LSE subject to UK regulations even if acquired by foreign companies

LSE subject to UK regulations even if acquired by foreign companies

	Published : Wed, 13 Sep 2006 14:05 By : Phil Bateman Print this Story

LONDON - In a move to protect the UK based companies in future, the British government will be passing a legislation that could see all the companies listed in the London Stock Exchange (LSE) regulated by the UK laws even if the LSE is bought by a foreign company.

There have been numerous indications that point out to the LSE being bought by the US-based Nasdaq, which already owns 25 percent of the UK exchange. If this happens then even UK based firms will be subjected to American laws.

Speaking to an audience consisting to business leaders in Hong Kong, the Treasury Minister Ed Balls clarified the stand of his government saying that even though they are neutral about the exact ownership of the exchange, they have a duty to protect it from laws that could well harm the transparency of the investments made.

"The issue was that if you had a foreign owner and that owner's home regulator starts exporting its rules to London, then the FSA would be able to not let that happen. This legislation will confer a new and specific power on the FSA to veto rule changes proposed by the exchanges that would be disproportionate in their impact on the pivotal economic role that exchanges play in the UK and EU," he said.

Balls added that the new laws would protect the "light touch, risk-based regulatory regime" of the LSE. "It will outlaw the imposition of any rules that might endanger the light touch, risk-based regulatory regime that underpins London's success. Nothing in this legislation has any consequence for the nationality of the ownership of UK exchanges. It will neither make overseas ownership easier nor more difficult. We remain open to overseas investment that will continue to be able to benefit from our regulatory regime", he said.

LSE has rejected numerous bids in the last two years. However with Nasdaq getting control of 25 percent of the exchange, there are fears being raised about a possible takeover and the imposition of the U.S rules that many see as being "onerous".