Bank of England refers hacking probe to financial watchdog
Bank investigates claims investors were paying to eavesdropped on sensitive conversations in bid to gain split-second advantage
The Bank of England has launched an investigation into claims some investors eavesdropped on press briefings moments before they were broadcast giving a split-second advantage to high-speed traders.
The video feed of the bank's press conferences has a slight delay while the audio feed is live thus enabling those listening in to gain a market advantage before Governor Mark Carney's speeches were made public.
The Times newspaper alleges hedge fund managers were paying between £2,500 and £5,000 per press conference for access to the BoE’s audio feed.
It is alleged one of the BoE's suppliers had been sending the market-sensitive audio feed of the bank's press conferences to hedge funds moments before the rest of the world.
The BoE says it has identified the feed that had been misused by a third-party supplier and has revoked their access.
"Following concerns raised with the bank, we have recently identified that an audio feed of certain of the bank press conferences - installed only to act as a back-up in case the video feed failed - has been misused by a third party supplier to the bank since earlier this year to supply services to other external clients," the bank said.
At press conferences following monetary policy decisions the BoE's governor makes comments on policy, some of which can produce considerable swings in the value of the pound. Even several seconds advantage could give traders the possibility to earn considerable returns.
"This wholly unacceptable use of the audio feed was without the bank's knowledge or consent, and is being investigated further," added the BoE.
"On identifying this, the bank immediately disabled the third party supplier's access.
"As a result, the third party supplier did not have any access to the most recent press conference and will no longer play any part in any of the bank's future press conferences."
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A spokesman for Britain's Financial Conduct Authority regulator says it is "looking at the issue" but declined to make further comment.
The BoE is due to reveal its first interest rate call since Prime Minister Boris Johnson's landslide election victory one week ago, and ahead of Brexit next month.
The bank is expected to keep its key lending rate at 0.75 percent, as speculation also swirls over an imminent appointment of the successor to departing Mr Carney.
Updated: December 19, 2019 02:25 PM