Written by Denny Gulino

WASHINGTON (MNI) - The Market News International financial news service and its parent, the Market Data and Analytics arm of the Frankfurt-based Deutsche Boerse Group, Friday announced the acquisition of Need to Know News, a Washington-based news firm specializing in the delivery of high-speed market-sensitive economic statistics.

Employees of the firms were informed of the transaction in a joint statement by Market News International President Michael Connor and the CEO and founder of NTKN John Harada, who will remain a consultant to the combined company.

"We had our first discussion about bringing these two companies together at the very beginning of the year," the statement said. "While that was a very theoretical and preliminary conversation, we could see then that there were some unique and interesting possibilities that would come out of such a combination within the larger framework of the Deutsche Boerse Group."

Deutsche Boerse Group, which completed its purchase of Market News International in January from a Shanghai-based Xinhua Finance, offers trading specialists through its Market Data and Analytics arm a range of price data, trading statistics, analyses and indices of economic activity.

Market News International, founded in 1983 and headquartered in New York, provides breaking economic and financial news, analysis and data from its bureaus in Washington, New York, Chicago, Beijing, Berlin, Brussels, Frankfurt, London, Paris, Singapore, Tokyo and Shanghai and correspondents in Latin America and Canada. Major components of its menu of news include intensive coverage of central banks, government finance and financial markets delivered to trading professionals and other media, including newspapers, Web sites and news services.

Need to Know News, with offices in Washington, Chicago, Ottawa and Frankfurt, has been a pioneer of what has come to be known as low-latency delivery of economic statistics from the government agencies that generate the data on jobs, GDP, inflation and other measures of economic activity that reach trading room computers within a tiny slice of a second. NTKN's COO Clint Rhea, an early and successful developer of the product category, will now report to MNI's Connor.

Connor and Harada told their staffs in their internal memo that, "One key to ensuring a successful integration is for everyone to recognize that we are building something entirely new. Both organizations will need to change and come together in order for this venture to reach its full potential."

The memo said the combined company will be "moving aggressively to expand current data coverage from North America and Europe to include data from Japan, China, Australia and other countries."

The Managing Director of Deutsche Boerse Market Data and Analytics Holger Wohlenberg said in Frankfurt, "We see an increasing demand from market participants pursuing automated trading strategies to integrate financial news and other event data into their algorithms, in addition to real-time market data."

The acquisition, he continued, "allows Deutsche Boerse to combine its expertise in the development of ultra high-speed data feeds with content provided by Market News International and with the proven market experience of Need to Know News."

The price paid for NTKN was in the "single digit million dollar range," according to Deutsche Boerse documents. NTKN becomes a subsidiary of Market News International. Both companies deliver their products primarily by leased data lines but both firms maintain Web sites with material derived from their professional products. NTKN also provides a "squawk" service, by which breaking news is delivered in audio form.

The economic statistics are one ingredient of a vast chain of high-speed trading technology that has drawn waves of mathematicians, computer programmers and information technology specialists to the Wall Streets of the world in recent years, to supplement the more traditional savvy of human traders, strategists and analysts.

While the fresh economic numbers have been fodder for trading computers, developers have been trying to extend the ability of machines to interpret words and their context so that more of the second-by-second flow of information can be used to guide high-speed trading.

The release of the sensitive economic data is tightly controlled by government agencies to ensure news firms receive the material at the same time. Then they all compete to deliver the data faster and in more useful formats and combinations than their competitors.

As it is, faster than human traders can react, the computers analyze the trading environment and execute trades using carefully constructed algorithms designed to squeeze an extra margin of profit on the basis of speed.

This so-called algo trading by carefully programmed computers has steadily become a major generator of trading transactions, accounting for sizable portions of equities trading volumes each day. One recent estimate was that fewer than 300 high-frequency trading firms account for more than 70% of all stocks trading volume this year. Hardly limited to equities, high speed strategies are being increasingly applied to a wide range of asset classes.

As more firms follow the technological lead of the largest securities firms, investment banks, hedge funds and other market participants, information providers as well as market exchanges have been under pressure to develop faster and more reliable sources of the data delivery measured in only dozens of milliseconds. There are 1,000 milliseconds in 1 second.

Deutsche Boerse AG, part owner of Eurex, Europe's largest futures market, this month is launching a pan-European exchange, Xetra International Market, which is built to allow investors to trade stocks from six European countries. The exchange has also bid for a controlling stake in the Warsaw Stock Exchange from the Polish government. Earlier in the month, the exchange acquired a majority share in Stoxx Ltd, a company intended to provide it broader access to the market for exchange traded funds. With Switzerland's SIX Group AG it acquired Dow Jones & Co.'s one-third stake in STOXX Ltd, a firm that calculates and licenses stock-market indices.

** Market News International Washington Bureau: 202-371-2121 **