US Fed probing market trades before policy release

Sep 25, 2013

The US Federal Reserve said Wednesday that it is looking into allegations that traders received information about its policy decision last week ahead of the official release time.

The Fed said it would be reviewing how it disseminates often market-moving monetary policy decisions after an analyst said that movements on the gold exchange just before the release last Wednesday could suggest someone had the information early.

The Fed's shock decision not to begin tapering its $85 billion a month was officially released at precisely 2 pm last Wednesday (1800 GMT), sending prices for stocks, bonds and gold soaring.

Most analysts and had expected that the stimulus would be reduced, and anyone who had the information early stood to rake in easy profits when it became public.

"We will be conducting follow-up conversations with news organizations to ensure our procedures are completely understood," a Fed spokesperson said.

Media organizations were as usual allowed early access to the decision, to prepare reports under embargo that could not be released prior to 2 pm.

Some news organizations release, upon expiration of the embrago, market-moving information like Fed decisions directly to clients' computers which are programmed for extremely high speed trading.

According to Eric Hunsader of Nanex, which created technology that allows real-time analysis of market trading, there were clear, unexplained rises in the gold and gold just before the official announcement.

"It was a pretty substantial move on gold two minutes and a half before," Hunsader told AFP.

"It started in Chicago and NYC (New York) reacted about 6 later.

"It was enough of a move that actually I sent out a to the effect that somebody got the news early. It was something that surprised me."

Nanex published charts of the movements backing its claims but it has not been directly contacted by the Federal Reserve.

Hunsader said the problem could have arisen from a news organization placing the no-taper information, ahead of the release and still under embargo, onto a computer server in close proximity to programmed trading machines

That would not break the embargo, but give the trading machines a minute, millisecond advantage over others at 2 pm."Or somebody knew the information beforehand. That's more a conspiracy theory," he said.

"But one way or another, the info was at the exchange before 2 o'clock."

According to Hunsader, the first movements in gold were immediately followed, at 2pm precisely, by sharp changes in the prices of other securities and commodities.

"It was really everything: financial futures, Treasury futures, precious metals, corn, soybeans, all equities... right at two o'clock"

"The only thing that had activity before two o'clock was gold."

The Fed said the that receive information under embargo—which include AFP—"agree in writing to make no public use of the until the time set for its release."

Explore further: Visa, MasterCard moving into mobile pay in Africa

add to favorites email to friend print save as pdf

Related Stories

3Q: As precious metals grow more precious

May 06, 2011

The value of silver soared to an all-time high last Thursday, and plunged dramatically yesterday, illustrating the constant volatility of the precious-metals market, which includes lustrous commodities like ...

US Fed joins Twittersphere

Mar 14, 2012

The US Federal Reserve, the financial backbone of the world's biggest economy, said Wednesday it would try its hand at Twitter to improve communications with the public.

Criminal probe led gov't to change release of data

Jul 10, 2012

(AP) — Federal criminal and civil investigators looked into possible leaks of economic data that the U.S. government provides early to news organizations, according to a report released Tuesday by the Labor Department.

Recommended for you

Visa, MasterCard moving into mobile pay in Africa

13 hours ago

Americans may just be getting used to mobile pay, but consumers in many African countries have been paying with their phones for years. Now payment processors Visa and MasterCard want to get a slice of that market, and are ...

Wireless show highlights: Eyes on Apple, Blackberry

14 hours ago

As a major wireless show continues this week in Barcelona, Spain, Apple is highlighting the capabilities of its iPhone cameras with a gallery of photos taken by its users around the world.

Venture capitalist testifies in Silicon Valley sex-bias suit

21 hours ago

A prominent Silicon Valley venture capitalist who helped direct early investments in Google and Amazon said Tuesday during testimony in a high-profile sex discrimination lawsuit that his firm is not run by men and has many ...

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

kochevnik
1 / 5 (4) Sep 25, 2013
Of course the Rothschillds have locked themselves into a scenario where they cannot raise interest rates or cut back on the oncoming hyperinflation. Doing so would immediately crash the bond market and the economy modeled after a crazy Rube Goldberg machine

Some were buying gold an hour before. Bernankie and the zionist FED is the reason behind most major wars on the planed. His free money to cronies like Warren Buffett is pure wealth redistribution from the 99% to the 0.1% who need it least

FED is pumping out funny money to keep the price of gold below $1400. Above that producers mine new gold and the price will inexorably rise. All that does is delay the hyperinflation making it catastrophic

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.