LORDS AMENDMENT TO COMMONS AMENDMENT No. 218 (Hansard, 27 March 1980)

§ Lord MISHCON
My Lords, I beg to move, as Amendment 218A, that this House do disagree with the Commons in their amendment No. 218. It is a method or lodging a protest as to the manner in which yet another important clause in this 13111 has been dealt with by the Government. I made a general observation at the very commencement when these parts of the Bill were being dealt, that as a result of the use of extraordinary speed, which need not have happened if the Government had dealt with this matter as we wanted them to do last July, there are half-baked, unexamined measures coming before this House in this way.
If I may immediately ask your Lordships to turn to the subject of this amendment, it is that Eurobonds, international bonds, should be excluded from insider dealing in regard to certain activities which would be carried on by managers of the Eurobond market. This is an important exemption to insider dealing, and your Lordships may be interested to know that it was a clause that was tabled as late as 20th February of this year, a mere few weeks ago. and it came before the Standing Committee of another place on 26th February, less than a month ago. I think I ought in sheer duty to read to your Lordships—and I am reading from col. 1171 of the Official Report of the other place for Tuesday. 26th February—what my honourable friend Mr. Anderson had to say when this clause came before the Committee: Clearly, we have had insufficient time as an Opposition to appraise the matter and to make the relevant consultations among the affected bodies and among those who could be of assistance to us. As a result, we cannot carry out our job to scrutinise and to improve Government legislation. We cannot obtain in time properly considered responses. It is asking too much of an Opposition when contrasted with the veritable army of advisers available to the Minister. Hence the need for the other place. Their Lordships will not recognise the Bill that we shall eventually return to them. It is of a wholly 1141 different character from the minor Bill which left them in July last year ".—[Official Report, Commons, 26/2/80; col. 1171.] I close the quotation, at all events for my honourable friend Mr. Anderson. I shall go on to quote Sir Brandon Rhys Williams, an honourable Member of the Government. I am quoting from column 1174. Mr. Brandon Rhys Williams said: I should like to echo the grumble of the hon. Member for Swansea, East (Mr. Anderson) that a new clause of this complexity has been tabled so recently. It does not give hon. Members the opportunity to study the implications. It is really beyond the majority of us in the House, even those who take an active interest in company law, to be perfectly certain about the implications of this and similar clauses". I cannot over-emphasise in sheer genuineness the complexity of a clause which deals with international bonds in the international market. It is supposed to deal with Eurobonds. Eurobonds are not mentioned at all, and the reason why Eurobonds are not mentioned was again given at that stage in the other place, only a few weeks ago, as being that the Government found it rather difficult, if not impossible, to describe precisely what is a Eurobond. It gives exemptions to managers, to agents, and to employees in certain circumstances dealing in international bonds; and it would be laughable, if it were not so sad and serious, that a clause of this type, with a total exemption, should have been thrust before the legislature literally only a few weeks ago, and before your Lordships' House without the Opposition here being able to get any sort of technical advice on the matter.
It may be a criticism generally of the way in which we deal with matters that when we have to have a discussion upon technical matters of this type, obstruse matters of this type with which only a few of your Lordships' House are at all acquainted, it may be a criticism of our procedure generally that we do not have the ability to call evidence, as it were, and to examine things in some specialised committee. However, that may be a general observation. As regards this clause, as I have said, placed before Parliament literally only a few weeks ago with this House now being asked to pass it, I have put down my amendment to register a protest so that it is on the official record that the Opposition here can accept no responsibility whatsoever for this clause or for clauses like it which are of a technical nature and as regards which no proper 1142 opportunity has been given for examination or consultation.
It is in that spirit that I move my amendment and your Lordships will not be surprised to know that, in due course, after having heard the Minister in reply, I shall ask your Lordships' leave to withdraw it. I beg to move.

§ Viscount TRENCHARD
My Lords, I have quite a lot of information on the degree to which the Government believe that they have thought out pretty clearly, admittedly in some hurry, the necessary exemptions which are the subject of Amendment No. 218. But I do not think that I shall weary the House in going through them in great detail. If I may, I shall commit myself to writing to the noble Lord, Lord Mishcon, at some length as to how we see the difference in Eurobonds, and other similar dealers, and the needs for this exemption in full.
The Law Society of England and Wales pointed out—

WEDDERBURN of CHARLTON
My Lords, if the noble Viscount is to deal with these very important matters by way of a letter to my noble friend which I thought I heard him say, would he make a copy of that letter available in the Library? This is a most important matter. Albeit my noble friend no doubt deserves a letter for putting down the amendment, but some of the rest of us would like to know the reasoning which the noble Viscount is going to put forward.

§ Viscount TRENCHARD
Yes, my Lords. The Law Society of England and Wales pointed out to us that certain well-established practices in the Eurobond market seemed to come within the off-market dealing provision, and that the clause did not seem to be intended to affect that market. This is where the information and suggestion came from originally.
The Eurobond market is, of course, a highly professional market and is not in need, to anything like the same extent as other markets, of the protection offered by the insider-dealing clauses. The lead managers in an issue will have, as the market 1143 will be aware, a wide range of information which is not available to others. But equally the market is much more affected by such things as currency movement and interest rate fluctuations than it is by news about particular companies.
It should also be remembered that the Eurobond market is highly international. In view of these factors, we think that it is right to exclude activities by Eurobond issue managers from the operation of the off-market deals clause. The defence is not exactly simple. Noble Lords will appreciate that it is a very difficult task to define Eurobond operations, for which we wish to provide the defence. However, it could not be simplified without providing a much wider defence than is necessary to meet the particular points of difficulty. For those reasons and with the promise that I shall put in the Library of the House a much longer statement as to the fuller considerations that the Government went into, I hope that the noble Lord will not press his amendment.

§ Lord MISHCON
My Lords, the House has heard the protest from the Opposition, and I shall merely say, therefore, that I ask the leave of the House to withdraw my amendment.