According to the 2006 International Monetary Fund (IMF) Financial System Stability Assessment (FSSA) Update, Ireland has achieved good progress in strengthening the securities regulatory and supervisory environment, in accordance with the recommendations of the IMF 2001 Report on Standards and Codes on Securities Supervision, a component of the 2001 Financial Sector Assessment Program. In particular, a consolidated regulatory framework was created. Before 2003, the supervision and the regulation of securities were the responsibilities of the Central Bank of Ireland. In 2003, the Central Bank and Financial Services Authority of Ireland Act of the same year, charged the Irish Financial Services Regulatory Authority (IFSRA) with regulation of the securities market. The IFSRA is a unified and autonomous regulator, and its purpose is to ensure consumer protection, prudential supervision, and financial stability. However, the 2006 IMF FSSA Update mentions a few areas that could use further improvement, as well as the need for Ireland's regulatory and supervisory framework to adapt to the evolving market conditions.

General Overview

According to the International Monetary Fund's (IMF) 2006 Financial System Stability Assessment (FSSA) Update, Ireland has achieved good progress in strengthening the securities regulatory and supervisory environment, in accordance with the recommendations of the IMF's 2001 Report on Standards and Codes (ROSC) on Securities Supervision, a component of the 2001 Financial Sector Assessment Program. In particular, a unified approach to securities regulation was created, that also allows for differentiation. However, the FSSA Update mentions a few areas that could use further improvement, as well as the need for Ireland's regulatory and supervisory framework to adapt to the evolving market conditions. The suggestions include continuously reviewing the resources available for supervisory and regulatory functions in consideration of regulatory developments and the growing international financial services sector; and more on-site visits to insurers could aid in the assessment of their risk management and corporate governance practices.

The IFSRA website discloses that the principle laws for the authorization and ongoing supervision of investment firms and exchanges and financial intermediaries are the Investment Intermediaries Act of 1995, the Stock Exchange Act of 1995 and for futures exchanges the Central Bank Act of 1989. The Central Bank and Financial Services Authority of Ireland Act of 2003 charges the Irish Financial Services Regulatory Authority (IFSRA) as the securities regulator and obligates it to report issues to the Revenue Commissioners, the Director of Corporate Enforcement, the Competition Authority, and the police force. The Central Bank and Financial Services Authority of Ireland Act of 2004 grants the IFSRA the power to sanction violations of financial services regulations. The Consumer Protection Code was published in July 2006 for the purpose of establishing protection standards for purchasers of financial products and services, ensuring a level of protection for consumers with regard to all regulated entities, and facilitating competition.

Before 2003, the supervision and the regulation of securities was the responsibility of the Central Bank of Ireland (CBI). Since then, the IFSRA, an autonomous regulator, is in charge of the regulation and supervision of the securities markets. It is a component of the Central Bank and Financial Services Authority of Ireland (CBFSAI) which was created by the Central Bank and Financial Services Authority of Ireland Act of 2003. The IFSRA is a unified regulator, created with the purpose of improving information flows among supervisors and others responsible for monitoring systemic risks, and for facilitating coordination between authorities. The 2006 IMF FSSA Update reports that it has adopted "an integrated approach that balances consumer protection, prudential supervision and financial stability" (p. 26). The IFSRA has three departments that supervise the capital markets. The Market Supervision Department (MSD) of the IFSRA supervises the Irish Stock Exchange (ISE) and the Financial Instruments Exchange (FINEX), and carries out the European Union (EU) Prospectus Directive, EU Market Abuse Directive, and EU Transparency Directive. The Investment Service Providers Supervision Department (ISPS) is in charge of the supervision of financial intermediaries; and the Financial Institutions and Funds Authorization Department (FIFA) is responsible for authorizing all financial services providers and supervising collective investment schemes (CIS). The scope of the IFSRA's supervision covers both domestic and International Financial Services (IFS) entities. According to the ISE website, under the Stock Exchange Act of 1995, the financial regulator is responsible for the authorization of stock exchanges and member firms. The IFSRA delegated the responsibility of overseeing member firms to the ISE. All members must comply with the requirements of the rules of the Irish Stock Exchange Limited, which cover proper business conduct.

