Brian Lenihan Jnr (Dublin West, Fianna Fail)

I am still searching.

The Bill includes a provision amending the Markets in Financial Instruments and Miscellaneous Provisions Act 2007 to enable the Minister for Finance to make regulations requiring that certain information relating to transactions in financial instruments must be disclosed to the Financial Regulator, the market or both. Certain financial instruments can be used to acquire an economic interest in the shares of publicly listed companies without acquiring direct control over, or ownership of, such shares. Such financial instruments are increasingly used by investors to avoid disclosure of their economic interest in a particular company.

There has been particular controversy regarding the use of contracts for difference, CfDs, which, unlike share transactions, do not need to be reported to the market, unless the contracts explicitly provide a right to acquire or give access to voting rights. The provisions in section 12 enable the Minister for Finance to make regulations to require all those who have entered into transactions in financial instruments to disclose certain information relating to those transactions to the Financial Regulator, the market, or both. The provision covers all financial instruments in order to cater for possible future market developments, but the intention is to make regulations covering CfDs in the first instance.

The decision to recapitalise Allied Irish Banks and Bank of Ireland is a clear indication that the Government is fully prepared to stand behind the banking system. We have embarked on a comprehensive recapitalisation programme for our financial institutions which will reinforce the stability of our financial system, increase confidence in our banking system and facilitate the banks involved lending to the wider economy. Our actions send a clear message to customers, investors, credit rating agencies and the markets generally that Ireland is a safe and secure place in which to do banking business.

In preparing this legislation, I was anxious to convey another important message. The existence of the National Pensions Reserve Fund is taken into account by those who lend to Ireland. The amendments to the legislation that have been brought forward in the House have been brought forward on the basis of minimal change to the existing legislation. The argument has been canvassed in the House as to whether we should take a holiday from making a contribution into the fund when we are operating from a position of Exchequer borrowing rather than surplus. It should be borne in mind that the front loading of the contribution means the essential investment which must take place in the banking system will allow us further space to consider this issue in the next two years. Therefore, it is not necessary to decide on this issue at this stage.

It is worth noting that the fund has substantially depleted in value as a consequence of the global decline in stock values. The sums that are available to finance the recapitalisation from the fund are liquid assets which can be realised easily. It has been canvassed in other quarters that the fund could be applied to some greater national purpose. However, the realisation of the remainder of the fund would come at a considerable cost because it is denominated in equities and other stocks which have depreciated in value and which would, in effect, have to be sold on a fire sale basis.

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