The Financial Services Authority has stepped into the bidding war for the London Stock Exchange by expressing a clear preference for the Exchange's new parent company to maintain a London listing. The watchdog's statement, married to a call by the LSE's investment banking users for fair competition based on open systems and fee cuts, may help tip the balance away from Deutsche Börse in favour of rival suitor Euronext.
In a statement, FSA chairman Callum McCarthy called for wider discussion of the long-term implications of any change in London Stock Exchange ownership. Although expresssing an indifference to nationality, McCarthy expressed a clear view that the regulation of LSE listed companies remain in the UK, under the auspices of the FSA.
In a separate statement, the London Investment Banking Association, joined by user groups from Italy, France and Sweden, insisted that any successful bidder commit to developing open systems that promote fair competition and lower costs for trading, clearing and settling shares.
Taken together, the Liba and FSA statements represent a shot across the bows of Deutsche Börse, which would prefer to operate a silo-based structure for trading, clearing and settlement from its base in Frankfurt. Euronext, which runs stock markets in France, the Netherlands, Belgium and Portugal, favours a more loosely integrated business model under which local exchanges operate under their domestic regulatory regimes.