A number of EU directives have been implemented since 2005 or are in the process of implementation. According to the ISE website, the Market Abuse Directive regulates laws on preventing insider trading and market manipulation. The UK's Financial Services Authority (FSA) website states that the EU Prospectus Directive regulates the laws pertaining to the content and format of prospectuses for public companies and companies whose securities are traded on an EU regulated market. The Transparency Directive, which was mandatory as of January 20, 2007, improves transparency by setting minimum periodic financial reporting, and disclosure of major shareholding requirements. It also defines mechanisms for the storage and dissemination of information. Also, the Markets in Financial Instruments Directive (MiFID) was due for implementation by November 2007. It harmonizes certain aspects of the organizational and business-conduct requirements that govern firms and standardize certain aspects of the operation of regulated markets, in accordance with the developments in the financial services markets. The MiFID applies to investment banks, portfolio managers, stockbrokers and broker dealers, corporate finance firms, several futures and options firms, and a few commodities firms.

The U.S. Department of Commerce's (DoC) 2007 Country Commercial Guide provides a good overview of capital market conditions in Ireland. Total market capitalization in the ISE reached euro 118.8 billion, almost 68 percent of the projected 2006 nominal GDP. In 2002, the ISE experienced a significant drop due to mismanagement of a number of major Irish companies; but then experienced enormous growth between 2002 and 2006. Between 2002 and 2005, returns were between 19 and 26 percent per year. In 2006, returns on 2005 totaled at 28 percent. The ISE opened the Irish Enterprise Exchange (IEX) for small and medium sized firms. In its first 11 months, returns were up 28 percent. The CBFSAI is an ordinary member of the International Organization of Securities Commissions (IOSCO), as disclosed on the IOSCO website.

The Principles

1. The responsibilities of the regulator should be clear and objectively stated.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to the regulator. Before 2003, the supervision and the regulation of securities were the responsibilities of the Central Bank of Ireland. According to the 2006 IMF FSSA Update, since then, the IFSRA is charged with the regulation and supervision of the securities markets by the CBFSAI Act of 2003. It is a unified regulator created with the purpose of improving information flows among supervisors and others responsible for monitoring systemic risks, and for facilitating coordination between authorities. It has adopted "an integrated approach that balances consumer protection, prudential supervision and financial stability" (p. 26). The IFSRA has three departments that supervise the capital markets. The MSD supervises the ISE and FINEX and carries out the EU Prospectus Directive, EU Market Abuse Directive, and EU Transparency Directive. The ISPS is in charge of the supervision of financial intermediaries; and FIFA is responsible for authorizing all financial services providers and supervising CIS. The scope of the IFSRA's supervision covers both domestic and IFS entities. According to the ISE website, under the Stock Exchange Act of 1995, the financial regulator is responsible for the authorization of stock exchanges and member firms. The IFSRA delegated the responsibility of overseeing member firms to the ISE. All members must comply with the requirements of the Rules of the Irish Stock Exchange Limited, which cover proper business conduct.

The principle laws for the authorization and ongoing supervision of investment firms and exchanges and financial intermediaries are the Investment Intermediaries Act of 1995, the Stock Exchange Act of 1995 and, for futures exchanges, the Central Bank Act of 1989. The CBFSAI Act of 2003 charges the IFSRA as the securities regulator and obligates it to report issues to the Revenue Commissioners, the Director of Corporate Enforcement, the Competition Authority, and the police. The CBFSAI Act 2004 grants the IFSRA the power to sanction violations of financial services regulations. According to the IFSRA website, the Consumer Protection Code was published in July 2006 for the purpose of establishing protection standards for purchasers of financial products and services, ensuring a level of protection for consumers with regard to all regulated entities, and facilitating competition. Also, the FSA website indicates that a number of EU Directives have been implemented since 2005 or are in the process of implementation, including Directives on Prospectus, Market Abuse, Transparency and MiFID.

