Let the Free Marketplace Principles Rule!

If you buy research information at a cost and then want to trade it others, who in turn would also make money or secure advantage out of the same and you wish to attach a premium for those who want to get that information earlier than others, then what’s wrong? But the NY Attorney-General does not think so.

Eric Schneiderman, the New York Attorney-General's overtures against Thomson Reuters defies market logic.

Thomson Reuters pays a hefty sum to the University of Michigan every year to secure the distribution rights for the University’s closely followed Consumer Confidence Survey. Thomson Reuters in turn has a three-tiered system for distributing the same data.  The top level of high-frequency traders pay a reported $6,000 per month to get the information at 9:54:58 am. The next level of Thomson Reuters subscribers, paying substantially less, get the data two seconds later, from a conference call which takes place at 9:55 am. Finally, at 10:00 am, the report is made freely available on the Web.

Considering that the University of Michigan’s data has the ability to move the markets and that super-fast computer programmed trading means that even two seconds have the potential of millions, the two second advantage has naturally a premium attached to it. In other words, the high-frequency traders can trade millions of dollars of stocks, bonds or other investments, once they are privy to this data.

Eric Schneiderman has problems with these two seconds or better that why should high-frequency traders get this information two seconds earlier than the other subscribers of Thomson Reuters and he is wielding the Martin Act to oppose the two-second window.

Eric Schneiderman supposedly altruistic 'rock and roll' fails on many counts -

1. Why should anyone have a problem with giving traders, who pay more, early access to financial information?
2. Considering that those who secure this data from Thomson Reuters also want to make hay, and then what’s wrong in charging those more who wish to make most of it?
3. Has anyone prevented other subscribers from moving to the high-frequency trader’s category? 
4. Consequently if a subscriber wants to pay less (and may be can pay less) and get the same data 2 seconds later then what is anyone’s problem?
5. Since Thomson Reuters made no secret of this three-tiered distribution, then there is no secret preferential distribution. Then what’s the hullabaloo about?
6. Then, why just oppose the 2-second window, why not the next 5-minute window as well? Might as well ask Thomson Reuters to give this information to everyone for FREE! 

A Russian revolutionary leader was once quoted saying that “Liberty is so precious that it must be carefully rationed.” Eric Schneiderman seems to be on a similar trail.

Life, Liberty and pursuit of happiness has been always punctuated by people like Schneiderman who think they are the apostles who can save this pursuit of the mankind. In reality they end-up rationing liberty.

Organizational Leaders and HR professionals who are at the helm of protecting life, liberty and the pursuit of happiness of their employees may take a leaf out of the same and believe that the best way to protect the same is not to adopt the 'rationing' approach. They need to create a culture of performance and not dictate similar outcomes for everyone, since that would be unfair to those who ’invest’ more.  And more importantly not to assume themselves to be the saviour of their most important ‘assets’ and instead let the ‘free marketplace principles’ rule.