The federal government routinely churns out new data that can cause huge swings in individual stock prices and sometimes entire markets, including commodity trends, FDA drug approvals, and, perhaps most importantly, the monthly jobs report from the Department of Labor.
The release of that figure on the first Friday of each month can move financial markets around the world — generating millions in profits for traders who are well positioned for it.
But government officials are increasingly worried that their market-moving information could be leaking to traders too early, giving a select, aggressive few unfair access to information that is supposed to be available to everyone at the same time. And officials at several federal agencies say they’re taking new steps to ensure that no one on Wall Street gets advance access to their data.
CNBC has learned that the Department of Labor has asked Sandia National Laboratories — the organization that ensures the safety of the nation’s nuclear weapons stockpile — to scrutinize the security procedures surrounding the release of monthly jobs report data.
The story also notes:
Generally speaking, there are three groups of people in Washington who have advance access to market moving data – the federal workers themselves who produce and disseminate the numbers, White House officials who receive the information in advance through the Council of Economic Advisors, and financial reporters who are given advance access to some of the information through what is known as a “lock up.”
Each agency has its own procedures for ensuring its workers don’t deliberately or accidentally leak market moving data. According to a rule called Statistical Policy Directive No. 3, which dates back to 1985 and is published in the Federal Register, agencies are required to develop systems to protect the information, clear times and dates for distributing it, and even to “physically secure” copies of all materials prepared for public release between the time they are printed and when they are released.
That directive also requires agencies to release information in advance to the White House, stating that agencies “will provide prerelease information to the President, through the Chairman of the Council of Economic Advisers, as soon as it is available.” Veteran White House economic officials tell CNBC that they received the monthly jobs report number as early as Thursday afternoon, before the information is released to the public on the first Friday of each month at 8:30 a.m. ET.
Federal rules state, “All employees of the Executive Branch who receive prerelease distribution of information and data estimates … are responsible for assuring that there is no release prior to the official release time. Except for members of the staff of the agency issuing the principal economic indicator who have been designated by the agency head to provide technical explanations of the data, employees of the Executive Branch shall not comment publicly on the data until at least one hour after the official release time.”
Similarly, many federal agencies hold lock ups for journalists during which they disseminate economic data to the journalists who cover the beat, answer questions, and allow reporters time to write stories. On the first Friday of every month at the Department of Labor, print and television journalists are sequestered in separate rooms before release of the monthly employment report. TV reporters are held in a basement room in a half hour lock up during which their email devices and mobile phones are confiscated by a government official.
The format for the Department of Labor jobs report lock ups has not changed in over a decade, people familiar with the process say. And that means when the February employment numbers are released Friday, it may mark the beginning of the end of a system that has not changed nearly as much as the world around it.
The huge profits would definitely provide an incentive to set up fake news agencies as camouflage.
AnnBrocklehurst.com 