Pssst...Want to buy a watch?
I don't have one for sale, but I know some folks that are willing to sell you... well, it's not a watch, but it's something much, much better. They'll sell you time. You want to buy some time?
Turns out, and who knew, you can buy time. You, yes you, can buy a few seconds for a whole bunch of money. High-frequency trading outfits and apparently tons of other "traders" and "investors" are buying this time. You can, too.
For a "Fistful of Dollars," what you get is a few seconds head start on knowing some very important economic data points.
It's amazing what money can buy.
Forget integrity, it's not for sale because it's out of stock. But if you want to buy the University of Michigan's highly regarded and market-moving report on consumer confidence, you can get it, right alongside the "investors" like the HFT boys and girls who pay the University to get the numbers two seconds before the rest of the world sees them.
Or you can pony up next to the same crowd that buys the Institute for Supply Management's manufacturing index numbers before the world sees them.
It's not insider trading. It's totally legal.
I'M NOT KIDDING.
On Wednesday, out of left field comes this revelation that for some time folks willing to pay to get market-moving data from private, non-governmental sources, sources that we all rely on, that we all thought were providing important (equal access) economic data points, have been getting that market-moving data before we all see it.
And they are making a ton of money front running all of us.
Apparently, selling access is "routine," according to some sellers. Besides the usual creeps manipulating the markets for their own bottom lines, Thomson Reuters is also buying data points from these sources and charging their news-feed customers a fat premium to get it passed along to them.
Hey, wanna buy some time?
I'M NOT KIDDING.
Honestly, I didn't know. I had no idea. For heaven's sake, if I'd known, I'd have gladly paid to gain a few seconds for a few hundred million dollars. I can afford it.
The truth is, I'm glad this came out. I've had my eye on this Russian's mega-yacht (the owner is building a new 1000-foot model), and with the extra time I can buy I'm going to make an offer. It might take me a few months of getting the data ahead of the tape to position myself to make those mega-millions, but that other ship won't be ready until the Baltic Dry Index hits it support levels.
Like the old saying goes, if you can't beat 'em, join 'em. And, darn it, I want to join that big yacht club. Besides, it will look great anchored off my place in the Hamptons.
I'd say more about the whole affair, but I have to go. I'm arranging a thank-you lunch and having the SEC, all of those darling folks, over to thank them for their generosity in allowing the complete bastardization of "fair and orderly" markets.
While I'm at it, maybe I'll ask the folks at the SEC how much it costs to buy their integrity to allow this "event jumping" or "news feed trading," as it's called by its long-time practitioners.
Well, that's it, I gotta go. Got a little luncheon and charity auction I'm putting on for the SEC. God bless American regulatory entrepreneurialism! That they can be bought is a beautiful thing.
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About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.