City watchdog ignored evidence of security breaches at Bank of England

Andrew Bailey left red-faced by claims the City watchdog he heads ignored evidence of security breaches at the Bank of England

Andrew Bailey, the next Governor of the Bank of England, has been left red-faced over claims the City watchdog he currently runs ignored evidence of serious security breaches at the central bank.

Livesquawk, which delivers breaking news to traders, leaked a market-sensitive speech given by Bank deputy governor Ben Broadbent in 2017 around 16 minutes before it was due to be published, according to the Times.

The Financial Conduct Authority (FCA), under the leadership of Bailey, was alerted to this by a whistleblower in 2018 who was called in for an interview that year. 

The Financial Conduct Authority, headed by Andrew Bailey (pictured), was alerted to this by a whistleblower in 2018 who was called in for an interview that year. But the FCA took no action

But the FCA took no action. This is an embarrassment for Bailey, who will have the headache of improving security at the Bank when he takes over from Mark Carney next month. 

Last year it emerged that Encoded Media, a company linked to Livesquawk, had unauthorised access to a secret audio feed of Bank of England press conferences.

Another company, Microlatency, owned by the directors of Livesquawk and Encoded Media, was selling this feed to customers so they could listen in up to eight seconds before the official video feed.

Livesquawk: Breaking news alerts for traders

For traders, where fractions of a second can mean the difference between millions of pounds in profit, high-speed news is essential.

‘Squawks’ get news out as soon as it breaks, with instant texts to clients’ computers or smartphones, and ‘squawk’ brief audio messages.

They are often used by brokers, investment banks, and hedge funds. Livesquawk’s service costs £250 plus VAT per month.

MPs on the Treasury Select Committee plan to haul Bailey, and Carney, in for questioning over the breaches.

For traders, getting copies of speeches and other market-sensitive documents ahead of time can be hugely profitable.

If investors place trades based on insider knowledge even seconds before their rivals find out, they can cash in when the market moves.

Embargoed copies of speeches and other sensitive documents are only given to accredited media organisations, on condition that they do not publish them ahead of the stated time. 

The Bank of England struck Livesquawk off its list of accredited media organisations in 2018.

Livesquawk told the Times; ‘When an individual had sight of a speech in error some years ago, we took immediate action to rectify the situation, getting clear and comprehensive undertakings that they would not share or act on the content. 

We continue to make it crystal clear that Livesquawk has no access to Bank audio streams and neither have we sought any access.’

The FCA declined to comment.


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