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Dec 19, 2019

Bank of England Audio Was Leaked, Giving Some Traders an Edge

By Amie Tsang



Business|Bank of England Audio Was Leaked, Giving Some Traders an Edge
The British central bank says a supplier, without authorization, provided sound from news conferences ahead of the video feed.
Credit...Hannah Mckay/Reuters
Amie Tsang
LONDON — The Bank of England said Thursday that an audio feed from its news conferences had been released to some investors before it had been made public, giving them a leg up on the rest of the market.
The central bank said it was investigating how a third-party supplier had gotten early access to policymakers’ remarks since earlier this year. In the world of high-speed trading, just a few seconds’ lead time can offer some investors a trading advantage.
The Financial Conduct Authority, which regulates Britain’s financial markets, also said it was investigating the leak.
Any trades made on the basis of leaked information or insider dealing would come under the review of the Financial Conduct Authority, which has a mandate to insure that competition in the markets is respected.
A spokeswoman for the agency said in an email that it was looking into the Bank of England leak, but declined to comment on whether any trading had occurred on the basis of the leaked information.
After queries from The Times of London, the bank said the audio feed of its news conferences, which is used as a backup in case the video feed fails, had been “misused by a third-party supplier to the bank since earlier this year to supply services to other external clients.”
The audio feed provides traders a five- to eight-second advantage over the video feed, The Times reported.
Bloomberg said that it was the manager of the video feed and that it made it available to other news providers. The Bank of England did not identify the supplier of the audio feed, but said that it had disabled the 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,” it said in a statement.
“The bank operates the highest standards of information security around the release of the market sensitive decisions of its policy committees,” the statement added. “The issue identified related only to the broadcast of press conferences that follow such statements.”
The disclosure came before the bank’s release of its periodic monetary policy statement on Thursday, in which it announced that it was keeping its benchmark interest rate unchanged at 0.75 percent.
Comments from the Bank of England’s news conferences are closely monitored for indications about the bank’s thinking on interest rates and the state of the economy.
The bank routinely puts reporters through tight precautions to prevent leaks that could prove valuable to traders. Before they are allowed to view policy announcements and forecasts ahead of their release, reporters are locked in a room with a security guard standing by and cellphone connectivity is cut. They are not allowed to leave the room until after the embargo is lifted.
Premature access to potentially market-moving information is a crucial concern to financial regulators around the world. In a 2015 case, prosecutors and regulators in the United States asserted that 32 traders and hackers had reaped more than $100 million in illegal proceeds from a scheme that provided a look at corporate news releases before they were made public.

Elian Peltier contributed reporting.

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