Tuesday, November 21, 2006

NASDAQ + SOX << LSE

NASDAQ wants to buy the London Stock Exchange to follow the money that's fled the US Sarbanes-Oxley plague. But if their hostile bid prevails, they'll just spread the contagion, so the Brit government needs to protect the LSE.

Here's the WSJ ($):
Another place merger money is going is overseas. This may help explain Nasdaq's $5 billion hostile bid for the London Stock Exchange, which was rebuffed yesterday. As more and more international companies list their shares overseas rather than in New York, having a foothold outside the U.S. has come to be seen as a survival strategy for the formerly comfortable U.S. stock exchanges. They have to follow the money if the money won't come here.
There's nothing wrong with Nasdaq - I once participated in a listing there, and it went swimmingly. The problem is the SEC:
America's Securities and Exchange Commission is the federal regulatory agency and can be over-zealous, prescriptive and intrusive – all things that the City of London can do without.

Yet the SEC will not think twice about extending its regulatory activities to the City of London should Nasdaq take over the London Stock Exchange, arguing that the New York-based exchange is part of its bailiwick wherever it may set up shop.
I wouldn't trust assurances from the SEC - it'll be led by a Dem appointee eventually, and we all know what they think about foreign competition - here's Rep. Frank, hat tip OpinionJournal (my emphasis):
Representative Barney Frank has proposed in a series of meetings with business groups a "grand bargain" with corporate America: Democrats would agree to reduce regulations and support free-trade deals in exchange for businesses agreeing to greater wage increases and job benefits for workers...

Frank casts his proposal as a way for capitalists to quell some of the populist fervor that was expressed in last week's election, when many Democrats vowed to crack down on companies moving jobs overseas.

The Brit government must plant a poison pill in the LSE. ASAP.