You are viewing this article in the archives. For the latest breaking news and updates in Ann Arbor and the surrounding area, see
Posted on Wed, Jun 12, 2013 : 6 p.m.

Thomson Reuters offers elite traders early release of University of Michigan consumer confidence figure

By Kellie Woodhouse

CNBC reports a select group of paying Thomson Reuters customers on Wall Street get a two-second sneak peak at the monthly University of Michigan consumer confidence figure.

The closely-watched figure, which assesses consumer attitudes and has the influence to move markets, is produced by U-M and funded by Thomson Reuters — which pays the Ann Arbor school around $1 million a year.

Reuters in turn has complete rights to the figure, which the company releases to the public at a 10 a.m. and to all Thomson Reuters' paying clients at 9:55 a.m.. However CNBC reports that a select group of elite clients, who pay an additional and undisclosed fee, get access to the data two seconds before the 9:55 a.m. release, thus awarding such companies a trading advantage.

The article quotes U-M spokesperson Rick Fitzgerald as saying the school's arrangement with Thomson Reuters complies with regulations and the index is produced with private funds.

However former Securities and Exchange Commission Chairman Harvey Pitt told CNBC "public colleges should set a higher standard."

Kellie Woodhouse covers higher education for Reach her at or 734-623-4602 and follow her on twitter.



Thu, Jun 13, 2013 : 4:44 p.m.

In some senses, this is a tempest in a teapot: 1) low-latency traders are decidedly NOT retail...this is not David versus Goliath, this is Goliath1 versus Goliath2; 2) when algorithmic traders trade, they can either offer or use liquidity (provide funds via buying; harvest cash via selling); this bid/offer for liquidity is giant fund to giant fund; 3) at the market open, this bid/offer of liquidity allows giant funds to, in effect, adjust liquidity relative to the prior day (since the current day, ex ante, is not can only adjust relative to prior day's trading and in anticipation of NON-previsible trading which will occur); 4) in a shortfall optimization program, trades which DID NOT occur on a prior day create short-fall implementation risk; this window probably equilibrates and smooths implementation risk and thus hedging risk, where controlling hedges is socially useful; again, this is useful for large/giant hedging operation and probably smooths markets for retail; 5) this initial perturbation of liquidity also "primes" the market and creates very transitory liquidity volatility which is useful for jump-starting trading...analogous to capillary action in a damp sponge versus a dry sponge; 6) academics who want no insider trading look for a square-shaped impulse function by stock increases and algo-traders a 2 second edge allows them to duke it out for any edge in the latency period, but does almost nothing to the otherwise measured impulse function; 7) while sentiment is somewhat correlated with forward trading, and is thus useful (that is why they calculate it) the other noise in the calculation of forward expectations probably completely swamps the net edge to the algo traders in this delay. In general, there isn't much to see here. That said, I think it makes sense to reduce the bad odor around releasing the numbers while the market is open by doing the converse. 5)


Fri, Jun 14, 2013 : 4:34 a.m.

I agree with the bad odor and your logic but why would investors pay for early access to this information if it was meaningless? Can those that are smart enough to make the money to pay for this be smart enough to take advantage of the early information? On the other hand people (and companies) pay for economic forecasts that have an error range greater than the value (example: % change in GDP). Maybe Reuters just has a great sales spiel. Still, it just plain smells and the U-M should be concerned with more than just complying with some narrow interpretation of regulations. Privileged early access to economic investment data is so close to insider trading that you would need a razor to draw the line in between. Early disclosure of medical trial results – bad. Early disclosure of economic data results – OK?


Thu, Jun 13, 2013 : 3 p.m.

Universities are supposed to preserve economic inequality, not create it.


Thu, Jun 13, 2013 : 2:05 p.m.

Legal insider trading, LOVE IT! Why doesnt the U just cut out TR from the loop?? Then they can make SEVERAL million by selling this data directly! Im sure the U's 7+ BILLION endowment doesn't get a sneak peak either...eyes rolling...

Kai Petainen

Thu, Jun 13, 2013 : 3:28 p.m.

The endowment is a fund of funds. That means that it invests in portfolios. The endowment itself does not pick stocks.

Kai Petainen

Thu, Jun 13, 2013 : 12:17 p.m.

There is an easy solution to this. In the business world, quite often important numbers are released before or after the bell (think about earnings). Release these numbers before or after the bell and it should be good.


Thu, Jun 13, 2013 : 11:52 a.m.

Two seconds is an eternity to computer based automated trading software.


Thu, Jun 13, 2013 : 4:43 a.m.

While it sounds bad, there's nothing to stop any company from doing a private survey, making investments on the results, and later releasing the data. I'm curious if the customers knew that others were getting the data earlier. Seems like a tax on day trading would make this less profitable.


Thu, Jun 13, 2013 : 1:51 a.m.

The solution is for U of M to find someone else to provide the million dollars who doesn't want to make a profit in return. Should be easy, right?

