New York Attorney General Eric Schneiderman took the latest step in his "Insider Trading 2.0" initiative to reshape the securities markets. On Wednesday, the attorney general announced an agreement with PR Newswire, a company that distributes corporate news releases. Pursuant to that agreement, PR Newswire will require direct recipients of its information to certify that they will not use it for high-frequency trading purposes. Attorney General Schneiderman has made similar pacts with other news distributors and entered into an agreement with Thompson Reuters, pursuant to which the company agreed to stop selling early access to the University of Michigan consumer sentiment survey. The attorney general is on a mission to ensure--as he said in a recent speech--that the United States is "a little more equal than the rest of the world." But equality based upon prohibiting people from investing in speed, technology, and legal access to information is a foreign concept in American markets. Freely functioning markets allow people to express the value they place on something. A long-term investor is not willing to pay anything for a short-term trading advantage, but a frequent trader may find a two-second information advantage so useful that she is willing to pay for it. The frequent trader's choice to buy something that the long-term investor does not want or need is not a sign of inequality; it is a reflection of different preferences. It's not the government's job to equalize market participants' preferences.
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