The Bank of England carried out due diligence three times on a tech firm that was later revealed to have passed paying clients early access to market-sensitive information.
The technology supplier Encoded Media was probed three times between 2008 and 2019, yet its status as a supplier to the BoE was only revoked following media inquiries in December.
The revelation has struck a fresh blow to the BoE’s credibility in securing crucial national infrastructure.
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The BoE disabled the company’s access to a backup audio feed after The Times revealed the breach and said the company would have no part in future press conferences, calling the sale of access “wholly unacceptable” and saying the feed was “misused”.
Although non-public information was not revealed, the audio feed potentially allowed unidentified paying customers to hear the governor Mark Carney’s highly influential words at press conferences as much as eight seconds ahead of rivals listening via other means – giving a potentially lucrative advantage.
“Eight seconds may not sound like a long time. But in the modern financial world, it’s a valuable head start that can give traders a crucial edge,” explained The Guardian last year.
Mel Stride, the chair-elect of parliament’s Treasury select committee, said he expected the MPs to ask “searching questions” of the outgoing governor, Carney, and his replacement, Andrew Bailey, at hearings this week.
Encoded Media director Wand insisted Encoded did not hijack audio feeds, adding that previous reports had “already caused economic loss to Encoded Media and Statisma, as well as considerable distress to its directors who run an entirely reputable small technology business with limited resources”.
The BoE has previously stated that its restructuring was carried out to strengthen its information security and that it is confident in its ability to protect against security threats.
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