LSE sees mergers driving regulatory reform

Tue May 10, 2011 1:09pm EDT

* Mergers could drive regulatory harmonisation - Rolet

* LSE and TMX want to create single listing framework

By Luke Jeffs

LONDON, May 10 (Reuters) - London Stock Exchange (LSE.L) Chief Executive Xavier Rolet, who wants to merge with Canadian market TMX Group (X.TO), hopes the current spate of international exchange mergers will help streamline global trading rules.

"If you look at the existing exchange mergers, including the transatlantic mergers, there's not a unified regulatory environment. This is the greatest opportunity the financial crisis has presented - to unify regulation," Rolet told a conference in London on Tuesday.

The LSE signed a $3.2 billion agreement to join with TMX in February but this deal was overshadowed when Deutsche Boerse (DB1Gn.DE) detailed its $10.2 billion takeover of NYSE Euronext NYX.N. [ID:nWLB3880] [ID:nWEB8110]

The Boerse-NYSE deal was thrown into doubt last month when Nasdaq OMX (NDAQ.O) and the IntercontinentalExchange (ICE.N) made a counter-bid for NYSE valued at $11.2 billion. [ID:nLDE73017Z]

The LSE chief executive said he hopes to set a precedent for cross-border regulatory harmonisation with the TMX deal, which the partners hope will complete in the third quarter of this year.

"This transaction is the basis of one such framework between Canada and Europe, to enable firms to establish through a single listing the ability to raise capital in North America and Europe," Rolet told the conference organised by The Economist Group, publisher of the Economist weekly. Exchanges and listed firms have complained that different national authorities impose different regulatory requirements, which can complicate listings in multiple jurisdictions and restrict cross-border investment.

Rolet is keen to break down these barriers and enable the free flow of capital between Canada and the U.K. once the TMX deal is completed, a move that will offer European investors easy access to Canada's strong stable of listed mining companies.

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