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Investment Exchanges and Clearing Houses Bill

moved the Amendment: Page 4, line 11, at end insert- ““(4) For the avoidance of doubt, should ownership of the London Stock Exchange or other principal financial exchange pass into the hands of a foreign entity, supervision and control of that exchange shall remain in the hands of the supervisory bodies already established for those purposes in the United Kingdom.”” The noble Lord said: I much regret that I was unable to be present when the Bill was given its Second Reading last week. The issues that need attention were addressed by Mr Balls, the Economic Secretary, in another place on 28 November and by the noble Lord, Lord McKenzie of Luton, in this House on 11 December. The Economic Secretary said very clearly that ownership of the Stock Exchange was not a cause for concern, but that a change of ownership should not affect the existing regulatory regime. I heartily agree with that view, but unfortunately it was not included in the text of the Bill as it now stands. Instead, the Bill confers powers on the regulator—the FSA—to disallow excessive regulatory provision. The sole purpose of my amendment is to remedy the omission—namely, the reassurance regarding the change of ownership, which should, I think, be a feature of the Bill. I have no other significant objective in view. The Bill focuses on the legal basis of the authority’s power to disallow excessive regulation. The neutrality of the Government on the ownership issue is not referred to. That is unfortunate, as it describes the authority’s existing powers to intervene and extends to five pages of complicated provisions on the way in which enforcement could be rendered more effective. How is that to be done if the owner of the exchange objects? Would the authority be obliged to bring proceedings in the English courts or in the European Court? The space devoted to the legal niceties in the Bill seems to be excessive and likely to provoke further anxious inquiries from the new owner. The key issue is the vexed question of international jurisdiction, which is always a difficult matter in our relations with the United States, as several noble Lords pointed out at Second Reading. I should briefly explain my interest in this subject. For four years, from 1976 to 1979, I was the Minister (Commercial) at the Washington embassy. After retirement from the public service, I was a non-executive director of the then SFA—an association at that time—and a member of its disciplinary committee. The American attitude to jurisdiction is very different from our own. Noble Lords may know that the IRS, the American equivalent of the Inland Revenue, taxes the revenue of its citizens resident abroad as a matter of course. In addition, the US authorities permitted American Airlines to breach our bilateral aviation treaty for several years by allowing it to have direct routes from London Heathrow Airport to European destinations. This was certainly extraterritoriality with a vengeance. We had to give legal notice of the termination of the treaty to obtain a fair and legal deal for our airlines. I could give other examples, and we could all recall, as some noble Lords did in Committee on another Bill, the recent problems with our bilateral treaty on extradition. My point is simply that the US has regularly extended its international legal reach to promote its perceived national interests. International jurisdiction is thus an active and sensitive subject in the USA; it is a far more important issue there than it is here. We should do nothing to stir this hornets’ nest, which I fear the Bill risks doing in its existing form. The long passages in the Bill making excessive and heavy-handed references to existing law are rather unfortunate and have no direct effect on international legal enforcement. If no one has questioned the validity of the various laws that are cited in the Bill, why do we need to list them now? If it is thought necessary to list them, they should be in a separate annexe with the Explanatory Notes, which are already to be treated in the same way, instead of in the body of the Bill. I thank the Minister for his kindness in discussing some of these matters with me on the telephone last week. At one point late last Thursday, he persuaded me to abandon the amendment but, after a sleepless night, I decided that my first instincts were right.He also expressed unease that my amendment, if accepted, might delay the passage of the legislation. But if speed is essential, why has it taken so long to prepare the Bill? Several people, including me, foresaw this difficulty some weeks ago. I cannot believe that it would cause concern if we were to delay this matter for some days or even a few weeks longer, given the very clear policy statements courageously made by Ministers about the acceptance of foreign ownership. All these difficulties could be overcome by accepting my amendment or another amendment on similar lines. Will the Government please decide to defer progress on the Bill until they have examined afresh the issues that I have mentioned this afternoon? The Bill does not strike the right balance in its present form. I beg to move.