MPs to hammer Stock Exchange

THE Stock Exchange is in for another pounding by the Treasury Select Committee this week, after a disappointing showing by chairman John Kemp-Welch in earlier hearings.

Michael Lawrence, the Exchange's ousted chief executive, is expected to detail how he was ambushed by Mr Kemp-Welch at the urging of the market- making firms in an attempt to foil reforms that threatened to remove much of their power.

He is likely to be given a warm reception by committee members from both sides of the House, who felt Mr Kemp-Welch's presentation last week was "under- whelming" despite announcing the launch of an internal probe into how the Exchange is run.

"The Stock Exchange is no longer the jewel in the crown of the City," Labour's Diane Abbott said at the weekend. "It's too much of a club and risks being overtaken by internationalisation of the market. If it doesn't change, it will become irrelevant."

Quentin Davies, a Conservative, said the Exchange was complacent and suffering from an identity crisis.

The committee hearings, prompted by Mr Lawrence's surprise removal last month, will finally get to hear his side of the story on Wednesday, although Labour backbenchers got a private briefing from him last week.

Mr Lawrence argues that there are "obvious inconsistencies" in the explanation he was given by Mr Kemp-Welch when he was forced to resign. In his written submission to the committee, he concluded that he "may have been seen as an impediment to a return to the previous mechanisms of detailed control of the Exchange by some of its members".

Although it had evolved from being run by a council to a company board, "neither attitudes or organisation had changed" when he took over two years ago: "Management did not feel they had the authority to manage."

Decisions were taken by narrowly focused committees chaired by non-executive directors who "had limited oversight of the detail of implementation and potentially could be over-influenced by an outside imperative".

One of the first changes Mr Lawrence instituted was proper management accountability, which he said "not everyone was comfortable with".