The Hungarian Financial Supervisory Authority (HFSA, Hungarian acronym: PSZÁF) noticed on 23 April 2013 that a headline was published, at 13.54 pm Central European Time, on the electronic news service system operated by Bloomberg L.P. (headquarters: 19808 Delaware, New Castle County Wilmington, 2711 Centerville Road Suite 400., United States of America), according to which the National Bank of Hungary cut its base rate to one percent. The HFSA conducted a market supervisory procedure to find out whether the Capital Market Act’s provisions prohibiting market manipulation had been violated as a result of Bloomberg’s misreporting.

Following the investigation, HFSA found in its resolution published today: the news was published due to a technical error. Erroneous data was recorded into the breaking news template by an application opening a new workspace prepared by a Bloomberg staff member before the press conference on the central bank’s interest rate decision and it was automatically displayed on the electronic news service system. Based on Bloomberg’s internal regulations, the false information was corrected within about 40 seconds and the erroneous function was deleted from its system.

The authenticity and reliability of information targeting financial markets are of utmost importance in an environment in which breaking economic news - and also trading based on them - is increasingly automated. Consequently, the due diligence prescribed by the Capital Market Act means that a market player, which conducts its activities in a businesslike manner and which has a significant position and outstanding reputation in the market of financial information providers, must have IT solutions that can efficiently handle the risks of misreporting.

HFSA has ordered Bloomberg to pay a fine of HUF 10 million for the violation of the provisions prohibiting market manipulation. The supervisory authority considered it a mitigating circumstance that the misreporting had been due to an unexpected, automatic technical factor that could not be eliminated by immediate, manual intervention. The error was corrected promptly after its detection by the news agency’s employee and immediate steps were taken to prevent similar cases in the future. Bloomberg’s cooperative conduct in the market surveillance procedure was also evaluated as a mitigating circumstance by HFSA.

Budapest, 2 May 2013

Hungarian Financial Supervisory Authority

Further information to the press:
István Binder, Spokesman
Phone: +361-489-9235
e-mail: sajto@pszaf.hu
website: www.pszaf.hu