The Fed shocked investors last week when it announced that it would not taper bond purchases. But it appears that some were shocked earlier than others—by seven milliseconds.
When the FOMC held its meeting last week, it gave certain reporters the press release early, but strictly prohibited publication until 2 p.m. The reporters remained in a locked room until that time.
According to a report by CNBC, market activity indicated that some investors had the information milliseconds sooner. This extra time could represent as much as $600 million worth of traded assets.
The Fed is now contacting all news organizations which participated in the lockup, in hopes of finding the culprit.
According to Washington Post columnist Neil Irwin, this episode reveals something important about markets today.
“It is the reality of how much trading activity, particularly of the ultra-high-frequency variety, is really a dead weight loss for society,” Irwin writes.
Following the Fed’s release, gold spiked by more than $55 to $1,364 an ounce.
Reprinted by permission of Mining.com