HISTORIC PRESS RELEASE : The future of the London Stock Exchange – Alistair Darling announces the next step in modernising financial regulation [February 1998]

The press release issued by HM Treasury on 6 February 1998.

The next step in the Government’s wide-ranging plans to modernise the financial regulation system was announced by the Chief Secretary, Alistair Darling today.

In a speech to the Securities Institute in Edinburgh, Alistair Darling said that the London Stock Exchange would continue as the competent authority for listing in the UK.  He went on to say:

“The London Stock Exchange enjoys a substantial reputation throughout the world.  However, whilst listing is a distinct function, it is closely related to the regime for which the FSA is to become responsible for.

The Stock Exchange will carry on as the listing authority.  But we recognise that circumstances may change.

The Bill reforming financial services regulation will therefore allow the Government to transfer all or part of the London Stock Exchange’s function to the Financial Services Authority should that prove necessary in the future.

Before a change was made, we would need to be sure that it was fully justified on the balance of arguments and that arrangements for satisfactory transition were in place.”

In response to a Parliamentary Question, Mr Darling said:

“The London Stock Exchange (LSE) is currently, under the Financial Services Act 1986, the competent authority for listing in the United Kingdom. I have considered future arrangements against the background of our decision to have a single statutory regulator for financial services, the Financial Services Authority.

I have concluded that the case for change at this stage is not made. The LSE is operating satisfactorily in creating and enforcing listing rules in a way which gives confidence to investors, while meeting the commercial needs of users. Before any changes were made we would need to be sure that this was fully justified on the balance of the arguments, and that arrangements for satisfactorily transition were in place.

Accordingly this will be a matter kept under review.  Among the factors which may be relevant to any decision to transfer functions could be the institutional arrangements for tackling market abuse and the impact of increased competition in the UK’s securities markets.

The new bill to reform the 1986 Act will therefore name the LSE as competent authority. However, I also intend that the bill will include a power for the Treasury to transfer the competent authority functions, in part or in whole, to another body by secondary legislation.”