Yet another scandal unfolds at the Bank of England

Sometimes the news just leaps at you off the page and overnight this has happened concerning a warning I have made in the past about the Bank of England. So let us get straight to the Financial Times on the subject.

The Bank of England has referred to the UK’s financial watchdog the revelation that an audio feed of its market-sensitive press conferences was supplied to high-speed traders before the events were officially broadcast.

This is disgraceful on two counts. Firstly in an era of computer driven algorithm driven trading an edge like this is quite something for them as we mull exactly who was more equal than others? To coin a phrase. Next is the fact that this happened at the ECB several years ago and after such a warning someone should have been dispatched to make sure that it could not happen at the Old Lady. So we can add laziness to the incompetence.

As ever the PR machine is in full flow and has opened its batting with an attempt to put the blame elsewhere.

Following a rapid internal investigation, the central bank confirmed what it called a “wholly unacceptable” use of its back-up audio feed of press conferences by a third party supplier, which it has refused to name citing legal reasons.  The BoE was responding to an article in The Times, which reported that hedge funds had been eavesdropping on press conferences a few seconds before others heard the words of governor Mark Carney.

The spinning starts with the report of a “rapid investigation” which surely is in fact a really tardy one as the ECB scandal was several years ago now! Also did no-one wonder why this was set-up?

The audio feed was installed only to act as a back-up in case the video feed failed, but the BoE said it had recently discovered — “following concerns raised with the bank” — that the feed had been misused by the supplier since earlier this year.  “This wholly unacceptable use of the audio feed was without the bank’s knowledge or consent, and is being investigated further,” the BoE said in a statement. Those who received the audio feed had a five to eight-second advantage over people who watched the main video feed, the Times reported.

Have you noted how a “few seconds” seems to have suddenly morphed into a ” five to eight-second advantage”? Also the attempt to shift blame to the supplier is really rather weak. Did nobody wonder why funds were willing to pay the amounts suggested below?

Clients were charged between £2,500 and £5,000 per press conference for access to the audio feed, the newspaper reported, adding that high-speed audio services were also offered for similar events at the European Central Bank, the US Federal Reserve and the Bank of Canada.

Even the Financial Times which like more than a few parts of the media has lauded Governor Carney as a “rock star” central banker have to admit this.

However, this is embarrassing for the BoE. Comments made by Mr Carney and other senior BoE officials at the press conferences that follow meetings of the monetary policy committee and financial stability committee often move sterling and gilt prices: having a start of a few seconds would allow traders to pre-empt the rest of the market.

As to any resolution well in true Yes Prime Minister style the ball is licked into the long grass.

On Thursday, the BoE said it had referred the matter to the Financial Conduct Authority to investigate whether rules had been broken and trading had occurred on the basis of early information from the feed.

How about yes and yes as the answers to those questions?! Indeed in the replies IronKnee seems to understand the game.

You don’t understand the system, it’s the City

We have a long investigation, then take a few traders to Court (great if they are from the EU27 or have excess melanin) because the Executives couldn’t possible know what their staff were doing and can’t be held responsible.

Indeed the higher up you are the less responsible you are for anything. Yet in other areas…..

#ECJ : An airline is liable for the harm caused by a spilt cup of hot coffee #nikiluftfahrt

Let me now link this back to my theme and what I consider to be an even more serious issue so let us step back in time to August 2nd 2018 and I have added some emphasis.

 Actually one way or another the decision has already been made as the Monetary Policy Committee voted last night. This was a rather unwise change made by Governor Carney as it raises the risk of leaks or what is called the early wire as the official announcement is not made until midday. As you can see from the chart below the BBC seems to think that the decision is a done deal or knows it is ( h/t @Old_Grumpy_Dave ).

Retail Sales

We can continue the Bank of England theme as we note that last time around 2 members voted for an interest-rate cut and would likely be further confirmed by today’s Retail Sales release.

The quantity bought in November 2019 fell by 0.6% when compared with the previous month, with only household goods stores reporting growth…….In the three months to November 2019, the quantity bought in retail sales decreased by 0.4% when compared with the previous three months; this is the first decline since April 2018.

The state of play is summed up by this bit.

There has been a slowdown in the rate of growth in recent months, with October 2019 increasing at just 0.1%. November 2019 saw a decline of 0.4%; this is the first decline since April 2018, which reported a fall of 0.2%.

Indeed the annual comparison has weakened too.

Year-on-year growth in the quantity bought increased by 1.0% in November 2019; this is the lowest growth since October 2017, owing to a decline of 1.1% in non-food stores.

So there does seem to be something going on although there is a catch as whilst the official view is that this is covered by the seasonal adjustment I am much more doubtful.

In 2019, the official Black Friday was on 29 November and outside our November reporting period, which covers four weeks from 27 October to 23 November; our seasonally adjusted estimates account for this shift in timing.


As the term of Bank of England Governor Mark Carney comes to an end I am reminded of the Yes Prime Minister view that an intelligent and honest Governor would be an “innovation”. Added to that has been the accusations that he has played politics in the Brexit debate which was frankly hardly a surprise for a man accused of playing politics when he was Governor of the Bank of Canada. Sadly such issues got covered in a smokescreen provided by a fawning media who presumably are hoping today that people have short memories.

