There have been calls for the Head of Security to the Bank of England to step down after a significant security breach.
It was discovered that hedge funds were accessing press conferences before being aired after one of the Bank’s suppliers had sent an audio feed of briefings to high-speed traders.
It is believed that the supplier, which remains unknown, sold the audio feed with aimed to profit from the comments of the Bank of England Governor, Mark Carney, as they were being made. The Governer’s comments have been known to create change in the markets, with traders placing trades based on them.
The current Bank of England Chief Operating Officer, Joanna Place, who has held responsibility for security since 2017, has faced calls to stand down. One of those calling for her resignation is a former member of the Monetary Policy Committee, Danny Blanchflower. Mr Blanchflower questions Ms Place’s knowledge of the breach while proclaiming the amount of financial harm that could have been caused. In a statement Mr Blanchflower said:
“The question I ask is, did the chief operating officer at the Bank of England know that access was being sold? If so, she should resign. And if she didn’t know she should resign as well.”
“I just don’t know how her position is maintained because this could have created a lot of harm. People could have made a lot of money.”
Undoubtedly an investigation into the matter has begun, with the Bank of England describing it as “wholly unacceptable use of the audio feed”. They have further stated that the hedge funds using the feed made use of it “without the Bank’s knowledge of consent”.
The issue has been referred to the Financial Conduct Authority. However, further information continues to remain confidential.
By allowing access to a press conference earlier than others put traders at an unfair advantage, allowing themselves to gain knowledge of interest rates, economic guidance and the financial health of the markets before anyone else. The Bank also sets rates eight times a year, with those rates being announced on half of those occasions.
With modern computerised systems being able to make thousands of transactions a second, traders could have been able to make millions more than other traders without access to the audio just minutes before. Such an advantage would have made waves in the markets but not without creating dangerously unfair competition.