The BoE has acknowledged some mistakes in its handling of the feed
The BoE has acknowledged some mistakes in its handling of the feed © Bloomberg

The UK markets regulator has dropped its investigation into the company at the centre of a controversy around the Bank of England’s market-sensitive press conference feeds, clashing with the BoE’s assertion that the business had “misused” the feed.

The Financial Conduct Authority said on Wednesday it had closed its probe into Encoded Media, a small UK technology company, without taking further action.

“We have examined these matters fully. We do not believe the audio feed contained any inside information, nor have we found any activity of concern or misconduct,” the FCA said.

Essex-based Encoded Media was pushed into the spotlight after the Times newspaper alleged that some hedge funds had been paying a third party to “eavesdrop” on press conferences.

Encoded had used a feed licensed from Bloomberg to broadcast information on the internet, allowing some traders listening in to hear comments from then-governor Mark Carney at press conferences up to eight seconds faster than rivals watching on slower television feeds.

Closing the case raises further questions over the Bank’s initial judgment in December that an unnamed third party had misused a back-up audio feed in what it called a “wholly unacceptable” way.

“We were genuinely amazed at the levels of ignorance displayed by some commentators who may be experts in economics but who clearly know little about broadcasting,” said Philip Wand, a director at Encoded Media.

The accusations made in December “were wrong [and] have damaged our business”, Mr Wand added. “We licensed our feed from the official public broadcaster and have the bills to prove it.”

In a statement on Wednesday, the BoE acknowledged some mistakes in its handling of the feed, but continued to describe Encoded’s distribution of its audio feed as “misuse”.

“Our review has indicated that there were occasions where, with the benefit of hindsight, this misuse by a third-party supplier of the bank’s audio feed could have been identified sooner by the bank,” it said.

Encoded’s deal with the BoE was to maintain the central bank’s internal audiovisual systems and put a feed of the public press conferences on YouTube. A person with direct knowledge of the relationship said Statisma, an affiliate of Encoded, was still broadcasting the BoE’s press conferences as recently as February.

In its statement, the BoE said it believed its relationship with Encoded was split between three different areas of the bank, “and there was insufficient clarity over their individual roles and responsibilities”.

Encoded has always denied wrongdoing. In December, it said it was “impossible to ‘hack’ or ‘eavesdrop’ any live public event or press conference. Any such suggestion is dismissed out of hand.”

Once official investigations started, Encoded sought an opinion from Michael Bowes QC, of Outer Temple Chambers in London, who concluded the feed did not facilitate insider trading because “it is self-evident that information communicated at a press conference is made public at the moment of communication”.

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