2. The regulator should be operationally independent and accountable in the exercise of its functions and powers.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to the regulator. The IMF 2006 FSSA Update for Ireland indicates that the IFSRA has operational and budgetary independence. Beginning in 2003, half of the IFSRA budget comes from the CBFSAI, and half comes from the industry.

3. The regulator should have adequate powers, proper resources and the capacity to perform its functions and exercise its powers.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to the regulator. According to the 2006 IMF FSSA Update, Ireland addressed the IMF's 2001 concerns pertaining to shortages of qualified staff and potential competition for staff. While there is still high demand for staff in the securities market, there are no more shortages. The number of staff in the SES and FIFA increased from 88 to 120 between 1998 and 2005. However, the 2006 FSSA Update suggests that "as the financial system develops, a move toward higher specialization might require a more formalized approach of internal information sharing" (p. 23). Also, a tracking system for supervisory activities may be beneficial to ongoing supervision.

4. The regulator should adopt clear and consistent regulatory processes.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to the regulator. The 2006 IMF FSSA Update reports that, in 2000, the revised Handbook for Investment and Stockbroking Firms was published. It consolidates and updates requirements for members of the ISE and firms that provide investment business services. Also, in 2001, two handbooks for Authorized Advisors and Restricted Intermediaries went into effect.

5. The staff of the regulator should observe the highest professional standards, including appropriate standards of confidentiality.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to the regulator. The Rules of the Irish Stock Exchange Limited (2007) covers the ISE's confidentiality requirements and the specific circumstances where disclosure is permitted.

6. The regulatory regime should make appropriate use of Self-Regulatory Organizations (SROs) that exercise some direct oversight responsibility for their respective areas of competence, to the extent appropriate to the size and complexity of the markets.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to self-regulation. The IFSRA delegated the responsibility of overseeing member firms to the ISE. Proper business conduct requirements for member firms are covered in the Rules of the Irish Stock Exchange Limited. The ISE ensures compliance through surveillance and on-site visits, and has disciplinary authority over members are in violation of the Rules.

7. SROs should be subject to the oversight of the regulator and should observe standards of fairness and confidentiality when exercising powers and delegated responsibilities.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to self-regulation. According to the IFSRA website, the Securities and Exchange Supervision department is responsible for supervising investment firms and exchanges.

8. The regulator should have comprehensive inspection, investigation and surveillance powers.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to enforcement. The 2006 IMF FSSA Update indicates that a new administrative sanctions regime was established to provide a more flexible enforcement system to fulfill recommendations by the 2001 IMF FSSA. It provides for supervisory action, administrative sanctions, and court prosecution. However, it further recommends that the administrative sanctions regime have improved investigation/ enforcement capacity and clear authority and decision making process, especially for decisions pertaining to administrative direction and criminal prosecutions.

9. The regulator should have comprehensive enforcement powers.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to enforcement. The 2006 IMF FSSA Update indicates that a new administrative sanctions regime was established to provide a more flexible enforcement system to fulfill recommendations by the 2001 IMF FSSA. It provides for supervisory action and administrative sanctions, Court prosecution.

10. The regulatory system should ensure an effective and credible use of inspection, investigation, surveillance and enforcement powers and implementation of an effective compliance program.

FC

See principle 9.

11. The regulator should have authority to share both public and non-public information with domestic and foreign counterparts.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to cooperation in regulation. According to the 2006 IMF FSSA Update, since the previous assessment, the IFSRA has entered into several additional Memoranda of Understanding (MoUs) with foreign securities regulators, such as the United States' FINEX and the Commodity Futures Trading Commission.

12. Regulators should establish information sharing mechanisms that set out when and how they will share both public and non-public information with their domestic and foreign counterparts.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to cooperation in regulation. According to the 2006 IMF FSSA Update, since the previous assessment, the IFSRA has entered into several additional MoUs with foreign securities regulators such as United States' FINEX and the Commodity Futures Trading Commission. The IOSCO website indicates that Ireland has signed IOSCO MoUs with the relevant authorities in 19 countries.

13. The regulatory system should allow for assistance to be provided to foreign regulators who need to make inquiries in the discharge of their functions and exercise of their powers.

