Wednesday, September 25, 2013

Somebody Stole 7 Milliseconds From the Federal Reserve

Last Wednesday, the Fed announced that it would not be tapering its bond buying program. This news was released at precisely 2 pm in Washington “as measured by the national atomic clock.” It takes 7 milliseconds for this information to get to Chicago. However, several huge orders that were based on the Fed’s decision were placed on Chicago exchanges 2-3 milliseconds after 2 pm. How did this happen?

CNBC has the story here, and the answer is: we don’t know. Reporters get the Fed release early, but they get it in a secure room and aren’t permitted to communicate with the outside world until precisely 2 pm. Still, maybe someone figured out a way to game the embargo. It would certainly be worth a ton of money.


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