The U.S. Department of Agriculture (USDA) has decided to no longer offer reporters a “lockup” period to digest its crop and livestock reports before they’re released to the public, as of August 1, 2018.
The change in procedure is meant to address concerns about news agency clients getting a head start on trading based on the information in USDA reports
Until now, reporters who entered lockup were given access to reports at 10:30 am (eastern), under the condition that no information would be shared until the report was released to the public at 12 pm. No electronic transmission devices, such as cell phones, were permitted in lockup.
The USDA says it takes approximately two seconds for one of its reports to be transmitted and posted online in its entirety for the public to read. Meanwhile, news agencies, who have 90 minutes to analyze the reports, have access to high-speed fiber optic lines and have advertised services to clients that offer ‘ultra-low latency’ data transmission.
“There is evidence to suggest that there is significant trading activity worth millions of dollars that occurs in the one to two second period immediately following 12:00 pm, which could not be based on the public reading of USDA data,” says the department. “The inference is that private agents are paying the news agencies for faster data transmission to get a jump on the market.”
After investigating, the department says media will no longer receive the reports in advance nor have access to high-speed transmission cables from within USDA’s lockup facility.
“Everyone who has interest in the USDA reports should have the same access as anyone else,” says U.S. Ag Secretary Sonny Perdue, in a statement. “Modern technology and current trading tactics have made microseconds a factor. This change addresses the ‘head start’ of a few microseconds that can amount to a market advantage. The new procedures will level the playing field and make the issuance of the reports fair to everyone involved.”
The USDA says there are currently six news agencies that participate in lockup: Associated Press, Dow Jones/Wall Street Journal, Thompson Reuters, Market News Int’l/Deutsche Boerse, Bloomberg News, and DTN/Progressive Farmer.