FC

See principle 12.

14. There should be full, timely and accurate disclosure of financial results and other information that is material to investors’ decisions.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to issuers. According to a 2006 press statement by Patrick Neary, chief executive of the IFSRA, in 2005, the IFSRA was given new market oversight responsibilities to enforce the EU Directives on Market Abuse and Prospectus. According to the ISE website, the Market Abuse Directive regulates laws on preventing insider trading and market manipulation. The FSA website conveys that the EU Prospectus Directive regulates the laws pertaining to the content and format of prospectuses for public companies and companies whose securities are traded on an EU regulated market. The Transparency Directive, which was required to be implemented by January 20, 2007, improves transparency by setting minimum periodic financial reporting and disclosure of major shareholding requirements. It also defines mechanisms for the storage and dissemination of information.

15. Holders of securities in a company should be treated in a fair and equitable manner.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to issuers. In its 2002 report, the law firm of Weil, Gotshal, and Manges (WGM) indicates that the ISE has disclosure requirements for share structure and significant shareholders. Shareholder approval is required for directors' reports and annual accounts. Shareholders also have decision making power with regard to dividends, election of directors, auditor appointments, auditor compensation, authorization of share repurchases, dividend reinvestment plans, amending the articles of association, stock issues approval, authorized capital increases, amending the stock option plans, director remuneration approval, and authorizing stock purchase plans. Also, there are no duties on controlling shareholders. It is customary for companies in Ireland to apply the one-share/ one-vote principle, meaning that a shareholder's voting power is directly proportional to number of shares owned. Laws do not protect shareholders from voting restrictions or multiple-voting shares. However, shares of the class are valued the same and receive equitable rights. In accordance with a 2004 amendment to section 131 of the 1963 Company Act, a company is required to hold an annual general meeting (AGM) each year. However, the Company Law Review Group's 2004 report points out that a written resolution signed by the shareholders entitled to attend and may override the requirement for an AGM. According to the KPMG International 2002 report, the Combined Code encourages the use of AGM to foster communication between boards and private investors, and initiate investor participation. Also, the Combined Code encourages a willingness to create a dialogue with institutional investors based on the direction of the company. However, institutional investors should not be privy to more information than private shareholders.

According to Manish Gupta's 2006 paper, Irish law stipulates that public companies must have at least two shareholders, while private companies may have no more than fifty shareholders. The shares of public companies may be transferred freely, while transferring the shares of a private company requires board approval. According to the Department of Enterprise, Trade, and Employment website, as of February 2007, the Investment Funds, Companies, and Miscellaneous Provisions Act 2005 implemented market abuse regulations, to prepare for the introduction of the EU Market Abuse Directive, which focuses on preventing insider trading and market manipulation. The ISE website indicates that Part V of the Companies Act 1990 prohibits insider trading and charges the Exchange with investigating insider trading.

16. Accounting and auditing standards should be of a high and internationally acceptable quality.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to issuers. The Companies (Auditing and Accounting) Act of 2003 establishes the Irish Auditing and Accounting Supervisory Board (IAASA), gives it the responsibility to supervise the regulatory functions of accountancy bodies, authorizes the Board to amend the Companies Law to transfer to it the necessary function to carry out its responsibility, and provides it with the authority to amend the company law with respect to auditing and accounting matters. The 2005 article by Mason Hayes and Curran reports that the Act applies to all public limited companies and large private companies and requires that all public limited companies have an audit committee and the Board of Directors of medium-sized companies states its compliance with legal obligations in a "Directors' Compliance Statement," including internal procedures to ensure compliance.

PricewaterhouseCoopers (PWC) reports in 2005 that the EC's (International Financial Reporting Standards and Miscellaneous Amendments) Regulations of 2005 were signed into Irish law by the Minister for Enterprise, Trade and Employment on February 24, 2005. The Regulations implement both the EU Regulation on the use of IFRS in Europe and the EU Modernization Directive on the preparation of accounts and directors' reports. Irish companies whose shares are listed on a regulated market in the EU must prepare their consolidated accounts in accordance with IFRS for years commencing on or after January 1, 2005. Most other Irish companies may choose to prepare their accounts, both individual and consolidated, for years commencing on or after January 1, 2005, either in accordance with IFRS or under existing Irish GAAP. (Charitable and Not-for- Profit companies may not use IFRS.)

