Bank of England says Bloomberg data use 'reprehensible'

Reuters News
Posted: May 14, 2013 1:13 PM
Bank of England says Bloomberg data use 'reprehensible'

LONDON (Reuters) - The Bank of England said on Tuesday it was "reprehensible" for Bloomberg News to allow journalists to see data on how clients used its financial information terminals, saying confidentiality was crucial to its work as a central bank.

It was one of the toughest assessments yet of Bloomberg's practice of giving reporters limited access to data considered proprietary, such as when a customer logs in, contacts the help desk or delves into the system for information about specific asset classes, like equities or bonds.

The list of central banks that have said they were examining Bloomberg's use of data includes the U.S. Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of Canada, Germany's Bundesbank and the Hong Kong Monetary Authority, but they have avoided any direct comment on the matter.

The British central bank was less restrained as it registered concern over a practice that Bloomberg said had been in effect since its early days in the 1990s but only came to light last week.

"The protection of confidential information is vital here at the bank. What seems to have happened at Bloomberg is reprehensible," a Bank of England spokesman said on Tuesday.

"Bank officials are in close contact with Bloomberg, who have provided assurances to ensure that this does not happen again. We will also be liaising with other central banks on this matter."

While there is no evidence the access given to Bloomberg reporters led to the disclosure of confidential data from central banks, the potential for security breaches is a matter of concern for policymakers. Their effectiveness in guiding the global economy depends on keeping the process of setting interest rates and using other monetary tools confidential, and they go to great lengths to protect against leaks.

"We regret the Bank of England has taken this position but we'll continue to engage with its management and staff to address their concerns," said Ty Trippet, a spokesman for Bloomberg LP, the news service's parent.

The criticism came a day after Matthew Winkler, editor-in-chief of Bloomberg News, apologized for the practice, saying it was "inexcusable" but maintaining that the company had always protected data from being misused.

Bloomberg, which competes with Thomson Reuters Corp, the parent of Reuters News, said it had stopped the practice last month after Goldman Sachs Group Inc complained.

Goldman, one of Bloomberg's biggest Wall Street customers, raised the issue after the bank found that journalists had access to more information than it had known and argued the information was too sensitive to be seen by reporters.

The news has triggered fears at Wall Street firms about the privacy of sensitive data, as well as at the Fed and other U.S. government departments that use Bloomberg terminals.

Fear and Loathing of Jordan Peterson
Suzanne Fields

Earlier, Japan's central bank followed its global counterparts in saying it had contacted Bloomberg over the matter. The Hong Kong Monetary Authority, effectively the territory's central bank, said it was looking into it, too.

"We ... are in the process of confirming the facts of the situation," a spokesman for the Bank of Japan told Reuters.

Jill Vardy, a spokeswoman for the Bank of Canada, said the central bank has been in contact with Bloomberg regarding the issue but had no further comment.

Closely held Bloomberg gets the bulk of its revenue from terminal sales to financial institutions. It has more than 315,000 terminal subscribers globally, with each Bloomberg terminal costing more than $20,000 a year. Last year it posted revenue of $7.9 billion.

In a statement on Friday, Thomson Reuters said its news division operates "completely independently, with reporters having no access to non-public data on its customers, especially any data relating to its customers' use of its products or services."

(Reporting by William Schomberg in London, Jennifer Saba in New York, Louise Egan in Toronto; Writing by Frank McGurty; Editing by Ron Askew, Claudia Parsons and Richard Chang)