SUMMARY:
High-frequency traders have been paying to get direct access to market-moving news releases, a practice that can give firms the ability to trade fractions of a second ahead of less fleet-footed investors. The traders are getting news releases from Business Wire, which distributes corporate-earnings releases and economic reports such as the Philadelphia Federal Reserve's monthly manufacturing survey and from Marketwired, a Toronto company that distributes earnings releases and the ADP monthly employment report.
QUESTIONS TO DO:
Problem 1. Do you think regulators should step in? Why or why not?
Problem 2. How can ordinary investors protect themselves against losses at the hands of high-frequency traders using this tactic?