November 27, 2006	Monday	Ziqa'ad 5, 1427

IT has been a fascinating week at the City as it was at the Karachi Stock Exchange (KSE). London was abuzz with failed take over bids of gigantic proportions and in Karachi the much awaited forensic report on the March 2005 market debacle seemed to have deepened the mystery further by what someone said, coming out with ‘Justice for the rich’.

It was a free-for-all at the City with some very big global players making a play for equally big global but highly prized companies. As the week began it seemed as if an Australian media tycoon was all set to completely corner the UK media, and by the end of the week an American stock company was seen offering to buy off the London Stock Exchange. What is the world coming to? Are not there any national borders? Yes, that is what I found so fascinating at the City.

At first came the offer of £5 billion from Britain’s largest cable operator NTL for the country’s largest terrestrial broadcasting company which is the ITV, drifting into red because of falling revenues and declining customers. But before the ITV could answer one way or the other and open its books for due diligence, the UK’s biggest satellite company BSkyB of Rupert Murdoch had jumped into the fray by gobbling up 19.9 per cent of the ITV shares.

While the battle royal among the Big-3 was still raging with the regulators closing in to see if any competition laws were under threat, the London Stock Exchange (LSE) itself was handed over an impossible – to-refuse bid of £2.7 billion by Nasdaq from across the Atlantic.

The London Stock Exchange is one of the world’s oldest stock exchanges and can trace its history back more than 300 years. Starting life in the coffee houses of 17th century London, the Exchange became the City’s most important financial institution very quickly. Over the centuries following, the Exchange has consistently led the way in developing a strong, well-regulated stock market and today lies at the heart of the global financial community.

The LSE has been enabling companies from around the world to raise the capital they need to grow by listing securities on its highly-efficient, transparent and well-regulated markets. Through the two primary markets – the Main Market and the AIM – the LSE gives companies access to one of the world’s deepest and most liquid pools of investment capital. Once companies have been admitted to trading, the LSE uses its expertise of the global financial markets to help them maximise the value of their listing in London.

Nasdaq's bid for the London Stock Exchange was understandably rebuffed on the grounds that it "substantially undervalues" the company and raises important issues of national interest. On the face of it, the UK seemed to have no objection to the foreign ownership of the LSE as it sees capital as a global commodity and also because the City of London flourished largely because of its openness and accessibility. It is also a success because it is lightly regulated and fast on its feet.

However, the issue of regulation is likely to keep at least the American companies from getting hold of the City for a long time to come. The America's Securities and Exchange Commission (SEC) is a federal regulatory agency and can be over-zealous, prescriptive and intrusive – all things that the City of London can do without.

The City watchers here believe that no UK legislation would be able to keep the SEC from extending its laws on the LSE once it got the foot-hold. The notion of the British government standing up to Washington on such delicate issues is strictly wishful thinking, they said.

Meanwhile, some investment bankers have floated an idea for a rival share trading system in what is seen as an attempt on their part to allow customers to buy and sell shares more cheaply that the LSE.

This is said to have actually opened the window for the bid from the US exchange Nasdaq. Nasdaq owns 25 per cent of the LSE but must pay £12.43 for the rest of the shares under City takeover rules.

The LSE has had offers from a number of rivals but is yet to succumb to a deal.

Playing down the threat from the London bankers the LSE said: "The London market is already open to competition with the existence of various trading venues," the LSE said.

"The key to our success is the ability to provide our companies, our investors and our intermediaries with the most efficient equity markets platform in a neutral and well regulated way.

"We are confident that we will continue to compete successfully to provide best execution in an increasingly international market."

It stressed it had already cut trading fees. The difference between the cost of buying and the cost of selling a share in the FTSE 100 index has fallen from 96 basis points to 14 basis points - effectively a reduction of £8.20 for every £1,000 traded.

"To put exchange fees into perspective, for every £1000 traded on our market, the exchange fees account for less than 7pence," the exchange said.

While the threat to the LSE from across the Atlantic has for the time subsided, the attempt by the Australian to take over the British media lock, stock and barrel and then make in-roads into the European media is till very alive. BSkyB has global ambitions. It is also looking at the Japanese media market as well as the Chinese media.

So while to some, the move by BSkyB to snatch 19.9 per cent shares in the ITV seems like a simple spoil sport game to stop the NTL from taking over the British broadcasting giant others, however see the development as more than a simple game.

“Nobody spends a billion pounds just to play the spoil sport. They are serious and their goal is to make their voice heard at the media table here and onwards to Europe,” an expert of the market scene told Dawn on condition of anonymity.

He said Sky wants to access homes in Britain and Europe through the ITV.

“And they are already testing waters in Japan and also eyeing the China market. They want to be global in the real sense of the term,” he added.