Chris Gibson-Smith, Chairman of the London Stock Exchange, is believed to be discussing the recruitment of a successor to Clara Furse, its gritty Chief Executive. The LSE is said to be using the services of a leading City search firm to oversee the appointment process.

There is apparently no formal timetable for Furse’s departure but she is unlikely to leave before next autumn at the earliest, and may even remain in place beyond the end of next year.

“Clara has been with the Exchange for eight years and it is natural that the board is thinking about succession planning,” said an insider, quoted by the Sunday Telegraph. “She remains fully committed to the completion of its integration with Borsa Italiana,” which the LSE merged with in 2007.

This move has come as a surprise in the City. During her time in charge, she has defended the LSE against a string of hostile takeover bids, earning her the nickname “Queen Clara”.

“Each of the bids was pitched above its current share price. The approaches included one from Macquarie, the Australian banking group, another from Nasdaq, the American technology exchange, and one from Deutsche Borse.”

Her determination to keep the LSE out of the clutches of foreign predators has, ironically, led to closer ties with overseas exchange groups. Large chunks of the London exchange are now owned by shareholders from the Middle East, while last year’s takeover of Borsa Italiana was one element of a wave of consolidation which has swept through the exchanges industry in the last two years.”

Successors are thought to include Massimo Capuano, the deputy chief executive of the LSE group, Doug Webb, the recently recruited chief financial officer, and Martin Graham, director of equity markets, who has led the growth of Aim, the LSE’s successful junior exchange.

The LSE has declined to comment on the search for Furse’s successor.

Generation after generation has to make the choice between free markets and Government regulation.

The solution seems to turn on the nature of the business cycle and the strengh of current booms and downturns.

In the present world recession the context is so severe that it’s become a crisis in both the financial markets and the real economy. Many governments are having to nationalize part or all of their banking systems. Financial services never seemed so brittle.

Is that really the case though? In a well-argued article, The world needs Up-To-A-Pointism, John Evans suggests that by staying within the boundaries where governments and free markets work best, the world would be a much more stable place to live and do business.

Although mostly mutually-exclusive, the interface between regulation and free markets could be made to operate more efficiently, to the benefit of both.