ECB has a Hedge Fund Issue

New York ( 1– Two stories have come out in the last few days with regard to how the ECB handles news and hedge funds. On Monday, ECB Executive Board member Benoit Coeure caused the first problem when he spoke at a dinner for hedge fund managers, bankers and academics in London. Mr. Coeure commented that the bank would accelerate its bond buying program ahead of the summer trading lull.

The problem with those comments is that they were not public knowledge and by the time the news was public on Tuesday, the Euro had moved significantly and so had equities and bonds. The guests at the dinner had been afforded an advantage with non-public material.

In response to the mishap on Monday, the ECB announced on Tuesday that they would stop providing journalists with embargoed copies of its speeches. In the past, the ECB has provided the media with the speeches before they were delivered so that the news would break from different news outlets simultaneously which in turn lowers the chances for traders trading on privileged information.

It seems that by halting the policy of providing the speeches, the ECB isn’t trying to prevent board members from leaking privileged information. Rather it looks as if they are trying to keep it from making the news if it happens again.

Rick Pendergraft
Research Analyst

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