Hedge funds listened to BoE news conferences before broadcast

Hedge funds have been listening to the Bank of England's news conferences before they were broadcast to the market after a supplier to the BoE sent an audio feed to high-speed traders.

The rogue supplier had been sending the feed to traders intending to use a few seconds' advantage to deal in assets such as sterling or government bonds, according to The Times, which broke the story.

The BoE confirmed that the audio of its press conferences had been misused and said the supplier had been terminated. The central bank was also reported to have referred misuse of the feed to the Financial Conduct Authority.

Press briefings by Governor Mark Carney and other BoE officials can move markets. Early access to their comments could allow traders to make large sums by placing bets before the rest of the market.

Liz Martins, HSBC's UK economist, told the BBC: "What the market wants to know is what is the central bank going to do next - are they going to raise interest rate, are they going to cut interest rates, is there going to be more QE [quantitive easing] . If you have got a clue as to whether they are going to do that you can make money. Sterling will move, the bond markets will move.

"Central banks typically are very, very careful with their words … and if they are going to drop a hint they might do it at those press conferences."

The hijacking of the BoE's systems could overshadow Thursday's interest rate decision, the first following the Conservatives' resounding election victory on 12 December. The revelation is also unfortunate timing for Carney, who is due to leave the bank early next year.

The BoE said: “Following concerns raised with the Bank, we have recently identified that an audio feed of certain of the Bank press conferences - installed only to act as a back-up in case the video feed failed - has been misused by a third party supplier to the Bank since earlier this year to supply services to other external clients. This wholly unacceptable use of the audio feed was without the Bank’s knowledge or consent, and is being investigated further."