Remember back when New York Attorney General Eric Schneiderman noticed that paying for an early look at information from news organizations looked an awful lot like insider trading? He even came up with a catchy name for it and got Thomson Reuters to agree to stop doing it. Well, fortunately for the high-frequency traders who rely on such sneak peeks, the Securities and Exchange Commission is still offering them.
Two separate groups of academic researchers have documented a lag time between the moment paying subscribers, including trading firms, newswires and others, receive the filings via a direct feed from an SEC contractor and when the documents are publicly available on the agency’s website.
The studies found a wide variation in the lag time, from no delay to one lasting more than a minute—a considerable advantage for computer-driven traders….
“We have reviewed the working paper and are taking the issues raised by it seriously,” an SEC spokeswoman said.