Written answers

Wednesday, 4 June 2008

Department of Finance

Financial Services Regulation

10:00 pm

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Question 117: To ask the Minister for Finance if, in view of the turmoil in the international financial markets and consequent concerns about probity in Irish financial markets, he is satisfied that the regulation of financial markets here is sufficiently robust and thorough, particularly in view of a recent Supreme Court ruling that the executive chairman of a major Irish company used insider information to trade illegally, has only recently resigned following the Irish Association of Investment Managers stating that it is inappropriate for them to remain in office; and if he will make a statement on the matter. [21984/08]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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I should first explain that policy responsibility for market abuse legislation is a matter for my colleague, the Tánaiste and Minister for Enterprise, Trade and Employment.

It is important to emphasise that the statutory framework for financial regulation in Ireland is largely shaped by a detailed and comprehensive EU template, which applies across the Union. The Irish financial services industry is also supported by a strong and credible regulatory system. Our principles-led regulatory system maintains the highest standards and the recent OECD economic survey of Ireland gave high marks to the Irish regulatory system, acknowledging in particular the important forward-looking actions taken by the Financial Regulator in advance of the market turmoil in the latter part of 2007. The International Monetary Fund in its assessment of the stability of Ireland's financial system also commented very favourably on the progress achieved in strengthening the regulatory and supervisory framework in Ireland.

The case to which the Deputy refers occurred prior to the enactment of the legislation which currently governs market abuse. The legislative framework which now applies to market abuse issues is S.I. No. 342 of 2005, the Market Abuse (Directive 2003/6/EC) Regulations, 2005. These regulations apply to all financial instruments admitted to trading on the main market of the Irish Stock Exchange and reflect the provisions of the EU Market Abuse Directive which embodies best practice international standards to guard against insider trading and market manipulation.

Responsibility for the day-to-day administration of this legislation is a matter for the Financial Regulator. Since it took on this function, the Financial Regulator has introduced additional market abuse rules. I understand that the Financial Regulator has also been working throughout 2007 and continues to work on strategic plans to strengthen significantly its supervisory role in relation to the financial markets. Furthermore it has substantial powers available to it to compel evidence and to impose administrative sanctions.

Consequently, I am satisfied that Ireland has a strong legislative framework for financial regulation, including in relation to market abuse, and that this is complemented by a robust supervisory regime.

With regard to the particular case referred to by the Deputy, it would not be appropriate for me to comment on an individual case in respect of which the Director of Corporate Enforcement has applied for the appointment of High Court inspectors.

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