LSE’s Rolet warns of shift in power from UK to Europe

Steve Dinneen
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THE proposed merger between Deutsche Borse and the NYSE Euronext could jeopardise London’s position as a global finance hub, according to London Stock Exchange (LSE) boss Xavier Rolet (pictured).

Rolet told the Financial Times he fears foreign financial centres could become more prominent in the investment decision-making process. He warned that the threat of power shifting abroad is not yet fully understood in the UK.

Rolet’s comments come after the LSE was last month forced to abandon its £4.3bn bid to merge with Canada’s TMX Group, sparking speculation it may itself become a takeover target. Rolet said he was “clearly disappointed” the threshold was not met.

The exchange scrapped the merger when it became clear it had failed to win the critical two-thirds level of support required by Canadian law.

Brussels is expected to decide this week whether it will launch a more thorough probe into the proposed Deutsche Borse/NYSE Euronext merger. All eyes are on regulators after investors from both sides gave the deal the thumbs-up earlier this month.

A rival £6.7bn bid for NYSE Euronext from Nasdaq collapsed in May.

Rolet also argued that the interests of British finance are not adequately represented in Europe, which could risk the UK being sidelined as plans are drawn up for reform of the sector.

He pointed to the Financial Services Authority’s voting rights on the new European industry regulator, the European Securities Markets Authority, which grants it just eight per cent of voting rights despite two thirds of financial services being conducted in London. Rolet called this a “clear mismatch” and a possible “risk”.

Rolet’s comments come against the backdrop of a scramble for consolidation in the exchange market.