News that Federal Police have charged two men with insider trading over the leaking of Australian Bureau of Statistics to use in currency trading is extremely important and good news.
Many have wondered about the currency fluctuations in recent times prior to key data being released and it now seems their suspicions about what was going on have proved correct.
Financial markets live on the flow of data that organisations like the ABS and the United States Bureau of Labour Statistics provide.
The information each economic release contains is poured over by economists, investors and traders alike in the search for information about the next trends in monetary policy, exchange rate movements and/or share prices.
As Michael Lewis showed in Flash Boys even a nano-second has value. Now imagine if you had data minutes or hours before release – the possible profit is only limited to the size of the positions you could take without, you think, getting caught.
It’s why data is so jealously guarded by organisations such the ABS. That data is released to everyone simultaneously is crucial, not only for fairness, but also for the integrity of the system. Any leak puts the Aussie dollar share prices and interest rate expectations at risk, with profound implications for all involved.
The very integrity of ABS processes now need to be carefully examined in the wake of the insider trading charges against these two men.
It must be a thorough check, because the fact that such a low-level employee could access and exploit such important data is a big concern, especially since it was only the trades themselves which enabled authorities to detect what was happening.
Millions of dollars in profits and losses for traders and investors hang on what ABS knows and when they share that knowledge with us. The ABS needs to reassure the Market that that data is safe.
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