Canadian Industry Minister Tony Clement ordered officials to investigate the early release of market-moving indicators by Statistics Canada, which had been made available to distributors as much as 59 seconds before their public release.
The federal agency, Canada’s primary source of economic information, had allowed distributors to get information ahead of the official release. The agency stopped the practice on Nov. 25 after being alerted to it by Bloomberg News.
“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,” Clement told reporters in Ottawa yesterday. “If the report is true, it would be a disturbing situation.”
The agency has a policy of providing equal access to all users. It conducted investigations last year into reports that some data may have been leaked, 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.
Clement told reporters today he does not yet know exactly how the investigation will proceed. “I do not have the details yet,” he said in a conference call from Fort Worth, Texas. “We’ll get back to you forthwith.”
In a statement yesterday, Statistics Canada said it had found data had been made available “no more than” 59 seconds in advance of the official release time, and said it will continue to review computer access logs. The agency didn’t say how long it had been providing the data early to distributors.
“Management took immediate steps to resolve this situation,” according to the statement. “Data releases are now all made available at the exact same time.”
The agency 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.
“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 on Dec. 3. “Upon learning of this practice, agency management directed that it be stopped immediately.”
‘Lot of Money’
“We need to get to the bottom of this. You can make millions of dollars in 59 seconds,” Michael Ignatieff, the leader of the main opposition Liberal Party, told reporters in Ottawa today. “We’re very concerned about that. Somebody may have made a lot of money.”
Statistics Canada has agreements with 10 distributors who are licensed to disseminate its data, including Bloomberg L.P., the parent of Bloomberg News.
“These changes ensure that all users of Statistics Canada data -- including distributors -- have access to the data at the same time,” Frayne said.
In the statement to Bloomberg, 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 say for how long the practice had been going on. In an e-mailed statement today, Frayne said Statistics Canada wouldn’t name the two other distributors, citing agency policy.
Use for Trading
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.
“Some people with that privileged information have been able to make a killing,” Thomas Mulcair, spokesman on financial matters for the opposition New Democratic Party, said in an interview. “The government, in its own interest and in the interests of all Canadians, has to get to the bottom of this.”
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.”
The agency has a mandate to collect and analyze financial, economic and social data and undertake a census of the population every five years. As the country’s industry minister, Clement is responsible for the agency.
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.