David Ross (right), deputy director of Carphone Warehouse: granted a security over his 17% shareholding in the company without telling other investors or the board

Arthur Cox, the Dublin-based law firm which has just won a contract to provide legal services to Nama, has warned the Financial Regulator that the markets could be led into uninformed speculation if directors are forced to disclose when they grant security over their shareholdings in their own companies.

The warning comes in response to a consultation paper issued by the regulator in April seeking submissions on proposed changes to the rules governing when directors have to inform the market-share transactions. The regulator is considering following the UK regulator by requiring directors to announce if they pledge their shares as security for loans, debt repayment or other investments.

The UK move came after it emerged that the financially troubled deputy director of Carphone Warehouse, David Ross, had granted a security over his 17% shareholding in the company without informing shareholders or the rest of the board.

Arthur Cox, along with A&L Goodbody, have recommended that the existing market-abuse rules in Ireland should not address such situations, since they could lead investors to trade on misleading and incomplete information.

Other parties, however, are pushing for a change in the law or a widening of its application. Stockbrokers Davy and Goodbody, along with the Irish Stock Exchange, made submissions calling for a new market-abuse law, in line with an agreed EU position, requiring disclosure of grants of security, since investors would need to know where ultimate control of a shareholding sits.

The consumer panel which advises the regulator submitted that the existing law was sufficient to force new types of disclosure if the regulator was willing to apply it more broadly.