ECB agrees code of conduct after hedge-fund dinner criticism

By John O'Donnell

FRANKFURT (Reuters) - The European Central Bank has agreed a new code of conduct to stop top officials giving select groups sensitive information, months after a rate-setter was criticised for discussing money printing plans with hedge funds.

The ECB said on Tuesday it had new guidelines to ensure that "market-sensitive information is not disclosed to select groups", spelling out restrictions to stop policy-setters inadvertently giving any audience an advantage over the public.

The move responds to criticism of a speech in May, when Benoit Coeure, a member of the ECB's Executive Board, gave market sensitive information to an invitation-only conference attended by hedge fund managers.

When his comments were finally released on the ECB's website the following morning, the euro fell sharply while stock and bond prices jumped. The ECB said this delayed publication was accidental.

Nonetheless, some investors cried foul and the EU's top watchdog or Ombudsman, who watches for lapses in ethics or transparency at European institutions, challenged Frankfurt to explain itself.

Based on the new rules, market-sensitive remarks can only be released if they are published by the ECB at the start of the speech or if the event can be monitored by the public live or if media representatives are allowed to attend.

Central bankers regularly speak at events, give briefings and attend meetings that are not open to the media. ECB officials alone go to hundreds every year, hosted by a wide variety of organisations.

In its statement on Tuesday, the ECB defended such gatherings with 'specialised audiences' as part of a legitimate 'two-way communication'.

In its new code, however, it said that any speaking engagement should not be "perceived as giving the organiser a prestige advantage over a competitor or allowing them to benefit financially from apparently exclusive contacts".

(Reporting By John O'Donnell; Editing by Ruth Pitchford)