Cantillon

Inside the world of business

Railway expert to ensure mortgage plan not derailed

TO ENSURE the Government’s key mortgage arrears resolution process, or Marp, comes in on schedule, the Department of Finance has turned to a project manager at the Railway Procurement Agency (RPA).

Derek Tierney, who was also a safety manager at the State agency that runs the Luas trams, has moved to the department and will be working with officials to make sure the banks’ mortgage arrears strategies arrive on time.

A spokeswoman for the department said, without a hint of laughter, that Tierney would be “ensuring that timelines are set and met” on the strategies to deal with the mounting mortgage arrears. Among the projects managed by Tierney at the RPA was the 4km (2.5-mile) extension of the Luas spur to Citywest in Dublin, which opened last July.

His secondment to the department is the kind of flexibility that should be shown across the public service when savings must be found in the public-sector pay bill. It is also an example of how capable people in one agency should be moved to carry out essential works in another.

Tierney will be reporting to the head of lending policy at the department, John Hogan, in a plan that is being jointly overseen by the department and the Central Bank.

The Government and the Central Bank have been pushing the banks for some time to do more in addressing mortgage arrears cases. The regulator has been particularly unhappy that banks are applying the go-slow code of conduct on buy-to-let arrears cases when it does not apply to them and where many of the cases are hopeless and will never be repaid.

The banks have been given until the end of next month to categorise mortgage arrears cases and propose solutions for each category, and to develop them into products by the end of September before launching them in October.

Tierney and others will ensure the plan, a key strategy for the Government given the lightning-rod nature of mortgage debt and State-funded banks, is not derailed.

InTrade on the money

AS THE US presidential election heats up, one Irish-based prediction trader is set to cash in on the hype. InTrade, which bills itself as the “world’s leading prediction market”, allows you to make predictions on the outcome of hundreds of real-world events. If it happens as you predicted, you win the trade and profit. If it doesn’t, you lose.

While InTrade services clients from all over the world, its main market is the US, even though prediction trading is an unregulated activity there. Earlier this month, a potential competitor, the North American Derivatives Exchange, tried to convince the US authorities to regulate the activity, allowing it to take bets on the outcome of political elections. However, the US commodity futures trading commission rejected the plan, giving InTrade, which runs its operation from Lucan, Co Dublin, and other offshore prediction traders like it, a clear run at the forthcoming election.

InTrade takes no stake in the markets it makes, with traders setting the price in each category. Instead, it makes its money by charging a flat $4.99 (about €3.80) monthly fee. So far this year, trades worth $58 million have passed through its site, with just over 5,000 traders logging on to bet on anything from the likelihood of the Dow Jones closing on or above 13,000 at the end of this year (currently a 59.8 per cent chance) to US Federal Reserve chairman Ben Bernanke losing his job before June (a 1 per cent chance).

But politics dominates, and InTrade is now watched closely by pollsters given its success in predicting the outcome of previous elections. In the notoriously tight 2004 US election it predicted the outcome of all 50 states correctly.

So what is it saying about 2012? Well, according to bets placed to date, US president Barack Obama has a 60.4 per cent chance of being re-elected. French counterpart Nicolas Sarkozy is a less safe bet, however, given just an 18 per cent chance in the forthcoming election.

Dealing with insider dealing

WITH THE Fyffes/DCC case still fresh in the mind, the Central Bank is set to introduce new rules on insider trading following an inspection of how price-sensitive information was handled. It coincides with a European Commission plan to introduce new market-abuse regulations. The Central Bank’s consultation focuses on three areas:

* Determining what information should be deemed “inside information” – the Central Bank suggests a committee of “relevant persons” should be tasked with this process, with a written record kept of its meetings.

* Insider lists – the bank proposes that an event-based list should be kept, essentially a contemporaneous chronology detailing who was told what information, when and why.

* Director and personal account dealing – each issuer should have a documented policy and procedure on director, senior-management and employee dealing, as well as “an alert procedure” for the employees’ code of conduct where they become aware of inside information.

The bank stopped delegating the power to investigate insider-trading and market-manipulation allegations to the Irish Stock Exchange last year, opting to take on the role itself.

The deadline for submissions on the new rules is June 14th, and any queries should be directed to marketmonitoring@centralbank.ie.

NEXT WEEK

Bank of Ireland holds its annual general meeting on Tuesday.

Later in the week, the Irish League of Credit Unions conference will discuss the recent report of the Commission on Credit Unions.

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