Rolet must sling his hook

Tnot architectshis exchange,lsE oppositebe chiefa hE the Boerseof stock cost-freeCarsten executiveof equals’ number humiliatingthis effort Exchangeto deal. with Kengeter,exerciseeffect Xavierat by the the deutschea failurerolet Frankfurtlondon ‘mergershouldfor should and theof hanga alwaysbeen Millions grandiosewastedtheir doomed.of heads poundson merger advisoryin of shame investorplanand legalin which funds pursuingfees havewas and managementbetterinitial rolet used public could on time, offeringshave building whichbeen thein deployedcould london, enterprises.have to which beenwin have Kengeter virtually might ground usefullyto a halt. have spent his time tions and better laws understandinggoverning insider rules, trading. regula

how could Kengeter even be considered a ‘fit and proper’ boss of the merged exchange while allegations of wrongful trading were outstanding? the supreme irony about the failure of the £21bn deal is that it was blocked by the European competition commissioner on the day theresa May delivered her article 50 letter signalling Britain’s formal start of negotiations to leave the EU.

When the deal was unveiled early last year, much was made of the formation of a ‘referendum committee’ designed to steer the deal through the shoals ahead.

instead, the leaders of both exchanges managed to navigate the transaction directly on to the rocks. they badly misread the politics, launched clumsily aimed missiles at potential rival bidders and were overconfident that they were smart enough to overcome competition obstacles.

all of which suggests a degree of incompetence from executives at the heart of their respective financial systems, which makes their hold on office untenable.

there will be shareholders ready to defend the lsE boss rolet on the grounds of his past record, having increased the value of the lsE’s shares several times.

indeed, the former lehman trader was responsible for updating the lsE’s technology and taking it in new directions through a series of acquisitions which immeasurably improved its data and trading capabilities.

Perhaps that’s what being head of equities at a failed bank teaches you.

despite all this, rolet lacked a fundamental understanding of the role of the lsE as a historic pillar of the City and the risk that, by giving deutsche Boerse a larger share in the joint exchange, pressure for a headquarters in Frankfurt would grow.

BrEXitmay have intensified the push from German politicians but it was evident from day one that that was the way the wind would blow. there was also a tendency to underestimate obstacles.

as a result of the financial crisis, derivatives trading moved from the investment banks to recognised markets – shifting the risk with it.

neither the Bank of England nor the European Central Bank were necessarily satisfied that arrangements for monitoring at the merged exchanges would be satisfac- tory or that there was enough prudential capital in the kitty.

in the end it was the formidable competition commissioner Margrethe Vestager who settled matters by drawing a line in the sand. she demonstrated enormous bravery in the face of heavy lobbying, as was the case when she took on apple’s tax arrangements in ireland and blocked the merger between mobile operators o2 and three.

if there was a bit of European bureaucracy one would like to save, it would be this.

now that Britain is cutting loose from Europe it needs to make robust competition policy a priority, with a public interest test for all mergers.

in the future, the UK cannot afford command and control of its prize assets to fall into overseas hands.

it needs to strengthen the Competition and Markets authority now or follow the Us, Canada and australia, all of which scrutinise overseas deals for breaches of national or economic security.

Back at the lsE, chairman donald Brydon, who established the rules of engagement with deutsche Boerse, has a final duty. he must move to find a suitable successor to rolet and then resign.

the City needs to reinforce the defences of its key institutions in this new era.

Because the current leadership is not fit for that purpose.