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Economists differ, but it's generally believed that tiered access to public information is a bad thing. It's one thing for algos to act faster on information th

Economists differ, but it's generally believed that tiered access to public information is a bad thing. It's one thing for algos to act faster on information that everyone gets, when everyone knows this is happening, because they can avoid suffering the worst of the information disadvantage--but it's another thing entirely if the public doesn't know about the information disadvantage. So I think this is against the spirit of public markets as it is generally understood in America. But it should also be pointed out that, as usual, the average individual investor shouldn't be speculating on these numbers in the first place. This is yet another instance of professionals harming professionals.

javert 13y ago
One of the fundamental, positive properties of markets is that there is information assymetry (i.e., "information disadvantage") in your language. When there is too much information assymetry about something, it gets reflected in the price. That is also part of the economic power of markets. So I disagree that this is against the "spirit of public markets." In addition, it's certainly against the American spirit to have government nannies bossing people around. Let free people interact in the market... there is no need for this.
- cma 13y ago
  "Free people" in this case includes the government-funded Michigan University.
  - JackFr 13y ago
    And yet they brazenly make me pay a premium to my cable provider for the Big Ten Network if I want to see their football games...
  - javert 13y ago
    That's a separate issue. I am not a proponent of the government-sponsored education bubble.
- cynicalkane 13y ago
  When market participation (here, trying to speculate on news) is optional, an unknown information disadvantage is far more pathological than a known information disadvantage.
- mbreese 13y ago
  > Let free people interact in the market This isn't the question. The question is whether or not the market is fair. This is the role of government in this case - to protect the little guy from being taken advantage of by the big guy. You can argue about whether or not Reuters should be able to release public information in a tiered manner. In this case, I don't think they should, but others may differ. But what you can't argue about is that the knowledge of the tiers must be made public. You should be able to know if someone else is getting information 2 seconds or 10 minutes earlier than you, just because they paid more for access.
  - enraged_camel 13y ago
    >>This isn't the question. The question is whether or not the market is fair. This is the role of government in this case - to protect the little guy from being taken advantage of by the big guy. Exactly. Having a free market is desirable if and only if we can also ensure fairness for all market participants. Otherwise it's just like the Wild West where the strong take advantage of the weak.
  - javert 13y ago
    > "This is the role of government in this case - to protect the little guy from being taken advantage of by the big guy." That narrative is nonsense. The government mainly protects the big guys and takes advantage of the little guys. That's what the banking bailout was. That's what a lot of Wall Street is today. When nobody can use force on anybody else to get their way, we are all players in a market. Our society has gotten very, very far away from that ideal. > But what you can't argue about is that the knowledge of the tiers must be made public. You are just making an assertion without any principle to back it up. I think people who produce knowledge should be free to sell it in whatever way they want, per whatever agreement they come up with with their customers. In this case it's more complicated, as the people producing knowledge (University of Michigan) are doing it via government handouts. In such a sitauation, there is no "right" or "wrong" except for the government to stop bossing people around.
    - mbreese 13y ago
      I'm not saying Reuters can't sell their information however they want. (Well, I'm not entirely sure about this). But what I am saying is that they need to make customers aware that they may get access to the data after other customers. It should be public when others get access, but I'm not willing (yet) to say that open access should be mandated. Depending on how the original contracts were written, it may be an FTC issue if everyone thought they were getting the information as soon as possible only to find out now that others were getting it earlier.
- glesica 13y ago
