London's financial sanctum sniffs the breeze of change
Change is sweeping through the tiny streets, staid buildings, and trading floors of the City of London, the world's largest financial center. ''The City has triumphed remarkably over the decline of the British economy and of sterling,'' says William Clarke, a former financial correspondent who is now deputy chairman of the Committee on Invisible Exports, a group that deals with British overseas earnings from such noncommodity exports as financial services and consulting.Skip to next paragraph
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''The question now is whether in the future London can withstand the growing challenges of other centers, such as New York, Chicago, Zurich, Paris, and Frankfurt.''
The City is built on the oldest spot in London, where the Romans built walls and temples 2,000 years ago. A mere square mile in area, the City of London is a clublike maze of Lombard Street banks (there are more US banks here than in New York), Leadenhall Street shipping offices, Thames-area gold and other commodity markets, Lime Street insurance houses, the Stock Exchange, and the Bank of England. The district is unmatched in its 24-hour-a-day variety, know-how, and flexibility.
But the City's penchant for self-regulation and its often old-fashioned ways have their critics - especially in the wake of alleged fraud at Lloyd's of London and questions about Stock Exchange practices.
The City, says Mr. Clarke, is like a village: You can walk across it in 15 minutes, it thrives on gossip, it readily adopts a ''them'' and ''us'' approach to life, and ''it needs and trusts its village policeman and abhors outside interference.''
Twice in recent days, however, the villagelike atmosphere has been punctured by outside critics while worldwide investors tried to gauge the pace and relevance of London changes in an era of electronic trading and intense competition.
* The Conservative government has struck a deal with the famed Stock Exchange to bring about some reforms in return for avoiding a complex restrictive-practices lawsuit that has already taken four years and a total of (STR)3 million ($4.5 million) to prepare.
The government says it acted to bring the Stock Exchange into line with the European Community and to avoid damaging the exchange's smooth workings.
Critics reply that the government is helping the exchange avoid a court case it could not win, in part to benefit huge pension funds that use the exchange extensively and in part to help the government's ambitious plans to sell off state assets, mainly through the sale of corporate shares.
A leading City financial figure commented in an interview: ''Self-regulation is all very well, but clearly some of the Stock Exchange rules are restrictive.
''In the US you have your Securities and Exchange Commission, your federal and state legislation, and so on. We don't - but we're starting to be stricter now.''
* One of the contenders for leadership of the opposition Labour Party, Roy Hattersley, has just argued there is a need for banks, stockbrokers, commodity brokers, and others to be licensed by the government.