High-Speed Traders Getting Early Look At SEC Filings

Oct 30 2014 | 2:09pm ET

High-frequency traders are getting an edge from an unlikely source: The Securities and Exchange Commission.

About 40 customers—including media outlets as well as hedge funds and other high-speed traders—pay an SEC contractor for direct access to corporate filings that are also posted on the SEC’s Electronic Data Gathering Analysis and Retrieval System, better known as EDGAR. While the contractor says it sends the information to both subscribers, who pay about $1,500 a month for the service, and the SEC website at the same time, there is usually a lag—which could be as long as a minute.

Two studies show that some subscribers may be making good use of that time: trading volume in some of the shares jumped in the time between when subscribers received the filings, and when it appeared on the SEC website, The Wall Street Journal reports.

The early access to SEC data appears similar to the sort of paid early access some companies received to news and data feeds; two companies, pressured by the New York State attorney general, have ceased providing that service.

The SEC may soon join them.

“We have reviewed the working paper and are taking the issues raised by it seriously,” a spokeswoman told the Journal. “We are conducting a thorough assessment of the dissemination process, including timing increments, and will make any systems modifications that may be necessary to optimize the dissemination of information to investors and the markets.”


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