The regulatory spotlight has fallen on relationships between market infrastructure providers and high-frequency trading firms – a growing and influential tranche of the former's client base.
Thomson Reuters was this week forced to suspend its practice of sending a survey of US consumer sentiment two seconds early to traders willing to pay for the privilege. Thomson Reuters did not respond to requests for comment at time of going to press. The move came amid an investigation by New York Attorney General Eric Schneiderman into the practice, which is not restricted to the Canadian-based data giant. German exchange Deutsche Börse has admitted sending a survey of US economic activity up to three minutes early for a fee, while, Markit, a London-based financial data firm, provides its high-profile purchasing managers’ indexes to paying customers before news releases in some countries.
HFTs have not just been able to gain an advantage through market data, but also by their knowledge of exchange and market data technology and by influencing upgrades to these systems, according to practitioners. In short, HFT has become a highly lucrative industry, in which exchanges and data providers have a huge stake.
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