Market-maker labels Lawrence `a loose cannon ready to explode'

`I like Mr Lawrence, he did some good things. He was a very clever man, but he was generally regarded as unsafe'
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The Independent Online
Michael Lawrence, the sacked chief executive of the Stock Exchange, was a loose cannon that threatened to explode at any moment causing immense damage, a leading City market-maker said yesterday.

Rejecting allegations by Mr Lawrence that he was ousted by a "classic coup" of market-makers fearing that proposed reforms to the way shares are traded would hit their business, Donald Brydon, deputy chief executive of BZW, said the truth was very different.

"Over a significant time many Exhange board members became edgy about aspects of Mr Lawrence's performance. There were many opportunities to gain the impression that at any moment the opportunity existed for an explosion to occur over one incident or another," Mr Brydon told the Treasury Select Committee.

Giving evidence to the MPs moments later, John Kemp-Welch, the chairman of the Stock Exchange, rejected Mr Lawrence's accusation that he could have saved him by supporting him. "I find it a doubtful proposition. When put to the vote, not one member of the board voted in favour of Mr Lawrence," he said.

He also denounced Mr Lawrence's account of a market-makers' coup. "It is totally and absolutely untrue that two or three market-making firms brought about, or could have brought about, Mr Lawrence's dismissal. I can't stress this too strongly."

Ian Salter, deputy chairman of the Exchange, said it had become clear from early November of last year that Mr Lawrence had to go. Mr Brydon said the former chief executive's erratic behaviour was causing concern much earlier on. He said it was impossible to divorce personality from the reasons for the dismissal. Describing Mr Lawrence as "generally unsafe", Mr Brydon said: "The opportunity for damage to the Exchange was very high."

He cited as one example Mr Lawrence's decision last year to sue ShareLink, the execution-only share-dealing business, without consulting the board.

"When a chief executive does this you have to ask some questions about his behaviour," Mr Brydon said, adding: "It is very important that the chief executive in any organisation understands the interaction between themselves and the board. It is not the role to build policy outside the board and then inform it later."

"I like Mr Lawrence, he did some good things for the Exchange, he brought in excellent management. He was a very clever man, but he was generally regarded as unsafe."

Mr Kemp-Welch and Mr Brydon both said that Mr Lawrence's dismissal was not occasioned by concern among big firms at proposals for reforming the way shares are traded in London.

The proposals would have done away with the market-makers' domination of the quote-driven system and replacing it with an automated electronic system that matches buy and sell orders.

During the recent market consultation on the trading reforms BZW made clear its opposition, suggesting a no-change option.

Yesterday Mr Brydon appeared more emollient, and said he supported change and that the Exchange's steering committee, of which he is a member, would unanimously recommend today the introduction of an order-matching system to London.

Both Mr Kemp-Welch and Mr Brydon dismissed parts of Mr Lawrence's account of events leading up to his dismissal as untrue.

"I find it difficult to reconcile with the reality of the months I lived through as a member of the board," Mr Brydon said.

Mr Kemp-Welch reiterated his argument that the reason for Mr Lawrence's dismissal was not a sudden knifing in the back by an unrepresentative cabal of powerful members of the Exchange, but the result "of an erosion of confidence on the part of the board over a period of time, and clearly related to his handling of a number of issues."

Questioned by Diane Abbott, Labour, about Mr Lawrence's account that he told Mr Brydon he could only go onto the steering committee on trading reforms if he first made a public statement of support for an electronic, order-matching system, the BZW executive retorted: "That is catagorically untrue. No such conversation took place."

Mr Brydon said that the "excellent consultation" of the market just carried out by the Exchange on the trading reform proposals was in stark contrast to practice under Mr Lawrence. "Consultation previously was anecdotal, selective and perceived by many to be self-serving," he said.