UPDATE: Trading Issues Spurred Changes in Labor Dept. Jobs-Data Release

--High-speed-trading technology cited as among reasons for changing delivery of key jobs data

--Labor department concerned with data security

--Labor official says changes in jobs-data release may not happen in July as planned

--Labor department meeting with media to address their concerns over changes in release

(Updates throughout.)

 
   By Geoffrey Rogow 
 

A Department of Labor official said planned changes in the release of the U.S. jobs report are aimed at addressing complications that have arisen as media companies have jockeyed to deliver the data to high-speed traders.

"It has become increasingly challenging to ensure that the technical work performed on behalf of news organizations complies with our data-security policy," said Carl Fillichio, senior adviser for communications and public affairs at the Department of Labor, in remarks before a House panel Wednesday.

Mr. Fillichio also said the Labor Department might rethink when the proposed changes take effect, now scheduled for July, as the department continues meetings with media companies to address their concerns.

The hearing by the House Committee on Oversight and Government Reform was called to examine the Labor Department's planned changes. Starting next month, the department has said it will no longer allow news agencies to use customized computer networks to send market-moving employment data to a range of clients, including traders. Currently, a number of news agencies, including Dow Jones & Co., publisher of this newswire, maintain specialized hardware and software on government premises, which allow them to transmit the data to subscribers as soon as figures are released.

Mr. Fillichio's remarks shed more light on why the Labor Department will change procedures for how the data are distributed. Previously, the Labor Department had only said the decision was geared at "leveling the playing field" among news organizations.

The push by news providers to serve the more technologically savvy of its customers, Mr. Fillichio said, has led to roughly seven instances where issues arose tied to security or the release of data ahead of the permissible time.

"The competition now extends to providing the raw data to subscribers trading on it through algorithms, which is not the purpose of the lockups," said Mr. Fillichio. "Lockups" is the term used for the media gatherings on government facilities as news outlets prepare for the data releases.

Rob Doherty, a general manager for the Thomson Reuters Corp.'s (TRI, TRI.T) news service, was among the witnesses representing the media. He told the panel there have been two instances where technological issues caused Reuters to inadvertently release data early. Both instances took place more than three years ago, and Mr. Doherty cited a "hardware reconfiguration" for the unintended early releases. He said Reuters has been working with the Labor Department in the time since to ensure such incidents don't happen again.

At the hearing, where witnesses included representatives from news organizations as well as former and current government officials, Mr. Fillichio expressed hope an agreement between the Labor Department and news organizations could be reached. While being questioned by Committee Chairman Darrell Issa (R., Calif.), Mr. Fillichio said the Labor Department might delay the July deadline.

"We are exploring with media organizations fudging the time line a little bit," Mr. Fillichio said.

The Labor Department releases some of the most-sensitive economic data in the world, including monthly reports on inflation and nonfarm payrolls, as well as the weekly payrolls report.

The media representatives present on Wednesday, as well as others not involved in the hearing, have expressed concerns about the planned changes, suggesting they may introduce errors in reporting and threaten smooth distribution of the news.

Reuters's Mr. Doherty told the panel that some organizations have recently held "a series of constructive meetings with Labor Department officials and staff." Mr. Doherty added he is optimistic those meetings will lead to a workable compromise for all parties, in a sentiment echoed by Rep. Elijah Cummings (D., Md.), a committee member.

"Over the past month ... the department has worked with press outlets to accommodate their concerns while enhancing security. We anticipate that there will be additional announcements regarding these ongoing discussions," said Rep. Cummings.

A spokeswoman for Dow Jones & Co., which didn't have a representative at the hearing, said the company has "been working closely with the Labor Department and other media organizations to ensure that the Department's concerns for the safety and integrity of the data are met, while at the same time ensuring the press can continue to freely report on this critical information."

News Corp. (NWSA) owns Dow Jones, publisher of this newswire, and The Wall Street Journal.

In one potential resolution being discussed, news organizations would be allowed to use their own equipment, but the Department of Labor would oversee its installation and would monitor that equipment, said Daniel Moss, an executive editor at Bloomberg News, in testimony before the panel.

As of now, "there is no formal comprehensive agreement," said Mr. Moss, adding he believes the participants are close to an agreement on "technical issues," though he hasn't heard back from the Labor Department on other parts of a potential new arrangement.

-Write to Geoffrey Rogow at [e-mail]