HONG KONG, Sep 12 (Reuters) Britain will introduce new legislation to ensure the London Stock Exchange will continue to benefit from the UK's ''light touch'' approach to regulation if it is taken over, a minister said on Wednesday.
Treasury Minister Ed Balls said in a speech to business leaders in Hong Kong that the government was neutral on the nationality of exchange owners, but wanted to make sure any new owner of the LSE did not damage the openness to investment which has been a key part of London's success as a financial centre.
The LSE, Europe's biggest stock market, has spurned a succession of bid approaches over the past two years.
But its most recent suitor, U.S. stock exchange Nasdaq, has built up a 25-percent stake in the business, raising speculation it may eventually succeed and export some of the United States' more onerous business regulations, such as Sarbanes-Oxley reporting requirements, to LSE-listed firms.
Balls said the new legislation would strengthen the hand of the UK's Financial Services Authority to ensure that could not happen.
''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,'' he said.
''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.
''It will outlaw the imposition of any rules that might endanger the light touch, risk-based regulatory regime that underpins London's success.'' Balls, who is minister for the City of London financial district, stressed the government remained blind to who owned the exchanges -- it was just concerned how they were regulated.
''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,'' Balls said.
''We remain open to overseas investment that will continue to be able to benefit from our regulatory regime.'' Treasury sources said the law could come into effect in the Companies Bill.
Balls is on a two-day trip to promote City of London interests in Hong Kong before he flies to Indonesia on Thursday.
LSE's share price has soared as much as three times over the past two years, spurred on by takeover interest. Exchanges across the world are looking to consolidate as they battle to provide global services and cut fees for customers.
Its shares closed at 1,202 pence on Tuesday, valuing the business at about 3.1 billion pounds (.8 billion).
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Treasury Minister Ed Balls said in a speech to business leaders in Hong Kong that the government was neutral on the nationality of exchange owners, but wanted to make sure any new owner of the LSE did not damage the openness to investment which has been a key part of London's success as a financial centre.
The LSE, Europe's biggest stock market, has spurned a succession of bid approaches over the past two years.
But its most recent suitor, U.S. stock exchange Nasdaq, has built up a 25-percent stake in the business, raising speculation it may eventually succeed and export some of the United States' more onerous business regulations, such as Sarbanes-Oxley reporting requirements, to LSE-listed firms.
Balls said the new legislation would strengthen the hand of the UK's Financial Services Authority to ensure that could not happen.
''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,'' he said.
''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.
''It will outlaw the imposition of any rules that might endanger the light touch, risk-based regulatory regime that underpins London's success.'' Balls, who is minister for the City of London financial district, stressed the government remained blind to who owned the exchanges -- it was just concerned how they were regulated.
''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,'' Balls said.
''We remain open to overseas investment that will continue to be able to benefit from our regulatory regime.'' Treasury sources said the law could come into effect in the Companies Bill.
Balls is on a two-day trip to promote City of London interests in Hong Kong before he flies to Indonesia on Thursday.
LSE's share price has soared as much as three times over the past two years, spurred on by takeover interest. Exchanges across the world are looking to consolidate as they battle to provide global services and cut fees for customers.
Its shares closed at 1,202 pence on Tuesday, valuing the business at about 3.1 billion pounds (.8 billion).
REUTERS SBA VP1320
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