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| Version 6 | Version 7 |
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| Bank of England press briefings hijacked by hedge funds | Bank of England press briefings hijacked by hedge funds |
| (about 1 hour later) | |
| An audio feed of the Bank of England's press conferences was leaked to hedge funds before they were broadcast, the Bank has admitted. | An audio feed of the Bank of England's press conferences was leaked to hedge funds before they were broadcast, the Bank has admitted. |
| The Bank said one of its suppliers had "misused" the feed, which is there as a fall-back in case the video broadcast fails. | The Bank said one of its suppliers had "misused" the feed, which is there as a fall-back in case the video broadcast fails. |
| It meant traders had access to the words of Mark Carney and his officials between five and eight seconds early. | It meant traders had access to the words of Mark Carney and his officials between five and eight seconds early. |
| The Bank of England said it had disabled the supplier's access. | The Bank of England said it had disabled the supplier's access. |
| The hijacking of the audio feed, first reported in the Times, gave an advantage to high-speed traders, such as currency speculators, who can make millions of pounds on tiny market moves. | The hijacking of the audio feed, first reported in the Times, gave an advantage to high-speed traders, such as currency speculators, who can make millions of pounds on tiny market moves. |
| Comments from Bank officials about market sensitive matters such as interest rate decisions can affect the value of sterling and other market assets within fractions of a second. | Comments from Bank officials about market sensitive matters such as interest rate decisions can affect the value of sterling and other market assets within fractions of a second. |
| The Times said it understood that the eavesdropping on the press conferences had been happening at least since the beginning of this year. | The Times said it understood that the eavesdropping on the press conferences had been happening at least since the beginning of this year. |
| Investigation | Investigation |
| The Bank of England said that the leak "was wholly unacceptable use of the audio feed" and the way hedge funds were allowed to make use of it was "without the Bank's knowledge or consent, and is being investigated further". | The Bank of England said that the leak "was wholly unacceptable use of the audio feed" and the way hedge funds were allowed to make use of it was "without the Bank's knowledge or consent, and is being investigated further". |
| The matter has been referred to the market regulator, the Financial Conduct Authority which told the BBC it was "looking at the issue". | The matter has been referred to the market regulator, the Financial Conduct Authority which told the BBC it was "looking at the issue". |
| Being able to hear the press conference early would provide an unfair advantage. Interest rates, economic guidance, and the financial health of banks and the markets are frequently discussed at the press conferences. | Being able to hear the press conference early would provide an unfair advantage. Interest rates, economic guidance, and the financial health of banks and the markets are frequently discussed at the press conferences. |
| The Bank sets rates eight times a year and holds a press conference on four of those occasions. A report on financial stability comes out twice, which also includes a press conference. | The Bank sets rates eight times a year and holds a press conference on four of those occasions. A report on financial stability comes out twice, which also includes a press conference. |
| All of this is broadcast on video provided by Bloomberg, which is shared to other news outlets. | All of this is broadcast on video provided by Bloomberg, which is shared to other news outlets. |
| The company that provides the audio feed, which is separate from the video feed, has not been identified. | |
| A spokesperson from Bloomberg confirmed to the BBC that the company does not provide the audio. "Bloomberg provides a distinct and independent video feed for the BoE's press conferences. This is completely separate to the backup audio feed." | |
| Why do those few seconds matter? | Why do those few seconds matter? |
| The pronouncements of central bank chiefs can sound like boring technical gobbledy-gook. But every word, every nuance, is carefully studied by financial markets for the slightest hint about the Bank's intentions and can cause big movements in the value of the pound and government bonds. | The pronouncements of central bank chiefs can sound like boring technical gobbledy-gook. But every word, every nuance, is carefully studied by financial markets for the slightest hint about the Bank's intentions and can cause big movements in the value of the pound and government bonds. |
| So getting wind of any potential future changes, even a few seconds ahead of the rest of the market, could be extremely valuable. | So getting wind of any potential future changes, even a few seconds ahead of the rest of the market, could be extremely valuable. |
| Computerised trading programs can execute thousands of transactions a second, so the four-to-eight second advantage enjoyed by those traders accessing the back-up audio feed is a vast amount of time in terms of market movements. | Computerised trading programs can execute thousands of transactions a second, so the four-to-eight second advantage enjoyed by those traders accessing the back-up audio feed is a vast amount of time in terms of market movements. |
| The Bank of England is usually very careful in managing the dissemination of sensitive information and the Bank was keen to stress that the information breach did not apply to the release of decisions on interest rates - just the press conferences afterwards. But those press conferences can - and do - move markets so this is still an embarrassing admission. | The Bank of England is usually very careful in managing the dissemination of sensitive information and the Bank was keen to stress that the information breach did not apply to the release of decisions on interest rates - just the press conferences afterwards. But those press conferences can - and do - move markets so this is still an embarrassing admission. |
| Price of access | Price of access |
| A statement from the Bank of England said: "The Bank operates the highest standards of information security around the release of the market sensitive decisions of its policy committees." The audio supplier would not be involved in any further press conferences, it said. | A statement from the Bank of England said: "The Bank operates the highest standards of information security around the release of the market sensitive decisions of its policy committees." The audio supplier would not be involved in any further press conferences, it said. |
| The Times said it had seen documents revealing how the service was sold on to traders. The supply cost between £2,500 and £5,000 each press conference for each client in addition to a subscription fee. | The Times said it had seen documents revealing how the service was sold on to traders. The supply cost between £2,500 and £5,000 each press conference for each client in addition to a subscription fee. |
| The newspaper also said press conferences from the European Central Bank, the US Federal Reserve and the Bank of Canada were on offer to trading firms. | The newspaper also said press conferences from the European Central Bank, the US Federal Reserve and the Bank of Canada were on offer to trading firms. |
| Automated options | Automated options |
| It is unclear whether the leaked audio feed was used by traditional traders at their desks to steal a march on rivals, or whether algorithm-driven software, that can conduct thousands of transactions a second, could be used to exploit those few seconds advantage. | It is unclear whether the leaked audio feed was used by traditional traders at their desks to steal a march on rivals, or whether algorithm-driven software, that can conduct thousands of transactions a second, could be used to exploit those few seconds advantage. |
| Hypothetically a computer program could be designed to pick out key words from the Bank governor's comments and trade on them. But central bankers are notoriously euphemistic. | Hypothetically a computer program could be designed to pick out key words from the Bank governor's comments and trade on them. But central bankers are notoriously euphemistic. |
| "[Early access] would be more important to a traditional voice trader or hedge fund," says Malcolm Baker, co-Founder at FX FWD, a trading firm. | "[Early access] would be more important to a traditional voice trader or hedge fund," says Malcolm Baker, co-Founder at FX FWD, a trading firm. |
| "Central bankers can speak in language that is hard to understand and there is a lot that's implied. It's like old Elizabethan language and can be misleading. A trader like me just wants to understand - is it hawkish? Or dovish?" | "Central bankers can speak in language that is hard to understand and there is a lot that's implied. It's like old Elizabethan language and can be misleading. A trader like me just wants to understand - is it hawkish? Or dovish?" |