MPs summon BZW chief in Stock Exchange sacking row
Monday 11 March 1996
The investigation into the turmoil at the London Stock Exchange will take a new turn with the decision by MPs to summon Donald Brydon, deputy chief executive of BZW - described by one MP as the "smoking gun" in the row over the running of the exchange. Alongside the recall of John Kemp-Welch, the exchange's chairman, the influential Treasury committee inquiry is set to turn into a public slanging match.
The moves mark a new determination among MPs to probe the inconsistencies in accounts of the controversial sacking at the beginning of this year of Michael Lawrence as chief executive of the exchange.
"I think Mr Kemp-Welch has a lot of explaining to do. There are a lot of discrepancies about, which have very serious regulatory implications," said Matthew Carrington, a Conservative member of the select committee.
During his recent evidence to the committee, Mr Lawrence accused Mr Brydon - a key figure with one of the City's most powerful market-making firms - of mounting a coup against him, in order to keep control over the exchange.
"We are very concerned about Mr Lawrence's accusations, Mr Carrington said.
"If the Stock Exchange is run by a clique of market-makers who can block important decisions, then it is very worrying to have a regulator run by the people it is supposed to be regulating. We have to get to the bottom of this,"
His concerns were echoed by Diane Abbott MP, one of the Labour members of the select committee. "If we're looking for a smoking gun, it's BZW," she added.
The MPs' decision to call BZW coincides with growing tension inside the Stock Exchange's board, with several members expressing private frustration at Mr Brydon's perceived conflict of interests.
Mr Brydon is a member of the exchange board, and the key appointments sub-committee which fired Mr Lawrence, as well as the steering committee deciding on the proposed radical reform of the way shares are traded in London.
Mr Brydon and BZW are among the strongest opponents of the Stock Exchange executive's preference for switching from the City's traditional trading -dominated by the market-making firms - to the order-matching system common in most other financial centres.
During the recent consultation on the trading reform proposals, a number of integrated City investment banking houses submitted two differing opinions from their broking and asset management arms. But some board members noted that the response from BZW Investment Managers - which differed from BZW's rejection - was never sent.
The Treasury is also planning to call Angela Knight, Economic Secretary to the Treasury, to give evidence, supported by the senior civil servant in charge of City affairs, Steven Robson. He is thought to be high on the list drawn up by headhunters seeking a replacement chief executive. Mr Robson was already approached for the job last time round, but is believed to have turned it down because of concerns over the exchange's strategy.
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