Today it was announced that the British Government will be introducing legislation to ensure that the London Stock Exchange will continue to be governed by what Treasury Secretary Ed Balls described as a â€œlight touch risk based regulatory regime.â€
The announcement comes at a time when there are concerns that the LSE could potentially be regulated by more stringent rules from abroad.
The U.S. based NASDAQ currently owns 24.1% of the shares at LSE, and earlier this year put in a 2.43bn takeover bid for the LSE, which was rejected.
If the LSE were to be bought by NASDAQ then it could potentially be subject to the U.S. Sarbanes Oxley Act of 2002 which would increase the reporting and regulatory requirements of LSE companies.
Speaking at The Hong Kong General Chamber of Commerce and the British Chamber of Commerce, Ed Balls spoke of the new legislation which would give the UK Financial Services Authority, â€œa new and specific power on the FSA to veto rule changes proposed by exchanges that would be disproportionate in their impact on the pivotal economic role that exchanges play in the UK and EU economies.â€
A spokesman for the LSE said: We welcome the Treasury's intervention, which should do much to allay market concerns about the regulatory impact of a possible takeover of the Exchange by a company outside the UK.â€