The Bank of England has admitted to a string of failures which allowed a tech company to ‘misuse’ a secret audio feed of its press conferences.
It emerged last year that a firm called Statisma News was allowing its customers access to live-streamed Bank of England press conferences seconds before they were available to the rest of the market through the official video feeds.
This worried the Bank, since traders can potentially make millions of pounds by knowing what policy-makers have said before anyone else does.
Statisma News was allowing its customers access to live-streamed Bank of England press conferences seconds before they were available to the rest of the market
But while the Bank admitted it had made mistakes – including failing to investigate a warning from a whistle-blower in 2018 – the Financial Conduct Authority (FCA) dropped its investigation into the affair.
The watchdog said: ‘We do not believe the audio feed contained any inside information, nor have we found any activity of concern or misconduct.’
One source with knowledge of the matter branded the regulator ‘toothless’.
Statisma had gained access to the secret streams through its affiliate company Encoded Media, which had been employed to video stream press conferences to the Bank’s official Youtube channel.
An Encoded employee installed equipment which streamed an audio feed of what was said by officials. Because this was an audio-only feed, it was faster than the official video feeds.
Various companies connected to Encoded and Statisma then marketed expensive subscriptions to traders, claiming that they could offer a stream of the press conferences before anyone else.
The Bank said that it had not ‘routinely monitored social media or the broader web for evidence of companies that advertise inappropriate access to the Bank’s publications’.
It admitted, however, that a whistle-blower tried to warn it in 2018, but said the claim was ‘not fully investigated’ because officials didn’t believe the allegations were possible. In a statement, the Bank said: ‘There were occasions where, with the benefit of hindsight, this misuse by a third party supplier of the audio feed could have been identified sooner by the Bank.’
It added that responsibilities for streaming press conferences had not been clearly assigned to one department, which created the opportunity for more confusion.
Philip Wand, a director at Encoded, insisted his company had done nothing wrong. He said his firm had licensed the audio feed from Bloomberg, which runs the official video feed.
However, the Bank has now launched an overhaul of its contracting and risk assessment processes.