An Oireachtas committee has heard about a gap in legislation which prevents the Irish Stock Exchange from investigating the conduct of stockbroking firms.
Officials from the ISE were before the Joint Committee on Economic Regulatory Affairs.
The gap means larger credit unions with complaints against stockbroking firms have recourse only to the courts and cannot have complaints dealt with by the exchange itself. Exchange officials said this was because its powers in this area were abolished as part of legislation introduced after an EU directive on financial instruments.
But ISE chairman Padraig O'Connor said the Financial Regulator could investigate the conduct of stockbroking firms, and had effectively taken over the ISE's role.
Asked about contracts for difference (CFDs), ISE chief Deirdre Somers said the exchange did not lobby the Government in any way against disclosure of CFDs, adding that they should be subject to the same rules as ordinary shares.
CFDs allow investors to borrow money from a stockbroker who purchases shares on their behalf. When the shares fall, however, the broker asks the investor to put up more money in what is known as a 'margin call'. CFDs were used by Seán Quinn and his family to build up a stake in Anglo Irish Bank.
