Financial Regulatory Forum

London Stock Exchange to quit pan-European lobby

By Reuters Staff
September 30, 2009

LSE/CEO LONDON, Sept 30 (Reuters) – The London Stock Exchange is quitting the industry’s main European association as it seeks a free hand to lobby regulators mulling a crackdown on off-exchange trading at banks and dark pools.

The LSE is Europe’s biggest stock market and will leave the Federation of European Securities Exchanges (FESE), which has been influential in the past as it spoke for the industry with one voice.

“We have told them we plan to leave,” an LSE spokesman said.

“We are reviewing a number of our memberships across the organisation and we will seek to work with regulators, legislators and the markets we serve across Europe more directly going forward,” the spokesman said.

FESE was not available for comment.

Exchange officials have said privately for some time that divergences were appearing between FESE and the LSE under chief executive Xavier Rolet, who took up reins at the exchange a year ago.

FESE has been lobbying regulators to apply the same share trading rules on a bank or dark pool that exchanges have to comply with.

It has been unable to campaign publicly as Rolet, a former Lehman Brothers banker, has not wanted to antagonise banks who are the main providers of share trading volumes to bourses like the LSE, industry officials said.

“When you try to get positions that represent everyone’s view, sometimes subtlety gets lost. Dark pools is an example where not all exchanges are aligned,” a source familiar with LSE thinking said.

The source dismissed the risk that leaving FESE could weaken the industry’s voice. A unified sector typically has more lobbying influence over bodies such as the EU’s executive European Commission, which formulates financial rules.

(Reporting by Huw Jones, editing by Rupert Winchester)

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