The Labor Department is suspending a plan to change how it releases economic data, in a win for financial-media firms that had lobbied against the changes.
The department had said in January that it would release market-moving data primarily through the internet, thwarting media firms that release the same data electronically over data feeds to customers, including high-speed trading firms. Officials from the Bureau of Labor Statistics, the unit of the department that generates such data, argued that posting it online would be fairer to investors.
But the planned policy change prompted fears it could cause the bureau’s website to crash because traders seeking to grab the data would barrage the site with traffic as soon as the data was posted.
The proposal had caught media companies by surprise. BLS Commissioner William Beach said in a letter to media organizations Wednesday that the agency was postponing the new policy as it considered further changes to how it released data. “We continue to be committed to the secure, equitable, orderly and timely dissemination of statistical data,” he wrote.
Originally, the bureau was set to start releasing data via its website this week. That meant Friday’s release of monthly U.S. employment figures—a report that often affects the stock market—would have been handled using the new approach. Last week, the bureau issued a letter saying it had delayed implementation of the changes until March 9 at the earliest. Wednesday’s letter puts them off indefinitely.
Dow Jones & Co., the parent company of The Wall Street Journal, is among the financial-media companies that disseminate the bureau’s data through electronic data feeds.
In early February, a law firm representing five financial media companies complained about the changes to the bureau. The changes “could materially increase the risk of market disruption,” due to the risk of the BLS site crashing or being attacked by hackers, it warned.
The letter was written on behalf of the Associated Press, Bloomberg LP, Dow Jones, Market News International and Thomson Reuters Corp. It also said the department had failed to follow federal requirements to seek public feedback on proposed new regulations, and that the changes would violate the press-freedom guarantees of the First Amendment.
A spokesman for the department declined to comment. “We are appreciative of BLS’s willingness to have a dialogue with stakeholders,” said Jennifer Mansfield, a partner at law firm Holland & Knight LLP, which sent the letter on behalf of the media companies.
Journalists from accredited media companies are given advance looks at government economic data in secure rooms called “lockups.” The original idea behind the lockups was to give newswires time to write up articles analyzing the data and publish them simultaneously with the release of the data.
With the Labor Department’s planned changes, journalists would still be allowed into a lockup to get early looks at the data, but they won’t be permitted to bring electronic devices into the room. That would effectively stop media companies from releasing data to their clients at the instant the department permits publication.
High-frequency traders can profit by obtaining market-moving data and using it to execute split-second trades before others can react, though traders say only a few firms have the sophisticated technology needed for such strategies.
Lockups have been the subject of periodic controversy over the years, going back to the administration of President George W. Bush. The department has reviewed whether certain lockup participants were legitimate media organizations. Law-enforcement agencies also investigated whether media companies or traders broke insider-trading rules by getting access to the data before it was formally released.
Write to Alexander Osipovich at alexander.osipovich@dowjones.com
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