ISE chief executive Deirdre Somers said the exchange is still in negotiations with the Department and Revenue Commissioners about ending the favourable treatment the tax system gives to government bonds.
"There are some impediments, being honest, to launching a bond market absent of certain tax changes," she said, "but we're continuing to work with them.
"It's fiscal equalisation we're looking for because nobody's going to invest in high-yield debt at a tax disadvantage," Ms Somers added.
"The exchange is a service provider to a market, it isn't the market-former. The market forms based on the attractiveness of the product to the ecosystem that's going to support it, the investment appetite around it and the modalities around that investment," she said.
"So if those three things aren't right, then it doesn't really matter what the exchange does and how lovely the piece of kit we put against it is ... all we can do is bring the parties together, we can't create the market."
The Government's 2014 "Action Plan for Jobs", published in February, commits it to working with the ISE on the plan.
"There is considerable potential to draw on recent experience in other EU Member States and create a more diversified funding environment for Irish SMEs by seeking to connect retail investors to productive investment through the development of a retail "mini-bond" market," the plan reads.
"We will work closely with the Irish Stock Exchange, building on previous engagements to make this a viable funding source for Irish-based enterprises," it adds.
Last week's Budget didn't introduce the equal tax treatment for bonds that the ISE is seeking. Gains made from selling Irish government bonds are exempt from Capital Gains Tax, while gains made from selling corporate bonds are not.
However, the Government does propose to abolish the 1pc stamp duty on shares listed on the Enterprise Securities Market of the Irish Stock Exchange - the market designed to cater to smaller companies.
The move is "to encourage more investors to back SMEs, thereby increasing the supply of equity available to them for growth and job creation."
ISE's director of Strategy, Policy and Communications, Aileen O'Donoghue, said the ISE recently brought together representatives from the Department of Finance, the Department of Jobs, Enterprise and Innovation, the Revenue Commissioners, the National Treasury Management Agency and stockbrokers to discuss how the bond market plan could be made to work.
Introducing it would allow firms to bypass banks when seeking access to funding. German trading venue Deutsche Borse has introduced a similar scheme.