NATHAN ROTHSCHILD made a killing with help from a pigeon bringing news of Wellington's victory over Napoleon at Waterloo. Traders today use algorithms and high-speed networks to respond quickly to market-moving news. Their hunger to gain an edge is creating a split system for data releases. Government agencies are trying to ensure official data are available to everyone at the same time. But private providers are increasingly looking to stagger the release of proprietary numbers so they can charge more to high-speed traders who will pay handsomely for the zippiest feeds. Regulators are watching. The New York Stock Exchange's parent, NYSE Euronext, this month settled allegations by the Securities and Exchange Commission (SEC) that it had fed market data to certain customers fractionally before sending it to everyone else. Such favouritism breaches a market-fairness rule known as Regulation NMS. The exchange will pay a mere $5m, but it will also have to make improvements to its compliance systems. The SEC is looking at other exchanges" arrangements with super-fast traders. Worries about the preferential treatment of such firms have also led to a tightening of the procedures for the 30-minute "lockups" before the release of widely watched employment data by America's Department of Labour. During these periods reporters from accredited media organisations (some of which have big data-feed businesses) get an early look at the new number so they can prepare detailed articles to be distributed at the moment of official release. But fears have grown that some of them have been giving their data subscribers an early peek, through customised feeds that media groups have been allowed to install in the lockup room. Carl Fillichio, an adviser to the department, testified in June that the rise of high-frequency trading had "strengthened the financial incentive to violate the terms of prerelease access for the purpose of providing non-public data to paid subscribers." He listed numerous violations of security policies in recent years, including by one (unnamed) news group that installed a fibre-optic cable despite having been told repeatedly this was not allowed. Under a system to be introduced later this year, media groups that want to continue to use their own hardware and software will have to order it from approved suppliers, and have it shipped directly to the department and installed by its own IT people. Reporters will no longer be able to bring in anything that can be used as or turned into a transmitting device, including pens. In stark contrast, dissemination of a twice-monthly consumer-sentiment index compiled by the University of Michigan is staggered by design. Under the terms of its contract with Thomson Reuters, its distribution partner, the index is released in three stages: to subscribers of Thomson's "ultra low-latency" feed two seconds before 9:55am; to the firm's desktop clients at 9:55am precisely; and to the public at 10am. The more who sign up for the costlier low-latency service, the better for both Thomson and the university. The contract for 2010, seen by The Economist, stated that Thomson was to pay the university an annual fee for co-branding and distribution rights, plus a "contingent fee" equal to 25% of any "qualifying" revenue generated by the service above that level. It is not known if the terms have since changed. Financial-data firms do not break out their fees from such tiered offerings. Adam Honoré of Aite Group, a consultancy, says hard-charging trading firms will pay $10,000-15,000 per month for an early look at just one or two market-moving numbers. Not everyone is interested. Manoj Narang of Tradeworx argues that it is of more value to "a hedge fund with the conviction to bet big on it" than to high-frequency trading firms like his, for which "it's all about doing a large number of different trades, each with a slightly better than 50% chance of making money." Stats spats Staggering the release of private data is perfectly legal, as long as the suppliers and distributors of the information keep to the contract terms. But it has its problems. A well-placed source says Thomson has threatened legal action against television networks, including CNBC, that announce the Michigan number when it hits desktop terminals at 9.55am, five minutes before the official public release. Thomson won't confirm this. Nor is it clear how many of Thomson's desktop clients are aware that a group of high-speed traders are getting the number a couple of seconds before them, a lifetime in today's markets. Bloomberg has been a bit warier than Thomson of embracing tiered releases for fear of alienating its desktop customers, who provide 80% of its revenues. Technological advances will make it ever harder to define an "early" data release. In truth, the line has always been blurred. Decades ago, when reporters covering Labour Department numbers would rush to phone them in to news desks, those dialling numbers containing lots of high digits would complain of being at a disadvantage because they took longer to dial on old rotary phones. The difference between then and now is that today the gap is measured in milliseconds.