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| Bank of England executive urged to quit over security breach | Bank of England executive urged to quit over security breach |
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| Joanna Place told to resign after hedge funds gain early access to Mark Carney pressers | Joanna Place told to resign after hedge funds gain early access to Mark Carney pressers |
| The Bank of England’s chief operating officer should resign immediately after a security breach that gave paying hedge funds early access to Mark Carney’s market-moving press conferences, according to a former member of the Bank’s monetary policy committee. | The Bank of England’s chief operating officer should resign immediately after a security breach that gave paying hedge funds early access to Mark Carney’s market-moving press conferences, according to a former member of the Bank’s monetary policy committee. |
| Joanna Place reports directly to Carney, the governor, and has had responsibility for the Bank’s information security since July 2017. | Joanna Place reports directly to Carney, the governor, and has had responsibility for the Bank’s information security since July 2017. |
| Danny Blanchflower, who served on the MPC until 2009, said Place’s position was untenable after the Bank admitted the breach, first reported by the Times, late on Wednesday night. | Danny Blanchflower, who served on the MPC until 2009, said Place’s position was untenable after the Bank admitted the breach, first reported by the Times, late on Wednesday night. |
| “Carney should be absolutely furious,” he said. “The person in charge of the Bank’s security should be quitting within the next hour. | “Carney should be absolutely furious,” he said. “The person in charge of the Bank’s security should be quitting within the next hour. |
| “Did they know this was being done? Did they know that someone was charging? If not, why not?” | “Did they know this was being done? Did they know that someone was charging? If not, why not?” |
| The Bank declined to comment on the call for Place to resign. | The Bank declined to comment on the call for Place to resign. |
| High-frequency traders could have used the information to gain an advantage over their rivals. Carney’s comments, which are broadcast online, can often move currency and bond markets if they give hints as to 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, can often move currency and bond markets if they give hints as to the future path of interest rates. |
| The Bank confirmed unnamed traders gained access to a backup audio feed run by an unnamed third-party supplier that was put in place in case the main feed failed. The financial data company Bloomberg handles the main video feed. | The Bank confirmed unnamed traders gained access to a backup audio feed run by an unnamed third-party supplier that was put in place in case the main feed failed. 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 up to eight seconds. | The audio feed, which is faster to compress and transmit than video, gave traders a head start of up to 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), and it has prompted a review of security at the Bank’s Threadneedle Street headquarters. | 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), and it has prompted a 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 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 breach will cast a shadow over the final six weeks of Carney’s term as governor. He will leave 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 published the latest MPC decision on Thursday but no press conference was scheduled to take place. | The Bank published the latest MPC decision on Thursday but no press conference was scheduled to take place. |
| Andrew Sentance, a senior adviser to Cambridge Econometrics who previously served on the committee, said the security failure was “unprecedented” for a central bank. | Andrew Sentance, a senior adviser to Cambridge Econometrics who previously served on the committee, said the security failure 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, the shadow chancellor, described the breach as “yet another scam exposed at the heart of our financial system” and said it lent weight to his call for an inquiry into financial sector regulation. | |
| In 2017, the Office for National Statistics stopped giving out figures early after research showed it was highly likely they were being leaked. | In 2017, the Office for National Statistics stopped giving out figures early after research showed it was highly likely they were being leaked. |
| The breach will be of particular embarrassment to the Bank, given its recent focus on the security policies of the companies it regulates. Researchers found there was a “credible case to link cyber-risk to systemic risk in the financial sector” in a December 2018 paper. | The breach will be of particular embarrassment to the Bank, given its recent focus on the security policies of the companies it regulates. 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 previous press conference, held after the release of its financial stability report on 16 December. | The Bank has known about the breach since before its previous press conference, held after the release of its financial stability report on 16 December. |
| The FCA is likely to focus on whether the information accessed early constituted inside information and then whether the managers of the investment firms involved had acted with propriety, a senior regulatory lawyer said. The investment managers involved could potentially face personal regulatory action, the lawyer said. | The FCA is likely to focus on whether the information accessed early constituted inside information and then whether the managers of the investment firms involved had acted with propriety, a senior regulatory lawyer said. The investment managers involved could potentially face personal regulatory action, the lawyer said. |
| In a statement published on Wednesday shortly before midnight, the Bank 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. | In a statement published on Wednesday shortly before midnight, the Bank 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. | “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.” |