Hedge funds eavesdrop on Bank of England briefings
High-frequency trading can give funds the edge over rivals
Hedge funds have been snooping on the Bank of England’s press conferences before they are officially broadcast, in an “embarrassing” development for the central bank.
The BoE has discovered that one of its suppliers has been leaking an audio feed of its press conferences to high-speed traders who hope to profit by responding to the governor’s comments before their rivals.
The Times says that hearing what senior officials, including Governor Mark Carney, say before others can be “highly lucrative” for speed traders, who can “make fortunes from early access to information”.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
“The revelation that the Bank of England’s systems have been abused to give one set of traders an advantage over another will be an embarrassment because one of its roles is to support fair and efficient markets,” says the newspaper.
The Daily Mail adds that the comments of Carney and co “have the power to shift the value of sterling and other financial markets”.
The Bank has said it “operates the highest standards of information security around the release of the market-sensitive decisions of its policy committees” and the issue identified “related only to the broadcast of press conferences that follow such statements”.
–––––––––––––––––––––––––––––––For a round-up of the most important business stories and tips for the week’s best shares - try The Week magazine. Start your trial subscription today –––––––––––––––––––––––––––––––
The third-party supplier is believed to be linked to a market news service that promises clients will gain an edge over rival traders in a field where getting information even microseconds before others can massively inflate profits.
Trading that takes advantage of early access to information is known as high-frequency trading. Though not technically illegal, it is controversial and has been compared to insider dealing because it is a way of trading on information that others do not have.
Although the BoE’s official video feed of press conferences is managed by Bloomberg, the Bank employed contractors to install a separate back-up audio feed several years ago in case the video feed went down.
This back-up feed was never intended to be used by an outsider unless the video failed, but a supplier has allegedly hacked into the audio feed since at least January to provide the service to one of its other companies.
The Bank said: “This wholly unacceptable use of the audio feed was without the Bank’s knowledge or consent, and is being investigated further”. It said that it had “disabled the third-party supplier’s access”.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
Today's political cartoons - November 2, 2024
Cartoons Saturday's cartoons - anti-fascism, early voter turnout, and more
By The Week US Published
-
Geoff Capes obituary: shot-putter who became the World’s Strongest Man
In the Spotlight The 'mighty figure' was a two-time Commonwealth Champion and world-record holder
By The Week UK Published
-
Israel attacks Iran: a 'limited' retaliation
Talking Point Iran's humiliated leaders must decide how to respond to Netanyahu's measured strike
By The Week UK Published
-
Will the UK economy bounce back in 2024?
Today's Big Question Fears of recession follow warning that the West is 'sleepwalking into economic catastrophe'
By Chas Newkey-Burden, The Week UK Published
-
Interest rates rise to 5.25% for first time in 15 years
Speed Read Inflation is slowing but at 7.9% it remains well above the Bank of England’s 2% target
By Julia O'Driscoll Published
-
Five options to get the UK back to 2% inflation
feature Some economists believe alternatives to raising interest rates are in the country’s best interests
By Sorcha Bradley Published
-
Why aren’t soaring interest rates bringing down inflation?
Today's Big Question PM pins blame for stubborn inflation on fixed-rate mortgages, but economists say the picture is more nuanced
By Arion McNicoll Published
-
Sticky inflation and sluggish growth: why does UK economy continue to struggle?
Today's Big Question Food prices, Brexit and the Bank of England have been blamed for poor economic performance
By Chas Newkey-Burden Published
-
Is it time for Britons to accept they are poorer?
Today's Big Question Remark from Bank of England’s Huw Pill condemned as ‘tin-eared’
By Chas Newkey-Burden Published
-
UK avoids recession - but will anyone notice?
Today's Big Question Think tank says 2023 ‘will feel like a recession for many, regardless of the data’
By Chas Newkey-Burden Published
-
Liability driven investment and its terrifying potential impact on our pensions
feature How did a niche corner of the pension market threaten to bankrupt Britain?
By The Week Staff Published