July 11, 2018
The U.S. Department of Agriculture has announced new procedures for the release of market-affecting crop and livestock reports from the National Agricultural Statistics Service (NASS) and World Agricultural Outlook Board (WAOB) to ensure that all members of the public have access to the information at the same time.
Under current “Lockup” procedures, information is released to the public at noon (Eastern), though the news media are allowed access approximately 90 minutes early, with the reports embargoed until the noon release time. Once people enter the lockup, they cannot leave until the reports are sent out to the public at noon. The public is allowed to enter lockup at 10:30 a.m. to hear about the lockup facility and to sit in on the data briefing that occurs at approximately 11:45 a.m. Again, no transmission devices are allowed into lockup, and the public is not allowed to leave until noon.
The media, on the other hand, are provided with an electronic copy of the report at 10:30 a.m. in order to write their articles and other custom reports between 10:30 a.m. and noon. Currently, six news services participate in lockup and are given early access to reports, including: the Associated Press, Dow Jones/Wall Street Journal, Thompson Reuters, Market News Int’l/Deutsche Boerse, Bloomberg News and DTN/Progressive Farmer.
Once the public report is released, press organizations have access to high-speed fiber optic lines out of the USDA lockup and advertise paid services to clients that offer "ultra-low-latency" data transmission speed. They have approximately 90 minutes to distill the reports down to their clients’ needs.
“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 p.m., which could not be based on the public reading of USDA data,” USDA said. “The inference is that private agents are paying the news agencies for faster data transmission to get a jump on the market.”
Prompted by inquiries from the public, USDA examined the procedures and determined that technological advancements have afforded recipients of customized media reports a market advantage not enjoyed by members of the general public. USDA also sought analytical assistance from the Commodity Futures Trading Commission to help inform a policy update to the lockup procedures. As a result, beginning Aug. 1, 2018, USDA will provide the news media with the same access to the NASS and WAOB reports as the public, with the information becoming available to all at noon (Eastern) on days the reports are released.
“These reports are greatly anticipated each time they are released, and they can have significant market impacts,” Agriculture Secretary Sonny Perdue said. “Everyone who has interest in the USDA reports should have the same access as anyone else. 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.”
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