Statistics Canada, the federal government’s data agency, provided market-moving economic indicators to distributors ahead of their release to the public. Officials stopped the practice on Nov. 25 to ensure all users have access to information at the same time.
Statistics Canada, the country’s primary source of economic information, found it had allowed distributors, some of which provide the data to investors, to get information ahead of the official release to the public on its website and through the media. The agency stopped the early release after being alerted to it earlier in the day by Bloomberg News.
“Agency management was unaware that files were being made available to distributors seconds prior to the official release time,” Peter Frayne, spokesman for the Ottawa-based agency, said in an e-mailed statement. “Upon learning of this practice, agency management directed that it be stopped immediately.”
Statistics Canada has a policy of providing equal access to all users. The agency conducted investigations last year into reports some data may have been leaked ahead of official releases, without finding anything wrong. Halting the early release ensures paying clients can’t use the information to unfairly profit from trades on currency, bond and money markets.
Statistics Canada never sold information on the basis that the general public wouldn’t have it or would get it later. Distributors were originally allowed early access to give them sufficient time to process the indicators in time for official release. Improved technology eventually allowed the data to be processed more rapidly.
“These changes ensure that all users of Statistics Canada data -- including distributors -- have access to the data at the same time,” Frayne said Dec. 3 by e-mail.
Industry Minister Tony Clement, who spoke to reporters in Ottawa today, said he was concerned by the reports and has ordered his department, which is responsible for the agency, to investigate.
“I pledge to you that I’ll be working with StatsCan to review the situation and if there have been some errors made they will be rectified forthwith,” Clement said. “If the report is true it would be a disturbing situation.”
Statistics Canada has agreements with 10 distributors, including Bloomberg L.P., the parent of Bloomberg News, who are licensed to disseminate its data.
Frayne said officials have conducted a “preliminary examination” of access logs from November. That investigation showed three distributors, including Bloomberg, had access to the data “seconds” before the release time. The agency didn’t name the two other distributors or say for how long the practice had been going on.
“The examination of historical logs will continue,” Frayne said.
Investors use the information to trade bonds, stocks and the currency, as well as to place bets on the path of monetary policy. The Canadian dollar is the world’s seventh-most traded currency, according to an April 2010 survey by the Bank for International Settlements, with daily turnover on trades against the U.S. dollar averaging $182 billion.
Statistics Canada disseminates data through its flagship “The Daily” publication. According to the agency’s website, all information must remain confidential until released in the publication to create “a level playing field that reinforces the agency’s reputation for neutrality.”
Statistics Canada, which was formed in 1918 as the then- Dominion Bureau of Statistics, releases social and economic indicators through its Canadian Socio-economic Information Management System database. The so-called Cansim database is updated daily and contains more than 35 million series covering national accounts, labor, manufacturing, trade and other data.
The agency’s 10 paying distributors are Bloomberg, the Conference Board of Canada, EcoWin AB, Emerging Markets Economic Data Ltd., FactSet Research Systems Inc., Global Insight (Canada) Inc., Haver Analytics, Moody’s Economy.Com, Nomura Research Institute Ltd. and Thomson Financial Investment Management Group, according to Statistics Canada’s website. Provincial statistics units also receive the data, Frayne said.
Documents obtained by Bloomberg last year through freedom- of-information laws show movements in the currency before jobs and inflation reports in April and May of 2009 led traders to suspect the figures had been leaked. Some traders expressed their concerns to the Bank of Canada, the documents showed.
While finding no wrongdoing at the time, the statistics agency tightened security measures. During the hour before publication of most economic reports, Bloomberg News and other services get advance copies in a press room at Statistics Canada’s Ottawa headquarters, under condition the information isn’t disseminated early. Other government departments receive copies of the reports the day before.
Statistics Canada has a mandate to collect and analyze financial, economic and social data and undertake a census of the population every five years. It reports to the country’s industry minister, who appoints the agency’s chief statistician.
Earlier this year, the head of the agency resigned over a decision by Prime Minister Stephen Harper’s government to eliminate a mandatory census and replace it with a voluntary one. Munir Sheikh resigned as Canada’s chief statistician in July, saying the new census form won’t be an acceptable substitute and may lead to distortions in data. Sheikh was replaced by his deputy, Wayne Smith, on an interim basis.