17. The regulatory system should set standards for the eligibility and the regulation of those who wish to market or operate a collective investment scheme.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to collective investment schemes (CIS). According to the 2006 IMF FSSA Update, FIFA is in charge of supervising CISs, which are authorized as a product, in line with international practice. Because insurance companies are authorized as companies, there is the potential that different rules might apply to similar products, for example insurance bonds and units in a unit trust. In addition, the Department of Enterprise, Trade, and Employment notes that the Investment Funds, Companies, and Miscellaneous Provisions Act 2005 modified the law on CIS by providing more flexibility to the Funds Industry while still maintaining control. The Act introduced the non- Undertakings for Collective Investment in Transferable Securities Common Contractual Fund (UCITS CCF), and cross investment and segregated liability for investment funds. It also modified the company law to prepare for the introduction of the EU Market Abuse and Prospectus Directives. Commencement orders were signed on June 30 and November 9 of 2005.

18. The regulatory system should provide for rules governing the legal form and structure of collective investment schemes and the segregation and protection of client assets.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to CISs. The law segregates and protects client assets through includes regulations governing the legal form and structure of collective investment schemes. According to the 2006 IMF FSSA Update, FIFA is in charge of supervising CISs, which are authorized as a product, in line with international practice. Because insurance companies are authorized as a company, there is the potential that different rules might apply to similar products, for example insurance bonds and units in a unit trust. In addition, the Department of Enterprise, Trade and Employment notes that the Investment Funds, Companies and Miscellaneous Provisions Act 2005 modified the law on CIS by providing more flexibility to the Funds Industry while still maintaining control. The Act introduced the non-UCITS CCF and cross investment and segregated liability for investment funds. It also modified the company law to prepare for the introduction of the EU Market Abuse and Prospectus Directives. Commencement orders were signed on June 30 and November 9 of 2005.

19. Regulation should require disclosure, as set forth under the principles for issuers, which is necessary to evaluate the suitability of a collective investment scheme for a particular investor and the value of the investor’s interest in the scheme.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to CISs. UCITS must comply with EU mandated disclosure requirements such as making initial disclosure and annual and half-yearly reports. According to the 2006 IMF FSSA Update, FIFA is in charge of supervising CISs, which are authorized as a product, in line with international practice. In addition, the Department of Enterprise, Trade and Employment notes that the Investment Funds, Companies and Miscellaneous Provisions Act 2005 modified the law on CIS by providing more flexibility to the Funds Industry while still maintaining control. The Act introduced the non-UCITS CCF and cross investment and segregated liability for investment funds. It also modified the company law to prepare for the introduction of the EU Market Abuse and Prospectus Directives. Commencement orders were signed on June 30 and November 9 of 2005.

20. Regulation should ensure that there is a proper and disclosed basis for asset valuation and the pricing and the redemption of units in a collective investment scheme.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to CISs. The 2001 ROSC, inclusion of a company's rules for CIS asset valuation are required in the constitutional document, and must be approved by the CBI. The law requires that the issuance and redemption of CIS units be at net asset value, aside from relevant charges. According to the 2006 IMF FSSA Update, FIFA is in charge of supervising CISs, which are authorized as a product, in line with international practice. In addition, the Department of Enterprise, Trade and Employment notes that the Investment Funds, Companies, and Miscellaneous Provisions Act of 2005 modified the law on CISs by providing more flexibility to the funds industry while still maintaining control. The Act introduced the non-UCITS CCF and cross investment and segregated liability for investment funds. It also modified the company law to prepare for the introduction of the EU Market Abuse and Prospectus Directives. Commencement orders were signed on June 30 and November 9 of 2005.