Kai Petainen

Thu, Jun 13, 2013 : 1:44 a.m.

I try my very best to teach about ethics and stocks in trading. And to see something like this article, makes me lower my head in shame. On such an important number... if it's ok to trade it a few seconds before everyone knows, then is it ok to trade it in the days/weeks before anyone knows? I'm going to have to presume it is -- and that bothers my very ethical core. Do I need to change how I teach and tell the students that it is ok to do this? It is vital that we teach the students about ethics -- stories such as this and the other story of insider trading that has been going around... only hurt. It's important to tell the stories, but I was hoping that the stories would happen elsewhere and not Ann Arbor. I didn't know that people could get this info before others... if I had... I would have brought it up when topics on 'front-running' came up. For example: "Students, front-running is bad, but this is not front-running and it is ok" From the CNBC article: "Without the support from Thomson Reuters, no data would be collected, the project would no longer exist and the public benefit would disappear." That sounds like a threat. If the support didn't exist from Thomson Reuters, it should be noted that there are HUGE funds that use this data. The funds market their funds using the data. If the data stops then they can't market using that data and the funds might die. The funds will lose hundreds of millions of dollars. If the support didn't exist from Thomson Reuters on this particular thing, then the funds would come from the huge funds. If no funds came in, then one might wonder if they were using the data in the first place, or just using it to market their funds.

Kai Petainen

Thu, Jun 13, 2013 : 12:44 a.m.

This isn't a legal opinion, I'm not a lawyer, but I think this just downright wrong. If I were to guess, I'd presume it's legal as it is out in the open and people know they are doing this. But in the court of public opinion, investor confidence, and those who wonder about ethics, it will not look good. This deal must stop. The President said earlier ... we are Michigan... 'we do it right. period.' If it's an issue about how to get the $1 million, then ask the multi-hundred-million dollar funds that use the numbers to pay up -- and verify that they don't get special advance notice. If it doesn't stop, then the UofM numbers and the UofM name could be tarnished. I'd hate to see that happen -- I love this school and this town. Already TD Ameritrade has decided to make a competing product... Fix it. Stop it. Do it right. Period.


Thu, Jun 13, 2013 : 1:06 a.m.

According to Jim Cramer all that need happen is for the head of the SEC to make a statement saying this practice is now banned. Same as law as far as the stock market is concerned. Let's see the UM and the SEC's response to see what controls what when big money seems to be dictating ethics.

Chase Ingersoll

Wed, Jun 12, 2013 : 11:35 p.m.

I'm certain that U of M can and is using the data to better their own portfolio before selling the data. Is it a "public" university or a tax free entity that is in reality controlled by interlocking university and corporate directorships. I'm certain that we will see a major "controller" of the U of M, when M.S. Coleman retires and pops up on the corporate boards a few weeks later.

Kai Petainen

Wed, Jun 12, 2013 : 11:49 p.m.

she is a director at JNJ. the question is -- will she retire from JNJ? As that could have some material impact on the stock.

Kai Petainen

Wed, Jun 12, 2013 : 11:18 p.m.

"On August 12th, major US indices dropped sharply within seconds after the release of US Consumer Sentiment Index data. The Thomson Reuters/University of Michigan's preliminary August reading on the overall index on consumer sentiment fell to 54.9, the lowest since May 1980, down from 63.7 in July. It was well below the median forecast of 63.0 aong economists polled by Reuters. U.S. stocks slipped after the consumer sentiment data was released following earlier gains on the retail sales data. Thomson Reuters News Feed Direct customers benefited from the 2-second advance and the fastest delivery in the market". "Exclusive 2-second advanced feed of results from The University of Michigan Surveys of Consumers" Source: Thomson Reuters

An Arborigine

Wed, Jun 12, 2013 : 11:13 p.m.

Just legalized "insider trading". But TR does pay the UM $1 Million annually for the rights to the data. Of which UM pays $ZERO taxes.


Wed, Jun 12, 2013 : 11:09 p.m.

Yes, Jim Cramer almost had a heart attack on cnbc when he heard this today for the first time. Did UM know of this edge cribbing? It was rumored that Thomson Reuters' paid clientele paid 1 million/year for the edge in high frequency trading. ...and it ain't rigged !

Nicholas Urfe

Wed, Jun 12, 2013 : 11:04 p.m.

I'll bet Mary Sue is losing a lot of sleep over the ethics of this one.

Kai Petainen

Wed, Jun 12, 2013 : 10:59 p.m.

This isn't right. The numbers should be released at the same time to everyone. Those are important numbers. "However former Securities and Exchange Commission Chairman Harvey Pitt told CNBC "public colleges should set a higher standard." I completely agree.


Thu, Jun 13, 2013 : 11:27 a.m.

Why should the numbers be released at the same time to everybody? That contravenes practically every other mechanism in the modern business world. I'm interested in hearing precisely how you are being harmed here.

Nicholas Urfe

Wed, Jun 12, 2013 : 10:35 p.m.