‘Hacked’ Bank of England audio feed sold to hedge funds seconds ahead of broadcast

Hedge funds could have gained a crucial advantage over rivals by listening to a hijacked audio feed of Bank of England press conferences a few seconds ahead of the TV broadcast.

An investigation by The Times newspaper revealed a back-up communications system installed by the Bank a few years ago had been hijacked and shared with a market news service.

The newspaper claimed those paying for the audio feed, via the third party supplier, would receive details of the Bank’s news conferences up to eight seconds before those using the television feed.

It is alleged the supplier charged each client a subscription fee and up to £5,000 per use.

The system, which had been misused by the supplier since earlier this year, was installed in case the Bloomberg-managed television feed failed.

The illegitimate use of the audio can be compared to insider trading because it gave traders a boost based on information their rivals did not have.

“This wholly unacceptable use of the audio feed was without the Bank’s knowledge or consent, and is being investigated further,” the Bank said.

“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.

“The Bank operates the highest standards of information security around the release of the market sensitive decisions of its policy committees.

“The issue identified related only to the broadcast of press conferences that follow such statements.”

High-frequency trading sees huge numbers of transactions executed in a fraction of a second via powerful computer programmes monitoring multiple markets simultaneously.

The strategy is so lucrative, some companies have invested heavily in equipment such as microwave transmitters to get information a split second before prices change.

It was unclear when the line was usually turned on in advance of a news conference, potentially giving traders the ability to earwig on conversations ahead of – or after – the actual start of an event.

The Bank said it had referred the matter to the Financial Conduct Authority.

The revelation was made hours before the Bank releases its latest interest rate decision – widely tipped to remain unchanged.

The meeting of the monetary policy committee was not due to be followed by a news conference because December’s meeting does not include the publication of a quarterly Monetary Policy Report – formerly known as the Inflation Report.

(c) Sky News 2019: ‘Hacked’ Bank of England audio feed sold to hedge funds seconds ahead of broadcast