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You can find the current article at its original source at https://www.theguardian.com/business/2019/dec/19/hedge-funds-hacked-into-bank-of-england-briefings
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| Version 1 | Version 2 |
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| Hedge funds hacked into Bank of England briefings | Hedge funds hacked into Bank of England briefings |
| (about 3 hours later) | |
| Traders could have used information to gain an advantage over rivals | Traders could have used information to gain an advantage over rivals |
| The Bank of England has admitted that hedge funds hacked into a high-speed live feed of its press conferences in the hope of profiting by reacting to the governor Mark Carney’s words before other investors. | The Bank of England has admitted that hedge funds hacked into a high-speed live feed of its press conferences in the hope of profiting by reacting to the governor Mark Carney’s words before other investors. |
| High-frequency traders could have used the information to gain an advantage over their rivals. Carney’s comments, which are broadcast online and sometimes carried on television, can often move currency and bond markets if they give hints on the future path of interest rates. | High-frequency traders could have used the information to gain an advantage over their rivals. Carney’s comments, which are broadcast online and sometimes carried on television, can often move currency and bond markets if they give hints on the future path of interest rates. |
| The unnamed traders gained access to a backup audio feed run by a third-party supplier, also unnamed, that was put in place in case the main feed failed, the Times first reported. The financial data company Bloomberg handles the main video feed. | |
| The audio feed, which is faster to compress and transmit than video, gave traders a head start of as much as eight seconds. | The audio feed, which is faster to compress and transmit than video, gave traders a head start of as much as eight seconds. |
| The third-party supplier reportedly charged clients between £2,500 and £5,000. The Bank has referred the case to the Financial Conduct Authority (FCA), the separate regulator that oversees investment firms, and it has already sparked a wide-ranging review of security at the Bank’s Threadneedle Street headquarters. | |
| The breach will cast a shadow over the final six weeks of Carney’s term as governor. He will leave the Bank on 31 January after carrying out one more interest rate press conference on 30 January. An announcement on his replacement by the chancellor, Sajid Javid, was expected before Christmas. | |
| The Bank is due to publish the latest decision of its interest rate-setting monetary policy committee (MPC) at midday on Thursday but no press conference was scheduled to take place. | |
| Andrew Sentance, a senior adviser to Cambridge Econometrics who previously served on the Bank’s MPC, said the breach was “unprecedented” for a central bank. | |
| “Central banks pride themselves on confidentiality and making sure communication is well managed,” he said. “There has been an abuse of information here. The question in your mind will be, if this happened what else has happened? Are the Bank’s communications secure?” | “Central banks pride themselves on confidentiality and making sure communication is well managed,” he said. “There has been an abuse of information here. The question in your mind will be, if this happened what else has happened? Are the Bank’s communications secure?” |
| John McDonnell, Labour’s shadow chancellor, described it as “yet another scam exposed at the heart of our financial system” and said it supported his call for an inquiry into financial-sector regulation. | |
| The breach is not the first time that early access to data has caused a scandal. In 2017 the UK’s Office for National Statistics stopped giving out figures early after research showed it was highly likely they were being leaked repeatedly. | |
| It will be of particular embarrassment to the Bank, given its recent focus on the security policies of the companies it regulates. The Bank’s researchers found there was a “credible case to link cyber risk to systemic risk in the financial sector” in a December 2018 paper. | |
| The Bank has known about the breach since before its last press conference, held after the release of its financial stability report on 16 December. | The Bank has known about the breach since before its last press conference, held after the release of its financial stability report on 16 December. |
| The last monetary policy report press conference, at which interest rates are set, took place on 7 November. At that meeting the MPC voted to keep the Bank’s main interest rate on hold at 0.75% by seven votes to two. | The last monetary policy report press conference, at which interest rates are set, took place on 7 November. At that meeting the MPC voted to keep the Bank’s main interest rate on hold at 0.75% by seven votes to two. |
| The FCA is likely to focus on whether the information accessed early constituted inside information and then whether the managers of investment firms involved had acted with propriety, a senior regulatory lawyer told the Guardian. The investment managers involved could potentially face regulatory action personally, the lawyer said. | |
| In a statement published just before midnight on Wednesday, the Bank of England said: “Following concerns raised with the Bank, we have recently identified that an audio feed of certain of the Bank press conferences – installed only to act as a backup in case the video feed failed – has been misused by a third-party supplier to the Bank since earlier this year to supply services to other external clients. This wholly unacceptable use of the audio feed was without the Bank’s knowledge or consent and is being investigated further. | |
| “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. | “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.” | “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.” |