The Conference Board, a research group that publishes market-moving economic data, announced Thursday that it will stop the practice of giving members of the news media early information as a result of concerns that it is creating an "unlevel playing field" in financial markets.
Citing "indications that our embargoed data is being diverted," the Conference Board wrote media members Thursday about "the blurring of lines between news outlets and data providers, and an ongoing advantage for trading measured in milliseconds." The group said it had concluded that the traditional media embargo system had become "impossible to monitor with any legal or technological clarity."
The announcement follows a May 28 report by CNBC detailing an unusual trading pattern about a quarter of a second ahead of the Conference Board's release that day. In the era of superfast computer trading, a quarter of a second is more than enough time for high-speed traders to scoop up profits ahead of the rest of the market.
On that day, the Conference Board told CNBC "there was no breach of information," and a spokesman expressed surprise at CNBC's questions, saying, "Frankly, we have not received any phone calls on this."
(For CNBC's earlier coverage, click here.)
But on Thursday, the group said its policy change is a response to a new, high-speed trading landscape. Conference Board CEO Jon Spector said it was notified Tuesday by one "media organization" that it had inadvertently released Conference Board data about 250 milliseconds early recently because of a problem with coordinating its clock. He declined to disclose which organization had accidentally released the data.
"We became uncomfortable with the fact that we could not really control what was going on," Spector said. "There was clearly an opportunity that people could be using it to trade in advance. And whether we could prove that was happening or not, we were concerned about a perception that people could be trading on it."
The Conference Board publishes a Consumer Confidence Index and other economic reports. In the past, the information was given under embargo to members of the media at 9:30 a.m. for a 10 a.m. release time to allow reporters time to prepare their stories. But in recent years, several media companies have gotten into a lucrative side business of distributing high-speed feeds of economic data in a format fit for computerized algorithmic trading in milliseconds.
That is the activity the Conference Board said causes concern.
"The Conference Board has been following this issue for the past few months, and concluded it is no longer certain that we can police the embargo program in a way that is fair, transparent, and in keeping with the public's trust," Spector said.