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HFT Too Fast - Insider Trading?

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The Federal Reserve recently announced there would be no tapering to its current bond buyback program. That kind of information can be hugely valuable for whoever can act on it first as bond prices would immediately be affected. It comes to no surprise that HFT systems tuned to media feeds would be able to react the quickest based on programmatic rules ... but within 3 milliseconds of the 2p.m. announcement. What is troubling is that reporters with advance access to the news were maintained in tight conditions:

The doors were locked at 1:45 p.m., and Fed staffers handed out copies of the statement at 1:50 p.m., allowing reporters a few minutes to digest the complicated document before reporting on its contents. At 1:58 p.m. television reporters were escorted out of the room to a balcony where cameras had been prepositioned. The Fed's security rules dictated that television reporters were not allowed to speak before precisely 2 p.m. Print reporters were told they were allowed to open a phone line to their editors at headquarters offices a few moments in advance of the hour, but not allowed to interact with people on the other end of the line until exactly two p.m. ~excerpted from CNBC.

Essentially, it was physically impossible for the data to have transited to Chicago where the trade was made (minimum 7ms), been consumed, been processed and been executed at the time the trade was received. Authorities are now looking at the HFT's trade as evidence the information was leaked early allowing investment computers a chance to win heavily against the competition.

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