With an Italian — Fabio Capello — now firmly ensconced as the England football manager (for the time being at least), and the comings and goings between new partners, the London Stock Exchange and its Italian counterpart now an established traffic flow, it seems British-Italian relations have never been better.

Tommaso Padao-Schioppa, Italy’s Finance Minister and policy committee member at the IMF, was guest of honour at the LSE’s Christmas lunch, we hear. As befits a 300-year-old institution, the wine cellar is generally reckoned to be superb.

However, an off note was struck amid this glutinous festive cheer when the Minister scolded Borsa Italiana for not bedding down with NYSE Euronext or the German exchange, Deutche Borse.

The name of the new group’s holding company will be London Stock Exchange — anything else would have downgraded the reputation of the new combine. It is also a fact that over 30 percent of Borsa’s trades come from London based investment banks.

It’s easy to see why the deal made more sense to the Milan bosses than a eurozone one, apparently favoured by the politician. Sr. Padao-Schioppa did concede, however, that mild disapproval of a marriage is often a good incentive to make it work.

Let us hope so.

The Qatar Investment Authority has shelved its attempt to buy the Scandinavian exchange group, OMX.

The plan now is to become the London Stock Exchange’s biggest shareholder by swapping its 10 percent stake in OMX for part of Dubai’s 20 percent holding in the LSE.

The Qataris already hold around 15 percent of the London exchange. A deal is thought to be imminent.

With the LSE in the FTSE 100, it won’t be so easy to take over the company in future, one presumes.

NYSE-Euronext suffered its first major setback last week as CEO John Thain, 52, looked poised to replace Stan O’Neal as boss of Merrill Lynch.

Wall Street was shocked at the news as Larry Fink had seemed quids in for the post. Thain was formerly President of Goldman Sachs.

The move leaves a hole at the top of stock exchange group NYSE-Euronext as the man who forged the transatlantic merger jumps ship.

Chief operating officer Duncan Niederauer looks poised to take control.

Merrill’s share jumped 5 percent as Wall Street absorbed the news.

CurrencyTrading.net has an interesting piece titled, 12 Surprising Implications of London’s Replacing New York as the World’s Financial Center by Jessica Hupp.

Here’s just one of the “implications” :

“Financial regulation: After scandals like Enron, the financial industry is more heavily regulated. The Sarbanes-Oxley Act required lots of tightening of financial controls. As a result, it’s less attractive to do business in a country where every transaction is scrutinized.”

Read the whole article here.