Watchdog says LSE safe

The body hinted that Treasury secretary Ed Balls overreacted when he announced radical plans to ring-fence the London capital markets regime from Sarbanes-Oxley regulation.

‘Joint ownership of a US exchange and a non-US exchange would not result in automatic application of US securities regulation to the listing or trading activities of the non-US exchange. You can’t be subject to US rules unless you either raise capital or provide financial services in the US,’ SEC spokesman John Nester said.

In a speech made last week, Balls said the UK would introduce legislation allowing the UK’s Financial Services Authority to veto any regulatory changes proposed by a foreign owner of the London Stock Exchange.

The announcement came amid fears that with New York-based exchange Nasdaq courting the LSE, the light regulatory touch of the UK markets could be at risk and overrun by Sarbox regulation.

The US regulator would not comment directly on the Balls’ speech.

For Ed Balls’ full speech see hm-treasury.gov.uk