London Stock Exchange (Hansard, 19 December 2000)

§ Lord McIntosh of Haringey
My Lords, the London Stock Exchange is a commercial company. Subject to its complying with regulatory requirements, its ownership and running are matters for the Exchange and its shareholders.

§ Lord Phillips of Sudbury
My Lords, can a government who are ready to intervene in almost all other walks of life be satisfied that an institution which is crucial to the future of the City and, like it or not, to the commercial future of this country can safely and adequately be left to a group of private shareholders whose understanding of the long-term strategic issues involved—if judged by the recent attempted Swedish take-over and the botched merger with the Frankfurt exchange—lead one to have little hope as regards dealing with their future?

§ Lord McIntosh of Haringey
My Lords, I reject the noble Lord's original premise that the Government are anxious to intervene in almost all walks of life. But even if I did not, I believe that he over-exaggerates the role of the London Stock Exchange. It provides a market for share trading—and there are many ways of providing markets for share trading. If it were providing a market which was defective in that it had problems such as barriers to entry, it would be potentially subject to investigation by the Office of Fair Trading. However, neither of the incidents to which the noble Lord referred—neither the iX incident nor the bid by OM—led the OFT to believe that there might be competition considerations worthy of further investigation.

§ Lord Taylor of Blackburn
My Lords, does my noble friend believe that the noble Lord, Lord Phillips, is speaking on behalf of the Liberal Democrat Benches or not?

§ Lord McIntosh of Haringey
My Lords, that always puzzles me. A group within the Liberal Democrat 630 Party likes to position itself to the Left of the Labour Party. However, whenever it comes 1 o the crunch, the more moderate and capitalist wing of the Liberal Democratic Party reasserts itself and the radicals retreat to the sidelines.

§ Lord Razzall
My Lords, does the Minister agree that there is no evidence whatever in the proceedings of this House that my noble friend Lord Phillips of Sudbury has ever positioned himself to the Left of the Labour Party?

§ The Earl of Northesk
My Lords, after that exchange between the Liberal Democrat and Government Benches, perhaps we may return to the Question. Will the Minister confirm that it is a statutory duty of the FSA to have regard to the competitiveness of the UK financial services industry? In that context, is it not desirable that in so far as it may not already exist machinery is put in place to enable the Treasury and FSA to be proactively involved in discussions with the London Stock Exchange as to its future?

§ Lord McIntosh of Haringey
My Lords, the noble Earl has gravely disappointed me. In asking such questions, his usual tactic is to call attention to what I said in the past in order to seek to find a conflict with what I am saying at the present. He failed last week—and on a number of other occasions. I thought that he would refer to my Answer to his Written Question dated 24th May this year; indeed, I took especial care to anticipate such a question. However, I imagine that he discovered that there was no change of government policy and no conflict.
Of course, the Financial Services Authority has regulatory responsibility for the London Stock Exchange, as I said in my Answer to the original Question. If the London Stock Exchange fails to meet the requirements for recognition as an investment exchange, the Financial Services Authority will step in. It is incumbent on the London Stock Exchange to maintain an orderly market for share trading. to have sufficient financial reserves and so forth. All of that is the responsibility of the Financial Services Authority, which in turn is accountable to Parliament through Treasury Ministers.

§ Lord Hooson
My Lords, is the Minister aware that there is little room on the Right of the Labour Party? However, does the attitude he has expressed today mean that the Government would regard with equanimity the taking over almost entirely of control and ownership of our service and manufacturing industries without any sign of government intervention?

§ Lord McIntosh of Haringey
My Lords, the reckless breadth of that question leads me to wonder whether I ought to make any assumptions about the Liberal Democrat point of view on any subject. Of course, there is no suggestion that the Government regard with equanimity any mergers or acquisitions in any part of the economy. As I have made clear, we have a 631 regime which provides for regulatory control through the Financial Services Authority and competition control through the Office of Fair Trading and the Competition Commission.
Returning to the London Stock Exchange, which was the subject of the original Question, none of the incidents which took place in recent months drew the attention of either of those authorities to problems in the London Stock Exchange.

§ Lord Newby
My Lords, does the Minister accept that if the single market is to work efficiently there must be a consolidation of stock markets across the EU? In those circumstances, does it not make sense to have a common EU regulatory regime? Will the Government take a leading part in bringing forward discussions to ensure that that takes place, thus enabling the single market to work more effectively?

§ Lord McIntosh of Haringey
My Lords, in this case I have some sympathy with the noble Lord's premise. It appears inevitable that in the longer term there will be a move towards global market trading which will affect not only the European Union but also the United States and the Far East. However, the need for a central regulatory regime in Europe is not a conclusion that appears to follow from that premise, and I am not sure that it is a line which the Government wish to follow. However, in general, European regulatory authorities have sought to emulate the regime which we introduced under the Financial Services and Markets Act.