Regulator to examine ISE dealings

THE FINANCIAL Regulator is preparing to examine share dealing records stored by the Irish Stock Exchange and the London exchange in its inquiry into "false and misleading" rumours about the fiscal position of Anglo Irish Bank and other Irish financials.

Separately, it emerged late yesterday that the regulator wants stockbroking firms to include information about the extent of proprietary trading - where a broker trades on its own account - in Anglo shares in preliminary reports which must be submitted to it by April 1st.

Some brokers are believed to be taking legal advice as they prepare to engage with investigators.

While seeking phone recordings and e-mail records from the stockbroking firms, the regulator also wants to examine details about advice offered to clients and information about "any significant communication" by their staff on mobile phones. Such communication would not be captured on the office phone recording system operated by all brokers.

In its examination of records held by the Irish Stock Exchange and its London counterpart, the regulator will concentrate in the first instance on transactions throughout the month of March.

The Irish Stock Exchange is co-operating with the inquiry and information is being sourced from the London exchange via the regulator's British counterpart, the Financial Services Authority.

Such records are the primary source of information about trading in both markets, where Anglo's shares in particular were subjected to heavy selling on St Patrick's Day after the near-collapse of US investment bank Bear Sterns.

This information could be significant to the inquiry, as exchanges record the time and price of every share trade and identity of the brokers engaged in the transaction.

"We are working very closely with the Irish Stock Exchange in terms of what we are doing," said the regulator's spokesman.

A spokesman for the Irish exchange said: "On an ongoing basis we monitor the market on a routine basis for unusual activity, volatility and price movements and we liaise with the regulator on all of these issues."

Neither the regulator nor the exchange would say whether the exchange had alerted the regulator to any usual activity before the investigation was initiated last Thursday.

Bank of England governor Mervyn King yesterday signalled a radical policy shift to resolve the liquidity problems of British banks but said institutions could expect more stringent regulation to prevent a repeat of the credit crisis.

He was not specific about the mechanisms, but possibilities are understood to include the purchase or the swapping of asset-backed securities for liquid assets or cash.