embargo under the Embargo Agreement or otherwise violates such agreement, The Conference Board reserves the right in its sole discretion to take whatever steps it determines are appropriate based on the facts and circumstances of the particular violation, including imposing an indefinite or permanent suspension of privileges.

If an embargo is broken, The Conference Board will immediately release the data to the public. In addition, The Conference Board will inform the U.S. Securities and Exchange Commission of the embargo breach.

Despite the view of anti-IP theorists, information can be very valuable. While this move by the Conference Board will stop some leaking, I suspect some traders are now plotting on how to get a source within the  Conference Board, itself.

UPDATE

 One news outlet recently informed the Conference Board about several breaches, with data disseminated one-quarter of a second early, reports Market Watch.

“We are concerned that 250 milliseconds is more than enough time for people to trade on the information,” said Jonathan Spector, the Conference Board’s chief executive.  “Once we concluded that there was a risk of early release, we just didn’t feel comfortable continuing [the embargoes].”

The decision to suspend the embargoes was made before the news outlet shared the information about the early release, according to the Conference Board.