We have now reached Report Stage and since there are no amendments on this Stage we will proceed to Fifth Stage.
Stock Exchange Bill, 1994: Report and Final Stages.
Question proposed: "That the Bill do now pass."
I will reiterate all the arguments I made on Committee Stage on this Bill. I cannot see why this Bill excludes a member of the stock exchange from being chairman of the stock exchange. While the Bill will obviously pass I wish to put on record again my objections to that provision which I consider unnecessary, ill advised and unduly dismissive of the integrity of the members of the stock exchange.
It is significant for the stock exchange that the Bill will pass. It moves the Irish Stock Exchange to a state of independence and allows for it to stand on its own. It is my wish and that of my party that the experience gained over several years will be put to good use by those who will operate the stock exchange. It is an important instrument in the State and best practice is essential. I hope the future of the Irish stock exchange will be good. All who participate in it will be anxious to ensure the well being of those involved and that it will grow from strength to strength. There is scope for the Irish stock exchange to expand. Many changes are occurring within stock exchanges worldwide and new ideas and new mechanisms are coming to the fore all the time. I hope the Irish stock exchange will be alert to that and will be innovative particularly in the operation of a stock exchange which by international standards is small. All of those things will be monitored carefully to ensure we have got it right in terms of the contents of this Bill.
As I said on Committee Stage — a point reiterated by Deputy McDowell — the Minister has made one glaring mistake in not allowing a member of the stock exchange to hold the chairmanship of the board of the stock exchange. There is no benefit in taking that approach. Indeed, it was not considered necessary in the original draft of the Bill. It was taken on foot of a ministerial amendment on Committee Stage. I do not know what sudden pressure, vested interest or reasoning came to the fore to make such an amendment necessary. The only argument the Minister put forward was that he wanted to confirm the perception that the stock exchange would be independent in every sense of the word and that we could all point to the fact that the chairman of the stock exchange was a person who was independent.
If that was the Minister's main concern, which it seemed to be on Committee Stage, given that this is a new operation he should have ensured that the chairman could be an independent member of the board. The Minister could have insisted on that in legislation but he should not have tied his hands forever and a day whereby no member of the stock exchange can assume the chairmanship. That is a fundamental mistake.
We will have to come back to his issue. It is not in the best interests of the stock exchange that such a final stand should be taken by the Minister with regard to the position of the chairman. We will have to revisit this issue and this section of the Bill. I wished to give my wholehearted support to the Bill but the insertion of that section by the Minister on Committee Stage diminishes the legislation. I regret the Minister has not seen fit to remove that amendment inserted on Committee Stage.
I thank Deputies for their constructive contributions on the Stock Exchange Bill whether on Second Stage when it was taken by the Minister of State, Deputy Eithne Fitzgerald, in Special Committee when it was taken by me and today in the House.
The enactment of this Bill will mark the end of the old system established by the Stock Exchange (Dublin) Act, 1799 under which the Irish Stock Exchange was set up and regulated — Grattan's Parliament. We will have a modern system of regulation more suited to the needs of our times and in line with modern international practice and the requirements of EU law.
Perhaps the most notable change will be the forthcoming separation of the Irish Stock Exchange from the International Stock Exchange of Great Britain and the Republic of Ireland, of which it has been a part for just over 20 years. That separation will take place once this Bill has been brought into operation, which, as I indicated on Committee Stage, I expect to happen on 1 July next.
The Bill establishes the Central Bank as the regulator for stock exchanges and their member firms. It sets up a detailed regulatory apparatus for this purpose which I believe will be flexible and effective. It will, I trust, allow the Central Bank and the Irish Stock Exchange to establish a good working relationship which will allow the Irish Stock Exchange to develop its full potential within an effective regulatory framework which will strengthen its position with investors and the companies which look to it for their funding.
I take this opportunity to respond briefly to one particular point made today by Deputies Michael McDowell and Cullen and which I promised to consider on Committee Stage. A number of Deputies, including the two Deputies in question, indicated they did not agree with the amendment to section 9 requiring an approved stock exchange to have an independent chairperson. I assure Deputy Cullen there was no pressure or any subtle leverage applied. The decision was taken after due and mature consideration.
The Bill, as amended on Committee Stage, now provides that the chairperson of a stock exchange must be independent of the member firms of that exchange and independent of the operation and management of the exchange. I explained on Committee Stage that I was responding to views on the subject expressed in this House during the Second Stage debate on the Bill and that the amendment was very much to do with ensuring that the Stock Exchange will be seen to operate in an open, transparent and above-board way.
The Stock Exchange is a small organisation, made up of only ten member firms, which plays a key role in the economy. It will be relaunching itself after it separates from the London Stock Exchange; it will, under this legislation, continue to have a regulatory role and it will continue to need the support and confidence of investors, quoted companies and companies considering a quotation. I have considered all aspects of this issue carefully, as I undertook to do, and I am all the more convinced that the requirement that the chairperson of the Exchange must be independent is a valuable addition to the Bill and will bring benefits to the Irish Stock Exchange and its member firms. I also believe that the Exchange and its member firms will come to share that view.
Deputy McDowell raised a number of points on Committee Stage which I have considered. None of them gives rise to an amendment and, rather than take up the House's time explaining them, I propose to write to the Deputy.
I would like to take this opportunity to thank the Central Bank for its contribution to the preparation of this Bill. I would also like to thank the Irish Stock Exchange for its co-operation in the process.
The Stock Exchange Bill, as I have mentioned before, is one part of the legislation which is required to transpose the EU Investment Services Directive. I expect to be back shortly with the other part, the Investment Intermediaries Bill. This will implement the Directive in respect of investment intermediaries who are not member firms of a stock exchange and will regulate the investment activities of investment intermediaries generally in this country. I look forward to the co-operation of the House in dealing with it. The pressure for this came from within this House on Second Stage. I stress that the Stock Exchange is a very small body containing ten member firms, but it has a key role in the economy. It is crucial that it should have an independent chairperson. That is essential from the point of view of ongoing confidence of investors, companies and the general public.
The Minister is impugning the members of the member firms.
I am not.
The Minister certainly is. It is an extraordinary statement to reiterate.
We are not imposing a particular chairperson. The member firms will have a majority and will pick the balance of the four independent members from among whom will come the chairperson. I do not know what else could be done by way of a gesture.
It is three plus one.
I am confident that not alone are we doing the right thing today but that this issue will not be revisited in the future.
The Minister is putting a veto on the potentially best chairman.
Question put and declared carried.