My colleague Eamon Javers has a fascinating story that I recommend market watchers read
Eamon noted that when the Federal Reserve released its statement on interest rates on September 18, some traders in Chicago appear to have received the information a bit before anyone else. Specifically, they began trading in Chicago-based assets (including eMini futures) before anyone could have been aware of the Fed decision.
We are talking about a difference of several milliseconds. But information takes seven milliseconds to travel from Washington to Chicago, Eamon noted, and there was buying in the eMini futures market in Chicago just three milliseconds after the 2:00 p.m. ET release, according to data provided to Eamon by Nanex. That's faster than information could have traveled between the two cities.
Eamon reported that Fed officials have contacted news organizations to discuss procedures for the release of sensitive information. In other words, they're trying to make sure everyone followed the rules.
Did someone know something early? In conversations with several traders, there possible explanations put forward:
What to do? Assuming that the final explanation is the correct one, the simple answer is to end the practice of releasing the information to a select group beforehand on an embargoed basis and just release the data to everyone at the same time.
But, as my colleague Bill Griffeth noted, this opens up another can of worms, since the purpose of an embargo is to make sure reporters have time to report the story correctly!
—By CNBC's Bob Pisani