The Bank of England has said it could have acted faster to identify a security breach that allowed hedge funds early access to its market-moving press conferences.
Publishing the findings of an internal report into the incident that hit the Bank during the last months of Mark Carney’s tenure as governor, Threadneedle Street said it had set out a range of measures to tighten its security systems.
It also said Andrew Bailey, who replaced Carney in March, had commissioned an external review to investigate whether further steps were required.
In a statement on Wednesday, the Bank said the internal review o had “indicated that there were occasions where, with the benefit of hindsight, this misuse by a third-party supplier of the Bank’s audio feed could have been identified sooner by the Bank”.
The Bank said it had not routinely monitored social media or the broader internet for evidence of companies advertising “inappropriate access to its publications and press conferences”, but was now assessing whether more monitoring could be done in future.
In December a technology supplier to the Bank was reported to have sold access to a backup audio feed for press conferences given by Carney alongside its interest rate decisions, potentially giving unidentified investors a lucrative headstart on interpreting his market-moving comments. The breach was missed by the Bank, and was only emerged after a newspaper investigation.
The Guardian revealed that the incident followed the restructuring of the Bank’s its department and loss of multiple senior employees in the process.
An Essex-based company, Encoded Media, had its status as a supplier to the Bank revoked the same month after media inquiries. The Bank disabled the company’s access to a backup audio feed after the Times newspaper first revealed the breach. Threadneedle Street said at the time that an unnamed third-party supplier would have no part in future press conferences, calling the sale of access “wholly unacceptable” and saying the feed had been “misused”.
Separately, the Financial Conduct Authority said on Wednesday it was dropping an investigation into the audio feed’s misuse.
The City watchdog said in a statement: “We have examined these matters fully. We do not believe the audio feed contained any inside information, nor have we found any activity of concern or misconduct. Our inquiry is now closed and we have informed the Bank and other parties connected to the review.”
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