I’ve been bemused for awhile now about how proposed changes to the Department of Labor lock-ups have been played as a great affront to journalists and freedom of the press, when, in reality, those who would be most affected by the suggested restrictions are so-called algorithmic or high frequency traders.
The general public, who the lock-ups are supposed to serve, doesn’t care a fig if they get their employment figures minutes, seconds or, gawd forbid, milliseconds late. Only traders worry about that.
As former Keith Hall, former Bureau of Labor Statistics Commissioner, said at congressional hearings held last month, the DOL changes were “an effort to get traders out of the lock-ups.” This is confirmed in the Sandia report released earlier this week, which states: “The apparent root cause for the issues driving this assessment is the possible presence of algorithmic traders and/or their agents in the press lockup facility.”
If you thought this would be something that legitimate journalists might want to address, you’d be wrong. Most don’t understand what’s happening and those who do have employers with a vested interest in keeping the lock-ups as they are. I’m looking at you Bloomberg, Reuters and Dow Jones.
The reason this story has never gotten much attention is because Vigilant Global (formerly Vigilant Futures), which bankrolled Canadian Economic Press to access lock-ups; JED Capital, which funded Need to Know News (NTKN); and all the other assorted hedge funds I haven’t been able to identify yet are small fry when compared to Reuters and Bloomberg and their big Wall Street clients.
Yes, Reuters and Bloomberg are legit news agencies, but they make most of their money from the financial data side of their business. And you can bet that if Vigilant Global and JED Capital were getting data straight from the lock-ups, without a millisecond-sucking detour through a third-party news service, Bloomberg’s and Reuters’ biggest clients were going to demand that too.
When the Department of Labor panicked and announced its changes, it was silly enough to forget or underestimate how unhappy Bloomberg’s and Reuters’ Wall Street customers were going to be in an election year. Of course, it had to walk things back.
While it’s true that if the DOL had gone ahead with its changes as proposed, it could have wreaked havoc if initial data releases were market moving and made public in an unorderly manner. But here’s the thing — lock-ups are not for traders. Or they’re not supposed to be.
According to Carl Fillichio, Senior Advisor for Communications and Public Affairs at the DOL: “Press lock-ups (exist) for one reason only: to serve the general public by facilitating the news media’s ability to read, review, ask questions about and prepare news stories explaining embargoed economic data reports.”
It’s interesting then that journalists, including the Reporters Committee for Freedom of the Press, whose executive director Lucy Dalglish testified at the congressional hearings, have blindly let themselves be used by Wall Street to push its agenda when, instead, they should be asking why traders are even in the lock-ups in the first place.