Senate scrutiny for Thomson Reuters data deal

In a letter sent last week, Senator Charles Grassley of Iowa, pictured, the top Republican on the Senate Judiciary Committee, asked the university to answer questions about the arrangement and to provide a copy of its contract with Thomson Reuters and any other similar contracts it might have entered into.

“My concern is that the [university’s] decision to allow preferential access” to the report “may not be in the public interest,” he wrote. Grassley asked the university to respond by 26 July. University spokesman Rick Fitzgerald said the university had received the letter and was reviewing it.

The senator has been looking into how various investors get market-moving data in legal ways from the government and other public institutions.

In his letter, he said the rise of high-frequency trading has made it more important for certain investors to get market-moving information quickly. “Technological innovations in trading speed create opportunities but also present difficult questions for legislators and regulators,” he wrote.

Thomson Reuters agreed last week to temporarily suspend its transmission of a two-second advance release of the survey to high-speed traders who pay a premium. The New York attorney general is investigating whether the arrangement complies with state laws.

The Wall Street Journal said Thomson Reuters declined to comment. It noted that a company spokesman said last week that the company “strongly believes that news and information companies can legally distribute nongovernmental data and exclusive news through services provided to fee-paying subscribers”.

The newspaper said that unlike indicators the government publishes, such as the Labor Department’s monthly jobs report, few rules govern the release of economic and industry reports put out by non-governmental entities. The latter can move markets just as much, putting individual investors and others who do not pay for early access at an informational disadvantage. “In today’s markets, in which high-speed, computer-driven trading accounts for much of daily trading volume, an advantage of just a few seconds can be enough to provide a substantial investing edge,” it said.

Under their contract, Thomson Reuters has agreed to pay the University of Michigan $1.1 million this year for rights to distribute its findings. That fee will rise to $1.2 million in 2014. In turn, Thomson Reuters’ subscribers who want to see those findings before anyone else pay as much as $6,025 a month. ■