Seán Ardagh (Dublin South Central, Fianna Fail)

I am delighted to have this opportunity to contribute to the Bill which I welcome. I welcome in particular the main reason for its introduction which is to give a legislative basis to the fines and potential ten year prison sentence for people found to be in contravention of the markets in financial instruments directive, MiFID. I question the imposition of a fine of €10 million in that regard in this day and age. While I am aware it is a pan-European figure, when account is taken of the types of bonuses some people in security firms earn per year, €10 million, effectively, would not be a quarter of the bonus earned by the principals in one year. There is an opportunity in the legislation to review that figure in the future.

Deputy Burton stole my thunder, to some extent, in regard to CFDs because CFDs and financial spread betting is the item of the moment as such. It came to the fore for me on Sunday night when a constituent telephoned and, effectively, said that many people were being ripped off by the stockbrokering firms in Ireland marketing and selling CFDs in particular.

Like Deputy Bruton, I also listened to the radio and I heard Nick Leeson, formerly of Barings Bank, promoting paddypowertrader.com, a financial spread betting website. Being close to a number of punters, physically and otherwise, I decided to check the website. A pop-up screen on the website stated: "€100 Free — Jump Start your Trading" but the small print below it stated: "Just deposit €250 and place four trades by 14 October and we'll give you an extra €100 absolutely free".

I refer to a company called City Index Limited, which I will mention later because it is relevant in another context. On 23 March 2005 a press release issued from Anna Bradley, director of the Financial Services Authority, stating that the Financial Services Authority has fined City Index Ltd £35,000 for producing misleading financial promotions for spread betting and contracts for differences between certain dates. It stated that the firm was also fined for various failures in its systems. It communicated the financial promotions to the general public through daily national newspapers, magazines and on carrier bags used by selected sandwich shops. The promotional strategy had the potential to attract customers to high risk investments without adequately describing the promotions, the commitment required and the risks involved with spread betting and CFDs. This is a statement from the Financial Services Authority. It stated further that spread bets and CFDs are both high risk investment activities as if the position moves against the customer he or she can rapidly incur liabilities far in excess of the initial stake. It stated also that it is important that the financial promotions disclose that a customer's liability may exceed the customer's initial deposit or margin.

Another paragraph in the press release relevant to paddypowertrader.com states:

The FSA also found that a financial promotion communicated on carrier bags did not include a fair description of the nature of an investment offered by City Index. That promotion referred to a "free £25 bet". The bet was not "free" because of a requirement that a potential customer had first to place an initial spread bet through City Index in order to become entitled to the "free" bet. The customer could lose all, and potentially much more, of the customer's initial spread bet before becoming entitled to the "free" bet.

That is very similar to the situation that arose on paddypowertrader.com.

See this speech in context