  Only if the market is known to be unregulated. The problem is that the government, and companies that operate within financial markets, create the perception that the markets are regulated and fair. Markets have rules on competition, that's just a fact, and no one wants to live with markets that have no rules. Taken to the extreme, a shopkeeper could just kill his competitor. It's still competition (why didn't the competitor hire body guards?), and it's still a market. Yet no one seriously objects to government interference in the market when it comes to declaring murder illegal and punishing murderers. So why is this? Probably because most people regard murder, or force in general (though not always) to be an invalid, or unproductive competitive dimension. We would prefer that shopkeepers compete on who has the best products rather than on who is the best at violently eliminating his competitors. This suggests that there are other dimensions on which we do not want competition to occur. If one of those is "who can get their hands on information the soonest", then sure, we should definitely regulate this issue.
  - javert 13y ago
    There is a fundamental dividing line here that you are missing. It is ultimately in every honest person's self-interest to disallow the _initiation_ of physical force. When you have that, you can have markets and a free society. When you don't have that, you have anarchy on the one hand, or some form of mixed or total authoritarianism on the other hand. Financial markets should have rules, and people who break those rules should be sued and disbarred from the market. People should be free to choose to participate only in markets whose rules they can agree with, and create new markets if they see the need. Such is a robust, free system. All of this is possible in a traditional market system that disallows initiated force. The SEC and other regulators use initiated force and do not permit such a system to exist.
    - glesica 13y ago
      > It is ultimately in every honest person's self-interest to disallow the _initiation_ of physical force. You used the word "honest" but failed to define it. That word must have a definition, and within that definition you are implying additional values beyond pure competition. I suspect that if we tried to clearly define that word we would find many more actions that many people would argue should be disallowed, like the "initiation of physical force". But many of those things would be far more controversial. My point is that real, existing (non-theoretical) markets are more complex than you seem to believe. Market actors will always try to find the "edges" of acceptable behaviour in order to gain advantage, and in a dynamic, changing world, those edges continuously multiply, making self-regulation in real life a pretty unreasonable prospect in my opinion.
- dragonwriter 13y ago
  > One of the fundamental, positive properties of markets is that there is information assymetry The entire theory of the efficiency of "free markets" is predicated on the rational choice model, which takes as a premise that all actors have perfect information about the expected costs and benefits of all possible market decisions. Information asymmetry is not a "positive property" of markets, it is a source of inefficiency.
  - javert 13y ago
    > entire theory of the efficiency of "free markets" is predicated on the rational choice model Whatever theory you are referring to is probably bullshit (definitely, if it's the one I think it is), but it's not the only theory supporting free markets. So you argument is basically a straw man.
    - dragonwriter 13y ago
      I am anxious to see your presentation of any theory supporting the efficiency, in utilitarian terms, of "free markets" in which the claim that information asymmetry is a positive property is defensible.
      - philwelch 13y ago
        Don't hold your breath. Javert is an Ayn Rand disciple.
        javert 13y ago
        Objectivism is actually the systematic rejection of Platonic thinking in philosophy, and thus is the opposite of a religion. So it's wrong to call me a "disciple." Why shouldn't he hold his breath? Do you think I can't answer a simple question?
        philwelch 13y ago
        Per Wiktionary: 1. A person who learns from another, especially one who then teaches others. 2. An active follower or adherent of someone, or some philosophy etc. (http://en.m.wiktionary.org/wiki/disciple http://en.m.wiktionary.org/wiki/disciple) I would say there's no connotation of religion or Platonism in the word "disciple" and that by the second definition especially, you are very much a disciple of Ayn Rand. That's why it's useless to ask you for a utilitarian argument--Rand never dealt in utilitarianism, and as her disciple, you wouldn't, either.