21. Regulation should provide for minimum entry standards for market intermediaries.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to market intermediaries. The examination of application is covered by Section 10 of the Investment Intermediaries Act 1995 and Section 18 of the Stock Exchange Act 1995. The 2006 IMF FSSA reports that a Handbook that includes general and supervisory requirements, advertising requirements, client money requirements, and the Code of Conduct has been provided to all supervised firms.

22. There should be initial and ongoing capital and other prudential requirements for market intermediaries that reflect the risks that the intermediaries undertake.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to market intermediaries. The examination of applications is covered by Section 10 of the Investment Intermediaries Act of 1995 and Section 18 of the Stock Exchange Act of 1995. The CBI practiced intensive oversight of cases with the risk of failure, and required continuous reporting from those market intermediaries. The 2006 IMF FSSA reports that a Handbook that includes general and supervisory requirements, advertising requirements, client money requirements and the Code of Conduct has been provided to all supervised firms. Also, new arrangements established by brokerages to outsource back-office operations have addressed the 2001 FSAP's concerns that staff recruitment problems were placing a strain on brokerage operations and back-office functions.

23. Market intermediaries should be required to comply with standards for internal organization and operational conduct that aim to protect the interests of clients, ensure proper management of risk, and under which management of the intermediary accepts primary responsibility for these matters.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to market intermediaries. The 2006 IMF FSSA reports that a Handbook that includes general and supervisory requirements, advertising requirements, client money requirements and the Code of Conduct has been provided to all supervised firms. Also, new arrangements established by brokerages to outsource back-office operations have addressed the 2001 FSAP's concerns that staff recruitment problems were placing a strain on brokerage operations and back-office functions.

24. There should be procedures for dealing with the failure of a market intermediary in order to minimize damage and loss to investors and to contain systemic risk.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to market intermediaries. The CBI practices intensive oversight of cases with the risk of failure, and requires continuous reporting from those market intermediaries. Also, the CBI is in charge of formal determination. The Investor Compensation Company Limited seeks claims from affected clients and compensation is provided in accordance with the provisions of the Investor Compensation Act 1998. Since 2003, the IFSRA is charged with the regulation and supervision of the securities markets by the CBFSAI Act 2003. The 2006 IMF FSSA reports that a Handbook that includes general and supervisory requirements, advertising requirements, client money requirements and the Code of Conduct has been provided to all supervised firms. Also, new arrangements established by brokerages to outsource back-office operations have addressed the 2001 FSAP's concerns that staff recruitment problems were placing a strain on brokerage operations and back-office functions. However, since there have been no significant financial institution failures under the IFSRA, its ability to deal with a failure is unknown.

25. The establishment of trading systems including securities exchanges should be subject to regulatory authorization and oversight.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to secondary markets. According to the 2006 IMF FSSA Update, since 2003, the IFSRA is charged with the regulation and supervision of the securities markets by the CBFSAI Act of 2003. The Market Supervision Department of the IFSRA supervises the ISE and FINEX, and carries out the EU Prospectus Directive, EU Market Abuse Directive and the EU Transparency Directive. Patrick Neary's 2006 press statement indicates that, in 2005, the IFSRA was given new market oversight responsibilities to enforce the EU Directives on Market Abuse and Prospectus. According to the ISE website, the Market Abuse Directive regulates laws on preventing insider trading and market manipulation. The FSA website states that the EU Prospectus Directive regulates the laws pertaining to the content and format of prospectuses for public companies and companies whose securities are traded on an EU regulated market. The Transparency Directive, to be implemented by January 20, 2007, improves transparency by setting minimum periodic financial reporting, and disclosure of major shareholding requirements. It also defines mechanisms for the storage and dissemination of information.

26. There should be ongoing regulatory supervision of exchanges and trading systems which should aim to ensure that the integrity of trading is maintained through fair and equitable rules that strike an appropriate balance between the demands of different market participants.

