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Exchange summons regulators to plug leaks

Mary Fagan
Friday 14 July 1995 23:02 BST
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The regulators of utilities and other industries have been summoned to a meeting with the Stock Exchange on leaks of price-sensitive information into the marketplace.

The move follows the alleged leak last week of new controls on electricity bills after Offer, the watchdog, gave companies advance warning of his plans.

In a letter to 11 regulators ranging from utilities to the Gaming Board and the Independent Television Commission, Michael Lawrence, chief executive of the Stock Exchange, said: "Procedures must be set in place which minimise the risk of unauthorised dissemination of price-sensitive information. In particular I would like to reach agreement with you that the content of any announcement will only be distributed to, at most, a very limited group."

He said that early disclosure should only take place when the stock market was closed, and that there should be agreed contingency arrangements in the event of a leak.

Mr Lawrence stops short of attacking Professor Stephen Littlechild, director-general of Offer. But he refers to "recent events . . . in relation to one regulated sector" which gave rise to concern.

Last week the exchange said it had warned Professor Littlechild of the risk of releasing information 24 hours early while Offer claimed that the procedure had been agreed with the exchange.

The Stock Exchange move comes as Offer launched an inquiry into the pounds 1bn hostile takeover bid for South Western Electricity by Southern Electric International of the US. The watchdog has asked for comments on the takeover to be submitted before the end of next week.

Professor Littlechild is concerned that his access to information about Sweb, and his ability to regulate effectively, might be undermined in the event of a takeover. He also said that he needed to be sure than the acquired business would be given the resources needed to fulfil its obligations in electricity supply.

According to the regulator, "if the takeover were to proceed, a public electricity supply licence would for the first time be held by a subsidiary company rather than a parent company.

"In my view, additional measures would be necessary in order to provide continued protection to customers and to maintain regulatory effectiveness."

Changes to Sweb's operating licence and substantial ring fencing of the core business might be needed.

Separately, East Midlands Electricity became the second regional firm after Seeboard to accept the new Offer controls on electricity distribution charges.

Northern Electric is expected to be among others following suit next week, opening the way for a renewed bid.

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