THE IRISH Stock Exchange (ISE) is to establish an independent body to combat insider trading and market abuse, and has appointed a senior figure from the Financial Services Authority in the UK to manage it.
Mike Duignan has been appointed head of market supervision at the ISE and will be responsible for the supervisory body, yet to be created, that will stand as a separate entity from the ISE.
Mr Duignan, described by the ISE as "a career regulator", has most recently led the market abuse investigation team at the UK Financial Services Authority (FSA) and is responsible for investigating insider trading. He previously advised British government ministers on markets policy.
Deirdre Somers, chief executive of the ISE, said the creation of a separate body followed an organisational review of the exchange and was part of its plan to increase the separation of the exchange's supervisory and commercial roles.
"The systems governing regulations have moved on and the stock exchange needs to be liberated, to be more commercially focused, and it needs an appropriate structure to facilitate that," she said.
Up until now ISE representatives who sat on its supervisory committee would absent themselves from any market abuse investigations where possible conflict of interest might arise.
However, Ms Somers added, a separate supervisory body for the exchange would remove any perception that the ISE was not independent in its supervision.
"This is going to copper-fasten that in a way that is more transparent, clearer and independent."
She said it was likely the body would be set up early next year.
Mr Duignan, who will take up his post in September, said: "It will create that degree of delineation and clarity about the respective roles." He will decide on the resources and structures needed for the body, which will have its own board and will be independent of the ISE board.
Ms Somers said the ISE had a short-list of possible candidates to chair the body and it would likely be a former senior public servant.
It is not yet clear how many of the 35 staff currently employed in the ISE's supervisory division will be transferred to the new entity.
The body will be based in the ISE's offices on Eden Quay in Dublin city centre, across the river from the exchange's headquarters on Angelsea Street in Temple Bar.
The body will be funded by the ISE by separating the supervisory fees charged by the exchange. Ms Somers said the body's budget and name had yet to be decided.
The financial regulator has been responsible for investigating insider trading and market abuse cases since the EU Market Abuse Directive came into effect in 2005.
Previously, the ISE was responsible for investigating insider trading and sending files to the Director of Public Prosecutions.
Ms Somers said the new supervisory body would act as an intermediary between the ISE and the regulator. "Our job is surveillance and bringing it to a certain level and we then hand it over."
The recent DCC insider dealing civil action concerning share trading at fruit importer Fyffes was not driving the changes. "This is being purely informed by our internal review." She said the case pre-dated significant changes in the supervision of the stock markets.
Mr Duignan said there were "enormous evidential hurdles to overcome" to prove the passage of information in insider trading.
