The Federal Reserve will tighten procedures governing the release of Federal Open Market Committee policy statements to prevent early release of the market-moving information.
“Starting with the Oct. 30 FOMC statement, our media release security procedures will be enhanced to include additional controls,” Fed spokesman David Skidmore said today in a statement. “We consulted with news organizations and we believe these additional measures will protect against premature release while still allowing news organizations an opportunity to accurately report the FOMC’s actions at the release time.”
The central bank’s process for releasing the statement came under scrutiny after trading in financial instruments linked to gold in New York and Chicago occurred quickly after the release of the Fed’s policy statement on Sept. 18. Trading in gold futures and exchange-traded funds linked to gold intensified within a millisecond of 2 p.m. eastern time that day, according to Nanex LLC, a firm that analyzes high-frequency trading.
The quick response was unusual because information takes seven milliseconds to travel to Chicago from Washington, where the Fed statement is released, according to Nanex. The time between Washington and New York is two milliseconds, Nanex said.
The Fed plans to release an FOMC statement at 2 p.m. on Oct. 30 after a two-day meeting of the committee.
The central bank previously released the FOMC statement at the press room of the U.S. Treasury Department. Journalists were given the statement about 10 minutes early on condition that they refrain from publication until 2 p.m., as measured by the U.S. Naval Observatory’s master clock.
Bloomberg News is among several news organizations that participate in the so-called lockup.
The prior procedures did not address whether news organizations could store the information in advance on remote servers and time it for release at 2 p.m. Such servers could be located in trading centers such as Chicago or New York, eliminating the time it takes for the data to travel from Washington.
Under the new procedures, journalists will gather in a room at the Fed headquarters in Washington, and won’t have access to the Internet until the 2 p.m. release time.