The Bank of England asked regulators to investigate how an audio broadcast of some of its press conferences was misused to potentially give traders an unfair advantage.
A faster audio could give some traders an edge on words spoken by BOE Governor Mark Carney, which can move the price of the pound or U.K. gilts. Even a few seconds can be enough to get a trade in ahead of a market move.
The discovery of misuse was made after concerns were raised with the bank. It found that a third-party supplier gained access to the BOE’s backup audio feed. That third party is now banned from future press conferences. The Financial Conduct Authority is also looking at the issue.
The breach means the BOE may need to revamp the way it broadcasts press conferences. The furor is likely to lead officials to change the way they put live events into the public domain, possibly toward a system where the fastest feed is openly accessible to all, as operated by the European Central Bank.
“This wholly unacceptable use of the audio feed was without the bank’s knowledge or consent,” the BOE said. “On identifying this, the bank immediately disabled the third party supplier’s access.”
Central bank announcements are among the most market-sensitive of any news releases, with major monetary authorities employing tight arrangements for how their information is released. The feed issue didn’t affect the security of that information.
“The bank operates the highest standards of information security around the release of the market sensitive decisions of its policy committees,” it said. “The issue identified related only to the broadcast of press conferences that follow such statements.”
The scandal relates to the BOE’s set-piece press conferences after some monetary policy decisions. The events start with a statement from the governor, who then takes questions from assembled journalists. The proceedings are broadcast, with the video managed by Bloomberg and made available to other news providers.
The audio feed involved was intended only as a backup in case the video failed. The BOE said the supplier that sold it on won’t play any part in future press conferences.
The central bank didn’t name the provider.
Yesterday, Statisma, an Essex-based firm which describes itself as “a technology company specializing in the delivery of publicly available audio content,” posted a statement on its website saying “we DO NOT carry embargoed information and we DO NOT release information without it first being made available to the public.”
“It is impossible to “hack” or “eavesdrop” any live public event or press conference,” Statisma said. “Any such suggestion is dismissed out of hand.”
The news was reported earlier by the Times of London. In an age of quantitative investing, where billions of dollars are run by black-box algorithms and high frequency traders, a few seconds’ lead on market-moving information provides a vital leg up.
While information breaches are rare for central banks, they are treated seriously when they occur. MDT/Bloomberg
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