Hi Pipsman
Official economic data has to be released simultaneously to the public (ie it has to hit the news wires at the same time). When I say 'lock-up' I mean the same thing as 'embargo', but for most economic data and monetary policy decisions the journalists will actually be physically locked-up (funny, eh)..in some cases this is so the central bank can explain the decision to them but more importantly its about ensuring equality. They are generally locked-in for long enough to properly digest the data report (they get the full report, not just the headline number) and write their stories on it. Think exam room conditions. The IMF has standards for the dissemination of economic statistics which the major countries meet - they include things like 'equal access' to the public, which basically means a simulataneous release of data to all parties at a set time - this excludes gvt agencies..the central banks often know the data before the market does, as of course do the original providers of the data...someone has to!...on that note, those folk putting the data together also do it in a secure 'locked-up' facility to prevent leaks, and of course, the data is 'locked-up' prior to its release....aagh, there are 'lock-ups' everywhere.
Here are some sources (the first three are quite techical):
- https://bea.gov/bea/aw/1096imf/beatext.htm
- https://bea.gov/bea/aw/1096imf/mclen.htm
- The main IMF web-site http://dsbb.imf.org/Applications/web/dsbbhome/
- This document contains the protocols for data release in the UK, and deals with the topic of lock-up from page 20 onwards. Easy to read and it gives a good overview of the procedures.
Sorry, I wasn't very clear. I was just trying to say that you can't really profit by trying to find the fastest publisher of the data and getting your trade in ahead of the spike. There may be some hedge funds that have invested millions in the latest technology that could give them a slight advantage, but as far as the human eye is concerned the data release and the price spike generally occurs simulataneously.
From the price action alone we know data sometimes does get leaked - its no real surprise given the relatively low salary of public servants and given how much they they could potentially make from one data release...a good plot for a book perhaps?...perhaps Sylvester Stallone Lock-Up could have been very different film (though I think its pretty darn good as it is!) Of course, this leaking doesn't happen all that often, and if it takes place at the level of the newswire, this would destroy their credibility and their business so its not in their interest to beat the competition by jumping the gun. (That said, I remember a massive panic on the trading floor once because Yahoo apparantly published the non-farm payrolls a minute a head of time...can't remember whether it was ever confirmed as true).
---
If you want an excellent detailed overview of the lock-up process, read this excerpt of Secrets of Economic Indicators. It's quite entertaining! Actually, I didn't need to write anything myself - you should just read this.
My favourite part is his description of the process some thirty years ago. This is real news trading! :
"Even Wall Street firms realized that big money could be made off the economic numbers given the lax supervision of their release. Some brokerages went so far as to dish out large amounts of money to reporters who were willing to leak economic news to the firm's traders before writing about it. Anyone who got an advance peek at the economic statistics stood to gain millions in a matter of minutes by knowing which stocks and bonds to trade. Eventually this blatant manipulation of the economic indicators led a furious Senator William Proxmire to schedule Congressional hearings in the 1970s on how these reports are released. Later that decade, the government set up a strict calendar that included rigid rules on how economic data would be distributed. Today, nearly every major economic indicator is released under tight lock-up conditions, which has enhanced the integrity of how the public gets such sensitive information. Trading based on inside information of economic indicators is now virtually unheard of."
...talk about taking all the fun out of it!
QuoteDisliked"... companies actually have reporters in 'lock-up' at the source."
What's "lock-up"? How does it work - how governments release news these days?
Official economic data has to be released simultaneously to the public (ie it has to hit the news wires at the same time). When I say 'lock-up' I mean the same thing as 'embargo', but for most economic data and monetary policy decisions the journalists will actually be physically locked-up (funny, eh)..in some cases this is so the central bank can explain the decision to them but more importantly its about ensuring equality. They are generally locked-in for long enough to properly digest the data report (they get the full report, not just the headline number) and write their stories on it. Think exam room conditions. The IMF has standards for the dissemination of economic statistics which the major countries meet - they include things like 'equal access' to the public, which basically means a simulataneous release of data to all parties at a set time - this excludes gvt agencies..the central banks often know the data before the market does, as of course do the original providers of the data...someone has to!...on that note, those folk putting the data together also do it in a secure 'locked-up' facility to prevent leaks, and of course, the data is 'locked-up' prior to its release....aagh, there are 'lock-ups' everywhere.
Here are some sources (the first three are quite techical):
- https://bea.gov/bea/aw/1096imf/beatext.htm
- https://bea.gov/bea/aw/1096imf/mclen.htm
- The main IMF web-site http://dsbb.imf.org/Applications/web/dsbbhome/
- This document contains the protocols for data release in the UK, and deals with the topic of lock-up from page 20 onwards. Easy to read and it gives a good overview of the procedures.
QuoteDisliked"I believe its impossible to beat the market by the 'time' factor alone."
What're the other factors? Care to elaborate?
Sorry, I wasn't very clear. I was just trying to say that you can't really profit by trying to find the fastest publisher of the data and getting your trade in ahead of the spike. There may be some hedge funds that have invested millions in the latest technology that could give them a slight advantage, but as far as the human eye is concerned the data release and the price spike generally occurs simulataneously.
From the price action alone we know data sometimes does get leaked - its no real surprise given the relatively low salary of public servants and given how much they they could potentially make from one data release...a good plot for a book perhaps?...perhaps Sylvester Stallone Lock-Up could have been very different film (though I think its pretty darn good as it is!) Of course, this leaking doesn't happen all that often, and if it takes place at the level of the newswire, this would destroy their credibility and their business so its not in their interest to beat the competition by jumping the gun. (That said, I remember a massive panic on the trading floor once because Yahoo apparantly published the non-farm payrolls a minute a head of time...can't remember whether it was ever confirmed as true).
---
If you want an excellent detailed overview of the lock-up process, read this excerpt of Secrets of Economic Indicators. It's quite entertaining! Actually, I didn't need to write anything myself - you should just read this.
My favourite part is his description of the process some thirty years ago. This is real news trading! :
"Even Wall Street firms realized that big money could be made off the economic numbers given the lax supervision of their release. Some brokerages went so far as to dish out large amounts of money to reporters who were willing to leak economic news to the firm's traders before writing about it. Anyone who got an advance peek at the economic statistics stood to gain millions in a matter of minutes by knowing which stocks and bonds to trade. Eventually this blatant manipulation of the economic indicators led a furious Senator William Proxmire to schedule Congressional hearings in the 1970s on how these reports are released. Later that decade, the government set up a strict calendar that included rigid rules on how economic data would be distributed. Today, nearly every major economic indicator is released under tight lock-up conditions, which has enhanced the integrity of how the public gets such sensitive information. Trading based on inside information of economic indicators is now virtually unheard of."
...talk about taking all the fun out of it!
"Always bet on black"
