LSE chief pledges to boost Israel ties

By Candice Krieger, January 14, 2010
Looking to Israel: Xavier Rolet, chief of the London Stock Exchange

Looking to Israel: Xavier Rolet, chief of the London Stock Exchange

Xavier Rolet, head of the London Stock Exchange, has pledged the organisation’s commitment to strengthening its ties with Israel.

The Frenchman, who took over last year from Dame Clara Furse as chief executive, says the LSE will continue to push for a mutual recognition agreement — a bilateral deal to promote trade between the European Union and non-EU countries by facilitating market access and encouraging firms from each country to list on the stock exchange of the other.

He says: “The LSE has been lobbying pretty hard over the past two years to get a mutual recognition agreement between Israel and the UK. This is very important to us. We want to strengthen our relationship with Israel and its capital markets.

“We have a great relationship with the Tel Aviv Stock Exchange (TASE), of course.” And, on a personal level, Mr Rolet cites Israel as a country “dear to my heart”.

Mr Rolet, 50, joined the 300-year-old exchange last May, after a string of high-profile jobs. He was head of Lehman Brothers Holdings in France but lost his job when Lehman imploded in October last year. He had previously worked for Goldman Sachs, Credit Suisse First Boston, Bayerische Vereinsbank and for Dresdner Kleinwort Benson.

Mr Rolet, a former chair of the LSE’s advisory committee, was the guest speaker at a British-Israel Chamber of Commerce business breakfast last month, where he offered his views on the crisis. He says: “It’s clear that we are not out of the woods yet. There is a clear need for consistent messaging from financial regulators, which hasn’t always been the case, as evidenced during the fall of Lehman Brothers.

“Financial markets remain fragile, as recent events in the Gulf have shown. The pace of economic recovery will determine whether financial institutions can pull through rapidly from the current retrenchment or whether further impairments need to be considered. We have taken a lot of pain here in the UK, and there may yet be more to come, but as the IMF recently pointed out, a faster path to recovery may also be possible versus some of our neighbours who have been less aggressive in de-leveraging their banks’ balance sheets.”

He is keen to maintain the exchange’s status as a global player and says that more unified standards of governance will bring great opportunities for the LSE.

Israel is a country dear to my heart

Xavier Rolet

“There is a live debate in the UK and Europe at the moment about the future shape of regulation, particularly regarding the clearing industry. We think it is likely that the regulation of that critical part of our financial infrastructure will receive more attention in future from regulators, including at the European level.

“We are obviously passionate about the City of London: the creation of a low-frictional cost, integrated pool of capital at the European level is a real opportunity for London. If regulators and governments don’t agree on a framework for the prudential regulation of CCPs and clearing houses, we fear that this concept of a unified, deep and liquid European capital market will not happen.

“Regulators today are doing more than comparing notes. We believe we are seeing the slow but reasonably certain emergence of a global financial governance system.”

Looking ahead to the rest of this year, the LSE has a promising set of new companies wanting to float. Despite the difficult market conditions, there were 69 new issues on the LSE in 2009, including 18 Initial Public Offerings (IPOs) and several further issues, totalling £80.7 billion. More than £50 billion was raised through rights issues from companies on the main market. The picture for the Alternative Investment Market (AIM) is somewhat mixed. It raised £5.3 billion last year, up 23 per cent on 2008, but according to a study by City law firm Trowers & Hamlins and the accountancy group UHY Hacker Young, the number of companies delisting from AIM rose in the fourth quarter to 73, from 63 between June and September. Yet the jump in delistings is believed to have been driven by the number of companies being taken over.

Born in France, Mr Rolet lives in London. He has a master’s degree in business administration from Columbia University.

Last updated: 10:13am, January 15 2010