The UK’s newly-appointed Economic Secretary to the Treasury, Ed Balls, has rejected American-style rules for the London Stock Exchange.

In his first speech in his new job, Balls insisted that the British light-touch regulatory approach was “a competitive advantage that should be preserved”.

“I don’t care who owns the stock exchange,” Balls said in a later interview. “I care that we have regulation that makes people want to list here from around the world. That’s got to continue.”

The comments are the latest by various officials expressing concern about regulation of the LSE in the event of a foreign takeover. The Financial Services Authority has already opposed the imposition of U.S. Sarbanes-Oxley rules, which force companies to disclose reams of information to protect investors from fraud.

Balls said that the British government would attempt to protect its regulatory framework in the event of a takeover: “The test of what is best for the City as a global financial centre in the long term” would be a priority.

“Nothing should be done to put at risk a light-touch, risk-based regulatory regime,” Balls said. “We must keep the U.K.’s regulatory system at the cutting edge — the best in the world.”

Nasdaq may bid for the London Stock Exchange by October, according to Robert Greifeld, Nasdaq’s Chief Executive.

If Nasdaq succeeds in buying the LSE it would allow the American exchange to compete for listings with the new NYSE-Euronext and consolidate trading systems to cut costs.

A combined Nasdaq-LSE would allow companies to list their shares in both London and New York and offer traders on both sides of the Atlantic a way to buy and sell stocks through a single trading system. Sorting out the regulatory tangle may prove a tougher nut to crack than resolving the ownership issue, however.

Callum McCarthy, Chairman of the Financial Services Authority, believes the London Stock Exchange will be safe from onerous Sarbanes-Oxley regulation even if it is bought by Nasdaq. In the longer term, however, he could give no such assurances.

The scenario configured is that the American exchange will eventually build on its 25pc stake in the LSE and take it over. It will though maintain it as a British-based entity under FSA rules.

The danger is that at some stage, Nasdaq will see fit to create a larger pool of liquidity and bring the LSE into the U.S. fold. Unhappily, that will not only affect the LSE itself, but any company listed on the exchange.

To complicate matters, with the NYSE looking a shoo-in to take Euronext, whatever President Chirac might say, it is likely that Brussels will forge a deal with Washington at some stage to regularize transatlantic rules. In those circumstances, could an independent LSE remain outside the restrictions imposed on the rest of Europe?

McCarthy admitted that attempts to “harmonize” market rules could mean London passing from FSA regulation to that of the SEC in the U.S. He has had “workmanlike” discussions with his opposite number at the SEC and concluded: “As long as the LSE remains a UK exchange, the FSA will require that it meets its regulatory obligations”. However, “Harmonization of listing and membership would present greater regulatory issues between jurisdictions.”

This issue is clearly worrying many listed British companies, some of which have approached the FSA. Isn’t it time the Treasury ring-fenced the LSE as a vital cornerstone of London’s continued existence as a major world financial centre?

The question is not quite the same as “Who is John Galt?” because we do have quite a lot of information about Thain, who has been recently instrumental in “taking over” Euronext, the pan-Continental conglomerate of stock exchanges.

On December 18th, 2003 the NYSE named John Thain Chief Executive Officer just one day after the SEC approved an overhaul plan for the New York Stock Exchange. John Thain replaces interim CEO John Reed, who was working for $1 a year following Dick Grasso’s resignation when his overcompensation was revealed.

The following is from the New York Stock Exchange’s website:

John A. Thain, 50, is chief executive officer, NYSE Group, Inc.

Prior to joining the NYSE Group, Inc., Mr. Thain had been chief executive officer of the New York Stock Exchange since Jan. 15, 2004.

Prior to that, Thain was president and Chief Operating Officer of Goldman Sachs Group, Inc. since July 2003 and was previously President and co-chief operating officer from May 1999 through June 2003; he had been a director since 1998. He was President and co-chief operating officer of The Goldman Sachs Group, L.P. in 1999. From 1994 to 1999, he served as chief financial officer and head of operations, technology and finance. From 1995 to 1997, he was also co-chief executive officer for European operations.

He is a member of The MIT Corporation, the Dean’s Advisory Council – MIT/Sloan School of Management, INSEAD – U.S. National Advisory Board, the James Madison Council of the Library of Congress and the Federal Reserve Bank of New York’s International Capital Markets Advisory Committee. He is also a member of the French-American Foundation, The Trilateral Commission, the International Advisory Board of BritishAmerican Business Inc., and the Financial Stability Forum Advisory Council, as well as a governor of the New York-Presbyterian Foundation, Inc., a trustee of New York-Presbyterian Hospital, and a General Trustee of Howard University.

Mr. Thain received an MBA from Harvard University in 1979 and a B.S. degree from Massachusetts Institute of Technology in 1977.