The ISE's director of trading and regulation, Brian Healy, rejected that figure, but also said the exchange does not quantify CFD trading as such. Instead, it has to look at hedging positions taken by investment banks to cover their CFD contracts with investors to get a read on CFD activity . . . "an onerous ad hoc exercise", according to Healy.

"CFDs are traded off-exchange, so by their nature they're not open to the market, " he said. "But the resulting CFD position is matched with a purchase of the underlying stock."

Internal ISE estimates from 2006 put the value of CFD-related trading below 25% of total market turnover, he said.

However, Brian Lucey, a lecturer in finance and market specialist at the Trinity College School of Business, said the level of CFD-related activity in Ireland could easily account for half of all turnover, as a small number of very large CFDrelated positions . . . the sort hedge funds tend to take . . . could outweigh a much larger number of small positions taken by other conventional investors. Hard data on CFDs is very thin, though, so speculation amounted to "well-informed pub talk", he admitted.

But asset managers and stockbrokers contacted by the Sunday Tribune corroborated his estimates, and expressed concerns that a rash of margin calls on the leveraged positions could do serious damage to market stability.

"CFDs facilitate other people's positions because they know someone is willing to take a risk at the margins of the market, " said Lucey. "But there's a relationship between liquidity and financial fragility: the more liquidity, the more rapidly the market can react."

He pointed to the clampdown on highmargin lending that is widely believed to have triggered the massive Shanghai selloff in February which set global markets back by about 6%.

CFDs offer investors exposure to equities and other securities for a fraction of the cost of buying the actual underlying assets. Investment banks that deal in CFDs hedge their own exposure by investing in the actual trade referenced in the contract.

They collect fees and commissions and can also profit on spreads between different clients' positions.

The ISE enjoyed record equity turnover of 48m in the first quarter, up 44% on 2006. While CFDs create a "degree of uplift" in the market, according to Healy, the large increases in turnover this year were the result of over-the-counter trading and popular IPOs, such as Smurfit Kappa.