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Fed following up on report of unusual trading on FOMC statement
September 24, 2013 / 6:07 PM / 4 years ago

Fed following up on report of unusual trading on FOMC statement

WASHINGTON, Sept 24 (Reuters) - The U.S. Federal Reserve said on Tuesday it was following up with news organizations over a report of unusual trading around the release of its monetary policy statement last week.

The report by CNBC television cited a wave of trading activity in Chicago at 2:00 pm ET (1800 GMT) on Wednesday, which appeared milliseconds ahead of other trades when the Fed stunned investors by deciding not to taper its $85 billion per month in bond purchases.

The Fed’s decision spurred a broad rally in financial markets, including gold. “Some traders in Chicago appear to have had access to the Fed’s decision before anyone else in the Windy City,” CNBC said in its report.

CNBC credited Chicago research firm Nanex for spotting significant activity in Comex gold futures, traded in Chicago, which it calculated was five to seven milliseconds ahead of a subsequent spike in gold transactions in New York.

Normally, Nanex said, traders in New York would have about a five milliseconds advantage over traders in Chicago on news coming from Washington because of their proximity to the nation’s capital and the time it takes for the data to be transmitted.

“As is generally the case with other releases of market-sensitive information by government agencies, news organizations receiving embargoed information from the Federal Reserve agree in writing to make no public use of the information until the time set for its release,” a Fed spokesman said.

“We will be conducting follow-up conversations with news organizations to ensure our procedures are completely understood,” he added.

There was no immediate comment from officials at electronic news vendors Thomson Reuters, Bloomberg, Dow Jones or Market News International on whether they had been contacted by the Fed.

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