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| Department of Finance, Dublin |
The Minister for Finance, Mr Brian Cowen TD, today announced that the Government had approved the publication of the Markets in Financial Instruments and Miscellaneous Provisions Bill 2007.
The EU Markets in Financial Instruments Directive (MiFID) was recently transposed into Irish law. The MiFID harmonises and modernises the EU-wide legislative framework for investment firms, promoting greater cross-border competition and the competitiveness of the EU financial sector overall.
The Bill being published today provides for some complementary measures to specify significant penalties following conviction on indictment for breaches of regulatory requirements under MiFID.
The Bill is also being availed of to make a range of largely technical amendments to various Acts including those concerning the National Treasury Management Agency, the Financial Regulator, the Financial Services Ombudsman, Ministerial pensions and credit unions.
1. Markets in Financial Instruments Directive (MiFID)
The aim of the MiFID is to create a pan-European market in investment products by replacing a patchwork of national rules with harmonised EU-wide regulation and investor protection, so as to allow investment firms to sell investment products and services outside their home markets based on a single licence from their home country regulator. It also introduces more comprehensive consumer protection and reporting arrangements. The scale of the proposed penalties (a fine of up to €10 million and/or 10 years imprisonment) is such that primary legislation is required.
2. Reinsurance Regulations
The Bill will ensure that appropriate sanctions can be provided for a conviction on indictment for specified offences in the Reinsurance Regulations which were introduced last July as part of the transposition of the EU Reinsurance Directive.
3. Netting of Financial Contracts Act 1995
The Netting of Financial Contracts Act ensures that agreements between two parties to set off their mutual liabilities to arrive at a single net amount owing by one party to another are enforceable. This reduces both parties exposure to risk. Given the rapid pace of change in financial services, this Bill now widens the range of financial contracts covered by the Act in response to market developments.
4. Client monies
The Bill amends Section 52 of the Investment Intermediaries Act 1995 to confirm certain limitations of receiver/liquidator access to client money following the winding-up of an authorised investment business firm as recommended in the report of the Morrogh Review Group.
5. Icarom Plc
The Bill provides for a simplification for the State ownership of Icarom plc (under administration) - formerly Insurance Corporation of Ireland - by authorising the removal of the holding company, Sealúchais Árachais Teoranta (SAT), from the current ownership structure.
6. Financial Regulator
The amendments in the Bill pertaining to the Financial Regulator allow for an extension of the deadline for submission of its annual budget and permit a reduction in the number of compulsory retirements from the Regulatory Authority to take account of voluntary retirements. It allows the Financial Regulator, subject to any EU confidentiality constraints, to disclose confidential information to the National Consumer Agency for the performance of the Agency's functions. The Bill also permits the Financial Regulator to charge fees (with the approval of the Minister for Finance) in respect of various functions under Irish investment services law.
7. Financial Services Ombudsman
In relation to the Financial Services Ombudsman, the Bill relieves the Ombudsman of the requirement to provide the Financial Regulator with certain details where he decides not to investigate or to discontinue an investigation and provides that members of the Ombudsman Council shall not be liable for costs arising from the discharge, in good faith, of their statutory duties.
8. National Treasury Management Agency (NTMA)
The legislation governing the National Treasury Management Agency (NTMA) is being amended under the Bill to allow the Agency provide foreign currency services for Government Departments and non-commercial state bodies and also to allow non-commercial semi-state bodies to avail of the Agency’s Central Treasury Service without being formally designated. Other amendments extend the Agency’s power to engage in swaps transactions through its Central Treasury Service.
9. Ministerial Pensions Legislation
The Bill amends legislation governing Ministerial pensions to provide the Minister for Finance the discretion to backdate the payment of a pension in the case of an application made outside the six month time limit for such applications. It also brings the qualifying requirements for Ministerial pension for those with service as a Minister and other service as a Minister of State prior to 1993 into line with the provisions of the current pension scheme.
10. Credit Unions
The Bill amends Section 35(2) of the Credit Union Act to allow an interpretation of the lending limits which excludes loans where the period remaining on the loan falls below the periods specified in the legislation. This amendment is in line with a recommendation of the Report of the Review Group on longer-term lending limits under Section 35 of the Credit Union Act, 1997.
