The Bank of England (BoE) has conceded that it could have moved more quickly to identify a security breach that allowed hedge funds to gain unauthorised access to press briefings and hear about sensitive market information ahead of their rivals.
The concession came in an internal report released this week into the security breach which took place back in December 2019.
The breach, which was initially missed by the Bank, was only uncovered after an investigation by the Times newspaper which found that a technology supplier to the central bank had sold access to a back-up feed of BoE governor Mark Carney detailing changes to interest rates. By hearing about the changes before the rest of the market, the various hedge funds and traders could have gained a potential advantage.
In its subsequent report, the BoE admitted that "there were occasions where, with the benefit of hindsight, this misuse by a thrid party supplier of the Bank's audio feed could have been identified sooner by the Bank".
In the immediate aftermath of the incident, a third party supplier, Essex-based Encoded Media had its supplier status revoked while there were also calls for the Bank's COO Joanna Place to step down.
However, in this week's report, the Bank outlined a number of steps it has taken to tighten up its security. These include considering more active monitoring of social media and the internet for evidence of companies offering “inappropriate access to its publications and press conferences”.
The city watchdog's report came just a day after the Financial Conduct Authority (FCA) announced that it was dropping an investigation into the audio incident:
“We have examined these matters fully," read an FCA statement. "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.”
Encoded Media has since said it feels "vindicated" by the FCA's finding