asked the Minister for Industry and Commerce if the IDA have yet completed their feasibility study on the establishment of a futures market in Ireland by the European Mercantile Exchange; if discussions have been held on it with the promoters; and if he will make a statement on the matter.
Ceisteanna — Questions. Oral Answers. - Establishment of Futures Exchange.
44.
The proposal to which the Deputy refers involves the setting up of an international futures exchange in Dublin which will provide a location for the carrying on of its main activity of offering price or interest rate protection for individuals and businesses exposed to fluctuations in the prices of commodities or financial instruments.
There have been many discussions with the promoters of this project over the past two years but it was only in October 1986 that the promoters of the European Mercantile Exchange applied to the Industrial Development Authority for assistance towards the cost of carrying out a feasibility study of their proposal. Work carried out to that date in the course of a number of meetings with the IDA was regarded as preliminary and it was proposed to carry out a more indepth study of the feasibility of setting up such an exchange, its position relative to other exchanges, the feasibility of selling seats, financing scenarios, marketing considerations etc.
In November 1986 the IDA approved a feasibility study grant towards the costs of this exercise. The study was pursued and the promoters submitted their results to the Minister for Finance on 25 February 1987. A copy of the study was presented to the IDA subsequently. No payments have been made in respect of the feasibility study grant and no claims for such have been received by the IDA.
Discussions continued with the promoters of the European Mercantile Exchange, and in March 1987, the Government decided to establish a working group under the chairmanship of the Department of Finance and including representatives of my Department, the Revenue Commissioners and the Central Bank of investigate the proposal.
Clearly a development of substantial significance for the advancement of consideration of this proposal was the end-April announcement by the Government of their intention to provide in the Finance Bill 1987 for the extension of the 10 per cent corporation profits tax regime to income from financial services provided in the Customs House Dock site.
Finally, many of the wider aspects for consideration in relation to the establishment of a European Merchantile Exchange are being covered in the broader work being undertaken in relation to the establishment of a Financial Services Centre in the Custom House Docks site.
Is the Minister aware of the enormous potential of a futures market in Ireland and the growth of futures markets in other parts of the world? For example, in Chicago contracts increased from 90 million in 1982 to 150 million in 1984. Would the Minister agree that there is a direct and indirect jobs potential of 1,000 jobs if such a centre was established in Ireland; that most of the business conducted would be foreign business which would bring stability to those seeking a hedge against a particular currency, and that such a development would be extremely welcome in this country and should be encouraged?
I agree with and accept what the Deputy has said. The development of such a futures exchange market in Ireland has vast potential in respect of the various areas of foreign exchange, commodity dealings etc., but I am sure the Deputy will accept that the Governments move in setting up an international financial service sector in the dock site will be investigating and finding solutions to the many problems which existed before this decision was made, and that the evaluation of this project will continue in conjunction with the development of the international financial services sector in Dublin.
Did I hear the Minister correctly to say in his reply that a working party was set up, further to the feasibility study which took place in conjunction with the IDA and others, to specifically look at a futures market? When will that working party complete their work and what timescale will be given for decisions to be made in relation to exchange control or to the tax changes which may be necessary? In other words, would it be possible to have the preliminary work completed in a matter of three months?
The study was pursued and the promoters submitted their results to the Minister for Finance on 25 February 1987. A copy of this study was presented to the IDA subsequently. Discussions continued with the promoters of the European Mercantile Exchange and in March 1987 the Government decided to set up a working group under the chairmanship of the Department of Finance and including representatives of my Department. Therefore, it is the Minister and the Department of Finance who are spearheading it in that direction. As the Deputy will appreciate, the questions which will have to be addressed in relation to a futures market are very similar, if not the same in many instances, to the ones which will have to be addressed in relation to exchange control. The Deputy can take it that the questions will be pursued on the lines I have outlined today.
Therefore, I think the Minister is agreeing that the working party was in operation after the result of the feasibility study. I do not entirely agree that the two are linked. They are related but one could go ahead without the other. Can the Minister tell us specifically when will the work of the working party to which he has referred be completed and what timescale is going to be given for decisions to be made in relation to exchange control?
The supplementary questions now asked by the Deputy should be referred to the Minister for Finance as it is he who will be in a position to answer them. The Deputy will appreciate that I am not in a position to answer questions in relation to exchange control and the other related items. This working party is under the chairmanship of the Minister for Finance and any further requests for information should be addressed to him.