... as Bank of England is rocked by traders’ hi-tech spying storm

THE Bank of England was in turmoil last night after it emerged traders had hijacked a secret audio feed for financial gain.

The breach meant the traders had access to market sensitive briefings by senior figures such as Governor Mark Carney before their rivals.

As City grandees called for heads to roll, the central bank and financial regulator were blasted over the ‘major failure’.

The internal audio feed of the Bank’s press conferences, which was intended to be used as a back-up if the official broadcast video failed, was hijacked by a third party believed to be Essex-based video technician Encoded Media.

The technician then allowed market news service Livesquawk to broadcast this illicit feed to its clients, including major investment banks and hedge funds.

Because audio feeds can be distributed faster than videos, these clients received information from the press conference before anyone else.

Comments given in Bank of England press conferences, such as tiny changes in language by officials, can cause large movements in the pound and assets such as gilts – UK Government bonds. Hearing these comments before anyone else meant traders could place bets split seconds before rivals, taking advantage of movements and potentially pocketing millions.

Traders reportedly boasted of making ‘plenty’ of money and called the five to eight-second headstart on competitors a ‘lifeline’.

The scandal, first reported by The Times this week, is now being investigated by the Financial Conduct Authority.

But former City minister Lord Myners said last night: ‘This is a major failure by the Bank of England and raises important questions about how the FCA had not picked up that this was happening. This is serious.’

Mr Carney, along with the Bank’s Monetary Policy Committee, sets interest rates eight times a year and holds a press conference on four of those occasions. A report on financial stability comes twice a year with a press conference. Danny Blanchflower, who was on the MPC until 2009, called for the Bank’s chief operating officer Joanna Place to step down, saying: ‘Mr Carney should be absolutely furious.’

The Bank said it had blocked the third party from accessing the audio feed, and reported them to the FCA. It said: ‘The third-party supplier did not have any access to the most recent press conference... The Bank operates the highest standards of information security around the release of the market sensitive decisions of its policy committees.’

Both the Bank and FCA refused to comment on the identity of the supplier – but it is understood to be Encoded Media, which has previously been employed as a contractor for the Bank to update television and audio systems.

Richard Poel, a former director of Encoded, even had a Bank of England email address.

Encoded Media is owned by Tom Sillence, who also co-owns Statisma News. Yesterday Statisma dismissed allegations of hacking. Livesquawk said it ‘has no access to Bank of England infrastructure’.