MPs to grill Stock Exchange chief

Don Cruickshank to be called to account over failure of planned merger with the Deutsche Börse
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The Independent Online

Don Cruickshank, the London Stock Exchange chairman, will next month face another grilling from MPs anxious for an explanation for the failure of its merger with the Deutsche Börse.

Don Cruickshank, the London Stock Exchange chairman, will next month face another grilling from MPs anxious for an explanation for the failure of its merger with the Deutsche Börse.

The Treasury Select Committee is planning to call for Mr Cruickshank to testify once the fate of the bid for the LSE by Sweden's OM Group is decided. He is unlikely to relish the prospect.

Five months ago, when he was chairman designate, Mr Cruickshank and Don Casey, who resigned as chief executive last month, were treated to a two-and-a-half-hour tirade from members of the committee angry at the terms of the proposed merger. In Mr Casey's absence, Mr Cruickshank may have to face his critics on the committee alone.

Giles Radice, the Labour MP who chairs the committee, told the Independent on Sunday: "We are planning to have a hearing with the Stock Exchange to get them to bring us more up to date. We want to know what happened with the Frankfurt deal."

He said that the hearing would take place by the end of November.

At the last meeting, the greatest criticism of Mr Cruickshank and Mr Casey came from the committee's Tory members who felt that the terms of the planned merger with the Deutsche Börse were not favourable to the UK.

"You have let them get their towels around the pool - and you have given them the hotel as well," was one of the acerbic contributions of Tory MP Michael Fallon.

His colleague, David Ruffley, accused the merger of threatening to "force the euro onto British business by the back door". He and other Conservative members were incensed by the LSE's alleged desire for all share prices to be quoted in euros, an accusation which Mr Cruickshank denied.

On this occasion, the bulk of criticism is likely to reflect concern about the LSE's revised strategy now that its merger with the Deutsche Börse has fallen through. Its Eurosceptic critics will also be unimpressed that it has become the target of a predator like OM Group, which operates a much smaller stock market in Sweden. Earlier this month, OM Group increased its bid for the LSE, but its offer is unlikely to meet with the approval of a majority of shareholders. There may also be disquiet at its failure to find a new chief executive to replace Mr Casey.

The German deal collapsed last month following the overwhelming opposition of retail brokers who felt that the merger was conceived with the interests of the larger investment banks at heart. The LSE has since acceded to some of the demands of the retail-broking lobby, including a call for greater representation in its decision-making process. Mr Cruickshank recently apologised for the LSE's conduct.

At Thursday's extraordinary general meeting, the LSE defeated a motion to lift the 4.9 per cent ceiling on individual shareholdings in the exchange. The result, which means that a 75 per cent majority of votes is required for the LSE to be taken over, will help to protect it against the unwanted advances of predators like OM.

Despite the interest of other exchanges, including the pan-European group Euronext and America's Nasdaq, the LSE is not expected to enter into another major deal in the foreseeable future.

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