UK to block Sarbox threat with legislation

Clara Furse, the London Stock Exchange’s chief executive, will be breathing a
huge sigh of relief today after the economic secretary Ed Balls said the
Treasury was going to strengthen the Financial Service’s Authority’s powers in
order to protect the light regulatory regime of the London Markets.

In a speech to the Hong Kong General Chamber of Commerce and the British
Chamber of Commerce in Hong Kong, Balls said that the government would introduce
legislation that will allow the FSA to veto any regulatory rule changes proposed
by any foreign buyers of the LSE.

Balls’ announcement follows months of anxious speculation that the LSE would
be forced to adopt the onerous requirements of Sarbanes-Oxley if either of its
US suitors, Nasdaq and the New York Stock Exchange, successfully bought the
London exchange.

‘The government’s interest in this area is specific and clear: to safeguard
the light touch and proportionate regulatory regime that has made London a
magnet for international business. That has made London an economic asset for
the UK, for Europe, and for countries throughout the world,’ Balls said in his
speech.

The new laws will effectively outlaw the imposition of any rules that
compromise London’s highly successful risk-based regulatory regime.

The new rules will not, however, have any effect on the ownership, British or
otherwise of the LSE.

‘We remain open to overseas investment that will continue to be able to
benefit from our regulatory regime,’ said Balls.