However there are 2 deeper issues which are as follows. The Bank of England has proved to be somewhat scandal ridden as we note the Li(e)bor and various other scandals. Next is the fact that this matters ever more because central bankers have intervened in so many new areas. Indeed that has been highlighted this morning by the Riksbank in Sweden which ran negative interest-rates in a boom and now responds to rising unemployment with this.

Therefore, in line with the assessment in October, the Executive Board has decided to raise the repo rate from –0.25 per cent to zero per cent. The forecast for the repo rate is unchanged, and the repo rate is expected to remain at zero per cent in the coming years.

Yet they mostly escape criticism for this shambles. Perhaps if Governor Carney could stick to the day job that might help.



14 thoughts on “Yet another scandal unfolds at the Bank of England

  1. Sorry Shaun you had me reading up until:
    “On Thursday, the BoE said it had referred the matter to the Financial Conduct Authority to investigate whether rules had been broken and trading had occurred on the basis of early information from the feed.”
    Sorry but once those clowns are mentioned I knew it is all going to be lost in an investigation that takes years, costs millions and results in either the case being dropped at the last minute or those accused getting off scott free, maybe a small fine issued to the bank those involved, but as the profits of the crime vastly outweigh the fine “all’s good in the hood” as they say.

  2. BOE scandal

    This shouldn’t have happened I thought the press and researchers were all locked in a room at the BOE and phones taken off them when they are privy to information before its officially announced. Its actually fraudulent if someone has passed on information and profited through it but I bet they wont get prosecuted.

    Retail Sales

    All the forecasts missed and Black Friday was later this year this may have affected the data with a caveat that many retailers started to the sales earlier this year, Curry’s has offers on the week before Black Friday with a guarantee prices would not be cheaper on some special offers on Black Friday. However some of the other data out there suggests consumers are indeed reigning in their spending.

    Interest Rates

    The same two members voted for a cut the others on hold its a wait and see approach. Again with a caveat that if there is no Borris bounce the BOE may have to cut rates:

    I think the BOE could have cut 0.25% the BOE are behind the curve they may regret it later on if the economy worsens significantly.

    • Guardian

      5h ago
      Why Bank’s doves pushed for a rate cut
      The Bank minutes show that Jonathan Haskel and Michael Saunders believe the UK economy needed an interest rate cut now, to protect it from problems at home and abroad.
      The pair, both external members of the committee, argued:

      “The economy had been a little softer than expected, and there was a modest but rising amount of spare capacity. Core inflation was subdued.
      Employment growth was slowing and seemed likely to weaken further given trends in vacancies and firms’ hiring intentions. Downside risks remained to the MPC’s projections from a weaker world outlook and Brexit uncertainties.
      With relatively limited space to cut Bank Rate, risk management considerations favoured a prompt response to downside risks at present in order to ensure a sustained return of inflation to the target. ”


      Some other news articles suggest the global economy will pick up next year with an agreement over China/US tariffs. But I am not so certain the world is coming to terms with consumerism damaging the planet and there is only one way forward on that front and its to be more sustainable, that argument is not going away.

      Most commentators think inflation is going to fall further next year and I expect more job losses after Christmas particularly in retail, the data out today was worrying.

      What beats me is rates are falling in most the global economies and its always best to try and predict the future and act before things worsen.

      It is possible however that Borris spending plans will boost the economy, but more police on the streets not going to do much for GDP!

      More spend on hospitals will help but I cannot see business spend increasing significantly at the moment with so much uncertainty over BREXIT and trade deals. Now don’t get me wrong I voted conservative and I think Borris is on the right track playing hard ball with Europe but we could see more pain before we see the benefits.

      There are massive discounts in retail trade right now and it will be another shock if December turns out to be poor.

      Debenhams are to shut more stores after Christmas they wont be the only retailer doing so, some House of Fraser stores will probably close, Marks is to close more stores as well. I noticed Beales which has about 23 department stores has put itself up for sale, it racked up circa £3 million of losses in its accounts published last October double the year before.
      In its latest weekly sales figures John Lewis revealed its total sales thus far are down on last year, most retailers are suffering.

      With bigger discounts in the shops it will only put more pressure on a downward path for inflation and the water utilities have to bring down costs.

      • and they have no idea what “sustainable” actually means

        means BAU for us mere mortals with perhaps fewer shopping bags

        but the Greens , as well , go and look for yourself

        the entire Western economy needs to be trashed , eheheheheh


    • Hi Peter

      It is a classic Yes Prime Minister style establishment stitch-up. The current head of the FCA has been announced s the new Governor of the Bank of England by the FT. So Andrew Bailey can make his new job easier by kicking that poor battered can into the (extra) long grass….

  3. Climate change/control is the agenda to tax and pauper the plebs under the guise of saving the planet. As soon as the solution is another tax and further regulations, as opposed to dismantling the military polluters, or banning rainforest deforestation, then one knows there is no serious problem, just another project-fear for the plebs.

  4. I’m particularly looking forward to admiring the accuracy of Mr Carney and the BoE’s climate forecasts given how successful they were with Brexit, forward guidance and inflation.

    Worth noting that Mr Carney has been paid a lot of money over the last 6 years. Which obviously pales besides his achievements.

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