The Central Bank and the Irish Stock Exchange claim a much stricter regulatory regime applies to stockbroking firms now compared with 10 years ago but say it is still difficult to detect fraud.

It has emerged that the 100year-old Cork stockbroking firm W & R Morrogh, which was wound up by the High Court this week, had incurred trading losses as far back as 1993. One of the firm's partners had made good these losses and the matter was never disclosed to the stock exchange or the Central Bank.

The Central Bank took over regulatory responsibilities for stockbroking firms only in 1995. During the period when the first losses occurred, the firm was monitored by the London Stock Exchange. It would have been required to make regular returns to the exchange but it was largely a self-regulatory arrangement.

Mr Brian Healy, director of trading at the Irish Stock Exchange, said that while it may ring hollow with investors, stockbrokers were now subject to a much more stringent regulatory regime than in 1993.

"There is a strong regulatory environment with a high degree of co-operation between ourselves and the Central Bank. We can't improve dramatically on what we are doing because there is always a limited defence against a person who is deliberately setting out to defraud people."

The Central Bank re-authorised R & W Morrogh to act as stockbrokers when it assumed its regulatory responsibilities in 1995. At that time it would have interviewed the firm's partners, its auditors and the Irish Stock Exchange, to ensure the firm was being properly run.

Stockbrokers are required to make weekly and monthly returns to the Central Bank and to issue annual audited returns. The stock exchange and the Central Bank will review the effectiveness of their roles arising out of the Morrogh affair.

It is understood that the regular returns from Morroghs to the Central Bank failed to signal any impropriety. The Central Bank and the Irish Stock Exchange also would have visited the firm annually to examine its procedures.