Pap was right all along
here’s my guess…
cep was being financed by a hedge fund or proprietary trading firm. they wanted to do what ntkn/jed has already done, which is get into the government lock ups so that they can get access to the economic data they release more quickly than anyone else. There is substantial money to be made if you can do it.
Problem is the government agencies are onto this sort of thing now…and ask a lot of questions. They want to avoid a repeat of the ntkn/jed situation. So when CEP didn’t get into the DC lock ups the whole scheme was a no go.
CEP had to put on the pretense of being a legitimate news business in order to quality to get into the government lockups. Of course rank and file employees would be unaware of this…only those who truly need to know would.
cheers,
pap
From me:
Thanks for getting in touch.
I have a feeling CEP was indeed set up as an NTKN clone.
What I don’t get is this:
1) How can NTKN and CEP beat Reuters and Bloomberg in getting data into the hands of traders unless they’re embargo-breaking and doing it illegally?? It just doesn’t make sense that they’d have some technological secret sauce.
2) Also, NTKN’s Jed connection is not a secret so if the govs don’t want them in the lock-ups, why don’t they just boot them?
My feeling is that if is what they’re doing, the reporters don’t know and it’s all done by the IT team. Also, the trades would have to be made by a lot of smaller players as opposed to one hedge fund or the pattern would arouse suspicion, wouldn’t it?
Any insights?
Thanks again
AnnB
From a source:
To address your questions:
1) Reuters and Bloomberg have legacy infrastructures that were designed for other purposes and have a lot of system overhead. NTKN built theirs just for this purpose, and thus have an advantage. However, the established players have figured this out and have come out with new products to address these issues, so the race is much more competitive than it was on the past.
2) Not sure exactly why they don’t get kicked out. Threats of litigation perhaps, and I think they probably do a pretty good job running the legitimate side of their business in a way that gives the appearance they are on the up and up. Plus there is the problem of jurisdiction and all of that…there are grey areas from a legal standpoint.
3) They may be breaking up their trades or maybe not…but the only people who know what is being done is the exchange and the regulators, and if they don’t do anything than nothing will be done. That being said, I’m pretty sure the exchanges have had JED/NTKNs pants down a few times…but don’t know if there were any steps taken.
From me:Hmmm, I do think this is all about some kind of trading advantage somewhere in the chain, I’m just not sure how much it has to do with lock-ups. A lot of attention is paid to them already and if it got out that NTKN and CEP had been gaming the system long-term, there would be hell to pay.Do you have any links for the JED/NTKN regulation stuff?Thanks again for your input.
Ab
From me:
Pap (Is that your real name?),
Can you give me an example? Back in the day, I used to deal with embargoed and potentially market-moving data and I remember the Bank of Canada calling the office if there was a misstep.
If JED started making a whole bunch of advantageous trades, they would be in the suspicious trading activity folder in a flash.
I’m thinking this is some kind of gray-area arbitrage play that’s a function of the newness of all these systems and online traders. Maybe legal, maybe not.
Futures trading makes sense given JED’s Chicago location and Montreal’s derivatives exchange.
Can you give me a concrete example of what you think they may be doing? And also, I got the impression from your earlier emails that regulators have looked into JED I will search for details but if you have any links, that would help.
Thanks again for your insights.
Ab
From a source:
Nope, Pap is not my real name…certain things will have to remain a mystery! 
Well…maybe Canada is better at regulation in general…their banks seem to be able to function without government bailouts!
If someone were making trades well in advance of the number the authorities may notice and do something…but if it is only a few milliseconds or microseconds…not so clear. Plus, there are various ways you could operate in order to avoid scrutiny and give yourself a rational explanation in the case that the exchange starts asking questions.
I don’t think there was ever anything publicly released about any sort of investigation…but back channels indicate that there were some inquiries made and that NTKN had to do some things to satisfy the exchange.
Competition amongst the data vendors has reduced that advantage that a JED/NTKN situation provides…but there is definitely still an advantage. At the end of the day there are all sorts of shenanigans they can pull…and it should really just be against the rules. However, it seems that it is not…
Cheers,
Pap
From me:
Pappy, if you are outside Canada, can you see my Google ads when you search for NTKN and Need to Know News.
They’re supposed to be showing but I’m getting hardly any impressions and clicks, which is strange.
Ab
From a source:
Hi there…
Yes, I can see your ad through google. I am definitely curious to see if you get any further info!
Pap
From me:
Just as curious, no doubt, as I am about your interest in all this.
Xoxo
AnnB
From a source:
Let’s just say that I work in the trading industry, and the NTKN/JED connection is of great interest to my firm.
From a source:
Hmmm….I think maybe your imagination is getting the best of you! 
Not sure why you think the lock ups are a diversion. There are at least seven services sending data out of the lock-ups to financial firms. And they charge hefty subscription fees…
I have heard rumors of other players in the financial news industry being upset with NTKN for essentially reading their stories over the squawk service…and potential law suits about this. Is this the fraud you are speaking of?
I do indeed know more than I am telling…but most of the info are details that I need to leave out to “protect the innocent”!
Bottom line…those of us in the industry can see many ways that NTKN/JED can game things to gain an advantage…or to erroneously send data that could sabotage their competitors. Anything that sheds light on their activities is a good thing for every one else in the space who are playing by the rules.
From me:
No one looks up JED Capital or NTKN or Scream or Lightning Bolt.
In other words, no one cares.
Except you. And you won’t tell me the real reason why.
From a source:
Well…actually I have told you why I care. I work for a trading firm that competes with JED capital, and of course, other trading firms. If any firm had an arrangement like NTKN/JED, they could make a significant amount of money, because they have an unfair advantage. The more scrutiny there is on this connection, the less they will be able to get away with.
And I think you might be making an assumption that search traffic has anything to do with the business of a firm like NTKN. They are very much a niche player, and probably have a roster of less than fifty customers (not sure what that number is…). They exhibit at industry shows like the FIA (http://www.futuresindustry.org/exhibitors.asp), and are mentioned regularly in other industry related websites.
You might take a look around www.elitetrader.com, where there are forums that discuss all sorts of services that are of interest to the trading community.
So, as I’ve been saying, NTKN has done a good job of creating a legitimate business that does have revenue etc. They need to do this in order to stay in the lock-ups. Over time, the advantages of being in the lockups has been reduced by competition by the likes of Dow Jones, Bloomberg, etc. At one point NKTN was able to get the information out of the lock ups 200-300 milliseconds faster than the other data services. This has been reduced to a sub millisecond difference.
However, there is still an advantage to be had, it’s just smaller than it once was. I think NTKN has actually concentrated more fully on the legit part of their business, as the advantage to their trading side has been diminished and they can get some revenue from legit side.
Cheers,
Pap
From me:I done you wrong and will eat a big slice of Humble Pie. CEP was a cover for a prop trading firm named Vigilant Futures.Thanks for your help. I was paranoid you were trying to send me down the wrong trail.
AnnB
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