FC

In its 2001 ROSC, the IMF reports that Ireland observed the principles relating to secondary markets. According to the 2006 IMF FSSA Update, since 2003, the IFSRA is charged with the regulation and supervision of the securities markets by the CBFSAI Act 2003. The Market Supervision Department of the IFSRA supervises the ISE and FINEX, and carries out the EU Prospectus Directive, EU Market Abuse Directive and the EU Transparency Directive. The ISE has switched to electronic trading and reporting via ISE Xetra platform which has solved the problem of delayed timing of information that was mentioned in the 2001 FSAP. According to a 2006 press statement by Patrick Neary, chief executive of the IFSRA, in 2005, the IFSRA was given new market oversight responsibilities to enforce the EU Directives on Market Abuse and Prospectus. According to the ISE website, the Market Abuse Directive regulates laws on preventing insider trading and market manipulation. The FSA website conveys that the EU Prospectus Directive regulates the laws pertaining to the content and format of prospectuses for public companies and companies whose securities are traded on an EU regulated market. The Transparency Directive, to be implemented by January 20, 2007, improves transparency by setting minimum periodic financial reporting and disclosure of major shareholding requirements. It also defines mechanisms for the storage and dissemination of information.

27. Regulation should promote transparency of trading.

FC

In its 2001 FSSA, the IMF reports that Ireland observed the principles relating to secondary markets. According to the 2006 IMF FSSA Update, since 2003, the IFSRA is charged with the regulation and supervision of the securities markets by the CBFSAI Act 2003. The Market Supervision Department of the IFSRA supervises the ISE and FINEX, and carries out the EU Prospectus Directive, EU Market Abuse Directive and the EU Transparency Directive. The ISE has switched to electronic trading and reporting via ISE Xetra platform which has solved the problem of delayed timing of information that was mentioned in the 2001 FSAP. According to a 2006 press statement by Patrick Neary, chief executive of the IFSRA, in 2005, the IFSRA was given new market oversight responsibilities to enforce the EU Directives on Market Abuse and Prospectus. According to the ISE website, the Market Abuse Directive regulates laws on preventing insider trading and market manipulation. The FSA website conveys that the EU Prospectus Directive regulates the laws pertaining to the content and format of prospectuses for public companies and companies whose securities are traded on an EU regulated market. The Transparency Directive, to be implemented by January 20, 2007, improves transparency by setting minimum periodic financial reporting and disclosure of major shareholding requirements. It also defines mechanisms for the storage and dissemination of information.

28. Regulation should be designed to detect and deter manipulation and other unfair trading practices.

FC

In its 2001 FSSA, the IMF reports that Ireland observed the principles relating to secondary markets. According to the 2006 IMF FSSA Update, since 2003, the IFSRA is charged with the regulation and supervision of the securities markets by the CBFSAI Act of 2003. The Market Supervision Department of the IFSRA supervises the ISE and FINEX, and carries out the EU Prospectus Directive, EU Market Abuse Directive and the EU Transparency Directive. The ISE has switched to electronic trading and reporting via ISE Xetra platform which has solved the problem of delayed timing of information that was mentioned in the 2001 FSAP. According to a 2006 press statement by Patrick Neary, chief executive of the IFSRA, in 2005, the IFSRA was given new market oversight responsibilities to enforce the EU Directives on Market Abuse and Prospectus. According to the ISE website, the Market Abuse Directive regulates laws on preventing insider trading and market manipulation. The FSA website conveys that the EU Prospectus Directive regulates the laws pertaining to the content and format of prospectuses for public companies and companies whose securities are traded on an EU regulated market. The Transparency Directive, to be implemented by January 20, 2007, improves transparency by setting minimum periodic financial reporting and disclosure of major shareholding requirements. It also defines mechanisms for the storage and dissemination of information.

29. Regulation should aim to ensure the proper management of large exposures, default risk and market disruption.

FC

In its 2001 FSSA, the IMF reports that Ireland observed the principles relating to secondary markets. . The 2006 IMF FSSA Update indicates that new arrangements, established by brokerages, to outsource back-office operations have addressed the 2001 FSAP's concerns that staff recruitment problems were placing a strain on brokerage operations and back-office functions.

30. Systems for clearing and settlement of securities transactions should be subject to regulatory oversight, and designed to ensure that they are fair, effective and efficient and that they reduce systemic risk.

FC

In its 2001 FSSA, the IMF reports that Ireland observed the principles relating to secondary markets.