The Bank of England hack is a Hollywood comedy waiting to happen – but not everyone is laughing

The Bank of England hack is destined to become a Hollywood movie somewhere down the line. If filmmakers can make a successful comedy drama out of what bankers and hedge funds got up to with collateralised debt obligations and sub-prime mortgages prior to the financial crisis, then this one ought to be easy.

What happened is that an unnamed “third-party supplier” was given access to the audio feed of the Bank of England’s press conferences. It was put in place as a back-up in case the main video feed, supplied by Bloomberg TV, were to go down.

Here’s the thing: the audio feed is faster than the video one. Quite a bit faster.

A trader able to access it would be able to hear the words of, say, governor Mark Carney before everyone else. This is what the mysterious “third party supplier” has apparently been facilitating “since earlier this year”.

In a world of ultra-fast, machine-driven high-frequency trading, you need only a second or so to steal a march on the market and make hay. Reports have suggested that hedge funds were able to get several seconds courtesy of the offending feed.

Bank decisions, and votes, are released half an hour before the press conference so everyone gets them at the same time.

But Carney’s subsequent words are just as important, if not even more so. A small army of people hangs on every one of them, seeking clues about the future and the decisions the bank might take. That’s where the real action is as far as the City is concerned.

Phrases like “uncertain outlook” or “softer than expected” or words like “challenging”, all have the potential to move markets if they are uttered by Carney. If you’re in a position to hear them before everyone else the potential to make a mint is huge.

Push the button and ker-ching, the money’s booked before the rest of the financial world is even aware of anything.

Gamblers may recall something similar happened with Betfair, the betting exchange, a number of years ago. It facilitates punters setting their own prices and allows them to back but also lay outcomes like a bookie does.

Some enterprising souls set up trading arcades whereby, for a fee, you could watch racing or other sporting events via a faster feed than was otherwise available through satellite TV.

This was a boon to those trading betting in running markets. Exchange punters using the arcades could react to events – a race leader falling at the final fence, for example – before everyone else.

Time – and feed speeds – move on, and most of the trading rooms have since closed, with the shrewdies moving in course. The thing is, while you could describe what went on as unsporting, it wasn’t illegal.

Getting a leg-up as regards financial markets very definitely is. If it has been done via Threadneedle Street’s own audio feed, it’s also horribly embarrassing.

“The bank operates the highest standards of information security around the release of the market sensitive decisions of its policy committees,” it said in a terse statement. Really?

If that’s the case, how did this happen? That’s a question I imagine the next Treasury Committee will want to ask. It’s been handed an early Christmas gift and one that’s going to keep on giving.

The bank, meanwhile, is facing the mother of all hangover headaches. Ditto the Financial Conduct Authority, which has been asked to conduct what will be a difficult and highly sensitive probe.

But if its investigation can strike gold and tell us precisely what went on and who the baddies were, its people might get to see themselves in a movie! How’s that for motivation? Anyone got Guy Ritchie’s number?