Nanex ~ 28-Oct-2013 ~ Fed News Gets an Internet Kill Switch
Bring the Fed Trading Bandits to Justice
On October 25, 2013, the Federal Reserve announced it would add an Internet Kill Switch (among
other measures) to prevent future leaks of FOMC news announcements. We
proved with market data that the September 18, 2013 Fed (FOMC no-taper) news
release must have been secreted out of the Treasury Department and placed on computers in New York
and Chicago trading centers sometime before the official 2 PM release from Washington,
D.C. We strongly encourage you
to read Einstein and the Great Fed
We have since learned, from people familiar with the matter, that one or more news organizations
secreted the Fed news out of the Treasury Department before 2 PM and loaded
it onto servers in trading centers in New York and Chicago. This has not yet been disclosed
For a list of all news
organizations with a machine readable news service who were in the Fed lockup room, read Eamon's
breaking coverage of the Great Fed Robbery.
Eamon Javers is the journalist who broke
the story on the Conference Board's release of consumer confidence numbers,
which led to a policy change after one media outlet confessed to an early release. Not
to be confused with the Thompson Reuter's early release of the University of Michigan's
Consumer Sentiment, which Eamon Javers also
first reported on and which also led to a policy change. Eamon Javers is 3 for
3 in 5 months!
Many questions remain unanswered:
- Which news organization(s) secreted the Fed news out of the Treasury Department?
- Why haven't the news organization(s) come forward?
- Who were the subscribers and what was the name of the news service product?
- How much did the service cost?
- Was the service available to anyone?
- Who profited and by how much?
- How many people in the news organization had early access to the Fed news (sys admins,
software/data quality assurance, supervisors, etc)?
- Did the Fed know about this news service?
- Was there a pre-meeting about encoding the Fed news into a machine readable
- Was the person who encoded the Fed news an experienced trader (so that algos would
be confident enough to buy over $1 Billion of stocks/futures)?
- Did anyone involved in delivering the leaked Fed news get a bonus or a percentage
of the profits?
- Has this happened before?
It seems reasonable that the guilty party should be banned from future Fed announcements
for a period of 1 year and pay a fine equal to 3 times the cost of the service. Reputable
news organizations don't participate in breaking/bending rules. At the very least, we
would expect when confronted with evidence, a reputable news service would immediately
confess about any involvement.
Do you have information about the Great
Fed Robbery? Contact one or
more of the whistle blower offices below, the reward could be substantial.
This event has all the elements for a great financial thriller (novel/movie).
- Money: over $1 Billion of stocks and futures traded, profits could exceed $50 million.
- Prestige: involvement of a world-class news organization and the Federal Reserve.
- Location: information stolen from within the Treasury Department.
- Betrayal: the sudden jump in gold
futures 2.5 minutes early - was that a secondary leak?
- Hi-tech criminals: the firms that pulled it off.
- A modern day David vs. Goliath: Shredding
Virtu's Response with Science.
- Corruption and conspiracy: a news organization's attempt at
1. Hunsader Speaking at the Chicago Fed October 24, 2013
2. U.S. stock trades during a second of time around FOMC news on September 18,
2013 (13:59:59.500 to 14:00:00.600).
Over $1 billion worth of stocks and futures traded in the first 1/100th of a second
after the official release time.