The consumer confidence number is a measure of household opinion about the state of the economy that has been conducted since the 1940s. Surveyors conduct telephone interviews to gauge consumer sentiment. It is looked to by market professionals as a guide to where the economy might be heading, or how well consumers are dealing with adverse economic events.
Within milliseconds, the new data causes market reaction—a move that can come the instant Thomson Reuters transmits the data to its elite group of traders. On May 17, for example, trading volume exploded in the Spider ETF at exactly 9:54:57.975. More than 100,000 shares traded hands in the first 10 milliseconds of the burst of activity, reports the analysis firm Nanex, LLC. Within 100 milliseconds, the price of SPY jumped from $165.90 to more than $166.06.
In the first half second of the trading burst, Nanex calculates that more than $40 million changed hands, just in the Spider ETF.
By 10 seconds into the event, more than $100 million had changed hands.
It takes a human being between 300 and 400 milliseconds to blink an eye.
Several economists contacted by CNBC said they were unaware that the data are released to the elite group two seconds before the 9:55 conference call. One called the release "disingenuous," another called it "unfair."
Thomson Reuters did not respond to a request for comment on those economists' remarks.
But Pitt pointed out that private entities are usually free to distribute their own work product however they see fit, as long as they disclose what their arrangements are. "A nongovernmental and noncorporate individual's generic data analysis can be market moving, but if so that is merely a reflection solely of the work product of that individual," Pitt said. "The insider trading laws can't—and shouldn't—be read to deprive the progenitor of personal analyses of the potential market uses that person can make of the data."
In marketing material on its Website, Thomson Reuters touts the virtue to traders of its economic data. "Be The First To React," says the site, explaining that the service offers "Data Your Algorithms Can Interpret."
The University of Michigan's arrangement with Thomson Reuters dates to 2007, said a university spokesman. "This is something that's been reviewed carefully," said university spokesman Rick Fitzgerald. "It's been in place for a number of years, and we think it complies with all the regulations." Fitzgerald said the total amount received by the university under the deal has been "very close" to a million dollars each year.
Asked why a taxpayer-financed university should sell data to Wall Street before it releases it to the taxpayers, Fitzgerald said: "Most of our research funding comes from private sources."
Richard Curtin, director of the Thomson Reuters/University of Michigan Surveys of Consumers at the Survey Research Center of the University of Michigan, defended the arrangement. "This research project is privately financed," he said. "Without the support from Thomson Reuters, no data would be collected, the project would no longer exist and the public benefit would disappear."
As for the university's role, former SEC chairman Pitt said, "I think public colleges should set a higher standard, but they need to get their money wherever they can, I suppose."
Within the past week, there have been two incidents involving trading ahead of the official release of market-moving data.
On June 3, Thomson Reuters inadvertently sent market-moving ISM manufacturing data early to its paying clients, many of whom immediately traded on the information before it was available to the wider market.
The manufacturing data, which that day came in disappointingly low and sent traders scrambling to sell shares, was set to be released at precisely 10 a.m. by the Institute for Supply Management, a private entity that puts out the data each month. Nanex showed a spike in the trading volume of the ETF SPY 15 milliseconds before 10 a.m., and a corresponding move down in the price ahead of the official release time of the information as computer trading algorithms processed the data and executed trades. Thomson Reuters said the accidental release was due to a "minor clock synchronization issue." The firm said it would take steps to fix the problem.
Separately, on Friday, Nanex spotted a burst of trading about a half second before release of the Department of Labor's highly scrutinized monthly jobs data, which often set the tone for market trading all day. It remains unclear what caused that spike in trading. There is no evidence that Thomson Reuters or the University of Michigan were involved with this early release of data.
Asked about the event, a Department of Labor spokesman said officials there saw nothing unusual during the "lock-up" in which members of the media are given the number in advance and asked to hold it for a precise 8:30 a.m. release time.
"I am not aware of any information slippage," said Labor Department spokesman Carl Fillichio. "There was nothing evidentially unusual during [the] lock up."
However, Fillichio did not discount the possibility of a mistake. "You should remember that even if there was human error on our part and even if the switch was hit milliseconds early, everyone in the lockup would have been affected, so it would have still been a level playing field," Fillichio said.
_By CNBC's Eamon Javers. Follow him on Twitter at
@EamonJavers. CNBC's Steve Liesman contributed to this report.