LONDON (Reuters) - The Bank of England has said misuse of its audio feeds was a “wholly unacceptable situation” and it plans to tighten the rules on how it handles the release of all sensitive market information, Governor Mark Carney said on Tuesday.
The BoE said in December that a rogue supplier had been misusing audio feeds from its press conferences to give traders potentially market-moving information seconds before rivals.
Carney told parliament’s Treasury Select Committee on Tuesday an investigation by the Financial Conduct Authority (FCA) limited what he could say, but that the Bank’s investigation into the matter should be published in April.
The FCA was looking at the behaviour of market participants as well as the supplier, Carney said.
“We referred the incident and the parties involved in the incident, which would include not just the technical party related to the audio link, but the parties who used the information,” Carney told lawmakers.
“We’ve also asked the FCA to look at this behaviour of market participants relative to their responsibilities under both the FX code and the Money Markets code, so … do you have advantaged information, are you knowingly using advantaged information, if I can put it that way.”
The FCA is also looking into an unnamed media organisation that is alleged to have shared Bank of England speeches ahead of an embargoed publication time.
The FCA declined to comment on its investigations.
The FX and Money Market codes were introduced to improve standards of behaviour in markets, in part after banks were fined for trying to rig currency benchmarks.
Senior officials at banks, trading houses and other financial firms sign up to applying the codes of best practice in their daily activities.
Breaches can be punished with fines or suspension under the BoE and FCA’s rules for holding senior officials at regulated firms directly accountable for their actions.
Carney said the misuse of its audiofeed and alleged leak of speeches has prompted the Bank to examine its entire approach to how sensitive information is released to the media and public
The BoE currently releases market-sensitive policy announcements by requiring journalists to attend a “lock-in”.
The journalists hand in their phones and write their articles in a basement room at the Bank with no means of contact with the outside world.
Wifi and other communication channels are switched back on at an agreed time to publish the articles.
Carney said that it was the Bank’s judgment that lock-ins will now be needed for many of its other communications, including speeches, which are currently available online under embargo for accredited journalists.
The Bank was going for “maximum security”, said Carney, who stands down as governor later this month, to be replaced by Andrew Bailey, who has been heading the FCA.
Reporting by David Milliken, Elizabeth Howcroft, Estelle Shirbon and Huw Jones; writing by Alistair Smout and Huw Jones; editing by William Schomberg, Larry King
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