Stock Exchange cheif calls for single City watchdog: Call for Square Mile traffic curbs repeated

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(First Edition)

The London Stock Exchange called yesterday for a single enforcement agency for the City and the introduction of civil as well as criminal penalties.

The call came in the exchange's 1993 annual report, and received a mixed response from other City watchdogs. One senior City regulator described the exchange's insider dealing investigations as 'a shambles' and agreed this area should be handed over to the Securities and Investments Board.

But the same regulator opposed the creation of a single City-wide body, saying it would inevitably be 'a very large, very bureaucratic organisation'.

Sir Andrew Hugh Smith, the exchange chairman, also called for a ban on through-traffic in the Square Mile and new stop-and-search legislation as a response to the recent Bishopsgate bomb.

All of which should not distract from a good year for the stock exchange, its busiest since 1987, Sir Andrew insisted. Domestic equity turnover rose by almost a third to pounds 474bn with a record pounds 367bn foreign equities traded.

In the report the exchange threw its weight behind a single City enforcement agency. It said: 'There has been much public concern at the manifest weaknesses of the procedures for enforcing the law against market manipulation in general, and insider dealing in particular.'

The exchange said that it was not widely realised how limited its powers are, and it is 'convinced that a single enforcement agency is needed, and that there should be civil as well as criminal penalties. The agency should have wide powers to carry forward the investigation of serious cases, drawing on information provided by our surveillance department and other regulators.'

The exchange investigated more than 295 possible breaches of trading and reporting rules in equities during the year to March and another 279 cases covering gilts.

Sir Andrew said the obvious candidate was the SIB. Labour's City spokesman, Alistair Darling, applauded the suggestion, but warned that total responsibility for the City should be handed over 'only if the fiction of self-regulation is abandoned. Over half of the new board should be non-practitioners'.

Sir Andrew said that his first reaction to the latest IRA bomb had been that 'perhaps we should have a walled City again'.

More realistically, he said that he had discussed the matter with the Corporation of the City of London and that the exchange was in favour of introducing licences for essential traffic, and new legislation to enable the police to stop and search unlicensed traffic.

Any scheme would involve the core of the City rather than the whole Square Mile.