javert 13y ago

One of the fundamental, positive properties of markets is that there is information assymetry (i.e., "information disadvantage") in your language. When there is too much information assymetry about something, it gets reflected in the price. That is also part of the economic power of markets. So I disagree that this is against the "spirit of public markets." In addition, it's certainly against the American spirit to have government nannies bossing people around. Let free people interact in the market... there is no need for this.

cma 13y ago
"Free people" in this case includes the government-funded Michigan University.
- JackFr 13y ago
  And yet they brazenly make me pay a premium to my cable provider for the Big Ten Network if I want to see their football games...
- javert 13y ago
  That's a separate issue. I am not a proponent of the government-sponsored education bubble.
cynicalkane 13y ago
When market participation (here, trying to speculate on news) is optional, an unknown information disadvantage is far more pathological than a known information disadvantage.
mbreese 13y ago
> Let free people interact in the market This isn't the question. The question is whether or not the market is fair. This is the role of government in this case - to protect the little guy from being taken advantage of by the big guy. You can argue about whether or not Reuters should be able to release public information in a tiered manner. In this case, I don't think they should, but others may differ. But what you can't argue about is that the knowledge of the tiers must be made public. You should be able to know if someone else is getting information 2 seconds or 10 minutes earlier than you, just because they paid more for access.
- enraged_camel 13y ago
  >>This isn't the question. The question is whether or not the market is fair. This is the role of government in this case - to protect the little guy from being taken advantage of by the big guy. Exactly. Having a free market is desirable if and only if we can also ensure fairness for all market participants. Otherwise it's just like the Wild West where the strong take advantage of the weak.
- javert 13y ago
  > "This is the role of government in this case - to protect the little guy from being taken advantage of by the big guy." That narrative is nonsense. The government mainly protects the big guys and takes advantage of the little guys. That's what the banking bailout was. That's what a lot of Wall Street is today. When nobody can use force on anybody else to get their way, we are all players in a market. Our society has gotten very, very far away from that ideal. > But what you can't argue about is that the knowledge of the tiers must be made public. You are just making an assertion without any principle to back it up. I think people who produce knowledge should be free to sell it in whatever way they want, per whatever agreement they come up with with their customers. In this case it's more complicated, as the people producing knowledge (University of Michigan) are doing it via government handouts. In such a sitauation, there is no "right" or "wrong" except for the government to stop bossing people around.
  - mbreese 13y ago
    I'm not saying Reuters can't sell their information however they want. (Well, I'm not entirely sure about this). But what I am saying is that they need to make customers aware that they may get access to the data after other customers. It should be public when others get access, but I'm not willing (yet) to say that open access should be mandated. Depending on how the original contracts were written, it may be an FTC issue if everyone thought they were getting the information as soon as possible only to find out now that others were getting it earlier.
glesica 13y ago
Only if the market is known to be unregulated. The problem is that the government, and companies that operate within financial markets, create the perception that the markets are regulated and fair. Markets have rules on competition, that's just a fact, and no one wants to live with markets that have no rules. Taken to the extreme, a shopkeeper could just kill his competitor. It's still competition (why didn't the competitor hire body guards?), and it's still a market. Yet no one seriously objects to government interference in the market when it comes to declaring murder illegal and punishing murderers. So why is this? Probably because most people regard murder, or force in general (though not always) to be an invalid, or unproductive competitive dimension. We would prefer that shopkeepers compete on who has the best products rather than on who is the best at violently eliminating his competitors. This suggests that there are other dimensions on which we do not want competition to occur. If one of those is "who can get their hands on information the soonest", then sure, we should definitely regulate this issue.
- javert 13y ago
  There is a fundamental dividing line here that you are missing. It is ultimately in every honest person's self-interest to disallow the _initiation_ of physical force. When you have that, you can have markets and a free society. When you don't have that, you have anarchy on the one hand, or some form of mixed or total authoritarianism on the other hand. Financial markets should have rules, and people who break those rules should be sued and disbarred from the market. People should be free to choose to participate only in markets whose rules they can agree with, and create new markets if they see the need. Such is a robust, free system. All of this is possible in a traditional market system that disallows initiated force. The SEC and other regulators use initiated force and do not permit such a system to exist.
  - glesica 13y ago
    > It is ultimately in every honest person's self-interest to disallow the _initiation_ of physical force. You used the word "honest" but failed to define it. That word must have a definition, and within that definition you are implying additional values beyond pure competition. I suspect that if we tried to clearly define that word we would find many more actions that many people would argue should be disallowed, like the "initiation of physical force". But many of those things would be far more controversial. My point is that real, existing (non-theoretical) markets are more complex than you seem to believe. Market actors will always try to find the "edges" of acceptable behaviour in order to gain advantage, and in a dynamic, changing world, those edges continuously multiply, making self-regulation in real life a pretty unreasonable prospect in my opinion.
dragonwriter 13y ago
> One of the fundamental, positive properties of markets is that there is information assymetry The entire theory of the efficiency of "free markets" is predicated on the rational choice model, which takes as a premise that all actors have perfect information about the expected costs and benefits of all possible market decisions. Information asymmetry is not a "positive property" of markets, it is a source of inefficiency.
- javert 13y ago
  > entire theory of the efficiency of "free markets" is predicated on the rational choice model Whatever theory you are referring to is probably bullshit (definitely, if it's the one I think it is), but it's not the only theory supporting free markets. So you argument is basically a straw man.
  - dragonwriter 13y ago
    I am anxious to see your presentation of any theory supporting the efficiency, in utilitarian terms, of "free markets" in which the claim that information asymmetry is a positive property is defensible.
    - philwelch 13y ago
      Don't hold your breath. Javert is an Ayn Rand disciple.
      - javert 13y ago
        Objectivism is actually the systematic rejection of Platonic thinking in philosophy, and thus is the opposite of a religion. So it's wrong to call me a "disciple." Why shouldn't he hold his breath? Do you think I can't answer a simple question?
        philwelch 13y ago
        Per Wiktionary: 1. A person who learns from another, especially one who then teaches others. 2. An active follower or adherent of someone, or some philosophy etc. (http://en.m.wiktionary.org/wiki/disciple http://en.m.wiktionary.org/wiki/disciple) I would say there's no connotation of religion or Platonism in the word "disciple" and that by the second definition especially, you are very much a disciple of Ayn Rand. That's why it's useless to ask you for a utilitarian argument--Rand never dealt in utilitarianism, and as her disciple, you wouldn't, either.