Traders gained access to press conferences of the Central Bank of England before their public broadcast

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The UK authorities are investigating the leak of information that could provide one of the stock market participants with an advantage over others. Traders were able to access the recordings of press conferences of the Central Bank of England (Bank of England) before the start of their official broadcasts.

What happened

According to representatives of the bank, the audio recordings of some press conferences, the participants of which made statements important for the financial market, flowed “to external customers”. The culprit of the leak is the audio recording and broadcasting service provider.

“This absolutely unacceptable use of audio streams was carried out without notifying the bank and without its consent; the investigation is ongoing, ”the Central Bank said in an official statement.

As it became known to the journalist, the data from the press conferences was used by high-frequency traders: they hoped to have time to “win back” the reaction of the markets to the press conference faster than their competitors.

Traders were interested in recordings of those press conferences at which the monetary policy of Great Britain was discussed, in particular, at which new interest rates were announced. Typically, such events have a serious impact on the situation on exchanges: traders use new information when trading currencies, government bonds and other financial assets.

How did the leak

A separate audio recording during press conferences of the Central Bank of England was carried out as a safety instrument in case the video stream with sound is unavailable. After it became known that unauthorized users got access to the records, this function was disabled.

Bloomberg is responsible for the video stream from the press conferences, but its specialists were not involved in the organization of “backup” audio recordings.

How to protect investors from market manipulation

In the history of financial markets, unexpected ups and downs in the value of certain assets occur periodically. These situations can be caused by various reasons: both commonplace mistakes of investors (often they simply confuse different companies and buy shares of one, thinking that they invest in another), and purposeful manipulations.

The main way to protect yourself from problems here – especially for novice investors – is not to try to beat the market "in the moment" faster than anyone else by reacting to important news. A much more effective strategy is to use low-risk investment tools. These include, for example, structural products or model portfolios.

Structural products – these are collected in a single portfolio of various financial instruments. Analysts of a brokerage company select them in a certain proportion in order to ensure either minimal or near-zero risk when investing on a stock exchange.

It works like this: assets with a low risk and a small possible profit and more risky assets are “collected” in a structural product, which, if successful, can bring a higher income. The idea is simple – if the risky tool “does not work” and there is a loss on it, then it will be compensated by the profit from the less risky asset – therefore its volume in the structure of the structural product is higher.

In turn, a model portfolio is an investment portfolio that consists of several securities selected for certain criteria (for example, bonds or shares of one sector of the economy). Something similar to a structural product, but there are fewer risk management opportunities, although you can start investing with slightly smaller amounts (tens, not a couple of hundred thousand rubles). An example of such a portfolio: a model portfolio of American stocks – the yield of which since opening is 14% per annum with a low level of risk.

Useful links on the topic of investment and stock trading:

  • Open a brokerage account online
  • Test account with virtual money
  • Software for trading on the exchange: trading terminal, mobile applications
  • Structural Products
  • Model Portfolios

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