Chicago PMI Data Now Catering To HFT Algos, As Deutsche Borse Buys And Adds Datastream To AlphaFlash HFT Product Offering
Tue, Jun 28, 2011
A few months ago we reported on Deutsche Boerse’s Alpha Stream: a product suite especially designed to allow subscribers to get a millisecond advantage when market moving economic data is reported, which would then set HFT algos off the races, with the expectation that those paying a pretty penny for such access could scalp a few nickels from those without this critical (in our day and age of collocated needs) data feed. As a reminder, among the key benefits to customers, Deustche Boerse, now the owner of NYSE Euronext were that i) Data is sent directly by our journalists from government lock-ups; ii) Designed for easy direct integration into trading algorithms; iii) Global co-location and other connectivity options iv) AlphaFlash uses the high speed global network of Deutsche Börse and was designed by technology experts from the world of low latency trading. And while Euronext has had about 3 market halts in Europe in the past week, that appears to be irrelevant: with reverse merger listing fees now a thing of the past, the Deustche Borse has to continue raking in high margin HFT clients with the promise of some free latency arbitrage. Therefore, in order to make its product offering that much more appealing to 19 year old Ph.D.’s everywhere, NYSE Boerse has just announced its purchase of Kingsbury International Ltd., which surveys managers for the Chicago Business Barometer, also known as the company that hosts the Chicago PMI data, in order to bring PMI data direct to feed subscribers. Net result: expect even more market volatility at each PMI release, now that the market is not two but three-tiered, and consisting of regular HFTs, HFTs with access to the Deutsche Boerse feed, and everyone else. Does this make capital markets any more efficient? Hell no. Does it benefit the willing participants in a rigged casino who are about to purchase a faster reaction time for one of the blackjack tables? But of course.
From Dow Jones:
Deutsche Boerse AG said Monday it acquired the firm that publishes the Chicago Business Barometer, in a move seen adding a key U.S. economic data point to a suite of products targeted at the professional trading community.
The German group and rivals have in recent years acquired providers of financial indices to generate new contracts, but Deutsche Boerse is a leader in taking control of data that drives the volume of business, particularly from high-frequency traders.
The company launched its AlphaFlash data and news feed in April 2010 and funnels more than 150 economic indicators directly to algorithmic trading firms, which use the data points as fodder for rapid-fire transactions.
Monday’s deal is seen propelling the 30-year-old monthly Business Barometer, formerly known as the Chicago Purchasing Managers’
Index, into the top tier of machine-readable news designed for high- speed traders.
“The Chicago Business Barometer is one of the most widely followed barometers among professional traders and market participants who use macroeconomic figures to make informed trading decisions,” said Holger Wohlenberg, Deutsche Boerse’s head of market data and analytics, in a statement. The barometer offers traders a monthly peek into U.S. business activity, querying purchasing managers on employment, inflation and customer demand.
As expected, the man behind the PMI, is delighted to be getting paid a lot of money just so his news can flood DB’s well paying customers first:
Jack Bishop, president of Kingsbury and the economist who formulated the barometer in 1981, touted Deutsche Boerse’s ability to market the service globally.
“That’s the reason I was a party to the transaction, because I know where our strengths and weaknesses are,” he said in an interview. Bishop has signed on for three years as a consultant to Deutsche Boerse.
It is unclear if the ultra-speed, HFT friendly feed would be activated before its next release on June 30. That said, we will certainly coordinate with our friends at Nanex for any trading abnormalities, primarily in the critical ES futures, this Thursday at 9:42am, keeping a close eye on the tape, and indicating precisely when the tiered data release hits.
h/t London Dude Trader
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